Schmidt et al. v. Wood et al., (2014) 569 A.R. 345

• Judge: Côté, Conrad and Costigan, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: January 28, 2014
• Citations: (2014), 569 A.R. 345;2014 ABCA 80

Schmidt v. Wood (2014), 569 A.R. 345; 606 W.A.C. 345 (CA)

MLB headnote and full text

Temp. Cite: [2014] A.R. TBEd. FE.118

Gerhard Schmidt, Giant LLC Nevada and Giant LLC North America (appellants/plaintiffs) v. Joseph Wood, Joseph R. Wood & Associates Inc., Marc Bilodeau, Amanda Wood and 1341453 Alberta Inc., carrying on business as Giant Marketing LLC and Giant Marketing (respondents/defendants by counterclaim)

(1203-0106-AC; 2014 ABCA 80)

Indexed As: Schmidt et al. v. Wood et al.

Alberta Court of Appeal

Côté, Conrad and Costigan, JJ.A.

February 26, 2014.

Summary:

Schmidt contracted with the defendants to provide funding in return for the exclusive right to market products using his inventions in much of the world. The parties were to share the profits derived from the marketing. Several companies were incorporated to handle different parts of the arrangement. A dispute arose and Schmidt and two corporations commenced an action. The statement of claim was struck out because of repeated convictions for contempt of court. A summary trial was held to determine the defendants' counterclaim for specific performance of certain obligations undertaken by the plaintiffs in two written marketing contracts and for a declaration as to certain rights that they acquired under the contracts.

The Alberta Court of Queen's Bench, in a decision reported at [2012] A.R. Uned. 205, granted judgment on the counterclaim. The plaintiffs appealed.

The Alberta Court of Appeal dismissed the appeal subject to two exceptions.

Company Law - Topic 4753

Contracts by companies - When and how company bound - Whether contract made by company - Defendants obtained judgment on their counterclaim respecting two written marketing contracts - The plaintiffs appealed, asserting that some necessary companies or persons, including Giant Nevada, were not named as parties to the contracts, or did not sign, or were companies then not yet incorporated - The Alberta Court of Appeal dismissed the appeal, stating that "One ground of appeal, the supposed absence of the party Giant Nevada, appears to be simply wrong. That company sealed the contract, as the respondents show by the photocopy in their Extracts ... The appellants' counsel suggests that it may be the seal of some other company, but there is no evidence of that. The seal is some evidence that the correct company executed the document, as the name on the seal seems to be correct. The courts do not need proof beyond a reasonable doubt. ... And if the individual who owns and controls a company makes a contract, that is a covenant by that individual to cause the company to perform (and cooperate about) what must come from the company. X can contract with Y that Z will give performance to Y, even if Z is not a party. One can contract to sell what one does not own; it is done all the time. It is the vendor's problem how to buy or deliver the item at or before the closing date. If he does not, he is liable for breach of contract. ... Bilodeau did not sign or seal the second contract. But Wood did, and Giant Nevada did, and Wood owns his own company. The only signature which the second contract lacks is Bilodeau's. But now he sues (with the other respondents) to enforce this result, and so he ratified the second contract." - See paragraphs 15 to 18.

Company Law - Topic 4762

Contracts by companies - When and how company bound - Incorporation after contract with owner in personal capacity - Effect of - [See Company Law - Topic 4753 ].

Contracts - Topic 1144

Formation of contracts - Signing - Failure to sign - Effect of - [See Company Law - Topic 4753 ].

Contracts - Topic 5110

Contracts by companies - Formalities - Seal - [See Company Law - Topic 4753 ].

Contracts - Topic 7435

Interpretation - Ambiguity - Inference of businesslike intention - Defendants obtained judgment on their counterclaim respecting two written marketing contracts - The plaintiffs appealed, asserting that the trial judge and the defendants went beyond the literal words of the contracts - They also asserted that the contracts were too unclear to be interpreted or enforced - The Alberta Court of Appeal dismissed the appeal, stating that "The original two contracts are obviously not drafted by lawyers. Parts are ambiguous or uncertain, and there are gaps in the topics covered. Complete certainty as to which is the correct alternative meaning maybe is not possible here. But where business people draft their own contract, without using lawyers, the maxim res magis valeat quam pereat is especially important. The court should strive to make the contract work, not to upset it. ... The poorer the quality of drafting, the less picky should be the interpretation, and the greater the effort to make the contract sensible and businesslike: ... The court should not give such a contract a picky interpretation. The overall aim of the contract is important. Note that the res magis rule usually prevails over reading a contract contra proferentem ... Maybe lack of certainty on the contract's face may allow extrinsic evidence. But it is not necessary to decide that here. We do not find these contracts very difficult to interpret, still less impossible to interpret. And there is an unappealed [contempt] order which struck the appellants' pleadings, and bars any argument of impossibility." - See paragraphs 7 to 14.

Cases Noticed:

Eli Lilly & Co. et al. v. Novopharm Ltd. et al., [1998] 2 S.C.R. 129; 227 N.R. 201, dist. [para. 10].

Hillas & Co. Ltd. v. Arcos Ltd., [1932] All E.R. 494; 147 L.T. 503 (H.L.), refd to. [para. 10].

Rosin & Turpentine Import Co. v. Jacob (1910), 102 L.T. 81; 11 Asp M.L.C. 363 (H.L.), refd to. [para. 10].

Keephills Aggregate Co. v. Riverview Properties Inc., [2011] A.R. Uned. 42; 44 Alta. L.R.(5th) 264; 2011 ABCA 101, refd to. [para. 10].

Mitsui Construction v. Hong Kong (1986), 71 N.R. 285; 33 Bldg. L.R. 1 (P.C.), refd to. [para. 10].

British American Assurance v. Law (William) & Co. (1892), 21 S.C.R. 325, refd to. [para. 11].

Hamlyn & Co. v. Talisker Distillery, [1894] A.C. 202; [1891-94] All E.R. 849 (H.L.), refd to. [para. 11].

Bearspaw Petroleum Ltd. v. Encana Corp. (2011), 505 A.R. 54; 39 Alta. L.R.(5th) 302; 2011 ABCA 7, refd to. [para. 11].

Clergue v. Vivian (H.H.) & Co. (1909), 41 S.C.R. 607, refd to. [para. 11].

Rodger v. Comptoir d'Escompte (1869), L.R. 2 P.C. 393; 38 L.J.P.C. 30 (P.C.), refd to. [para. 12].

Gainers Inc. v. Pocklington Holdings Inc. (2000), 255 A.R. 373; 220 W.A.C. 373; 2000 ABCA 151, refd to. [para. 28].

Guaranty Properties Ltd. et al. v. Edmonton (City) (2000), 261 A.R. 376; 225 W.A.C. 376; 2000 ABCA 215, refd to. [para. 28].

Authors and Works Noticed:

Burrows, Interpretation of Documents (2nd Ed. 1946), pp. 20 to 23 [para. 28]; 90 [para. 12]; 92, 93 [para. 11].

Halsbury Laws of England (5th), vol. 102, pp. 191 to 195, paras. 208 to 213 [para. 27].

Counsel:

E.R. Feehan and J.D. Laverty-Harrigan, for the appellants;

P.J. Van Campenhout, for the respondents.

This appeal was heard on January 28, 2014, by Côté, Conrad and Costigan, JJ.A., of the Alberta Court of Appeal. The court filed the following memorandum of judgment at Edmonton, Alberta, on February 26, 2014.