CITATION: Seaworld Parks & Entertainment LLC v. Marineland of Canada Inc., 2011 ONSC 4084 COURT FILE NO.

: 52783/11 (St. Catharines) DATE: 2011/07/05

2011 ONSC 4084 (CanLII)

ONTARIO SUPERIOR COURT OF JUSTICE

) ) Seaworld Parks & Entertainment LLC ) ) ) Applicant ) ) ) - and ) ) Marineland of Canada Inc. ) ) ) Respondent ) ) ) ) BETWEEN:

Peter R. Jervis, P. John Landry and Rebecca Gosevitz, for the Applicant

John A. Keefe and Julie Rosenthal, for the Respondent

HEARD: May 25 and 26, 2011

REASONS FOR DECISION I. Introduction

[1] Ikaika is a killer whale owned by Seaworld Parks & Entertainment LLC. He was born at Seaworlds Orlando, Florida aquarium facilities in 2002. Since 2006, Ikaika has been located at aquarium facilities owned by Marineland of Canada Inc. in Niagara Falls, Ontario. Ikaika was

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loaned to Marineland under a Breeding Loan Agreement, a common practice with captive marine animals. The Breeding Loan Agreement is governed by Florida law.
2011 ONSC 4084 (CanLII)

[2] In December 2010, Seaworld gave written notice to Marineland of its intention to terminate the Breeding Loan Agreement as of December 31, 2010. Marineland declined to give up possession of Ikaika. He remains at Marineland in Niagara Falls. [3] Seaworld brought an application seeking possession of Ikaika. Seaworlds position is that under the clear words of the Breeding Loan Agreement, it was able to terminate the contract at any time upon 30 days written notice. Seaworld terminated the contract and was entitled to immediate possession of Ikaika. [4] Marinelands position is that Seaworld should not be granted immediate possession of Ikaika, and that instead this application should be converted to an action. In Marinelands submission, there is a fundamental dispute as to the correct interpretation of the termination provision of the Breeding Loan Agreement under Florida law, foreign law in this Court being a question of fact. The essence of the dispute is whether in interpreting the Breeding Loan Agreement the Court is able to consider extrinsic or parol evidence beyond the words of the agreement. According to Marineland, a trial is required since it is not appropriate to resolve this dispute based on a paper record. [5] The issues to be determined on this application are therefore as follows: (a) Conversion of application to an action: Are there material facts in dispute that would justify converting this application to an action? (b) Interpretation of the Breeding Loan Agreement: Did the Breeding Loan Agreement permit Seaworld to terminate the agreement? (c) Admissibility of parol evidence under Florida Law: Is parol evidence admissible under Florida Law to interpret the meaning of the Breeding Loan Agreement? [6] Although these issues are interrelated, I will consider each of them in turn.

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II.

Conversion of the application to an action

2011 ONSC 4084 (CanLII)

[7] Seaworlds claim for relief was brought by way of application based on affidavit evidence. Under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, a court proceeding may be brought by way of application where the relief claimed is the determination of rights that depend on the interpretation of a contract.1 On the hearing of the application, the Court may order the whole application or any issue to proceed to trial2 and be treated going forward as an action.3 An application may proceed without a trial even if there are material facts in dispute.4 The Court will require a trial only if there is good reason to do so and no determination can properly be made on the application record, a common circumstance being a credibility conflict between witnesses.5 [8] As already stated, Marinelands position is that Seaworlds claim for immediate possession of Ikaika should be refused and this application should proceed as an action. In Marinelands submission, there are material facts in dispute, as demonstrated in particular by conflicting expert evidence relating to the admissibility of parol evidence under Florida law. A trial is necessary in order to resolve the matters in dispute. Marineland also argued that it would be preferable in this case to have the benefit of pleadings and the opportunity for full document productions and discovery that would be provided in an action but not an application. [9] In this case, for the reasons explained further out below, I have concluded that a determination of the matters in issue can properly be made based on the record before me, and that Seaworlds application for possession of Ikaika should be granted. I have concluded in particular that a trial is not necessary in order to resolve conflicting evidence of the parties experts on Florida law.

III.

Interpretation of the Breeding Loan Agreement on the the 31,

[10] The Breeding Loan Agreement was entered into by Seaworld and Marineland November 16, 2006. That agreement provided for the loan of Ikaika to Marineland for purposes of propagation, research, education and public display, with Ikaika remaining property of SeaWorld. The agreement was in force for an initial term ending December

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See paragraph 14.05(3)(d) of the Rules of Civil Procedure, supra. See paragraph 38.10(1)(b) of the Rules of Civil Procedure, supra. 3 See subrules 38.10(2) and (3). 4 See McKay Estate v Love, 1991 CarswellOnt 548 (Ct J (Gen Div)) at para 6. 5 See Gordon Glaves Holdings Ltd v Care Corp of Canada, 2000 CarswellOnt 1883 (CA) at para 30.

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2010, renewing automatically for one year terms unless terminated. The termination provision of the agreement provided as follows:
2011 ONSC 4084 (CanLII)

Either Party to this Agreement may terminate this Agreement at any time by giving the other Party thirty (30) days written notice prior to the effective date of the proposed termination. [11] The termination provision of the agreement was therefore clear on its face there was nothing in the Breeding Law Agreement itself that expressly limited the right of either party to terminate the agreement. [12] Section 21 of the Breeding Loan Agreement also provided that the agreement constitutes the entire agreement between the parties, which shall not be amended, altered or changed except by a written agreement, signed by the parties. [13] As noted previously, Seaworlds position is that in accordance with the clear words of the Breeding Loan Agreement, it had terminated the agreement and was entitled to possession of Ikaika. Marineland did not dispute that the notice given by Seaworld complied with the formal notice requirements of the Breeding Loan Agreement. What Marineland did dispute was that Seaworld was entitled to terminate the Breeding Loan Agreement in the circumstances it did. [14] According to Marineland, to properly interpret the termination provision, it is necessary to read the Breeding Loan Agreement together with an earlier agreement between the parties, the Mammal Support and Interchange Agreement dated September 26, 2005. The Interchange Agreement stated that Marineland and Seaworld had agreed to collaborate on a number of ongoing projects relating to the care and maintenance of marine life. That agreement also stated that while the terms and conditions of the agreements for each project would vary, the agreements would be guided by the four principles set out in the Interchange Agreement. [15] The Interchange Agreement then went on to provide for breeder loans of certain specified animals (including a female killer whale to Marineland and a beluga whale to Seaworld) as well as the sale of certain other animals by one party to the other. Each of these transactions was subject to prior government approval, compliance with animal welfare regulations and execution of a breeder loan agreement or an acquisition/disposition agreement in a form attached as an exhibit to the Interchange Agreement. The form of the breeder loan agreement attached was similar, although not identical, to the agreement entered into by the parties with respect to Ikaika the following year. The Interchange Agreement also specifically contemplated future animal exchanges and transfers on mutually acceptable terms. [16] The Interchange Agreement also had a modified form of entire agreement clause, providing that the Interchange Agreement together with the others referred to in it collectively

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[17] In order to properly interpret the termination provision of the Breeding Loan Agreement, Marineland relied in particular on the third of the four guiding principles set out at the beginning of the Interchange Agreement, which stated as follows: Both parties are willing to loan animals to each other and continue such loans on a regular basis until either party is unable to properly maintain the mammals or requests their return.6 [18] According to Marineland in order to properly interpret that provision, it was necessary to read the Interchange Agreement together with a letter dated March 29, 2005 from the chief executive of Seaworld to the chief executive of Marineland. In that letter, Seaworlds chief executive stated that he was pleased that Marinelands chief executive had agreed to the Mammal Support and Interchange Agreement previously discussed by them, as documented in that letter. The letter set out the four guiding principles, very much as they appeared in the Interchange Agreement signed several months later, except that the third principle omitted the concluding words or requests their return. In the letter, the third principle read as follows: Exchanged mammals and offspring to be held for life and only returned to the donor if the recipient is no longer able to properly maintain the mammals. [19] Marinelands position was that in order to give effect to the clear intention of the parties, the correct interpretation of the Breeding Loan Agreement, when read together with the Interchange Agreement and the earlier letter, was that it could only be terminated by the transferring party if the receiving party was no longer able to properly maintain the mammal. According to Marineland, there was no evidence to justify a finding that Marineland was no longer able to maintain Ikaika, and that accordingly, Seaworld was not entitled to terminate the Breeding Loan Agreement. [20] The evidence of Seaworld was that by 2009, it had become concerned about Ikaikas physical and psychological health if it remained at Marineland. However, Seaworld did not rely on the facts underlying this concern as providing a legal justification for terminating the Breeding Loan Agreement, since, in their submission, there was nothing in the agreement limiting their ability to terminate.
6

Emphasis added.

2011 ONSC 4084 (CanLII)

represented the complete agreement of the parties, and superseded all other prior or contemporaneous commitments, understandings, representations discussions or promises, oral or written. The Interchange Agreement also provided that the Interchange Agreement would control over any inconsistencies in the Breeder Loan Agreements and the Acquisition/Disposition Confirmation Agreement.

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IV.

Admissibility of parol evidence under Florida law

[22] Since the Breeding Loan Agreement is governed by Florida law, the principles of contract interpretation under Florida law apply. Foreign law is a question of fact, and must be proven to the satisfaction of the Court. 7 [23] Both parties filed affidavit evidence from Florida legal experts as to Florida law relevant to this case, in particular the law relating to interpretation of contracts and the admissibility of parol evidence. Both experts were cross-examined on these affidavits. In his oral submissions, Marinelands counsel highlighted the differences of opinion between the parties experts, and suggested that viva voce evidence was required to resolve these differences. I disagree. In my view, nothing of significance would be gained in this case from hearing oral evidence from these experts there is no credibility contest that their presence in court would assist in resolving. [24] Upon review of the affidavit evidence from these experts, it appears that Florida law in this area is substantially the same as Ontario law. Where the terms of a written agreement are clear and unambiguous, the language of the agreement is controlling, and as a general rule parol evidence is inadmissible to contradict or add to the written terms of the agreement. The question of whether a Contract is ambiguous is a question of fact to be determined by the Court. Where the Court determines that the terms of the contract are ambiguous, the Court may admit parol evidence to explain or clarify the ambiguous terms, in order to give effect to the intent of the parties. [25] In this case, both experts also provided their opinions as to whether a Florida Court would find the termination provision of the Breeding Loan Agreement to be ambiguous. Seaworlds expert was of the opinion that a Florida Court would find that the termination provision of the Breeding Loan Agreement was unambiguous. Marinelands expert gave the opposite opinion. [26] According to Marinelands expert, when read together with the Interchange Agreement and the March 2005 letter, the termination provision of the Breeding Loan Agreement was
See Phillips v Phillips, 2006 CarswellAlta 46 (CA) at paras 72-73; leave to appeal to SCC refused, [2006] SCCA No 95.
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2011 ONSC 4084 (CanLII)

[21] As explained below, I agree with Seaworld that its ability to terminate the Breeding Loan Agreements was not limited to circumstances in which Marineland was no longer able to property maintain the captive mammal. In my view, Seaworld has properly terminated the Breeding Loan Agreement and is entitled to possession of Ikaika.

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[27] Marinelands expert also relied on the wording of the entire agreement clause of the Interchange Agreement to justify his conclusion. He stated that given that a form of the Breeding Loan Agreement was attached as an exhibit to the Interchange Agreement, the Court should read the Breeding Loan Agreement together with the Interchange Agreement (which he called the parent agreement) as one agreement, with the Interchange Agreement controlling as to any inconsistencies. He concluded that when read together, a Florida Court would likely conclude that the agreements were ambiguous as to whether Seaworlds termination rights were absolute or whether such right could only be exercised if Marineland could no longer properly maintain Ikaika. Accordingly, Marineland argued that given the conflicting expert evidence, conversion of this application to an action was necessary in order to resolve the conflict. [28] Having reviewed the evidence before me, including the evidence of the Florida legal experts provided by each of the parties, I have concluded that the termination provision of the Breeding Loan Agreement is not ambiguous, and that parol evidence should not be relied upon to interpret this provision other than in accordance with its terms. I agree with Seaworld that it was entitled to terminate the Breeding Loan Agreement and has effectively done so. Seaworld is therefore entitled to possession of Ikaika. [29] Although foreign law is a question of fact and must be proven to the satisfaction of the Court (as previously noted), the effect of that law on the facts of a particular case is a question of law to be decided by the Court as a matter of Ontario law.8 It may be of interest to know the opinions of the parties legal experts as to whether a Florida Court would find the termination provision of the Breeding Loan Agreement to be ambiguous and admit parol evidence to clarify its meaning, but such opinions do not ultimately assist this Court in determining this issue as a matter of Ontario law.9 [30] In this case, on the clear words of the Breeding Loan Agreement, Seaworld was entitled to terminate the agreement. It did not need to provide any reason to do so in order for the termination to be effective. Since the termination provision was not ambiguous, there was no need to consider parol evidence to interpret its meaning.
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See James G. McLeod, The Conflict of Laws, 1983, (Calgary, Alberta: Carswell Legal Publications) at p 41. See Rouyer Guillet et Compagnie v Rouyer Guillet Co Ltd, [1949] 1 All ER 244 (CA), which held that evidence of this nature was not admissible.

2011 ONSC 4084 (CanLII)

ambiguous, and parol evidence should accordingly be admitted. He relied, among other things, on Florida case law that suggested that where an agreement specifically provided that the agreement may be terminated without cause or for convenience, the Court will regard the agreement as unambiguous and will not allow the introduction of parol evidence. The expert noted that no such language was present in the Breeding Loan Agreement.

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[32] In this regard, the Interchange Agreement provided as one of its guiding principles that animal loans would continue until either party is unable to properly maintain the mammals or requests their return. In order to interpret the termination provision of that agreement in the manner proposed by Marineland, it would be necessary to ignore the words or requests their return, which do not place any restriction on that partys ability to terminate the agreement. [33] In order to support Marinelands interpretation, it is necessary to reach back to the March 29, 2005 letter from Seaworld to Marineland, confirming prior discussions relating to entering into a Mammal Support and Interchange Agreement, that letter referring only to a partys inability to maintain the mammals as grounds for termination. The letter requested Marinelands chief executive to acknowledge acceptance of the terms of the letter by signing and returning the letter, but he did not do so. Negotiations as to the form of the Interchange Agreement went on for several weeks after the March 29, 2005 letter, and subsequent versions of the draft agreement included the additional words or requests their return, as did the final agreement executed by the parties in September 2005. As well, as I have already noted, the entire agreement clause of the Interchange Agreement stated that the agreement superseded all prior and contemporaneous commitments, understandings, representations discussions or promises, oral or written. [34] In these circumstances, I see no justification for reading the Interchange Agreement together with extrinsic evidence in the form of the March 25, 2005 letter to support a finding that the termination provision was ambiguous. Such a finding was a necessary step in allowing extrinsic evidence to supersede the clear wording of the Interchange Agreement which, like the Breeding Loan Agreement, did not restrict the circumstances in which termination could occur.

V.

Conclusion

[35] Accordingly, an order will issue granting Seaworld recovery of possession of Ikaika, and ordering Marineland to co-operate in any way reasonably necessary to allow the safe and expeditious transport of Ikaika from Canada to the United States to a location directed by Seaworld in accordance with the Breeding Loan Agreement.

2011 ONSC 4084 (CanLII)

[31] But, in my view, even if Marinelands legal expert were correct that the Breeding Loan Agreement and the Interchange Agreement should be read as one agreement and the Interchange Agreement would take precedence with respect to any conflict with the wording of the Breeding Loan Agreement, Seaworld would still have been entitled to terminate the Breeding Loan Agreement.

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_________________________________ The Honourable Mr. Justice R.A. Lococo

Released:

July 5, 2011

2011 ONSC 4084 (CanLII)

[36] On the question of costs, unless otherwise resolved between the parties, Seaworlds counsel shall provide Marinelands counsel and file with the Court brief written submissions (not to exceed three pages) together with a cost outline within 14 days of release of these reasons. Marinelands counsel will have an opportunity to respond with brief written submissions to be provided to Seaworlds counsel and filed with the Court within 14 days of receipt of the Seaworlds submissions. Seaworlds counsel will have the opportunity to reply with brief written submissions within seven days from receipt of the Marinelands submissions. Should counsel for both parties prefer to make oral submissions, please speak to the Trial Coordinator to arrange a date.

CITATION: Seaworld Parks & Entertainment LLC v. Marineland of Canada Inc., 2011 ONSC 4084 COURT FILE NO.: 52783/11 (St. Catharines) DATE: 2011/07/05 SUPERIOR COURT OF JUSTICE - ONTARIO
2011 ONSC 4084 (CanLII)

BETWEEN: Seaworld Parks & Entertainment LLC Applicant - and Marineland of Canada Inc. Respondent

REASONS FOR DECISION

Lococo J.

Released:

July 5, 2011