Federal Appeal


Contracts

Construction and interpretation

General principles

Testimony clearly in breach of parol evidence rule

Plaintiff entered into fixed price agreement with defendant suppliers to govern its purchase of bunkers on “time to time” basis. Plaintiff placed two spot orders with supplier for supply of bunkers to vessels, for which supplier made arrangements with third party M Ltd. for physical delivery of bunkers. Supplier invoiced plaintiff while M Ltd. invoiced supplier. After suppliers declared bankruptcy, both M Ltd. and suppliers’ receivers requested payment from plaintiff. In action by plaintiff and shipowners seeking determination as to which entity should be paid, motions by M Ltd. and receivers for summary judgment led to ruling that plaintiff pay M Ltd. its invoiced amount and pay receivers small amount equal to supplier’s mark up. Receivers appealed. Appeal allowed. Motion judge erred in accepting evidence from plaintiff’s representative that suppliers had orally agreed to accept plaintiff’s position in agreement negotiations that terms and conditions of schedule 3 of agreement would apply to all purchases including spot purchases. Representative’s testimony was clearly in breach of parol evidence rule and was not supported by any documentary evidence. Representative’s evidence did not fall within rubric of surrounding circumstances and, in its absence, motion judge would necessarily have concluded that suppliers’ general terms and conditions would have applied pursuant to agreement and to supplier’s order confirmations. Motion judge erred in law by failing to apply relevant principles of contractual interpretation. Motion judge did not turn his mind to supplier’s general terms and conditions which differed from one found in schedule 3 by requiring insistence of third party for its terms and conditions to replace supplier’s. Motion judge made no finding whether M Ltd. insisted that plaintiff be bound by its terms and conditions. There were other differences between clauses that might be material. Matter would be returned to motion judge for reconsideration in light of these reasons.

ING Bank N.V. v. Canpotex Shipping Services Ltd. (2017), 2017 CarswellNat 697, 2017 FCA 47, M. Nadon J.A., Eleanor R. Dawson J.A., and Wyman W. Webb J.A. (F.C.A.); reversed (2015), 2015 CarswellNat 4741, 2015 CarswellNat 9601, 2015 FC 1108, 2015 CF 1108, Russell J. (F.C.).

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