Rainmakers Marketing Group Inc. Plaintiff - v. -, 2017 ABQB 624

Court of Queen’s Bench of Alberta Citation: Rainmakers Marketing Group Inc v AS America, Inc, 2017 ABQB 624 Date: 20171017 Docket: 1301 02946 Registry: Calgary Between: Rainmakers Marketing Group Inc. Plaintiff - and - AS America, Inc. Trane Inc., American Standard Companies Inc., Trane Canada Holdings Inc., American Standard International Inc. and Trane Canada Co. and AS Canada, ULC Defendants _______________________________________________________ Memorandum of Decision of J.L.

Mason , Master in Chambers _______________________________________________________ [ 1 ] From 2007 to 2012, the plaintiff Rainmakers Marketing Group Inc. was the exclusive marketing representative for American Standard plumbing fixtures in Alberta. It alleges that it entered into three substantially similar contracts with the defendants in this regard.

For convenience, the defendants will be collectively referred to as “American Standard” in these reasons, and the contracts as “contract”. [ 2 ] Rainmakers ended its relationship with American Standard effective February 29, 2012. [ 3 ] The central issue in the litigation is the

interpretation of Rainmakers’ entitlement to commissions under the contract.

[ 4 ] Rainmakers alleges that it is entitled to commissions on sales that it procured, but which were not finalized until after termination. American Standard defends on the basis that Rainmakers is only entitled to commissions on sales concluded during the life of the contract. [ 5 ] Both sides apply for

summary judgment based on their respective

interpretations of the contract. In addition to evidence of the factual matrix of the contract, the parties refer to evidence of subsequent conduct. [ 6 ] For the reasons that follow, I am granting Rainmakers

summary judgment for commissions on sales it procured, but which were finalized after termination. The quantum of this entitlement remains to be determined failing agreement between the parties. [ 7 ] There is also an issue with respect to the entities that Rainmakers alleges are obliged under the contract for payment of the commissions. Rainmakers seeks a declaration that all the defendants are jointly and severally liable. The defendant AS Canada ULC asserts that it is the only responsible party and that the action should be dismissed against the myriad other entities named. By agreement those portions of the applications are adjourned. Test for

summary judgment [ 8 ] Rule 7.3(1) provides that a party may apply to the court for

summary judgment in respect of all or part of a claim on one or more of the followings grounds: (

a) there is no defence to a claim or part of it; (

b) there is no merit to a claim or part of it; (

c) the only real issue is the amount to be awarded. [ 9 ]

Summary judgment is no longer denied solely on the basis that the evidence discloses a triable issue. The court now asks whether there is any issue of merit that genuinely requires a trial or, conversely, whether the claim or defence is so compelling that the likelihood it will succeed is very high such that it should be determined summarily.

The court will also consider whether examination of the existing record can lead to an adjudication and disposition that is fair and just to both parties: Whitecourt Power Limited Partnership v Elliott Turbomachinery Canada Inc. , 2015 ABCA 252 at paragraph 9 , citing Hryniak v Mauldin , 2014 SCC 7 and other authorities from the Court of Appeal. [ 10 ] The standard for fairness is not whether the process is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles: Hryniak v Mauldin at paragraph 50 . [ 11 ] The court is to presume that the best evidence from both sides is before it: 1214777 Alberta Ltd v 480955 Alberta Ltd , 2014 ABQB 301 at paragraph 17 . [ 12 ] A party faced with an application for

summary judgment must put its best foot forward, and present evidence to show sufficient “merit” to establish a genuine issue requiring a trial with respect to the outstanding issues: Windsor v Canadian Pacific Railway Ltd , 2014 ABCA 108 at paragraph 21 , citing Canada v Lameman , 2008 SCC 14 at paragraph 19 . The mere assertion of a position by the non-moving party in a pleading or otherwise, or the mere hope of the non-moving party that something will turn up at a trial, does not suffice.

The key is whether the circumstances require viva voce evidence in order to properly resolve the case: 776826 Alberta Ltd. v Ostrowercha , 2015 ABCA 49 at paragraph 11 . [ 13 ] The onus remains on the applicant to present uncontroverted facts and law which entitle it to judgment: see for example, Access Mortgage Corporation

(2004) Limited v Arres Capital Inc. , 2014 ABCA 280 at paragraph 45 . [ 14 ] Issues of contractual

interpretation are often suitable for

summary judgment. The parties agree that the issue of Rainmakers’ entitlement to commission under the contract is appropriate for

summary determination. Principles of contractual

interpretation [ 15 ] The overriding concern in interpreting contacts is to determine the intent of the parties and the scope of their understanding.

To do so, the decision maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract: Creston Moly Corp v Sattva Capital Corp , 2014 SCC 53 at paragraph 47 . [ 16 ] The Supreme Court of Canada confirmed that surrounding circumstances are to be considered even in the absence of ambiguity, but not so as to overwhelm the words of the agreement, or deviate from the text.

Such evidence serves to deepen the decision maker’s understanding of the mutual and objective intentions of the parties as expressed in the words of the contract: Sattva at paragraph 57; IFP Technologies (Canada) Inc. v EnCana Midstream and Marketing , 2017 ABCA 157 at paragraphs 80-82 . [ 17 ] The type of evidence that can be relied on under the rubric of surrounding circumstances necessarily varies from case to case, but may consist only of objective evidence of the background facts at the time of the execution of the contract: Sattva at paragraph 58.

Examples of relevant background facts include: the genesis, aim, or purpose of the contract; the nature of the relationship created by the contract; and the nature or custom of the market or industry in which the contract was executed: IFP Technologies at paragraph 83, citing Sattva at paragraphs 47-48, among other authorities. [ 18 ] Evidence of surrounding circumstances must be distinguished from evidence of subsequent conduct.

The scope of surrounding circumstances is necessarily temporally limited to evidence of facts known to the contracting parties at the time of execution of the contract: Shewchuk v Blackmont Capital Inc. , 2016 ONCA 912 at paragraph 41 .

[19] Evidence of subsequent conduct should be admitted only if the contract remains ambiguous after considering its text andfactual matrix: IFP Technologies at paragraph 87; Shewchuk at paragraph 46 and 47, citing Canadian National Railway v CanadianPacific Ltd (1978) 95 DLR (d) 242 (BCCA), aff’d (SCC), [1979] 2 SCR 668, among other authorities. [20] The Court in Shewchuk explains at paragraphs 42-47 that the use of evidence of subsequent conduct to interpret a contract islimited in this way due to the recognized dangers associated with reliance on evidence of subsequent conduct: a.

The parties’ behaviour in performing their contact may change over time. Using their subsequent conduct as evidence of theirintentions at the time of execution could permit the

interpretation of the contract to fluctuate over time. b. Evidence of subsequent conduct may itself be ambiguous. For example, the fact that a party does not enforce its strict legal rightsdoes not mean that it never had them. Some courts suggest that evidence of subsequent conduct will carry little weight unless it isunequivocal. c. Over-reliance on subsequent conduct may reward self-serving conduct whereby a party deliberately conducts itself in a way thatlends support to its preferred

interpretation of the contract. [21] Used carefully, evidence of subsequent conduct can be useful in resolving ambiguities. It may help to show the meaning theparties subsequently gave to the words of the contract, which may in appropriate cases support an inference concerning their intentions atthe time they made their agreement: Shewchuk at paragraphs 48-50. [22] Typically, evidence of subsequent conduct will be more reliable if the acts relied upon are the intentional acts of both parties,are consistent over time, and are acts of individuals rather than corporations. It will have greater weight if it consistent with only one ofthe two alternative

interpretations that generated the ambiguity triggering its admissibility, and also in proportion to the proximity of thesubsequent conduct to the time of the contract’s execution: Shewchuk at paragraphs 53-55. [23] Commercial contracts should be interpreted in accordance with sound commercial principles and good business sense: IFPTechnologies at paragraph 88. [24] Against this backdrop of legal principles, I turn to the contract at issue.

Paragraph 3.6 of the contract remunerates Rainmakers for procuring sales [25] Paragraph 3.6 of the contract addresses the payment of commission: [American Standard] shall pay to [Rainmakers] a commission for Products sold within the Territory pursuant to ordersprocured by [Rainmakers] and accepted by [American Standard], such commission is based on the structure set out in

Schedule B.The commission shall be calculated as a percentage of the price of the Products sold, not including taxes and shipping charges. Adeduction in commission will be made if product is returned by a customer. Deductions will occur in subsequent months as customerssend in deductions to [American Standard] order desk. Commissions are payable to [Rainmakers] within 30 days of delivery of theProduct to the customer, provided that no commission shall be payable on: (

a) an order not accepted by [American Standard]; (

b) an order for which payment has not been received by [American Standard]; or (

c) an order cancelled by [Rainmakers] or the customer. [Rainmakers] shall return to [American Standard] any commission paid to [Rainmakers] with respect to any order described in (

a) to (c)above or with respect to Products returned to American Standard by the customer. [Emphasis added.] [26] Rainmakers submits that the words of paragraph 3.6 are straightforward, and clearly provide that commissions will be payablefor sales it procured. [27] The word “procured” is defined in Webster’s Ninth New Collegiate Dictionary as “...to obtain by particular care and effort...to bring about”. It lists “achieve” as a synonym.

This word denotes activity, and not passivity. [28] Similarly, Black’s Law Dictionary defines “procure” as follows: To initiate a proceeding; to cause a thing to be done, to instigate; to contrive, bring about, effect, or cause. To persuade, induce, prevailupon, or cause a person to do something...Procure connotes action and means to cause, acquire, gain, get, obtain, bring about, cause to bedone...To find or introduce; - said of a broker who obtains a customer.

To bring the seller and buyer together so that the seller has anopportunity to sell... [29] American Standard argues that if the parties intended to compensate Rainmakers for sales it procured and thus, entitle it tocommissions on sales it generated but which were not concluded until after termination, there would be a mechanism in the contract forattributing sales to Rainmakers’ marketing efforts. [30] It submits that the absence of such a mechanism makes it clear that the parties intended that Rainmakers would receivecommissions on all sales in the territory only while it was the marketing agent, regardless of whether it was involved in procuring them. [31] American Standard does not refer to the words used in the contract to support what it suggests is the only possibleinterpretation of Rainmaker’s entitlement to commission. [32] Perhaps this is by design, since American Standard’s

interpretation would require the court to ignore the words “pursuant to

orders procured by [Rainmakers]” and replace them with “prior to the termination of this contract” . It is not the court’s function to re-write the parties’ bargain. [ 33 ] Further, the court must consider the meaning of the words in paragraph 3.6 in light of the contract as a whole. The entirety of the contract serves to set out the parties’ obligations in regard to the marketing of American Standard’s products. Rainmakers’ duties are particularized at paragraph 4.1.

These include the obligations to “aggressively promote and ... sell the Products within the Territory...” and “service the customers of American Standard in a professional and diligent manner, including making regular calls on these customers at least [twice] per month”.

These duties suggest that it was the parties’ intention that Rainmakers would work hard to market American Standard products, and that it would be compensated for its efforts, even if the sale was finalized after termination. [ 34 ] In addition, there is nothing in the contract that says that the obligation to pay commission for orders procured by Rainmakers ends upon termination, although the parties saw fit to expressly limit the payment of commission in several other ways.

The parties agreed in paragraph 3.6 that commissions would not be payable if: 1) an order is not accepted by American Standard; 2) American Standard does not receive payment for the order; or 3) the order is cancelled or product returned by the customer, or the order is cancelled by Rainmakers. [ 35 ] The words of the Court of Appeal in Baim v North Country Catering Ltd , 2017 ABCA 206 at paragraph 15 , also in the context of a dispute as to payment of commission post-termination of contract, are apropos: There is nothing in the foregoing

interpretation that would lead to an unreasonable commercial result. Had the appellants wished to limit commission entitlement, the appellants simply could have added the clear wording that would have indicated that no commission would be payable to the respondent if no longer employed by the appellants. [ 36 ] Not only is there no provision that limits Rainmakers’ entitlement to commission to the life of the contract, the parties in fact expressly contemplated the survival of obligations beyond termination.

Paragraph 9.4 provides: All obligations of [American Standard] and [Rainmakers] which expressly or by their nature survive termination or expiration of this Agreement shall continue in full force and effect subsequent to and notwithstanding such termination or expiration or until they are satisfied or by their nature expire. [ 37 ] The existence of this clause is similarly consistent with the survival of the commission obligation after termination.

As discussed further below in connection with the factual matrix in which this contract was formed, the long lead sales process in use prior to and during the currency of the contract meant that the procurement work would often pre-date the actual order or sale for the products, by many months. This suggests that the entitlement to commission is an obligation which “by its nature” survives the termination of the contract.

Factual matrix: established brand, dropping sales, dissatisfaction with existing marketing efforts, long lead contracts [ 38 ] American Standard emphasizes that at the time of contracting, it was known to both parties that it was an established brand, with $4 million in market share. As such, it argues, sales would occur that Rainmakers would not have had any involvement in procuring, particularly at the outset of the contract relationship.

It asserts that this indicates that the parties intended that Rainmakers would receive commissions every month it worked, regardless of its involvement in the sale, but not following termination. [ 39 ] But this cannot be viewed in isolation from the rest of the context in which this contract was formed. [ 40 ] In meetings among Rainmakers’ prinicipal, Jackie Rainforth, American Standard Regional Manager Tony Testini and American Standard Business Leader Harry Kandilas leading up to the formation of the contract, it was discussed that sales were down in the territory by $2 million, and that American Standard’s vice president was dissatisfied with the performance of the salaried employees who had been doing the marketing in the 3 years prior. [ 41 ] Ms.

Rainforth explains this in detail in her affidavit sworn January 3, 2017 (“January Affidavit”): On November 15, 2006, I had initial discussions with [Mr. Testini] and [Mr. Kandilas]...They were pursuing me offering me a salaried position as a Sales Representative to cover the southern Alberta/BC region. I had been working at Kohler, a competitor to American Standard, and had made a huge impact and success in the residential market. They stated sales were down in the territory by $2 million. I attach as Exhibit A... a copy of my handwritten notes made during that conversation.

On January 18, 2007, I met in person with [Mr. Testini] and [Mr. Kandilas] to finalize a job offer. We also discussed the history of the territory, requirements of the position and for the territory, American Standard brand programs, and details regarding a start date of February 1, 2007. I attach as Exhibit B... a copy of my handwritten notes made during that conversation. During the January 18, 2007 meeting, I was told that the American Standard Brands had only one salaried representative named [D] in the Southern Alberta/BC territory. [Mr. Testini] and [Mr.

Kandilas] said they previously had another salaried employee named [C] covering the Northern Alberta territory, but he had resigned a number of months earlier. They said [D] and [C] had been employed in the territory for the last 3 years, but sales had been steadily declining to about 75% of sales three years earlier. There were no commission- earning sales representatives of the American Standard Brands immediately prior to Rainmakers; the prior sales representatives were salaried employees. [Mr. Testini] and [Mr.

Kandilas] also told me that the vice president of the American Standard Brands, Simone Abele, felt that [D and C] weren’t doing the job effectively. ...They were making limited sales calls, and mostly to the main branches of Calgary and Edmonton distributors, and were neglecting out of town customers and the smaller distributor branches. Extensive travel and thorough coverage of the distributors network, and residential home builders would be a priority focus and requirement of the position for which I was being considered.... They stated that 75% of their business was residential and 25% commercial.

I asked what the staffing plans were for the Edmonton region and was advised that they were looking to hire a second salaried employee for Edmonton for February 1, 2007.

[ 42 ] AS Canada ULC corporate representative Mr. Testini acknowledged at questioning that American Standard wanted Rainmakers to try to increase market share and to increase overall sales. [ 43 ] Thus, while it is true that American Standard was not a new brand or a “greenfield” operation, it was looking to improve its slipping sales and recognized that more marketing effort was required.

In that context, getting paid for procuring sales that are finalized after termination makes sense and is consistent with the plain meaning of the words used in the contract, including “procured”; the requirement on Rainmakers to “aggressively market” American Standard products; the absence of any time limit on the obligation to pay commission; and the contemplation that some obligations would survive termination. [ 44 ] It was well known to the parties at the time of contracting that sales do not simply materialize without effort, even with an established brand; sales require procurement.

The purpose of the contract is absolutely clear – to provide the basis of Rainmakers’ remuneration for its procurement efforts that resulted in sales.

Payment of commissions for such efforts that led to sales after termination is consistent with this purpose. [ 45 ] Over-emphasis on the fact that American Standard was an established brand would result in overwhelming the terms of the contract or deviating from its text, contrary to the Supreme Court’s direction in Sattva at paragraph 57: While the surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowed to overwhelm the words of that agreement...The

interpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract...While the surrounding circumstances are relied upon in the interpretive process, courts cannot use them to deviate from the text such that court effectively creates a new agreement... [ 46 ] American Standard further argues that there is no evidence of any discussions about the mechanism it would use to tie Rainmakers’ procurement efforts to sales and thus, the parties could not have intended that it be compensated for such efforts that led to sales after termination. [ 47 ] But there is there is similarly no evidence that there was any discussion that American Standard would just track sales during the life of the contract only and pay Rainmakers commission on this basis. [ 48 ] Another part of the factual matrix in which this contract was formed relates to the nature of the marketing of American Standard fixtures. [ 49 ] Mr.

Testini confirmed at questioning that American Standard marketed to wholesale customers, designers, engineers and other potential influencers of a sale. It was aware that there could be a long lead time between generating the interest in its fixtures, and the actual placing of an order. This lead time, while it necessarily varied from project to project, could be many months. This was discussed with Ms. Rainforth in the meetings leading up to the formation of the contract. [ 50 ] Thus, at the time of contracting the parties recognized that marketing efforts could take time to come to fruition.

This too supports the

interpretation that Rainmakers’ procurement efforts that led to a sale after termination would result in a commission. [ 51 ] In

summary, the parties chose to use the word “procured” in reference to the commission obligation contained in this contract setting out their respective obligations with respect to Rainmakers’ marketing efforts, formed in the context of slipping sales and dissatisfaction with salaried employees. They did not include any temporal limit on the obligation in the commission clause, and the obligation in the context of the business of marketing to wholesale customers and long lead quotes is one that “by its nature survives”. [ 52 ] Reading the contract as a whole, giving the words used their ordinary meaning, consistent with the surrounding circumstances, the resulting

interpretation is that Rainmakers’ entitlement to commissions did not end on termination. To the extent that Rainmakers’ procurement efforts led to sales that were finalized afterward, it should be compensated. Otherwise, Rainmakers would be working for free for a significant period of time toward the end of the contract. That is not a commercially reasonable result and it could not be what the parties intended. [ 53 ] As stated by the Court of Appeal in IFP Technologies at paragraph 89: In the end, contractual

interpretation is not an exercise in second guessing what could have been included in a contract while discounting or dismissing relevant terms of a contract and uncontradicted contextual information. It is instead an exercise in determining what the parties objectively intended having regard to the entire written text, relevant contextual background and commercial context.

Subsequent conduct: if there is an ambiguity in the use of the word “procured” [ 54 ] American Standard submits in the alternative that there is an ambiguity in the word “procured” contained in paragraph 3.6 of the contract. [ 55 ] In my view, having considered the text of the contract and its factual matrix, the use of the word “procured” in the commission provision is not ambiguous. It is not “reasonably susceptible of more than one meaning”: IFP Technologies at paragraph 87, citing Paddon-Hughes Development Co v Pancontinental Oil Ltd , 1998 ABCA 333 at paragraph 29 . As described above, the

interpretation put forward by American Standard ignores the words of the contract and does not reflect the totality of the context in which it was formed. [ 56 ] If I am incorrect in this conclusion, it is open to the court to consider evidence of subsequent conduct to assist in determining the intention of the parties. [ 57 ] The bulk of American Standard’s submissions in these applications focused on the manner in which it paid Rainmakers commissions after the contract was formed.

It emphasizes that over the entirety of the contract, Rainmakers received payment in only one way: by a percentage of sales in any given month, regardless of its role in procuring the sales. It submits that it is inappropriate for

Rainmakers to now cry foul and demand commissions based on its procurement efforts. It labels these distinct payment methods as “objective” and “subjective". [1] [ 58 ] Mr. Testini swore an affidavit in support of American Standard’s application on December 16, 2016. He deposes that: AS Canada’s records state that Rainmakers was paid commission on all orders that, by February 29, 2012, had been accepted by AS Canada, had been paid for, and had not been cancelled by Rainmakers or the customer. [ 59 ] Mr.

Testini does not supply any documentation substantiating his assertion. [ 60 ] In any event, American Standard’s chosen method to calculate commissions owing is not determinative. It does not exclude the possibility that it is nonetheless obliged to pay commissions when sales procured by Rainmakers take place post-termination. Only a sale can trigger a commission.

Using sales totals as a payment method could also be characterized as a simple and efficient way to pay an exclusive agent. [ 61 ] Further, there is also significant evidence on the record that shows that Rainmakers received commissions on sales that it procured. [ 62 ] American Standard points out that Rainmakers received commissions for the first month it worked, but could not have procured those sales. It argues that this demonstrates the parties’ intention that commissions be paid only while Rainmakers was agent, and not afterward. [ 63 ] Mr.

Testini deposes that: ...AS Canada’s records state that when Rainmakers initially commenced its role as an agent for AS Canada and its predecessors, Rainmakers was paid commissions on orders that were accepted by AS Canada and paid for after Rainmakers assumed that role from its predecessors, even though its predecessors’ efforts contributed to the securing of at least some of those orders, and Rainmakers made no contributions to those orders. [ 64 ] Again, Mr. Testini does not provide supporting detail or any of the referenced records.

There is no meaningful support for his assertions. [ 65 ] It is true that Rainmakers received a commission cheque for the first month it worked under the contract, as shown in the cover letter and cheque exhibited to Ms. Rainforth’s January Affidavit. [ 66 ] However, Ms. Rainforth testified at questioning that Rainmakers’ marketing efforts had commenced by February 1, 2007, the effective date of the contract. That evidence is unchallenged.

There is no dispute that Rainmakers’ marketing activities were focused and significant throughout the term of the contract. [ 67 ] American Standard makes a similar argument with respect to its acquisition of two further brands in the spring of 2008, which it suggests also generated commissions for Rainmakers that it had no

part in procuring. Mr. Testini’s affidavit is silent on this topic. [ 68 ] But Ms. Rainforth gave detailed evidence in her January Affidavit about Rainmakers’ procurement efforts in regard to the additional brands: Rainmakers was informed of an upcoming merger between American Standard, Crane/Fiat and Eljer taking place in Canada in late spring 2008. The American Standard Brands wanted Rainmakers to take on the new lines but demanded that two new staff be hired. Accordingly, [KL] and [JM] started as Rainmakers employees in June 2008. Rainmakers was hired to represent the two new companies (Crane/Fiat and Eljer).

I received two new contracts (one for Crane which owned Fiat and another for Eljer). Both had start dates of June 5, 2008... Rainmakers started marketing Crane, Fiat and Eljer brands immediately in June 2008. At the request of American Standard Brands, Rainmakers hired two new sales representatives to handle these product lines. Accordingly, Rainmakers hired two new employees: [KL] started June 9, 2008 and [JM] started June 15, 2008.

Rainmakers was paid start- up funds for American Standard Brands in 2007, but with the addition of the Crane, Fiat and Eljer brands, and the two new contracts in 2008, Rainmakers did not receive start- up funds or commissions for the first month, being June 2008. Rainmakers first received payment from the new brands in August 2008, which were for commissions earned in July 2008. In fact, Spectrum Sales (the sales agency who previously represented the Fiat line) was paid the commissions for June 2008.

Spectrum Sales was on a 30 day contract with American Standards Brands when American Standard terminated it as the marketing representative. Harry Kandilas later found out that Spectrum Sales had just signed a new lease on their building, and because Fiat had been their main product line and their “bread winner”, Harry decided to extend their payout by another 30 days, paying them the commissions for June and July 2008.

American Standard Brands paid both Rainmakers and Spectrum Sales commissions for July 2008. [ 69 ] Again, this evidence suggests that Rainmakers was in fact involved in procuring these sales. [ 70 ] American Standard argues that it did not ever track Rainmakers’ procurement efforts, nor link them to sales, and that there is no commercially feasible or objective way to do so in any event. [ 71 ] Perhaps American Standard did not track Rainmakers’ marketing efforts. But the evidence is clear that Rainmakers certainly did.

Rainmakers kept detailed records in this regard, and supplied regular marketing reports to American Standard. Those reports described Rainmakers’ marketing activities, and identified customers and projects, among other details.

[ 72 ] Because American Standard did not provide detailed commission statements, Rainmakers was not in a position to assess whether or not it was getting paid for sales that it did not procure. Nor was Rainmakers privy to the sales process or the actual orders, which were handled through American Standard’s distributors. There is no evidence that Rainmakers knowingly took commissions on all sales concluded starting on the first day of the contract as American Standard asserts. Ms.

Rainforth expressly deposes in her January Affidavit that Rainmakers never knowingly received commissions to which it was not entitled. [ 73 ] The record does not suggest that Rainmakers was conducting itself according to what American Standard describes as an objective payment model. As stated by the Court in Shewchuk , evidence of subsequent conduct is more reliable if the acts relied upon are the intentional acts of both parties. [ 74 ] Nor does the evidence support American Standard’s submission that it was not feasible to track procurement efforts and link them to sales. [ 75 ] Under questioning, Mr.

Testini described that prior to engaging Rainmakers, sales were tracked using a “quotation pipeline” so as to be able to identify which of the two employees handling sales was responsible for the sale, and to track whether the sale was ultimately “won” or “lost”. Once issued, the quote would be used for ordering by the wholesale distributor. Mr. Testini confirmed that while it was also possible for sales to proceed without a quote, the quotation process itself did not change after Rainmakers became the marketing agent for American Standard products in place of the two employees.

Further, at a certain point in time after it realized that some customers were using quotes to obtain discounted pricing on other projects, American Standard required that the quote include the project name, along with the breakdown and quantity of products that were requested to be quoted. [ 76 ] In addition to the detailed marketing records Rainmakers maintained and the marketing reports it supplied to American Standard, the evidentiary record includes 104 long lead quotes placed by Rainmakers, each with a specific time frame beyond the termination date of February 29, 2012 in which the prices in the quote would be honoured by American Standard if the customer chose to purchase the fixtures referenced in it.

Each identifies Ms. Rainforth as the “Sales Rep”. This is certainly a commercially feasible method that could be used to track sales back to Rainmakers. [ 77 ] Rainmakers’ ongoing and extensive efforts to market American Standard plumbing fixtures is similarly consistent with the

interpretation that its procurement efforts would be compensated should they result in a sale after termination. [ 78 ] The evidence is clear that Rainmakers kept up its efforts in this regard, to the very end of the contract. This included increased focus on early influencers of sales. Mr. Testini confirmed under questioning that Rainmakers was putting a “very high effort” into marketing American Standard brand fixtures, and continued to do so, without reduction, right up to the termination date. As noted, the record includes104 quotes issued by American Standard prior to that date, that identified Ms.

Rainforth as the “Sales Rep” and Mr. Testini as the “Sales Manager” and which remained valid until after the termination date. [ 79 ] Why would Rainmakers keep up this effort if it were not going to be paid for any resulting sales that were finalized post- termination? [ 80 ] American Standard further asserts that Rainmakers’ successor received the commissions on orders placed on quotes that were generated by Rainmakers.

It argues that this demonstrates the parties’ intention that no commissions would be payable to Rainmakers after the contract ended. [ 81 ] This evidence does not assist in establishing American Standard’s

interpretation. It was its own unilateral choice to pay those commissions to Rainmakers’ successor, and it did so at its peril. It made this choice in the face of Rainmakers’ communications that it expected to be paid on sales generated by its long lead quotes that it placed. Further, there is no evidence before the court as to the terms under which Rainmakers’ successor was retained and the basis of its commission entitlement.

It is not appropriate to infer the intention of the parties to this dispute, based on a contract made five years later, made between American Standard and another company. [ 82 ] Finally, if there were an ambiguity in the use of the word “procured” in the contract, it should be construed against the drafter of the contract, American Standard. [ 83 ] American Standard argues that this was a negotiated contract. [ 84 ] It is true that American Standard initially offered a salaried employee position covering southern Alberta/south eastern British Columbia to Rainmakers’ principal, Ms. Rainforth.

She then suggested an independent contractor relationship through a corporate vehicle, with a larger territory covering all of Alberta, south-eastern British Columbia and the Northwest Territories. Apart from those topics, however, the contract was not negotiated. It was prepared by American Standard and signed by Rainmakers in the form presented. It would have been easy to include a restriction on payment of commissions to the life of the contract, but this was not done. [ 85 ] In

summary, to the extent that there is any ambiguity in the contract, which I do not accept, the evidence of subsequent conduct does not reliably establish the parties’ intention that Rainmakers would simply receive commissions on sales that occurred in the territory while it was agent, without regard to its procurement efforts. Any ambiguity in the contract should be construed against American Standard. Conclusion [ 86 ] To the extent that Rainmakers procured sales that were concluded after termination of the contract, it is entitled to commissions.

If the parties cannot agree on quantum, that may be addressed in a further hearing. [ 87 ] Rainmakers is the successful party and presumptively entitled to costs. If the parties would like to make submissions in this regard, they may contact the Masters’ office, within 30 days of the date of these reasons. [ 88 ] I commend counsel for their thorough and helpful submissions.

Heard on the 14 th day of September, 2017. Dated at the City of Calgary, Alberta this 17 th day of October, 2017. J.L. Mason M.C.C.Q.B.A. Appearances: Philip A. Carson Miller Thomson LLC for the Plaintiff Andrew E. Stead McMillan LLP for the Defendants [1] Arguably, American Standard is using this evidence of subsequent conduct in an attempt to create ambiguity in the word “procured”, which is contrary to the authorities described above. The ambiguity must flow from the text and the factual matrix, prior to consideration of evidence of subsequent conduct.