OCA Finds Judges Cannot Decide Issues Not Before the Court

The latest round in a high-profile fight over National Hockey League sponsorship rights ultimately turned on a point of civil procedure and underscored need for judgments to be tied to the submissions of the parties.  In turn, this decision provides an answer to the question of what to do when the judge reaches a conclusion that was not urged by any of the parties.

Following the expiration of its sponsorship deal with the NHL, Labatt sought to negotiate a new agreement.  Labatt had a 60-day exclusive negotiation period.  Ultimately, the NHL sided with rival beer company Molson.  Labatt sought an interpretation of its rights under the renewal provision in the old agreement.  Labatt argued that it had agreed on terms of renewal with the NHL, and on that basis, the NHL was obliged to continue negotiation to a binding agreement.  Molson and the NHL countered that the NHL was under no obligation to continue to negotiate.

At first instance, Newbould J. adopted his own theory of the case.  Noting “I realize that this result is not exactly what either side contended” he found that Labatt and the NHL had concluded a binding sponsorship agreement.  This disposed of the issue before him, but it did so on the basis of a legal theory advanced by none of the parties.  This was a classic case of the reasons failing to match the case that was argued.

Decision

The Ontario Court of Appeal accepted that the NHL and Molson had been taken by surprise.  Labatt had not pleaded the existence of a binding agreement, nor had it argued for any such agreement before Newbould J.  In essence, Labatt had applied for a very different thing – the interpretation of its rights to continue negotiating under the renewal clause – than Newbould J. had granted: a determination that the parties had formed a new contract.  The Court of Appeal accepted that, had Molson and the NHL faced an allegation of a binding agreement from the outset, they would have conducted the case differently.

Significance

This case stands for the proposition that the parties must be given an opportunity to address the ultimate conclusion that is reached by the judge.  Without that opportunity, there has been a denial of procedural fairness.  This case is a cautionary tale to litigants who would frame their claims narrowly, and to judges who would ignore that narrow framing altogether.

Molson was represented by McCarthy Tétrault.

Case Information:

Labatt Brewing Company Limited v. NHL Enterprises Canada, L.P., 2011 ONCA 511 (CanLII)

Date of Decision: July 12, 2011

agreement contract judge judgment Ontario Court of Appeal procedural fairness renewal clause sponsorship submission submissions

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