Automodular – Supreme Court of Ontario finds that there was no implied term in a settlement agreement for grossing up a settlement amount for ETA s. 182 tax
Counsel to the parties in an action for wrongful termination by the defendant of an agreement for the long-term supply of parts to it by the plaintiff agreed by exchange of emails on the weekend before the trial that the action would be settled by the payment by the defendant of a $7M sump sum. Dunphy J, in dismissing a motion by the plaintiff for a declaration that there was an implied contractual term that the $7M should be grossed up for HST remittable out of the settlement amount by the plaintiff under ETA s. 182, stated:
It cannot be said here that the agreement lacks commercial efficacy without the implied term. It cannot be said that term the plaintiff seeks was so obvious as to “go without saying” in the eyes of an objective person. …
The simple fact of the matter is that the plaintiff stipulated the sum it was prepared to accept and did not seek to allocate it in any way.
Neal Armstrong. Summary of Automodular Corporation v. General Motors of Canada Limited, 2018 ONSC 1640 under ETA s. 182(1).