COURT OF APPEAL FOR ONTARIO
CITATION: Sera GmbH v. Sera Aquaristik Canada Ltd., 2007 ONCA 70
DATE: 20070201
DOCKET: C45777
SHARPE, JURIANSZ and ROULEAU JJ.A.
B E T W E E N :
SERA GMBH
Plaintiff (Appellant)
Brian N. Radnoff for the appellant
- and -
SERA AQUARISTIK CANADA LTD., SERA U.S.A. INC., FRED TAN and IRENE TAN
Defendants (Respondents)
Martin Sclisizzi and Christina K. Litt for the respondents Fred and Irene Tan
AND BETWEEN
SERA AQUARISTIK CANADA LTD., SERA U.S.A. INC, FRED TAN and IRENE TAN
Plaintiffs by Counterclaim
- and -
SERA GMBH, SERA NORTH AMERICA INC., and HARVEY FELL
Defendants by Counterclaim
Heard: January 16, 2007
On appeal from the judgment of Justice Elizabeth M. Stewart of the Superior Court of Justice, dated June 28, 2006.
SHARPE J.A. (Dissenting):
[1] The appellant, Sera GmbH, sues for over one million euros, the price of aquarium and water purification products supplied to the corporate defendants, Sera Aquaristik Canada Ltd. (“Sera Canada”) and Sera U.S.A., Inc. (“Sera U.S.A.”). These products were supplied pursuant to an oral distribution agreement between the appellant and Sera Canada and Sera U.S.A. that was negotiated between Fred Tan, shareholder and director of both corporate defendants, and Josef Ravnak, managing director of the plaintiff. Irene Tan is also a shareholder and director of the corporate defendants.
[2] The Tans successfully moved for summary judgment dismissing the claim against them personally. The appellant raises three grounds of appeal:
(1) the motion judge erred by reversing the onus and by weighing evidence;
(2) the motion judge failed to perceive that the personal defendants admitted that they were parties to the oral agreement in their statement of defence and counterclaim;
(3) the motion judge erred by failing to find that there was sufficient evidence to support a triable issue as to personal liability.
[3] For the following reasons, I would dismiss the appeal.
(1) Onus of proof and weighing evidence
[4] In my view the motion judge did not err with respect to the onus of proof. She states: “The moving parties must establish that there is no genuine issue requiring a trial. The onus on the moving parties is a heavy one. In response to a motion for summary judgment, the responding party is to put his ‘best foot forward’ and is required to ‘lead trump or risk losing’ [citations omitted].” That is an accurate statement of the law and that is precisely the test the motion judge applied.
[5] The recent decision of this court in Royal Bank of Canada v. Société Générale (Canada), 2006 ONCA 42545, [2006] O.J. No. 5081 (Q.L.) does not assist the appellants. That case involved a complex $100 million fraud, with claims sounding in negligence, unjust enrichment and conversion. This court set aside a summary judgment dismissing some of the claims on a variety of grounds. One of the errors found by the court was that the motion judge placed the legal burden of persuasion on the responding party “to show” and “to establish” a genuine issue for trial.
[6] In the present case, the respondent had adduced sufficient evidence to shift the tactical (not the legal) burden to the appellant to “lead trump or risk losing”. References by the motion judge to the failure of the appellant to provide documentary evidence capable of demonstrating personal liability, when read in the context of her recitation of the proper legal test, do not support the argument that she reversed the legal onus of proof on the summary judgment motion.
[7] Nor do I accept the submission that the trial judge engaged in impermissible weighing of the evidence. She properly noted the appellant’s obligation to put to its “best foot forward” and concluded that“the evidence [the appellant] has adduced does not, and could not, raise a genuine issue for trial insofar as the Tans’ personal liability is concerned.” In my view, fairly read as a whole, the motion judge’s reasons make it clear that, as she was required to do, she measured the evidence against the appropriate legal test and that, as she was entitled to do, she concluded that the evidence was simply insufficient to give rise to a triable issue.
(2) Admission in the pleadings
[8] The appellants submit that the personal defendants admit in their statement of defence and counterclaim that they were parties to the oral contract and that this leaves open an inference that they were personally bound for the obligations sued upon. I disagree.
[9] The appellant relies on the following portions of the statement of defence in support of this argument: “Sera Germany entered into an oral agreement with the Tans” for the sale and distribution of products in Canada; and: “The Tans entered into an oral agreement with Sera Germany regarding the distribution of Sera products in the United States similar to the agreement they had with Sera Germany regarding the Canadian market”. The agreements referred to relate to the two corporate defendants (Sera U.S.A. had yet to be incorporated) having exclusive rights to import and distribute Sera products.
[10] In my view, the statement of defence says nothing more that the Tans were involved in negotiating the distributorship agreement pursuant to which those products were shipped. There is certainly no admission that the Tans personally agreed to be bound for the price of goods shipped to the corporate defendants pursuant to that distributorship agreement. Any suggestion to that effect is effectively trumped by the fact that the statement of defence specifically pleads that the personal defendants “have no personal liability whatsoever to Sera Germany” and that “[a]ny obligation to Sera Germany for [their] payment of products was the obligation of Sera Canada or Sera USA”. Reading the pleading as a whole, I do not accept the submission that there is anything capable of amounting to an admission of personal liability for the obligation sued upon.
[11] I do not agree that the fact that the counterclaim is advanced by “the defendants”, without qualification, has any bearing on the Tans’ personal liability to the appellant for the cost of products supplied to the corporate defendants for the following reasons. First, the Tans were named as defendants together with the corporate defendants and the counterclaim must be viewed in that light: it is framed in terms of a global response to the global claim advanced by the appellant. By joining the counterclaim the personal defendants admit nothing; they are simply responding in kind to the attack they face. Second, this argument should be considered in the light of the explicit denial of personal liability in the statement of defence and the absence of evidence capable of supporting personal liability. From that perspective, this argument appears to me to be nothing more that an ingenious last-ditch attempt by the appellants to overcome the fact that they have no evidence to support their case.
[12] I would add, however, that the consequence of a successful motion for summary judgment on the ground that the Tans were not personally liable on the agreement sued upon must be that they cannot be parties to that same agreement for the purposes of advancing the counterclaim.
(3) Sufficiency of evidence to give rise to a triable issue.
[13] In support of the claim of personal liability, the appellant offers little more than Ravnak’s bald assertion that he thought that the Tans were personally liable. In Guarantee Co. of North America v. Gordon Capital Corp., 1999 SCC 664, [1999] 3 S.C.R. 423 1, at para. 31, the Supreme Court of Canada held that “a self-serving affidavit is not sufficient in itself to create a triable issue in the absence of detailed facts and supporting evidence [citations omitted].” [Emphasis added.] The only additional evidence is that the Tans signed correspondence and purchase orders on company letterhead without specific qualification that they were signing “per” the corporate entities. It is also submitted that certain documents carry only the corporate name and logo without the addition of “Ltd.” or “Inc.”
[14] An unqualified signature on corporate letterhead might, in certain contexts, be one factor capable of supporting an inference of personal liability: see Barnett v. Rademaker (2004), 2004 BCSC 1060, 47 B.L.R. (3d) 159 (B.C.S.C.). However in that case, there were several other significant features in the dealings between the parties pointing to personal liability. Moreover, the correspondence signed without qualification was the very basis for the agreement and included language (“I undertake”) that clearly indicated that personal liability was being assumed for certain obligations. Here, there is nothing in the documents or the dealings between the parties that, viewed through the lens of ordinary commercial practice, could support personal liability.
[15] On this record, the motion judge was entitled to weigh the evidence to the limited extent required to determine whether or not there was a triable issue. I do not agree that she erred in finding that there was no triable issue. In my view, on this record, her conclusion is unassailable on appeal.
Conclusion
[16] Accordingly, I would dismiss the appeal with costs fixed in the amount agreed to by counsel, namely $7,500 inclusive of disbursements and GST.
“Robert J. Sharpe J.A.”
ROULEAU J.A.:
[17] Although I agree with my colleague Sharpe J.A. that the motion judge did not err in her appreciation of the onus of proof or in the limited weighing of the evidence that she undertook, I disagree with his analysis of the impact that the pleadings have on the motion and would allow the appeal. In my view, the motion judge’s analysis does not take into account the position taken and admissions made by the personal defendants in their statement of defence and counterclaim. When these are taken into account, the issue as to whether an inference can be drawn that the Tans were personally bound for the obligations sued upon remains a genuine issue for trial.
[18] At the outset I will briefly summarize the position taken by the Tans in their defence and counterclaim. The allegations are not made in the alternative and are to the effect that:
in 1994, the Tans entered into an oral agreement where, in exchange for the Tans giving up a viable tropical fish business and agreeing to concentrate their efforts exclusively on the Canadian corporation’s business, SERA Germany promised the Tans that it would give SERA Canada the exclusive Canadian rights to SERA products and SERA Germany would give financial and other support to SERA Canada;
in 2000, the Tans entered into a similar agreement with SERA Germany with respect to SERA USA’s operations;
the defendants (consisting of the Tans as well as SERA USA and SERA Canada) were entitled to a minimum of three years notice of the termination of the agreements;
the Tans have no personal liability to SERA Germany; and
the defendants (again consisting of the Tans personally as well as SERA USA and SERA Canada) were entitled to damages against SERA Germany for breach of contract in the amount of $5 million.
[19] I disagree with Sharpe J.A.’s view that the pleadings say nothing more than the Tans were involved in negotiating the distribution agreements. The pleadings go further. They are to the effect that the Tans were parties to agreements with SERA Germany and that they gave consideration consisting of the closing their tropical fish business and an ongoing commitment to exclusively devote their efforts to SERA Canada and SERA USA. In exchange, SERA Germany agreed with them that it would give SERA Canada and SERA USA certain exclusive rights and, more importantly, SERA Germany would give full financial support to SERA Canada and SERA USA. A counterclaim is advanced by all defendants, including the Tans’ in their personal capacity, alleging that SERA Germany breached the terms of the oral agreements made with them.
[20] The fact that the Tans consider themselves to be parties to agreements with SERA Germany is consistent with the affidavits they have filed on the motion. In these, the Tans deny personal liability and assert that the distribution agreements were between SERA Germany and the corporate defendants. They do not, however, specifically deny being parties to agreements with SERA Germany. In order to deny being parties to agreements with SERA Germany, they would have had to amend their defence and drop their personal counterclaim. They did not seek to do so as part of their motion.
[21] The central issue, therefore, in both the claim and counterclaim is the terms of the oral agreements. On my reading of the pleadings both the appellant and the respondents agree that oral agreements were entered into and that the Tans were parties to them. Neither has alleged that personal liability of the Tans was discussed or specifically addressed in the course of coming to the agreements. Both, however, have different views of the terms of the oral agreements as well as the obligations that flow from the agreements reached. For example, SERA Germany denies that it agreed with the Tans that it would “fully financially support” SERA Canada and SERA USA. The Tans for their part, maintain that SERA Germany did promise full financial support to their companies, but that it could not reasonably be inferred from the dealings and agreements reached that they incurred personal liability in exchange for the financial support.
[22] Until the terms of the oral agreements are known, it is difficult to determine what inferences can reasonably be drawn from the nature of the exchange between the parties and the terms of the agreements reached. I agree that the documents referred to in the materials do not, in and of themselves, demonstrate that the Tans are personally liable. The relevance of these is whether they support SERA Germany’s or the Tans’ interpretation of the discussions and agreements reached.
[23] The pleadings issue may well not have been argued before the motion judge. This would explain why the motion judge made no reference to the pleadings in her decision and, does not appear to have considered the impact that the pleadings had on the motion. The statement in her reasons that “it would be unjust if the Tans were not extracted at this stage from this action given this paucity of evidence of any personal liability” suggests that it was not pointed out to her that, even if she allowed the Tans’ motion, the Tans would remain parties to the proceedings as plaintiffs by counterclaim. In my view, it would be unfair to finally determine, at this stage of the proceeding, that the oral agreements whose terms are disputed and to which the Tans appear to be parties cannot be interpreted as rendering them personally liable to SERA Germany, but can be interpreted as the Tans suggest so as to make SERA Germany liable to them personally for breach of contract.
[24] When all of the evidence is considered in light of the admissions and positions taken in the pleadings, the Tans’ motion for summary judgment cannot succeed. It requires assessing credibility, weighing evidence and making findings of fact on disputed evidence.
[25] Sharpe J.A. expressed the view that the consequence of the Tans being successful on the motion for summary judgment must be that the Tans cannot be parties to the same agreement for purposes of advancing a counterclaim. I agree that removing the Tans from the counterclaim would produce a more coherent result. However, this is not what the motion judge did, nor could she have done so on the materials before her. Had the Tans not counterclaimed and simply taken the position in their pleadings and materials filed that they were not parties to any agreement with SERA Germany and only acted as representatives of the corporations in the negotiation of the agreements, the motion and appeal would have had a totally different complexion.
[26] Accordingly, I would allow the appeal and set aside the summary judgment with costs fixed in the amount agreed to by counsel, namely $7,500 inclusive of disbursements and G.S.T. I would also award the appellant costs of the motion to be agreed to or, if no agreement is reached, assessed.
“Paul Rouleau J.A.”
“I agree R. Juriansz J.A.”
RELEASED: February 1, 2007