Aronowicz et al. v. Emtwo Properties Inc. et al. [Indexed as: Aronowicz v. Emtwo Properties Inc.]
98 O.R. (3d) 641
Court of Appeal for Ontario,
Gillese, Blair and MacFarland JJ.A.
February 4, 2010
Civil procedure -- Summary judgment -- Motion not erring in applying "no chance of success" test on motion for summary judgment -- Motion judge not erring in assuming existence of certain facts for purposes of disposing for summary judgment motion where existence of those facts did not give rise to genuine issue for trial -- Motion judge not erring in determining "novel" issue of law raised by claim in waiver of tort where he had sufficient factual foundation before him to permit that determination.
Corporations -- Shareholders -- No fiduciary duty existing as between two shareholders with respect to exercise of shotgun buy/sell provision in unanimous shareholder agreement -- Loan agreement in which Shareholder A agreed to repay vendor who loaned him money to purchase Shareholder B's interest pursuant to shotgun buy/sell provision by transferring three of corporation's properties to lender not constituting appropriation of corporate opportunity by Shareholder A -- Shareholder A not breaching any duty to Shareholder B by sharing confidential information about corporation with lender in context of loan agreement.
Fiduciaries -- Duties -- No fiduciary duty existing as between two shareholders with respect to exercise of shotgun buy/sell provision in unanimous shareholder agreement.
AA and HA each owned or controlled 50 per cent of the common shares of E Inc. They had executed a unanimous shareholders' agreement containing a buy/sell shotgun provision. HA triggered the provision and ultimately acquired AA's interest. AA subsequently learned that, as part of the financing arrangements by which HA raised the funds to buy him out, HA had agreed to repay the loan by transferring three of E Inc.'s companies to the lender. AA was displeased. He brought an action in which a large number of claims and causes of action were asserted, including breach of fiduciary duty, breach of duty of good faith, theft of a corporate opportunity, disclosure of confidential information and waiver of tort. The defendants' motion for summary judgment dismissing the action was granted. AA appealed.
Held, the action should be dismissed.
The motion judge did not err in his approach to the summary judgment motion. He appreciated that the test was whether there was a genuine issue of material fact that required a trial for its resolution. He did not err in applying a "no chance of success" test. The "no chance of success" principle is simply another way of expressing the view that where there are no genuine issues of fact that require a trial for determination and the claim cannot be proved on the basis of the undisputed facts, the action should not be permitted to go to trial. While he assumed the existence of certain facts for purposes of disposing of the summary judgment, he was not barred from doing so in the circumstances. A motion judge may not assume the existence of critical disputed facts for purposes of a summary judgment motion where there continue to be issues to be tried in which those same facts may be in dispute, and where doing so would (a) undermine the ability of a party to present [page642] its case in relation to other i ssues still to be determined in the proceedings, or (b) create the risk of inconsistent findings or conflicting decisions in those proceedings. Here, the motion judge accepted that the plaintiffs would be able to establish the duty of honesty and good faith they alleged if there were a trial, and the scope of that duty as they asserted it. The existence of such a duty was of no avail to the plaintiffs, however, if, on the undisputed facts, the parties' conduct under the shotgun provision did not attract such a duty. The motion judge concluded that it did not. There was therefore no genuine issue for trial on the question of whether HA was obliged to disclose the terms of the loan agreement (the issue with respect to which the motion judge's assumption was made).
The motion judge did not err in concluding that no fiduciary duty existed as between HA and AA with respect to the triggering of the shotgun provision. A shotgun buy/sell provision in a unanimous shareholders' agreement is the quintessential corporate mechanism for the exercise of corporate self-interest and does not attract the operation of fiduciary obligations. There was nothing in the relationship between HA and AA in the context of the shotgun provision that carried any indicia of a fiduciary relationship.
The motion judge did not err in finding that the loan agreement, with its potential transfer of E Inc. properties to the lender, did not constitute the appropriation of a corporate opportunity by HA. Moreover, there were no critical facts in dispute with respect to the disclosure of confidential information to the lender or with respect to the extent to which such disclosure had any impact on E Inc., AA or HA. The undisputed evidence did not support a finding that AA had a reasonable expectation that HA would keep all confidential E Inc. information from third parties. The disclosure of confidential information did not constitute a breach of fiduciary obligation or oppressive conduct because there was no evidence of any harm or detriment to E Inc. or to AA, or of any benefit or profit to HA, as a result of HA's disclosure of the confidential information to the lender. The claim for deceit and negligent misrepresentation failed for the same reason -- there was no evidence of any harm or detriment to E Inc. or to AA, or of any benefit or profit to HA.
The motion judge did not err in deciding "novel" issues of law. The legal issues before him were not novel or unsettled, for the most part, and to the extent that they might be considered novel -- for example, the claim in waiver of tort -- the motion judge had a sufficient factual foundation to permit their determination. Whatever its nature or elements, waiver of tort requires some form of wrongdoing. The motion judge found that there was no wrongdoing here.
APPEAL from the order of Wilton-Siegel J. (2009), 2009 CanLII 23888 (ON SC), 96 O.R. (3d) 510, [2009] O.J. No. 1990 (S.C.J.) granting summary judgment dismissing the action.
Cases referred to Chitel v. Bank of Montreal, 1999 CanLII 8746 (ON CA), [1999] O.J. No. 3988, 126 O.A.C. 159, 92 A.C.W.S. (3d) 37 (C.A.); Law Society of Upper Canada v. Ernst & Young (2003), 2003 CanLII 14187 (ON CA), 65 O.R. (3d) 577, [2003] O.J. No. 2691, 227 D.L.R. (4th) 577, 174 O.A.C. 49, 38 C.P.C. (5th) 40, 123 A.C.W.S. (3d) 480 (C.A.); Royal Bank of Canada v. Société Générale (Canada), 2006 CanLII 42545 (ON CA), [2006] O.J. No. 5081, 219 O.A.C. 83, 31 B.L.R. (4th) 63, 154 A.C.W.S. (3d) 72 (C.A.) [Leave to appeal to S.C.C. refused [2007] S.C.C.A. No. 87], distd Aguonie v. Galion Solid Waste Material Inc. (1998), 1998 CanLII 954 (ON CA), 38 O.R. (3d) 161, [1998] O.J. No. 459, 156 D.L.R. (4th) 222, 107 O.A.C. 115, 17 C.P.C. (4th) 219, 77 A.C.W.S. (3d) 520 (C.A.); Canada (Attorney General) v. Lameman, [2008] 1 S.C.R. 372, [2008] S.C.J. No. 14, 2008 SCC 14, 292 D.L.R. (4th) 49, [2008] 2 C.N.L.R. 295, 86 Alta. L.R. (4th) 1, 164 A.C.W.S. (3d) 873, J.E. 2008-689, EYB 2008-131651, 372 N.R. 239, [2008] 5 W.W.R. 195, 429 A.R. 26, 68 R.P.R. (4th) 59; Dawson v. Rexcraft Storage and Warehouse Inc., 1998 CanLII 4831 (ON CA), [1998] O.J. No. 3240, 164 D.L.R. (4th) 257, 111 O.A.C. 201, 26 C.P.C. (4th) 1, 20 R.P.R. (3d) 207, 81 A.C.W.S. (3d) 783 (C.A.), consd [page643] Other cases referred to Alexis v. Toronto Police Service Board, [2009] O.J. No. 5170, 2009 ONCA 847; B. (K.L.) v. British Columbia, [2003] 2 S.C.R. 403, [2003] S.C.J. No. 51, 2003 SCC 51, 230 D.L.R. (4th) 513, 309 N.R. 306, [2003] 11 W.W.R. 203, J.E. 2003-1874, 187 B.C.A.C. 42, 18 B.C.L.R. (4th) 1, [2003] R.R.A. 1065, 19 C.C.L.T. (3d) 66, [2004] CLLC Â210-014, 38 C.P.C. (5th) 199, 44 R.F.L. (5th) 245, 125 A.C.W.S. (3d) 432; Bader v. Rennie, 2007 CanLII 37674 (ON SCDC), [2007] O.J. No. 3441, 229 O.A.C. 320, 160 A.C.W.S. (3d) 447 (Div. Ct.); Bendix Foreign Exchange Corp. v. Integrated Payment Systems Canada Inc., [2005] O.J. No. 2241, 18 C.P.C. (6th) 15, 139 A.C.W.S. (3d) 1092 (C.A.); Donoghue v. Stevenson, 1932 CanLII 536 (FOREP), [1932] All E.R. Rep. 1, [1932] A.C. 562, 101 L.J.P.C. 119, 147 L.T. 281, 48 T.L.R. 494, 76 Sol. Jo. 396, 37 Com. Cas. 350 (H.L.); Frame v. Smith, 1987 CanLII 74 (SCC), [1987] 2 S.C.R. 99, [1987] S.C.J. No. 49, 42 D.L.R. (4th) 81, 78 N.R. 40, 23 O.A.C. 84, 42 C.C.L.T. 1, [1988] 1 C.N.L.R. 152, 9 R.F.L. (3d) 225, 6 A.C.W.S . (3d) 263; GATX Corp. v. Hawker Siddeley Canada Inc., 1996 CanLII 8286 (ON SC), [1996] O.J. No. 1462, 1 O.T.C. 322, 27 B.L.R. (2d) 251, 62 A.C.W.S. (3d) 700 (Gen. Div.); Guarantee Co. of North America v. Gordon Capital Corp., 1999 CanLII 664 (SCC), [1999] 3 S.C.R. 423, [1999] S.C.J. No. 60, 178 D.L.R. (4th) 1, 247 N.R. 97, 126 O.A.C. 1, 49 B.L.R. (2d) 68, 15 C.C.L.I. (3d) 1, 39 C.P.C. (4th) 100, [2000] I.L.R. I-3741, 91 A.C.W.S. (3d) 796; Heward v. Eli Lilly & Co. (2008), 2008 CanLII 32303 (ON SCDC), 91 O.R. (3d) 691, [2008] O.J. No. 2610, 58 C.C.L.T. (3d) 99, 295 D.L.R. (4th) 175, 167 A.C.W.S. (3d) 249, 239 O.A.C. 273, 56 C.P.C. (6th) 309 (Div. Ct.); Hodgkinson v. Simms, 1994 CanLII 70 (SCC), [1994] 3 S.C.R. 377, [1994] S.C.J. No. 84, 117 D.L.R. (4th) 161, 171 N.R. 245, [1994] 9 W.W.R. 609, J.E. 94-1560, 49 B.C.A.C. 1, 97 B.C.L.R. (2d) 1, 16 B.L.R. (2d) 1, 6 C.C.L.S. 1, 22 C.C.L.T. (2d) 1, 57 C.P.R. (3d) 1, 95 D.TC. 5135, 5 E.T.R. (2d) 1; Irving Ungerman Ltd. v. Galanis (1991), 1991 CanLII 7275 (ON CA), 4 O.R. (3d) 545, [1991] O.J. No. 1478, 83 D.L.R. (4th) 734, 50 O.A.C. 176, 1 C @@.P.C. (3d) 248, 28 A.C.W.S. (3d) 974 (C.A.); Lac Minerals Ltd. v. International Corona Resources Ltd., 1989 CanLII 34 (SCC), [1989] 2 S.C.R. 574, [1989] S.C.J. No. 83, 61 D.L.R. (4th) 14, 101 N.R. 239, J.E. 89-1204, 36 O.A.C. 57, 44 B.L.R. 1, 26 C.P.R. (3d) 97, 35 E.T.R. 1, 6 R.P.R. (2d) 1, 16 A.C.W.S. (3d) 345; M. v. H., 1999 CanLII 686 (SCC), [1999] 2 S.C.R. 3, [1999] S.C.J. No. 23, 171 D.L.R. (4th) 577, 238 N.R. 179, J.E. 99-1064, 121 O.A.C. 1, 62 C.R.R. (2d) 1, 46 R.F.L. (4th) 32; Robertson v. Thomson Corp., [2006] 2 S.C.R. 363, [2006] S.C.J. No. 43, 2006 SCC 43, 274 D.L.R. (4th) 138, 353 N.R. 104, J.E. 2006-2002, 217 O.A.C. 332, 52 C.P.R. (4th) 417, 151 A.C.W.S. (3d) 103, EYB 2006-110209; Robinson v. Ottawa (City), [2009] O.J. No. 262, 55 M.P.L.R. (4th) 283 (S.C.J.); Romano v. D'Onofrio (2005), 2005 CanLII 43288 (ON CA), 77 O.R. (3d) 583, [2005] O.J. No. 4969, 262 D.L.R. (4th) 181, 143 A.C.W.S. (3d) 1141 (C.A.); Serhan Estate v. Johnson & Johnson (2006), 2006 CanLII 20322 (ON SCDC), 85 O.R. (3d) 665, [2006] O.J. No. 2421, 269 D.L.R. (4th) 279, @@.213 O.A.C. 298, 28 C.P.C. (6th) 83, 24 E.T.R. (3d) 265, 149 A.C.W.S. (3d) 197 (Div. Ct.) [Leave to appeal to S.C.C. refused [2006] S.C.C.A. No. 494]; Starcevic v. Pavicic, [2009] O.J. No. 1028, 2009 ONCA 224; Transamerica Life Canada Inc. v. ING Canada Inc. (2003), 2003 CanLII 9923 (ON CA), 68 O.R. (3d) 457, [2003] O.J. No. 4656, 234 D.L.R. (4th) 367, 41 B.L.R. (3d) 1, [2004] I.L.R. I-4258, 127 A.C.W.S. (3d) 235 (C.A.) Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 20 [as am.], 20.04 [as am.], (2)(a) [as am.], 21 [as am.], 21.01(1) (a) [as am.] Alberta Rules of Court, Alta. Reg. 390/68 [as am.] Authorities referred to Maddaugh, Peter, and John D. McCamus, The Law of Restitution, looseleaf (Aurora: Canada Law Book, 2009) [page644]
Jeffrey S. Leon, Gideon C. Forrest and Rebecca Huang, for appellants. Joel Richler and Marcy McKee, for respondents Emtwo Properties Inc., Harry Aronowicz and Internvest Holdings Ltd. Clifford Lax, Q.C., and Amy Salyzyn, for respondents John W. McClure trustee of AL Trust, 1112825 Alberta Ltd., Menashe Grinshpan, 2060227 Ontario Inc., 1640156 Ontario Inc. and Terrma GP I Inc.
The judgment of the court was delivered by
BLAIR J.A.: Overview
[1] Dr. Abraham Aronowicz and Dr. Harry Aronowicz are brothers. From 1982 until 2006, each of them owned or controlled 50 per cent of the common shares of Emtwo Properties Inc., a company that owned and operated five commercial properties in Toronto and Vancouver. Each was a director, but Abraham was responsible for the day-to-day management and operations.
[2] On July 1, 1988, Abraham and Harry and their father executed a Unanimous Shareholders' Agreement containing a buy/ sell Shotgun Provision. On November 18, 2004, Harry triggered the provision, offering to pay approximately $26 million for Abraham's interest in the company. The brothers have been in litigation of one form or another ever since.
[3] There was arbitration over the mechanism by which Abraham chose to respond to Harry's offer. Eventually, however, the buy/sell transaction closed and Harry acquired Abraham's interest.
[4] Abraham subsequently learned that, as part of the financing arrangements by which Harry raised the funds to buy him out, Harry had agreed to repay the loan by transferring three of Emtwo's properties to the lender. Abraham -- who had acquired and managed the properties for Emtwo over two decades -- was indignant about this and sued both Harry and the lender, Menashe Grinshpan (and their respective corporations). He alleges that Harry had an obligation to disclose these financing details because, had he known of them, he could have responded differently in the shotgun process. He does not say how he might [page645] have done so, other than to suggest that he might have challenged Harry's right to trigger the Shotgun Provision. Nor does it seem to bother him that he, himself, agreed with his proposed lender to mortgage the Emtwo properties as part of his own financing arrangements when considering whether he would be a buyer or a seller.
[5] Abraham alleges a pantheon of claims and causes of action in the proceedings, including breach of fiduciary duty, breach of duty of good faith, theft of a corporate opportunity, disclosure of confidential information, oppression, deceit or misrepresentation, conspiracy, inducing breach of contract, unjust enrichment and waiver of tort. In spite of the litany of alleged wrongdoing, Justice Wilton-Siegel granted summary judgment in favour of the defendants, dismissing the action in its entirety.
[6] On behalf of the appellants, Mr. Leon argues that the motion judge made essentially three errors: (1) he applied the wrong approach to a summary judgment motion by (a) failing to apply the "genuine issue for trial" test and instead applying a "no chance of success" test, (b) reversing the onus of proof, (c) reaching conclusions based on assumed facts, (d) improperly weighing evidence and drawing inferences; (2) he decided novel issues of law; and (3) he misconstrued the Loan Agreement between Harry and Menashe Grinshpan.
[7] I do not accept these submissions and would dismiss the appeal for the following reasons. Facts
[8] The Shotgun Provision in the Unanimous Shareholders' Agreement provided that either of the brothers could purchase the shares held by the other. Under its terms, the recipient of an offer had the sole and complete discretion to exercise one of three options: (1) he could accept the offer; (2) he could deliver what was called a "Split Decision Notice" (allowing the offeree to divide all of the Emtwo assets into two packages for division between the two shareholders); or (3) he could elect to purchase all of the shares of the offeror at a 10 per cent discount from the offeror's common share price. The only other means of terminating the relationship between the parties was by way of a consensual winding-up of Emtwo. [page646]
[9] Over the years, Harry concluded that he wished to dissolve the business relationship between the two brothers. Abraham opposed the winding-up of the company, leaving Harry with the Shotgun Provision as the only mechanism to accomplish his wishes. He began looking for financing.
[10] Menashe Grinshpan was Harry's neighbour and someone he had met socially at street functions but with whom he had never before done business. Mr. Grinshpan was in the process of closing a large business deal and, as it turned out, was willing to make available the funds that Harry needed to trigger the shotgun. Mr. Grinshpan and some of Mr. Grinshpan's companies (collectively, the "Lenders") entered into a Loan Agreement with Harry on November 14, 2004. The Loan Agreement was designed to respond to any of the three options open to Abraham. If Abraham elected to purchase Harry's shares, or to deliver a Split Decision Notice, the Lenders would receive an approximate $1.7 million fee. If Abraham accepted or was deemed to have accepted Harry's offer to purchase, the Lenders would lend Harry up to $26 million. In the latter event -- and this is at the nub of the dispute -- a substantial portion of the loan was to be repaid by Harry causing Emtwo to transfer three of Emtwo's properties to the Lenders.
[11] The Loan Agreement was not disclosed to Abraham.
[12] After receiving Harry's offer on November 21, 2004, Abraham considered his options. As part of that process, he sought financing to purchase Harry's shares. It appears that his own potential financing package involved the pledging of Emtwo's assets. Moreover, Abraham's negotiating process involved similar exchanges of confidential information regarding Emtwo's affairs to those that he criticizes Harry in the action for making.
[13] In the end, Abraham concluded that he would not be a buyer because he was unwilling to assume the level of debt that such an option would entail. Instead, on February 16, 2005, he delivered a Split Decision Notice, and subsequently, on August 10, 2005, he elaborated on that by delivering a Division Notice proposing that each of Emtwo's five properties would be held in equal undivided interests as tenants-in-common. Harry rejected this approach because, in his view, it was not in compliance with the Shotgun Provision and it did not have the effect of severing the relationship between the parties. This issue was arbitrated before the Hon. Coulter Osborne, who ruled in Harry's favour. As a result, Abraham was deemed to have accepted Harry's offer to purchase.
[14] The sale transaction was completed on May 26, 2006. In the fall of that year, Abraham became aware of the terms of the [page647] Loan Agreement when it was accidentally disclosed to him. This lawsuit followed. Analysis (1) The motion judge did not err in his approach to summary judgment (a) The test and the burden of proof
[15] The proper test for summary judgment -- as articulated by Morden A.C.J.O. in Irving Ungerman Ltd. v. Galanis (1991), 1991 CanLII 7275 (ON CA), 4 O.R. (3d) 545, [1991] O.J. No. 1478 (C.A.), at pp. 550-51 O.R.-- is whether there is a genuine issue of material fact that requires a trial for its resolution. Neither Aguonie v. Galion Solid Waste Material Inc. (1998), 1998 CanLII 954 (ON CA), 38 O.R. (3d) 161, [1998] O.J. No. 459 (C.A.) nor Dawson v. Rexcraft Storage and Warehouse Inc., 1998 CanLII 4831 (ON CA), [1998] O.J. No. 3240, 164 D.L.R. (4th) 257 (C.A.) -- the two summary judgment authorities most referred to in this province -- alter this test. Indeed, they affirm it. What Augonie and Dawson and their jurisprudential progeny have done is develop a more restricted view of the analytical approach to be adopted by the summary judgment motion judge and of the judge's role in determining the "genuine issue for trial" question.
[16] Here, the motion judge applied the correct test. He addressed each of the appellant's proposed causes of action and claims in his careful and thorough 40-page reasons. With respect to each of them, he considered whether there were any material facts in dispute and whether there was a genuine issue of a factual nature concerning the causes of action or claims that required a trial for determination.
[17] The motion judge was alive to, and applied, the appropriate test and the approach to such motions mandated by Augonie and Dawson, and more recently by the Supreme Court of Canada in Canada (Attorney General) v. Lameman, 2008 SCC 14, [2008] 1 S.C.R. 372, [2008] S.C.J. No. 14 [^1] and Guarantee Co. of North America v. Gordon Capital Corp., 1999 CanLII 664 (SCC), [1999] 3 S.C.R. 423, [1999] S.C.J. No. 60. In this respect, the motion judge explained [at paras. 28-31]:
The principles applicable to a summary judgment motion are most succinctly set out in Dawson v. Rexcraft Storage and Warehouse Inc. (1998), 1998 CanLII 4831 (ON CA), 164 D.L.R. (4th) 257 (Ont. C.A.), in which Borins J.A. states at para. 13 that the essential purpose of summary judgment is to isolate, and then terminate, claims and defences that are factually unsupported. A defendant who seeks [page648] to dismiss an action on a summary judgment motion bears the burden of proving that there is no genuine issue of a material fact requiring a trial. On a summary judgment motion, the Court is not to assess credibility, weigh evidence or draw factual inferences. On the other hand, the Court is entitled to assume that the record contains all of the evidence which the parties will present if there is a trial.
In the present motion, the issue for the Court is, for the most part, whether the undisputed facts before the Court support any of the causes of action alleged by the plaintiffs. The issue is not whether a genuine issue for trial exists with respect to facts that are material for one or more causes of action. Rather, the issue is whether, on the record before the Court, any or all of the plaintiffs' causes of action are so doubtful that the case does not deserve consideration by a trier of fact at a future trial: see Pizza Pizza Ltd. v. Gillespie (1990), 1990 CanLII 4023 (ON SC), 75 O.R. (2d) 225 (Gen. Div.) at 238 and Papaschase Indian Band No. 136 v. Canada (Attorney General), 2008 SCC 14, [2008] 1 S.C.R. 372 at para. 10, both of which appear to have involved the same exercise.
On this motion, therefore, the Court is required to give a good hard look at the evidence and to grant summary judgment if it concludes that "the facts do not entitle the plaintiff to some remedy from the defendant": see Dawson v. Rexcraft at para. 13. In Papaschase at para. 10, the Supreme Court appears to have set the test for summary judgment to be demonstration that the claims "have no chance of success". I have adopted this standard on this motion.
While similar to a Rule 21 motion, I have therefore approached the issue on this motion as a determination not as to whether the pleadings disclose a reasonable cause of action but as to whether the plaintiffs' various causes of action have no chance of success based on the undisputed facts before the Court. I should note, as well, that I do not agree with the plaintiffs that the Court is entitled to make only one determination of law pursuant to Rule 20.04(4) on a summary judgment motion. Rule 20.04(4) is sufficiently flexible to be applied separately in respect of each cause of action. A party cannot prevent summary judgment by alleging a multiplicity of unmeritorious causes of action.
[18] This is a correct recitation of the applicable law and I am satisfied, on a review of the motion judge's reasons as a whole, that he applied these principles throughout.
[19] In Lameman (referred to by the motion judge in the passage cited above as Papaschase), the Supreme Court of Canada summarized its view on summary judgment motions, at paras. 10-11: [^2]
This appeal is from an application for summary judgment. The summary judgment rule serves an important purpose in the civil litigation system. It prevents claims or defences that have no chance of success from proceeding [page649] to trial. Trying unmeritorious claims imposes a heavy price in terms of time and cost on the parties to the litigation and on the justice system. It is essential to the proper operation of the justice system and beneficial to the parties that claims that have no chance of success be weeded out at an early stage. Conversely, it is essential to justice that claims disclosing real issues that may be successful proceed to trial.
For this reason, the bar on a motion for summary judgment is high. The defendant who seeks summary dismissal bears the evidentiary burden of showing that there is "no genuine issue of material fact requiring trial": Guarantee Co. of North America v. Gordon Capital Corp., 1999 CanLII 664 (SCC), [1999] 3 S.C.R. 423, at para. 27. The defendant must prove this; it cannot rely on mere allegations or the pleadings: 1061590 Ontario Ltd. v. Ontario Jockey Club (1995), 1995 CanLII 1686 (ON CA), 21 O.R. (3d) 547 (C.A.); Tucson Properties Ltd. v. Sentry Resources Ltd. (1982), 1982 CanLII 1218 (AB KB), 22 Alta. L.R. (2d) 44 (Q.B. (Master)), at pp. 46-47. If the defendant does prove this, the plaintiff must either refute or counter the defendant's evidence, or risk summary dismissal: Murphy Oil Co. v. Predator Corp. (2004), 365 A.R. 326, 2004 ABQB 688, at p. 331, aff'd (2006), 55 Alta. L.R. (4th) 1, 2006 ABCA 69. Each side must "put its best foot forward" with respect to the existence or non-existence of material issues to be tried: Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1996), 1996 CanLII 7979 (ON SC), 28 O.R. (3d) 423 (Gen. Div.), at p. 434; Goudie v. Ottawa (City), [2003] 1 S.C.R. 141, 2003 SCC 14, at para. 32. The chambers judge may make inferences of fact based on the undisputed facts before the court, as long as the inferences are strongly supported by the facts: Guarantee Co. of North America, at para. 30. (Emphasis added)
[20] The appellants contend that the motion judge improperly applied a "no chance of success" test. However, it is clear from the foregoing that the "no chance of success" principle is simply another way of expressing the view that where there are no genuine issues of fact that require a trial for determination and the claim cannot be proved on the basis of the undisputed facts, the action should not be permitted to go to trial. This is consistent with Justice Borins' recognition in Dawson, at para. 14, that "the function of a motion for summary judgment" is "[to weed] out cases where a substantively adequate claim, or defence, has been pleaded, but cannot be proved". In other words, summary judgment is used to weed out cases where there is no chance of success.
[21] More recently, this court refused to interfere with a summary judgment order granted on the ground that there was "no chance of success" with respect to the claim against one defendant, in effect equating that standard with "no genuine issue for trial": Starcevic v. Pavicic, [2009] O.J. No. 1028, 2009 ONCA 224. (b) The motion judge did not reverse the onus of proof
[22] In the same vein, the motion judge did not reverse the onus of proof. He clearly understood -- as indicated in para. 28 [page650] of his reasons, cited at para. 17 above -- that "[a] defendant who seeks to dismiss an action on a summary judgment motion bears the burden of proving that there is no genuine issue of material fact requiring a trial". The appellants seize upon a subsequent statement in para. 117 of the reasons in support of their argument that the motion judge reversed the onus. There, the motion judge said:
Therefore, to succeed in this action, the plaintiffs must establish that the particular circumstances of the relationship between the shareholders prior to the exercise of the Shotgun Provision imposed upon Harry duties in respect of his financing arrangements that would not ordinarily operate in the circumstances of termination of a joint shareholder relationship. (Emphasis added)
[23] The motion judge then went on to recite five reasons why, in his view, the plaintiff had failed to demonstrate evidence of such circumstances. I read this simply as a reflection of the appellant's obligation to "put its best foot forward" on the motion, however. It is apparent from a review of the reasons as a whole that in each instance where the motion judge considered whether a cause of action or a claim asserted by the appellants could survive summary judgment scrutiny, he did so expressly against the backdrop of the moving party's obligation to demonstrate that no genuine issue for trial arose with respect to that cause of action of claim. (c) The motion judge did not improperly reach his conclusions based on assumed facts
[24] The appellants' third complaint is that the motion judge improperly decided the motion based on assumed facts. In this regard, they rely upon decisions of this court in Royal Bank of Canada v. Société Générale (Canada), 2006 CanLII 42545 (ON CA), [2006] O.J. No. 5081, 31 B.L.R. (4th) 63 (C.A.), leave to appeal to S.C.C. denied [2007] S.C.C.A. No. 87; Law Society of Upper Canada v. Ernst & Young (2003), 2003 CanLII 14187 (ON CA), 65 O.R. (3d) 577, [2003] O.J. No. 2691 (C.A.); and Chitel v. Bank of Montreal, 1999 CanLII 8746 (ON CA), [1999] O.J. No. 3988, 126 O.A.C. 159 (C.A.). I shall review these authorities briefly in assessing the validity of this ground of appeal.
Société Générale
[25] Société Générale involved a complicated series of actions arising out of a sophisticated commercial fraud supported by cheques allegedly negotiated by fraudsters on forged endorsements. The reverberations of the fraud worked their way up through the chain of financial institutions involved in the [page651] transactions and the buck stopped with RBC, as it were. RBC was required to honour the cheques through the "reverse clearing" mechanism established by member banks of the Canadian Payment Association.
[26] However, cheques must be "forged" or "unauthorized" as a pre-condition to reverse clearing. RBC commenced an action against the financial institutions below it in the chain, contesting the forged/unauthorized character of the cheques and claiming damages for negligence, unjust enrichment, money had and received, and conversion. It also alleged that the defendants were "precluded" from relying upon the reverse clearing mechanism because the cheque endorsements had not been forged or unauthorized.
[27] The financial institutions sued included Société Générale (Canada), CitiCapital Limited and Bank of Montreal. They all moved for summary judgment dismissing the claims against them. Summary judgment was partially granted, dismissing the claims for damages for negligence, unjust enrichment, and money had and received. Importantly, however, the action was permitted to continue with respect to RBC's claims for conversion and preclusion.
[28] One of the issues on appeal in Socété Générale was whether the motion judge was entitled to proceed -- as he did, apparently with the parties' agreement -- on the assumption that the cheque endorsements had been forged. This court, at para. 9, concluded he was not: it was inappropriate in the circumstances for the motion judge to have "decided the motions on the basis of a critical fact that he assumed to be true for the purpose of the motion".
[29] Speaking for the court, Borins J.A. observed that by proceeding on the assumption the endorsements were forged, the motion judge had deprived RBC, and its insurers (in other related claims), from advancing their core position at trial -- i.e., that the cheques were not forged -- on the basis of a full evidentiary record. He said, at para. 42, that "[d]eciding a Rule 20 motion on assumed facts is contrary to this court's direction that on a Rule 20 motion all of the evidence that could be led at trial should be before the court" and that "it is unfair to dismiss a litigant's claim and to deprive the litigant of its right to a trial on the basis of an artificially curtailed record". He also noted that in artificially restricting the record on the summary judgment motions the motion judge "created a real risk of conflicting decisions on the same factual and legal issues within the same action". [page652]
Ernst & Young
[30] In Ernst & Young, the Law Society of Upper Canada sued its former auditors and actuaries for breach of contract, negligence and negligent misrepresentation. There were material issues of fact in dispute and genuine issues for trial to be determined in relation to those claims. However, there was an overriding question of law that went to the heart of the Law Society's right to recover: the defendants alleged that even if they were at fault, damages were not recoverable because the Law Society had passed on the damages to its members through supplemental and increased levies.
[31] The defendants moved for summary judgment under rule 20.04 and for the determination of a question of law under rule 21.01(1)(a). For the purposes of these motions only, the defendants conceded that the plaintiff could prove the alleged breach of contract, negligence and negligent misrepresentation. The motion judge proceeded on that basis. He dismissed the motions, save for the granting of declaratory relief under Rule 21 with respect to one aspect of the plaintiff's damage claim.
[32] In a split decision, this court allowed the appeal and remitted the matter for trial on all issues. Borins J.A. concluded that the motion judge erred in adjudicating the motions on the basis of facts assumed or conceded for the purposes of the motion, thus rendering the question of law determined "hypothetical". He expressed a similar concern to that raised in Société Générale, namely, that because the matter was proceeding to trial in any event, there was a risk of inconsistent factual findings. At para. 46, he noted:
As the above cases illustrate, because the motion judge's legal analysis was informed by the defendants' concession of their alleged wrongful conduct, it is not possible to say that any of the legal results that flow from the motion judge's order will survive a revision of the facts at the trial that is to be held consequent to the motion judges' order. As the defendants' motion was dismissed, there must be a trial at which the facts as found by the trial judge may differ from the facts assumed for the purpose of the motions. This possible revision of the facts on the basis of a complete trial record graphically demonstrates the hypothetical nature of the questions of law that the motion judge was asked to decide.
[33] McMurtry C.J.O. delivered reasons concurring in the result but disagreeing with Borins J.A.'s conclusion that the appellants' hypothetical admission of negligence was fatal to their motion under Rule 21. In that respect, the Chief Justice agreed with Carthy J.A.'s dissent. Both concluded that the hypothetical concession was not essential for the determination of the question of law under rule 21.01(1)(a). As Carthy J.A. noted, at para. 65: [page653]
The essence of the motion lies within rule 21.01(1)(a), seeking a determination of a question of law. Here, two questions of law [arise]. Were damages sustained and, if so, does the defence of "passing on" prevent their recovery. It is only after those questions of law are resolved that any issue of summary judgment under Rule 20 or striking of pleadings under rule 21.01(1)(b) could arise. Thus, I would not look to jurisprudence concerning the latter rules to determine the outcome of this appeal.
Chitel
[34] Chitel was a complex action with many parties, arising out of a failed joint-venture concerning a parcel of land. The motion judge granted summary judgment in favour of two of the parties and an order narrowing the issues regarding Chitel's claims against the bank and two other defendants. However, he dismissed Chitel's motion for summary judgment against various defendants and the bank's motion for summary judgment against Chitel. These matters were to go to trial.
[35] This court set aside the summary judgment, at least partly on the basis that the motion judge erred in proceeding on the basis of counsel's agreement to abandon certain contested factual positions for the purposes of the motion. The motion judge's legal analysis was based on the conceded facts and it was therefore impossible to say whether any of the legal results would survive a revision of the facts at the trial [which] was still to come.
Société Générale, Ernst & Young and Chitel are distinguishable
[36] I agree with Justice Wilton-Siegel, however, that these authorities are distinguishable from the present case. I do not read them as precluding a judge in all cases from assuming the existence of certain facts for purposes of disposing of a motion for summary judgment.
[37] What the Société Générale line of cases illustrates is that a motion judge may not assume the existence of critical disputed facts for purposes of a summary judgment motion where there continue to be issues to be tried in which those same facts may be in dispute, and where doing so would (a) undermine the ability of a party to present its case in relation to other issues still to be determined in the proceedings or, (b) create the risk of inconsistent findings or conflicting decisions in those proceedings.
[38] This is clear, I think, from Borins J.A.'s statement in Ernst & Young, at para. 22:
Of course, had the defendants been prepared to admit for all purposes that they had breached their contracts with the plaintiffs or had performed their [page654] services negligently, that would have removed the hypothetical nature of the questions of law raised by their motions. (Emphasis added)
[39] To similar effect is this court's statement in Chitel, at para. 7:
In any case where it is left open to the motions judge on the summary judgment motion to narrow the issues for trial or to grant partial summary judgment to any party, then any agreement on the facts must be for the purposes of the entire proceeding. (Emphasis added)
[40] Here, the motion judge accepted the appellants' case at its highest, i.e., that they would be able to establish the duty of honesty and good faith they alleged if there were a trial, and the scope of that duty as they asserted it. No other matters involving that issue remained to be tried following his decision.
[41] The appellants contended that in the conduct of the business and operations of Emtwo, the parties were subject to a duty of "honesty and good faith" in favour of each other. And they were very clear about the content of that obligation: it invoked (a) a duty to disclose any information or document that could have an impact on Emtwo or its properties, and (b) a duty not to take any action that would harm the interest of the other as a shareholder of Emtwo. The existence of such a duty was of no avail to the appellants, however, if, on the undisputed facts, the parties' conduct under the Shotgun Provision did not attract such a duty. The motion judge concluded it did not.
[42] Assuming the existence of the duty of honesty and good faith contended for by the appellants gave rise to none of the concerns expressed in the Société Générale line of authorities. The summary judgment motions determined the whole proceeding, subject to appeal. There was therefore no risk of conflicting findings or a revision of the facts affecting the legal result at a later trial. Moreover, the ability of the appellants to present their case was not prejudiced because the motion judge accepted the disputed factual underpinning for their duty of good faith claim at its highest in their favour. In particular, the motion judge did not -- as argued in para. 37 of the appellants' factum -- "[deprive] the Appellants of the opportunity to put forward their evidence to a trial judge and to have the judge make the necessary findings of credibility and draw inferences from the evidence by dismissing the claims based on the assumed limited scope of the duties".
[43] First, he concluded -- correctly in my view -- that even if the appellants were to succeed fully on the disputed facts giving rise to the duty at a trial, there nonetheless remained no genuine [page655] issue that required a trial for its resolution regarding the good faith ground. This was so because, accepting the existence and scope of the duty as put forward by the appellants, on the undisputed facts the duty would not give rise to a remedy in the circumstances. Secondly, the motion judge did not assume a limited scope of the duty, leaving the prospect that a broader scope might be established at trial. His assumption was based on the precise scope of the duty asserted by the appellants.
[44] There was no dispute that Harry did not disclose the Loan Agreement. However, the motion judge concluded that the duty of honesty and good faith alleged, even if established, would not require the disclosure of the Loan Agreement in the context of the operation of the Shotgun Provision. I agree. There was therefore no genuine issue for trial on the question of whether Harry was obliged to disclose the terms of the Loan Agreement (the issue with respect to which the motion judge's assumption was made).
[45] Finally, it cannot be said in the circumstances of this case that deciding the summary judgment motion on the basis of assumed facts was contrary to this court's direction that on a Rule 20 motion, all of the evidence that could be led at trial should be before the court, as was the case, for example, in Société Générale. Here, examinations for discovery and production had been completed. In addition, the parties had the benefit of cross-examination on the affidavits filed in connection with the summary judgment motion. The motion judge had a full and complete record before him. (d) The motion judge did not err in weighing evidence and drawing inferences
[46] I am not satisfied that the motion judge erred by engaging in an exercise of weighing the evidence and drawing inferences of the type prohibited on motions for summary judgment. Leaving aside the facts underpinning the appellants' allegation of a duty of honesty and good faith -- which were assumed at their highest, in favour of the appellants -- the material facts in the action were not in dispute.
[47] The appellants rely heavily on the well-accepted principle that causes of action involving allegations of fiduciary duties, good faith, oppression and misrepresentation are individually fact-laden. In determining whether, on the specific facts, the duty has been breached, they contend, "there is no substitute . . . for a meticulous examination of the facts": Hodgkinson v. Simms, 1994 CanLII 70 (SCC), [1994] 3 S.C.R. 377, [1994] S.C.J. No. 84, at pp. 413-14 S.C.R. Here, however, the motion judge had a full and complete [page656] record before him and the material facts were not in dispute. On that basis, he could conduct the requisite "meticulous examination", and he did so. The brothers were brothers. Emtwo was a family company founded by the brothers and their father together. Abraham had managed its operations for 20 years. Harry had not. There were differences. Harry wanted out. Abraham would not agree to a winding-up. Harry arranged financing and pulled the Shotgun Provision trigger. He did not reveal the co ntents of his Loan Agreement, but the particulars of that Loan Agreement were before the motion judge.
[48] Mr. Leon submits that the extent of fiduciary duties owed by Harry to Abraham and to Emtwo, the extent of Harry's duty of good faith owed to Abraham, and matters relating to the oppression remedy must all be considered in the context of the activities and evolving relationship of the brothers and the company over a period of more than 20 years. I agree. But I do not agree that it was impermissible for the motion judge to make that determination on the record before him.
[49] To support this conclusion, I need not go through the motion judge's lengthy reasoning and analysis with respect to each of the causes of action asserted, and the myriad ways of asserting those causes of action contained within them (Mr. Lax says there are 23 causes of action asserted and 30 separate claims within them). I am satisfied, on the whole, that he was entitled to reject each of the appellant's claims on the basis that there were no genuine issues that required a trial for their resolution, having regard to the material undisputed facts before him. However, I will touch on some of the causes of action and claims briefly.
Fiduciary duty
[50] It is hard to conceive of a corporate/commercial mechanism less likely to attract the operation of fiduciary obligations than a shotgun buy/sell provision in a unanimous shareholder agreement. The same may be said for the operation of obligations to act reasonably, honestly and in good faith -- other than the good faith obligation not to act in a fashion that eviscerates the very purpose of the agreement. [^3] A shotgun buy/sell provision is the quintessential corporate mechanism for the exercise of [page657] shareholder self-interest. Carefully drafted, it provides a delicate balance for the preservation of the parties' individual rights by ensuring that the pulling of the trigger generates the best and highest price in exchange for the involuntary termination of the shareholders' relationship.
[51] The Shotgun Provision here appears to have been well- drafted. It ensures that the shareholder who first activates it does so at a price sufficiently high that he will be prepared to be bought out, himself, at a 10 per cent discount. The recipient of the offer, on the other hand, has the option of being a buyer at the discounted price, or of selling at the higher price, or of suggesting a division of the corporate assets, tempered in this case by the old parents' stratagem: here, Abraham cuts the pie and Harry gets to choose first (as per art. 12.13 of the Unanimous Shareholders' Agreement).
[52] The motion judge accurately captured this reality in disposing of the fiduciary duty claim as follows [at para. 83]:
There is no basis for the operation of a fiduciary duty in respect of the exercise of the Shotgun Provision. The Shotgun Provision specifically enables a shareholder to act in his own interest and contrary to the interest of another party who wishes to maintain the existing ownership structure of the corporation. Moreover, Harry was not in a position to unilaterally exercise any power or discretion so as to affect Abraham's legal or economic interests apart from triggering the Shotgun Provision. Nor is there any basis for finding that Abraham was at the mercy of Harry in some manner or was otherwise vulnerable to him. The circumstances upon which Sanderson J. imposed a fiduciary duty in Waxman v. Waxman (2002), 2002 CanLII 49644 (ON SC), 25 B.L.R. (3d) 1 (Ont. S.C.J) are entirely absent in the present proceeding. There is no room in such circumstances for the operation of a fiduciary duty in the sense of a duty of the exercising shareholder to prefer the interests of the other shareholder(s) to his own or a duty to act only in accordance with interests of the other shareholder in the exercise of the Shotgun Provision.
[53] I agree.
[54] There is nothing in the relationship between Harry and Abraham in the context of the Shotgun Provision that carries any indicia of such a relationship. No duty of loyalty or good faith. No discretionary power or trust. No undertaking by one party to submerge its own interests and to act for the benefit of the other. No dependency or vulnerability. As noted above, the relationship between parties to a shotgun buy/sell agreement is the very antithesis of these attributes: see Hodgkinson v. Simms; Frame v. Smith, 1987 CanLII 74 (SCC), [1987] 2 S.C.R. 99, [1987] S.C.J. No. 49, at para. 136, Wilson J., dissenting; Lac Minerals Ltd. v. International Corona Resources Ltd., 1989 CanLII 34 (SCC), [1989] 2 S.C.R. 574, [1989] S.C.J. No. 83, at p. 599 S.C.R., Sopinka J., dissenting in part, and pp. 646-47 S.C.R., La Forest J.; B. (K.L.) v. British Columbia, 2003 SCC 51, [2003] 2 S.C.R. 403, [2003] S.C.J. No. 51, at paras. 40-41. [page658]
[55] Finally, courts are appropriately reluctant to impose fiduciary duties where the parties' relationship is governed by commercial contract. As La Forest J. noted in Hodgkinson, at p. 414 S.C.R.:
Commercial interactions between parties at arm's length normally derive their social utility from the pursuit of self-interest, and the courts are rightly circumspect when asked to enforce a duty (i.e., the fiduciary duty) that vindicates the very antithesis of self-interest . . .
[56] The motion judge was entitled to conclude on the undisputed facts that no fiduciary duty existed as between Harry and Abraham with respect to the triggering of the Shotgun Provision.
Corporate opportunity
[57] In addition, the motion judge was satisfied that the Loan Agreement, with its potential transfer of Emtwo properties to Menashe Grinshpan, did not constitute the appropriation of a corporate opportunity by Harry. He wrote [at para. 49]:
The foregoing suggests that there is a qualitative difference between the type of transaction that Abraham had in mind in raising his concern about a possible corporate opportunity and the transaction that Harry concluded with Menashe. The evidence is clear that the arrangements under the Loan Agreement respecting the Transferred Properties did not constitute a corporate opportunity of the nature that was of concern to Abraham because, as a factual matter, they did not involve the sale of the Transferred Properties for a profit.
[58] The appellants submit that the motion judge erred in concluding that Abraham's claim for appropriation of a corporate opportunity proceeded from his entitlement to know of any "back pocket offers" that would entitle Harry "to flip" the properties for a "profit" (as opposed to a "benefit"). They also say he erred by making findings about what "Abraham had in mind in raising his concern", including the finding that the arrangements were not "of a nature that was of concern to Abraham". This constituted impermissible fact-finding on a motion for summary judgment, the appellants contend.
[59] What Abraham had in mind in raising his concern about a possible corporate opportunity was not a mystery, however, or the subject of disputed fact. He was concerned that the Loan Agreement signalled an opportunity for Emtwo to sell some of its properties to Mr. Grinshpan and that Harry was using the Shotgun Provision to "flip" the properties for his own benefit at Emtwo's expense (and therefore, Abraham's). The evidence showed that Emtwo's properties were known to be in play. There was no evidence, however, that Abraham or Emtwo had any interest in selling the properties at the values negotiated by Harry for the purposes of the Loan Agreement and, indeed -- as [page659] the motion judge noted -- the values ascribed to the properties in the Loan Agreement were less than other expressions of interest in the properties received from third parties. Thus, there was no hidden profit or benefit to Harry in the transfers contemplated under the Loan Agreement other than the benefit of being able to finance the shotgun transaction, something he was entitled to do. Nor was there a corporate "opportunity".
[60] Thus, there was no theft of a corporate opportunity, both because there was no fiduciary relationship between Harry and Abraham in relation to the Shotgun Provision and because there was no corporate opportunity to steal.
Disclosure of confidential information
[61] There were no material facts in dispute with respect to the disclosure of confidential information to Mr. Grinshpan or with respect to the extent to which such disclosure had any impact on Emtwo, Abraham or Harry. The undisputed evidence did not support a finding that Abraham had a reasonable expectation that Harry would keep all confidential Emtwo information from third parties. I note in this regard that the Unanimous Shareholders' Agreement was silent about the right of a shareholder to use confidential Emtwo information to obtain financing to fund the exercise of the Shotgun Provision. Further, it was commercially unreasonable to expect that a third-party lender would provide significant acquisition financing to a shareholder triggering the Shotgun Provision without financial confirmation of the value of the assets that were the subject of the transaction. Indeed, Abraham himself provided confidential Emtwo information to third parties in order to obtain valuations of the Emtwo properties and the business for purposes of seeking his own financing in considering his options in responding to Harry's offer.
[62] Finally, the disclosure of confidential information did not constitute a breach of fiduciary obligation or oppressive conduct because there was no evidence of any harm or detriment to Emtwo or to Abraham, or of any benefit or profit to Harry, as a result of Harry's disclosure of the confidential information to Mr. Grinshpan. If the appellants were unable to establish any loss suffered by them, or any benefit or profit for Harry, there was no genuine issue for trial on an essential element of their claim.
Deceit and negligent misrepresentation
[63] The appellants' claims for deceit and negligent misrepresentation failed for the same reason. There is no evidence of any [page660] harm or detriment to Emtwo or to Abraham, or of any benefit or profit to Harry.
Mr. Grinshpan as a de facto director
[64] The appellants contend that by disclosing confidential Emtwo information to Mr. Grinshpan and by involving him in the decision-making process respecting the buy/sell transaction, Harry in effect constituted Mr. Grinshpan a de facto director of Emtwo, contrary to the Unanimous Shareholders' Agreement. This was also said to be a fiduciary breach.
[65] This claim also fails for want of evidence on the detriment/benefit side. In addition, however, the facts simply do not support the de facto director claim.
[66] The Unanimous Shareholders' Agreement did not prevent Harry from consulting with anyone about the exercise of the shotgun provision. There was no evidence that Harry had in any way fettered his discretion as a director or that Mr. Grinshpan dictated the position to be taken by Harry with respect to directors' decisions. Indeed, the only decision the directors took during the relevant period was in relation to dealing with a Bloor Street lease, and in that regard -- after discussions with Mr. Grinshpan -- Harry advised that he was content to let Abraham, as managing director, deal with the property as Abraham thought fit.
Other claims
[67] The remaining claims asserted by the appellants are derivative of the foregoing causes of action in the sense that their success is dependent upon findings in favour of the appellants on issues rejected by the motion judge for the reasons summarized above. These include the claims against the Grinshpan defendants. I need not address them individually.
[68] Given the context of the Shotgun Provision and the state of the record, the motion judge was entitled to hold that Abraham's action should be dismissed. In doing so, he did not impermissibly weigh evidence or draw inappropriate inferences. While acknowledging that there were some facts in dispute, he concluded that those facts were not essential to the resolution of genuine issue for trial questions. Whether there were genuine issues that required a trial for their resolution respecting the various causes of action alleged could be determined -- subject to the assumption dealt with above -- by reference to undisputed material facts. [page661] (2) The motion judge did not err in deciding "novel issues" of law
[69] The appellants argue that the motion judge impermissibly "granted summary judgment on the basis of significant legal conclusions on novel or unsettled questions of law without the benefit of a full trial record". They make this submission in relation to three areas of law: (1) the duties of a shareholder/director in exercising a shotgun clause; (2) the law of fiduciary duty, duty of good faith and oppression, and corporate opportunity in the context of a shotgun clause; and (3) the availability of waiver of tort in respect of an action for deceit or misrepresentation.
[70] I would not give effect to this ground of appeal either.
[71] Generally, courts are reluctant to determine unsettled matters of law at a pre-trial stage -- including on motions for summary judgment -- on the theory that new or important questions of law should not be determined on an incomplete factual record: Société Générale, at para. 51; Romano v. D'Onofrio (2005), 2005 CanLII 43288 (ON CA), 77 O.R. (3d) 583, [2005] O.J. No. 4969 (C.A.), at para. 7: Bendix Foreign Exchange Corp. v. Integrated Payment Systems Canada Inc., [2005] O.J. No. 2241, 18 C.P.C. (6th) 15 (C.A.), at para. 6. [^4] However, a court may determine a question of law on a motion for summary judgment if it has the necessary undisputed factual record before it, is in just as good a position as the trial judge would be to do so and is satisfied the only genuine issue is a question of law: see, for example, Bader v. Rennie, 2007 CanLII 37674 (ON SCDC), [2007] O.J. No. 3441, 229 O.A.C. 320 (Div. Ct.), at para. 22; Robinson v. Ottawa (City), [2009] O.J. No. 262, 55 M.P.L.R. (4th) 283 (S.C.J.), at paras. 63-64; Alexis v. Toronto Police Services Board, [2009] O.J. No. 5170, 2009 ONCA 847, at para. 19.
[72] Here, the motion judge was justified in determining the legal issues presented to him, in my view. They were not novel or unsettled, for the most part, and to the extent they may be considered "novel" -- the claim in waiver of tort comes to mind -- [page662] the motion judge had a sufficient factual foundation to permit their determination.
[73] Recall again that the relationship between the parties is rooted in contract: Harry exercised his rights under the Shotgun Provision. Abraham says he acted wrongfully in the exercise of those rights. What is essentially a complaint about failing to comply with the provisions of a contract is dressed up in the action as a claim for breach of fiduciary duty, breach of a duty of good faith, breach of confidentiality, oppression, misrepresentation, deceit, conspiracy and -- if all else fails -- waiver of tort. There are times in litigation when the Shakespearean expression "the lady doth protest too much, methinks" has the ring of truth to it.
[74] The facts underlying all of these claims are the same. And the motion judge was satisfied on the basis of the undisputed facts before him, together with facts that he assumed at their highest in favour of the plaintiffs, that none of these claims were made out. Did he err in doing so because the claims were "novel" or "unsettled"? In my opinion, he did not.
[75] There is nothing either novel or unsettled about any of the foregoing causes of action, with the exception of "waiver of tort" (to which I will return). It may be true that there is no specific jurisprudence on the question of the duties of a shareholder/director in the context of exercising a shotgun clause. However, as the motion judge concluded, that alone is not enough to create a genuine issue for trial or to preclude summary judgment on unsettled law grounds, where it is clear there is no chance of success on the factual record, measured against established principles of law. That was the case here.
[76] This was not a pleadings motion. It was a motion for summary judgment. As noted earlier in these reasons, the motion judge had a very considerable record before him. There had been full examinations for discovery prior to the motion and lengthy cross-examination on the affidavits filed in relation to it. The motion judge thus knew all about the terms of the Unanimous Shareholders' Agreement and the Loan Agreement, and the facts leading up to their execution. He knew about the business, management and ownership structure of Emtwo. He knew about the business and family relationship between Harry and Abraham, and about all the events that transpired during the relevant period. As Harry's counsel note in their factum, this was not a case where there were questions crucial to the analysis of the issues that were left unanswered on the record or where expert evidence was required. There was no new evidence to be presented to a trial judge, and the mere prospect that some [page663] hoped-for nuance or subtl ety might arise in the evidence should the matter go to trial does not turn an application of the facts to well-established legal principles into a "novel" exercise.
[77] The motion judge concluded that: (a) there was no basis for the operation of a fiduciary duty in respect of the exercise of the Shotgun Provision; (b) there was no theft of a corporate opportunity or breach of duty of confidentiality; (c) there was no obligation in relation to the Shotgun Provision that was analogous to the duty "to act reasonably and in good faith" in respect of rights of first refusal; (d) there was no duty of honesty and good faith created by the relationship between Harry and Abraham; (e) there was no genuine issue for trial regarding the extension of the general duty of "honesty and good faith" to include a duty to disclose information such as the Loan Agreement, or to extend that duty to the exercise of the Shotgun Provision; and (having regard to the foregoing) (f) there was no basis for the claims in oppression, misrepresentation, deceit or conspiracy.
[78] These findings were all open to the motion judge based on the undisputed facts and the facts that he chose to accept at their highest in favour of the plaintiffs. They involved no determination of novel or unsettled principles of law.
[79] "Waiver of tort", on the other hand, qualifies as an uncertain area of the law, but it has no application on the facts of this case, in my view.
[80] Waiver of tort is a restitutionary remedy. There is considerable controversy over whether it exists as an independent cause of action at all or whether it is "parasitic" in the sense that it requires proof of an underlying tort and -- since a tort requires damage -- proof of harm to the plaintiff. By invoking waiver of tort, a plaintiff gives up the right to sue in tort but seeks to recover on the basis of restitution, claiming the benefits the wrongdoer has derived from the wrongful conduct regardless of whether the plaintiff has suffered damages or not: see, for example, Serhan Estate v. Johnson & Johnson (2006), 2006 CanLII 20322 (ON SCDC), 85 O.R. (3d) 665, [2006] O.J. No. 2421 (Div. Ct.), at paras. 45-69, leave to appeal to S.C.C. dismissed [2006] S.C.C.A. No. 494. [page664]
[81] The claim is not so much "novel" -- it has its roots in the ancient action of assumpsit -- as it is "mysterious" or "mystical". In their text, The Law of Restitution, Maddaugh and McCamus describe it in this fashion: [^5]
The doctrine known as "waiver of tort" is perhaps one of the lesser appreciated areas within the scope of the law of restitution. From the outset, it seems to have engendered an undue amount of confusion and needless complexity. The almost mystical quality that surrounds the doctrine is attested to by the following famous couplet penned by a pleader of old [J.L. Adolphus, "The Circuiteers -- An Eclogue" (1885) 1 L.Q. Rev. 232, at p. 233]:
Thoughts much too deep for tears subdue the Court
When I assumpsit bring, and god-like waive a tort.
One source of this confusion stems from the doctrine's very name. As one writer has pointed out, not entirely facetiously, it has "nothing whatever to do with waiver and really very little to with tort". (Emphasis added)
[82] While waiver of tort appears to be developing new legs in the class action field -- see Serhan Estate and Heward v. Eli Lilly & Co. (2008), 2008 CanLII 32303 (ON SCDC), 91 O.R. (3d) 691, [2008] O.J. No. 2610 (Div. Ct.), for example -- it is of no assistance to the appellants here. Whether the claim exists as an independent cause of action or whether it requires proof of all the elements of an underlying tort aside, at the very least, waiver of tort requires some form of wrongdoing. The motion judge found none here. No breach of contract. No breach of fiduciary duty, or duty of good faith or confidentiality. No oppression. No misrepresentation. No deceit. No conspiracy. As counsel for Mr. Grinshpan put it in their factum, "its eleventh hour insertion into the statement of claim does not provide the appellants' claim with a new lifeline given that the record discloses no wrongful conduct on the part of the respondents in respect of any of the causes of action pleaded". (3) Construction of the loan agreement
[83] One of the appellants' central contentions is that the Loan Agreement was not merely a loan agreement, but was instead -- or as well -- an agreement of purchase and sale respecting the Emtwo properties that were to be transferred to Mr. Grinshpan upon completion of the transaction. Mr. Leon argues that the motion judge erred by construing the Loan Agreement as a personal financing loan to Harry because, in doing so, he favoured [page665] one reasonable inference on disputed facts over another -- something that a summary judgment motion judge is not to do.
[84] The motion judge did not improperly "construe" the Loan Agreement in my view. There was no dispute between the parties as to what was agreed to between Harry and Mr. Grinshpan. The terms of the Loan Agreement were not ambiguous. There was no dispute over what the parties did or did not do. As the motion judge recognized, the subjective intentions of Harry and Mr. Grinsphan were irrelevant in this regard. The motion judge's characterization of the Loan Agreement was accurate and was properly based on the undisputed facts before the court. Disposition
[85] Accordingly, for the foregoing reasons, I would dismiss the appeal.
[86] The respondents are entitled to their costs of the appeal fixed in favour of the Aronowicz respondents in the amount of $34,000 and in favour of the Grinshpan respondents in the amount of $23,000. These amounts are inclusive of disbursements and GST.
Appeal dismissed.
Notes
[^1]: This cases is also known as Papaschase Indian Band No. 136 v. Canada (Attorney General).
[^2]: While lameman arose in the context of the Alberta Rules of Court [Alta. Reg. 390-68], those Rules incorporate essentially the same "genuine issue for trial" test as is found in Ontario rule 20.04(2)(a) of the [Rules of Civil Procedure, R.R.O. 1990, Reg. 194].
[^3]: See, for example, Transamerica Life Canada Inc. v. ING Canada Inc. (2003), 2003 CanLII 9923 (ON CA), 68 O.R. (3d) 457, [2003] O.J. No. 4656 (C.A.), at para. 53; GATX Corp. v. Hawker Siddeley Canada Inc., 1996 CanLII 8286 (ON SC), [1996] O.J. No. 1462, 27 B.L.R.(2d) 251 (Gen. Div.), at para. 72.
[^4]: While this principle is, of course, quite sound, it conveniently ignores that numerous important issues of law have been determined in such proceedings. Donoghue v. Stevenson, 1932 CanLII 536 (FOREP), [1932] All E.R. Rep. 1, [1932] A.C. 562 (H.L.), for example -- the great godmother of all modern negligence law -- was decided on a pleadings motion. See, also, M. v. H., 1999 CanLII 686 (SCC), [1999] 2 S.C.R. 3, [1999] S.C.J. No. 23 (extending spousal support obligations to individuals in same-sex relationships); and Robertson v. Thomson Corp., 2006 SCC 43, [2006] 2 S.C.R. 363, [2006] S.C.J. No. 43 (examining the right of newspaper publishers to reproduce individual articles in electronic formats).
[^5]: Peter D. Maddaugh and John D. McCamus, The Law of Restitution, looseleaf (Aurora: Canada Law Book, 2009) at p. 24-1.