Court of Appeal for Ontario

Date: 2017-04-03 Docket: C62688

Judges: Juriansz, Lauwers and Hourigan JJ.A.

Parties

Between

Etaliq Inc. Plaintiff/Defendant by way of counterclaim (Respondent)

and

Cisco Systems Inc. and Cisco Systems Co. Defendants/Plaintiffs by way of counterclaim (Appellants)

Counsel

James M. Wishart, for the appellants

Peter J. Cronyn, for the respondent

Hearing and Appeal

Heard: March 29, 2017

On appeal from: the judgment of Justice Sylvia Corthorn of the Superior Court of Justice, dated August 12, 2016.

Endorsement

[1] The respondent brought an action claiming the appellants improperly used confidential and proprietary information the respondent had disclosed to them in 2002. The respondent filed its action on September 9, 2011. The appellants moved under r. 20 to strike the claim on the basis that it was statute-barred by the Limitations Act.

[2] In their motion, the appellants also sought orders declaring that the evidence on discovery of Kenneth Poisson, the principal of the respondent, would be binding on the respondent for all purposes, irrespective of the source of his knowledge, and could be used for all purposes against the interests of the respondent. The reason for that is that Mr. Poisson was also a principal of MetaData, a company associated with the respondent, and on behalf of MetaData had provided consulting services to the appellants and had access to information allegedly relevant to the discoverability of the respondent's claim.

[3] The motion judge issued an order granting the respondent partial summary judgment dismissing the appellants' limitations defence, and adjourning the portion of the motion related to the examination for discovery of Mr. Poisson.

[4] The appellants appeal from the motion judge's dismissal of their limitations defence.

[5] The motion judge found, at para. 50, that even if no distinction were made between Mr. Poisson's knowledge acquired through MetaData and the respondent, the respondent's obligation to exercise due diligence in the investigation of its potential claim against the appellants was not triggered prior to April, 2009. Further, she found, at para. 71, that to the extent Mr. Poisson was exposed to the appellants' affairs through his work as a MetaData consultant, "that exposure was not sufficient to constitute actual notice of a claim against [the appellants] or to trigger an obligation on the part of [the respondent] to exercise due diligence in the investigation of the potential claim against [the appellants]."

[6] We are not persuaded by the appellants' argument that the motion judge made palpable and overriding errors of fact, and of mixed fact and law. The motion judge was called upon to consider a large and complex record and make findings. There was an evidentiary basis for all of her findings. It is not our function on appeal to reweigh the evidence.

[7] The appellants also submitted the motion judge erred in law in her application of the "reasonable diligence" test. The appellants argue that she excused the respondent from making earlier inquiries that it refrained from making in order to avoid damaging its business prospects.

[8] The submission, in our view, is based on isolated sentences of the motion judge's reasons taken out of context. In considering all the circumstances, the motion judge had to consider the particular position of Mr. Poisson, who was subject to a non-disclosure agreement while working as a consultant to the appellants and other clients. She recognized the importance in the industry that individual consultants not breach confidentiality agreements into which they had entered. The record contained Mr. Poisson's explanation why it was not until the appellants returned the respondent's two demo servers that he discovered Cisco software that was potentially based on the respondent's proprietary specification. He then embarked on a technical inquiry in breach of his confidentiality agreement. The motion judge accepted Mr. Poisson's statement of the importance of his reputation with respect to confidentiality and his explanation of his ability to have discovered the respondent's potential claim against the appellants at a date earlier than September 11, 2009.

[9] We are satisfied the record supported the motion judge's finding that the respondent, exercising reasonable diligence, could not have discovered its claim until September 11, 2009.

[10] The parties contested the significance of the question the motion judge left open in the portion of the motion she adjourned. That interlocutory question is not one with which we are concerned. This appeal was taken from the motion judge's final decision dismissing the limitations defence. In proceeding with their summary judgment motion, the appellants were obliged to put their best foot forward. As explained above, we are not persuaded there is any basis to interfere with the motion judge's decision finally dismissing the appellants' limitation defence.

[11] The appeal is dismissed. The respondent's costs of the appeal are fixed in the amount of $20,000, all-inclusive. In the absence of agreement, the quantum of the respondent's costs of the motion below is referred to the motion judge.

R.G. Juriansz J.A. P. Lauwers J.A. C.W. Hourigan J.A.