DATE: 20041008

DOCKET: C41465

COURT OF APPEAL FOR ONTARIO

RE:

ALLEREX LABORATORY LTD. (Plaintiff/Appellant/Respondent by way of cross‑appeal) – and – DEY LABORATORIES L.P. and EM INDUSTRIES, INCORPORATED, c.o.b. under the firm name and style CENTER LABORATORIES (Defendants/Respondents/Appellants by way of cross‑appeal)

BEFORE:

McMURTRY C.J.O., MACPHERSON and ARMSTRONG JJ.A.

COUNSEL:

John M. Connolly and J. Robert Allan

for the appellant

Brian B. Isaac and Kevin K. Graham

for the respondents

HEARD:

October 5, 2004

RELEASED ORALLY:

October 5, 2004

On appeal from the judgement of Justice Royden J. Kealey of the Superior Court of Justice dated February 2, 2004.

E N D O R S E M E N T

[1] The appellant, Allerex Laboratory Ltd. (“Allerex”), appeals from the summary judgment of Kealey J. dated February 2, 2004, dismissing Allerex’s claim for damages arising from future sales of EPIPEN products in France. The respondents cross‑appeal, in the event that it is found that the motion judge erred in granting summary judgment, and assert that summary judgment should have been granted on several other grounds which were rejected by the motion judge.

The appeal

[2] The motion judge held that there was no contract between the parties. He concluded that the May 10, 1993 letter was merely an agreement to agree at a later time.

[3] We do not think that the May 10, 1993 letter is sufficiently clear to permit a definitive determination of its legal category on a motion for summary judgment. The brief letter contains the language of a contract (“this letter will confirm our agreement”). However, it also contains language that suggests that the true contract would follow later (“the contract would run concurrently with the Canadian contract”).

[4] In light of the ambiguity in the letter, its proper characterization would require evidence at a trial – about the 12‑year history of contractual dealings between the parties, industry practice, and, importantly, the conduct of the parties in the months and years after they signed the letter. Only then could a confident decision be made about whether the letter was a stand‑alone contract or, alternatively, merely presaged a contract to follow later.

The cross‑appeal

[5] The respondents contend that summary judgment should have been granted on four other grounds:

(1) The May 10, 1993 letter was superceded by a 1997 agreement;

(2) the letter expired upon its own terms prior to any alleged breach by the respondents;

(3) the letter terminated pursuant to an implied termination clause such that there was no breach causing damages; and

(4) the appellant is precluded from claiming any expectation damages since it had failed to mitigate its damages.

[6] On these issues, the motion judge refused to grant summary judgment. He said: “it seems to me that these suggested grounds . . . cannot be resolved on the basis of uncontentious facts, but require consideration of factual and credibility issues”. We agree.

Disposition

[7] For the sake of completeness, we would not admit the fresh evidence tendered by the appellant. Nor would we amend the Statement of Claim. These are matters to be resolved in the trial process which will now unfold.

[8] The appeal is allowed and the cross‑appeal is dismissed. The entire dispute must proceed to trial for a fair resolution. The appellant Allerex is entitled to its costs of the summary judgment fixed at $25,000 and of the appeal fixed at $15,000, both inclusive of disbursements and GST. These figures are arrived at taking into consideration that the respondents are entitled to costs in relation to the appellant’s unsuccessful motion for the admission of fresh evidence.

“McMurtry C.J.O.”

“J. C. MacPherson J.A.”

“R. P. Armstrong J.A.”