DATE: 20050509

DOCKET: C41641

COURT OF APPEAL FOR ONTARIO

RE:

CALIAN TECHNOLOGY LTD. (Respondent (Plaintiff), Appellant by Cross-appeal) – and – MELVIN FREDRICKSON, ANDRZEJ POLUCHOWSKI, IAN MARTIN LIMITED and GERALDINE JOHNS (Appellants (Defendants), Respondent by Cross-appeal)

BEFORE:

CRONK, GILLESE and MacFARLAND JJ.A.

COUNSEL:

John M. Connolly

for the appellants and for the respondent by cross-appeal, Geraldine Johns

Andrew McCreary

for the respondent, appellant by cross-appeal

HEARD:

May 4, 2005

On appeal and cross-appeal from the Judgment of Justice A. Panet of the Superior Court of Justice dated March 11, 2004.

E N D O R S E M E N T

A. Appeal

[1] In our view, the appeal must be dismissed for the following reasons.

[2] First, the record establishes to our satisfaction that confidential information and work product belonging to Calian Technology Ltd. (“Calian”) was communicated by the appellants Melvin Fredrickson and Andrzej Poluchowski, without authority, to the corporate appellant Ian Martin Limited (“IML”) in breach of Fredrickson’s and Poluchowski’s duty of fidelity to Calian as its employees: see Alberts v. Mountjoy (1977), 16 O.R. (2d) 682 (H.C.J.).

[3] Second, in relation to causation, the trial judge was entitled to conclude that, absent Fredrickson’s and Poluchowski’s described breach, and their active assistance to IML, IML could not have assembled the technical information required to respond to the government’s request for proposal within the tender period. There were only two bids submitted: those of IML and Calian. Without a technically compliant proposal from IML, only Calian’s proposal would have been available for consideration by the government.

[4] Third, in the circumstances that prevailed here, we see no error in the trial judge’s approach to and calculation of damages, which were consistent with McCormick Delisle Thompson Inc. v. Ballantyne, [2001] O.J. No. 1783 (C.A.).

[5] We would add these observations. The trial judge offered an alternative basis for the imposition of liability in respect of Fredrickson. He was of the view that Fredrickson’s actions were in breach of a restrictive covenant contained in an exclusivity clause in a “Letter of Intent” that he had signed with Calian.

[6] The trial judge’s analysis on this issue is directed at whether the exclusivity clause was enforceable. His analysis is predicated on the assumption that the clause was contained in a binding contract. However, the trial judge made no such determination.

[7] This matter was not fully argued before us. However, on the face of it, we do not see how the Letter of Intent could be a binding contract. The document is entitled “Letter of Intent”. Moreover, by its terms, the Letter of Intent is conditional upon a number of things, including Calian obtaining the government contract and Calian’s determination that Fredrickson was providing satisfactory service and that his services were required for the project. Indeed, by its express terms, the Letter of Intent gave Calian the right to include and revise other terms in “any contract negotiated” as a contract of employment.

[8] As the exclusivity clause is in a document that does not appear to be a binding contract, it is not clear upon what basis Fredrickson could be bound by its terms.

B. Cross-appeal

[9] We also conclude that the cross-appeal must be dismissed. We are not persuaded that the requisite elements for proof of inducing breach of contract or intentional interference with economic relations have been satisfied in respect of Geraldine Johns.

C. Disposition

[10] Accordingly, for the reasons given, both the appeal and cross-appeal are dismissed. Calian has been successful on the appeal, which both counsel agree generated about 95% of the costs of these proceedings. However, it has been unsuccessful on its cross-appeal. In these circumstances, Calian is entitled to part of its costs of these proceedings, on a partial indemnity basis, which we fix in the amount of $20,000, inclusive of disbursements and Goods and Services Tax.

“E.A. Cronk J.A.”

“E.E. Gillese J.A.”

“J. MacFarland J.A.”