Court File and Parties

CITATION: NewPoint Capital Partners Inc. v. Diena, 2011 ONCA 394

DATE: 20110519

DOCKET: C53110

COURT OF APPEAL FOR ONTARIO

MacPherson, Armstrong and Karakatsanis JJ.A.

BETWEEN

NewPoint Capital Partners Inc.

Plaintiff (Respondent)

and

Daniel Diena, Emmanuel Diena, Parkway Pharmacy Inc., Methadrug Clinic Limited, Union Medical Pharmacy Inc., and 68235 Ontario Limited

Defendant (Appellants)

Jane Sirdevan, for the appellants

Peter W.G. Carey and Meagan J. Swan, for the respondent

Heard and released orally: May 18, 2011

On appeal from the judgment of Justice P. Theodore Matlow of the Superior Court of Justice, dated December 6, 2010.

ENDORSEMENT

[1] In a judgment dated December 6, 2010, Matlow J. granted partial summary judgment to the plaintiff NewPoint Capital Partners Inc. (“NewPoint”) against the personal defendants Daniel Diena and Emmanuel Diena. The judgment was for $249,547.49 relating to a financing fee provided for in a contract between the parties. The motion judge also held that the balance of the plaintiff’s claim relating to a so-called “work fee” needed to proceed to trial. The appellants appeal from the partial summary judgment component of the decision.

[2] The Diena brothers retained NewPoint to assist them in securing financing for the acquisition of pharmacy businesses. Article 4.1 of the contract provided for NewPoint to receive fees for its services:

4.1 Fees

During the period we [NewPoint] are retained by the Purchaser [the appellants], or within six months thereafter, or longer by reason of continuing bona fide negotiations subsequent to the six month period, NewPoint will be paid the following:

Immediately upon the closing of each Acquisition the Purchaser agrees to pay NewPoint a success fee (“Success Fee”) equal to 1% of the aggregate purchase price of the acquired entity; plus

Immediately upon raising capital to fund ongoing acquisitions, NewPoint will be paid a fee equal to 1% of senior debt committed, 2% of subordinated debt committed, and 3% of equity committed. Additionally, NewPoint will be issued equity warrants of the Purchaser equal to 5% of the fully diluted equity of the Target, at an exercise price per share equal to the per share value implied by the equity raise. In the event that there is no equity raise at the time of raising the initial capital, the parties to this agreement will determine an equity value in good faith. The warrant will be subject to standard terms and conditions and will have a term of three years.

[Emphasis added.]

[3] On two occasions after the contract was executed, NewPoint secured substantial financing for the Dienas. On both occasions, the transactions did not close for reasons connected to the Dienas, not the prospective sellers. On the second occasion, NewPoint sought payment of a fee pursuant to Article 4.1 of the contract. The motion judge granted summary judgment for $249,547.49.

[4] The Diena brothers’ essential submission is that Article 4.1 is ambiguous. It is unclear whether a fee is to be paid once NewPoint secured financing from a third party for the Dienas or, alternatively, whether the fee was to be paid only if the acquisition of a pharmacy business by the Dienas actually closed. In light of this ambiguity, a trial, including evidence about the parties’ intentions and communications, was necessary.

[5] We disagree. Although the motion judge’s reasons are inadequate and do not meet the Sheppard standard, in our view the language of Article 4.1 is clear. Article 4.1, read as a whole, and in the context of the entire agreement, contemplates that payment of fees to NewPoint would occur at two different points in time. The first paragraph of Article 4.1 begins with the words “immediately upon the closing of each Acquisition”. The second paragraph of the article commences with “immediately upon raising capital to fund ongoing acquisitions”. Both paragraphs then provide for fees calculated in different ways. NewPoint’s bill for a fee after the second failed transaction fits four-square into the second paragraph of the article; it was a fee sought after NewPoint had raised $23.5 million financing for the Dienas and the fee was calculated in accordance with the formula in the second paragraph.

[6] In short, the contractual wording is clear and supports the motion judge’s decision granting partial summary judgment.

[7] The appeal is dismissed. NewPoint is entitled to its costs of the appeal fixed at $5,000, inclusive of disbursements and HST.

“J. C. MacPherson J.A.”

“Rob P. Armstrong J.A.”

“Karakatsanis J.A.”