COURT OF APPEAL FOR ONTARIO

CITATION: AF Industries Limited Liability Corporation (Flom LBS Consulting) v. Complete Innovations Inc., 2014 ONCA 60

DATE: 20140124

DOCKET: C56047

Rosenberg, Cronk and Tulloch JJ.A.

BETWEEN

AF Industries Limited Liability Corporation c.o.b. as Flom LBS Consulting

Plaintiff (Respondent)

and

Complete Innovations Inc.

Defendant (Appellant)

James Jagtoo, for the appellant

Micheal Simaan, for the respondent

Heard: January 20, 2014

On appeal from the judgment of Justice Andra Pollak of the Superior Court of Justice, dated March 8, 2013.

ENDORSEMENT

[1] The principal submission made by the appellant was that Pollak J. failed to give effect to her finding (really an assumption) that the respondent breached a fiduciary duty owed by it to the appellant.

[2] We reject this submission. The only breach of fiduciary duty specifically alleged in the statement of defence and repeated in the appellant’s factum relates to the respondent’s alleged use of confidential information to the detriment of the appellant and “to extort monies from the Defendant”. The trial judge found that any alleged use of confidential information did not cause any damages to the appellant. This finding was open to the trial judge. Further, this is not a case like McBride Metal Fabricating Corp. v. H & W Sales Co. (2002), 2002 41899 (ON CA), 59 O.R. (3d) 97 (C.A.) where the trial judge found that had the plaintiff been aware of an apparent breach of fiduciary duty, it would have terminated the agreement. In this case, as pleaded, the only breach of fiduciary duty alleged took place after the parties’ agreement had been terminated. It is not open to the appellant to argue for the first time on appeal in oral argument that the breach of fiduciary duty occurred at an earlier time.

[3] The appellant also argues that the trial judge erred by finding that the services agreement in question had not been amended by the submission of the June 2009 and following invoices.

[4] We disagree. Those invoices refer only to expenses, which were never in issue. There is nothing to indicate that the parties, in fact, agreed on a replacement agreement or an amendment to the existing agreement. To the contrary, the correspondence shows there was no such agreement. The invoices relied upon by the appellant refer only to expenses and say nothing about the fundamental issue, which was whether the appellant was to pay the respondent a set fee per month or continue to pay on an hourly basis as per the original agreement.

[5] We also agree with the trial judge that, in the circumstances of this case, the defence of acquiescence had no application. The respondent was seeking to enforce a legal right, namely, its right to compensation under the contract. Acquiescence is a defence to an equitable claim and therefore had no application.

[6] As the trial judge noted, estoppel might well have been a defence. In this case, however, estoppel was never pleaded and, despite several inquiries by the trial judge, the appellant never sought to amend its pleading to allege estoppel. Again in this court, the appellant does not claim to be relying on estoppel. In any event, since it was not pleaded, the trial judge was not required to make the necessary findings of fact that could have given rise to a successful claim of estoppel.

[7] Finally, we have not been persuaded that the trial judge erred in failing to give effect to the allegation of breach of duty of good faith. First, the appellant did not plead that the respondent’s manner of invoicing from and after June 2009 evidenced a breach of its duty of good faith. Second, and in any event, after May 2009, the respondent no longer submitted invoices setting out the fees claimed, only expenses. The fact that the respondent kept track of hours worked without revealing those calculations to the appellant did not amount to a breach of the duty of good faith. The correspondence shows that the parties continued to disagree as to how to amend their agreement regarding compensation, or whether to enter into a new agreement. Eventually, the negotiations broke down. The respondent was therefore entitled to claim for the hours worked in accordance with the existing agreement.

[8] Accordingly, the appeal is dismissed with costs to the respondent, fixed at $12,000 inclusive of disbursements and all applicable taxes.

“M. Rosenberg J.A.”

“E.A. Cronk J.A.”

“M. Tulloch J.A.”