COURT OF APPEAL FOR ONTARIO

CITATION: Northern Industrial Services Group Inc. v. Duguay, 2016 ONCA 539

DATE: 20160707

DOCKET: C61019

MacPherson, Cronk and Benotto JJ.A.

BETWEEN

Northern Industrial Services Group Inc.

Plaintiff/Defendant by Counterclaim/ (Appellant)

and

Maurice Duguay Sr., Maurice Duguay Jr., Docithee Rondeau and 2362969 Ontario Inc. c.o.b. as DSI Services

Defendants (Respondent)

Bob Yu, for the appellant

Sylvano A. Carlesso, for the respondent

Heard: July 5, 2016

On appeal from the judgment of Justice Robin Y. Tremblay of the Superior Court of Justice, dated July 29, 2015.

By the Court:

[1] The appellant, Northern Industrial Services Group Inc. (“NISG”), appeals from the summary judgment granted by the motion judge in favour of the respondent, Maurice Duguay Sr. (“Duguay Sr.”), whereby the motion judge: i) dismissed NISG’s action as against Duguay Sr. for damages for breach of contract and fiduciary duty; and ii) granted Duguay Sr.’s counterclaim for $274,900, plus interest, for monies owed to him by NISG under a share purchase agreement, and costs.

[2] For the reasons that follow, we conclude that the appeal must be dismissed.

I. Background in Brief

[3] For many years, Duguay Sr. owned and operated a company in Timmins that engaged in commercial and industrial high pressure washing, vacuuming and associated services. He employed his son, Maurice Duguay Jr. (“Duguay Jr.”), in the business for about 11 years.

[4] On September 28, 2011, as he was approaching retirement, Duguay Sr. entered into a written share purchase agreement (the “Share Purchase Agreement”) with a predecessor company to NISG whereby he sold all his shares in his company for the aggregate amount of $550,000. The purchase price was payable in three instalments over two years: i) $100 on closing; ii) $274,950 on September 28, 2012; and iii) the remaining sum of $274,950 on September 28, 2013.

[5] The Schedules to the Share Purchase Agreement included a non-competition agreement, signed by Duguay Sr. in favour of NISG. As relevant to this appeal, it provided that, for a period of four years, Duguay Sr. could not, directly or indirectly, “engage in or aid, assist or abet others in engaging in any business, conduct or activity in competition with [NISG]”. Neither Duguay Jr. nor DSI were parties to the non-competition agreement.

[6] After the closing of the share purchase transaction, Duguay Jr. remained in NISG’s employ for approximately 18 or 19 months. In the spring of 2013, he quit his job with NISG and, together with a partner, incorporated the defendant 2362969 Ontario Inc. to carry on a rival commercial and industrial washing enterprise under the name DSI Services (“DSI”).

[7] NISG paid the first two instalment payments to Duguay Sr. due under the Share Purchase Agreement. However, it failed to make the third and final payment of $274,950 due on September 28, 2013. Instead, on the same day, it commenced proceedings against Duguay Sr., Duguay Jr., DSI and others, claiming, as against Duguay Sr., that he had breached the terms of the non-competition agreement by funding Duguay Jr. and DSI, and by providing real and personal property to Duguay Jr. and DSI for use in DSI’s competing business. It also sought damages for breach of fiduciary duty, although this claim, as pleaded, appears to have been in the alternative.

[8] Duguay Sr. denied these allegations. When the dispute could not be resolved, Duguay Sr. defended the action and, in turn, counterclaimed against NISG for the outstanding payment owed to him under the Share Purchase Agreement for the purchase of his shares. In late February 2014, he moved in the Superior Court of Justice for summary judgment dismissing the main action as against him and granting judgment in his favour on the counterclaim. His co-defendants did not join in the motion.

II. Issues

[9] NISG attacks the motion judge’s decision on multiple grounds. In essence, it argues that the motion judge misapprehended the governing test for summary judgment, made factual findings that are either unsupported by or inconsistent with the evidentiary record, failed to resolve ambiguities that he held existed in certain of the evidence relied on by NISG and further failed to properly assess the evidence relating to NISG’s claimed damages. Its arguments on appeal are confined to its breach of contract claim against Duguay Sr.

[10] We reject these arguments for the following reasons.

III. Discussion

(1) Liability

[11] We see no basis on which to fault the motion judge’s approach to or application of the test for summary judgment.

[12] After setting out the undisputed background facts and the parties’ positions on the motion, the motion judge turned directly to the principles governing motions for summary judgment. He referenced Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, [2014] S.C.J. No. 7, and set out in some detail, at paras. 14-18 of his reasons, the “roadmap” to a motion for summary judgment outlined in Hryniak by the Supreme Court. He then noted, correctly, at para. 19:

The moving party must lead evidence that there is no genuine issue requiring a trial, demonstrating that a trial is unnecessary to truly, fairly and justly resolve the issues. It is only after the moving party has met its onus that the burden shifts to the responding party to show that there is a genuine issue requiring a trial. [Citations omitted.]

[13] The motion judge did not err in his description of the principles applicable to the determination whether to grant summary judgment. His reasons confirm that he understood the legal test for summary judgment and applied it to the facts as he found them.

[14] And it is in the latter regard that NISG’s challenge to the motion judge’s decision founders. Contrary to NISG’s submission, the motion judge’s critical factual findings were amply supported by the evidentiary record. They included the following:

(1) The funds alleged by NISG to have been provided by Duguay Sr. to his son to fund DSI (a total of $40,000 advanced by Duguay Sr. between April 21, 2013 and June 4, 2013), formed part of monies paid by Duguay Sr. to Duguay Jr. in recognition of the latter’s many years of service with his father’s company;

(2) Duguay Sr. promised to pay these, and other funds, to his son prior to the creation of DSI, at a time when Duguay Jr. was still working for NISG;

(3) As admitted by Alan Perello, the principal of NISG, on his cross-examination, NISG’s claim that the payments in issue were intended by Duguay Sr. to fund DSI was based on “rumours”. NISG had no “hard facts” to support the claim;

(4) Although NISG maintained that Duguay Sr. and Duguay Jr. admitted in a recorded conversation on September 30, 2013 that Duguay Sr. provided funding to DSI, the alleged admissions were not clearly made. To the contrary, the statements in question were “far from clear” and “subject to interpretation”;

(5) Duguay Sr. provided a detailed breakdown of how his son expended the monies given to him by his father, establishing that they were used to pay for his son’s personal expenses, including the expenses of his matrimonial separation;

(6) In particular, there was no evidence proffered by NISG demonstrating that Duguay Sr. provided money to his son “for the specific purpose of funding DSI” or with the knowledge that the money furnished by him would be used to fund DSI; and

(7) Similarly, no breach of the non-competition agreement by the provision of property or assistance to DSI by Duguay Sr. was established on the whole of the evidence. The only relevant evidence in this regard reflected normal assistance, of a limited and transitory nature, that might be expected between a father and son, rather than “a larger pattern” of continuing provision of property or other assistance to DSI.

[15] As we have said, these key findings were firmly anchored in the evidentiary record. They are dispositive of the issue whether Duguay Sr. breached the terms of the non-competition agreement.

[16] Having found that certain of the evidence relied on by NISG to prove its breach of contract claim was ambiguous or inconclusive, the motion judge was not obliged to undertake detailed credibility assessments or to resolve the ambiguities in question. It was sufficient to establish Duguay Sr.’s entitlement to summary judgment to find, as the motion judge did, that NISG owed the debt in question under the Share Purchase Agreement and that NISG had failed to put its best foot forward on the motion by adducing clear and reliable evidence of Duguay Sr.’s breach of the non-competition agreement.

[17] Perhaps most telling, in this regard, was Mr. Perello’s own admission, binding on NISG, that he had no firm facts but, rather, only rumours to support NISG’s breach claim. Suspicions alone cannot establish breach of contract.

(2) Damages

[18] As we see no basis for appellate interference with the motion judge’s holding that Duguay Sr. did not breach the non-competition agreement, no issue of set-off of NISG’s alleged damages arises. For the same reason, it is unnecessary to address NISG’s argument that the motion judge erred in his assessment of the evidence regarding NISG’s damages claim. Similarly, as the appeal must be dismissed, we do not reach NISG’s request for a stay of the judgment granted on Duguay Sr.’s counterclaim.

[19] We note that the summary judgment granted by the motion judge pertains only to Duguay Sr. NISG’s action against the other defendants has not been dismissed. Should that action proceed, it will be open to NISG to advance those arguments that it regards as appropriate, in the normal course.

IV. Disposition

[20] The appeal, therefore, is dismissed. Duguay Sr. is entitled to his costs of the appeal, fixed in the amount of $16,950, inclusive of disbursements and H.S.T.

Released:

“JCM” “J.C. MacPherson J.A.”

“JUL 7 2016” “E.A. Cronk J.A.”

“M.L. Benotto J.A.”