Court File and Parties
COURT OF APPEAL FOR ONTARIO DATE: 20220426 DOCKET: C69674
Fairburn A.C.J.O., Pepall and Sossin JJ.A.
BETWEEN
Kirloskar Technologies (P) Ltd. Plaintiff (Respondent)
and
Best Theratronics Ltd. Defendant (Appellant)
Counsel: Samuel Schwisberg, for the appellant Jean-Simon Schoenholz and Amélye Paquette, for the respondent
Heard: April 22, 2022
On appeal from the judgment of Justice Kristin Muszynski of the Superior Court of Justice, dated October 21, 2021, with reasons reported at 2021 ONSC 4291.
Reasons for Decision
[1] This is an appeal from the order of the trial judge that the appellant, Best Theratronics Ltd. (“BTL”) pay an outstanding debt to the respondent, Kirloskar Technologies (P) Ltd. (“KTPL”). There is no dispute as to the debt or the amount owed. Rather, at trial, BTL raised several grounds on which it should be relieved of the obligation to pay its debt to KTPL, including that the risk of prosecution under the Corruption of Foreign Public Officials Act, S.C. 1998, c. 34 (“CFPOA”) absolved BTL from paying the debt owed to KTPL. The trial judge rejected these grounds.
[2] At the hearing, we dismissed the appeal with reasons to follow. These are those reasons.
A. Overview
[3] BTL is a Canadian corporation that manufactures medical equipment. KTPL is incorporated under the laws of India and was the agent for BTL in India at the material time. An agency agreement between the parties provided commission rates payable to KTPL from BTL for sale of medical equipment in India and Nepal.
[4] The parties agree that there are outstanding funds owing to KTPL from BTL for work that was done by KTPL for the sale of BTL’s medical equipment in India and Nepal under the terms of the agency agreement.
[5] The parties have had a long-standing commercial relationship and, until this recent dispute, BTL had paid KTPL’s commissions for the sale of its equipment without issue. The amounts outstanding are not in dispute.
[6] BTL raised three grounds on which it argued it was under no obligation to pay the debt: first, it claimed a portion of the amounts owing were statute barred by virtue of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B; second, it claimed to be entitled to a set-off against the amount owing for various alleged breaches of contract by KTPL; and third, BTL argued that it risks prosecution under the CFPOA if it makes any payment to KTPL.
[7] The trial judge rejected each of these grounds for resisting payment of the debt. Only the last ground is in issue on this appeal.
[8] With respect to the potential violation of the CFPOA, the trial judge admitted into evidence, on consent, a “Charge Sheet” from India that purported to detail criminal charges against both KTPL and BTL, and others relating to the sale of medical equipment that occurred in 2006. The trial judge found the potential prosecutions of the parties on the basis of conduct unrelated to the debt at issue was “collateral,” and not relevant to the action before her.
[9] BTL had brought a counterclaim against KTPL claiming reputational damages but abandoned this claim at the start of the trial.
[10] At the conclusion of the trial, the trial judge found that KTPL was entitled to commissions owing in the full amount claimed of $300,594 CAD plus $253,153.46 CAD, for a total judgment in favour of KTPL in the amount of $553,747.46 CAD, exclusive of pre-judgment interest and costs.
B. Analysis
[11] BTL argues that the trial judge erred by:
(1) ordering a Canadian business to pay an agent in a foreign jurisdiction where there are “red flags” of potentially corrupt practices on the part of the agent (such as the Charge Sheet);
(2) declining to take judicial notice of the high level of corruption in India; and
(3) failing to find that the contract clauses that required KTPL to comply with the domestic laws of India and indemnify BTL for any malfeasance strengthened the policy argument against ordering payment, or provided an independent contractual basis to delay payment until and if KTPL is exonerated.
[12] BTL argues that this court should recognize a principle, as a matter of public policy, that contract payments do not need to be paid to agents who are under a “cloud of suspicion for corrupt practices.”
[13] BTL’s submissions flounder on the state of the evidentiary record that was before the trial judge. At para. 32 of her reasons for decision, the trial judge wrote:
From a review of the Charge Sheet, the prosecution in India appears to relate to the alleged bribery of government officials in India, but it is far from clear. BTL did not produce an expert in Indian law to provide the court guidance on the significance of the Charge Sheet or what charges are presently before the court in India. The parties do agree that the charges relate to allegations against KTPL that are unproven. The parties further agree that the transaction involved in the Indian criminal prosecution is unrelated to the sales for which KTPL is claiming outstanding commissions are owing from BTL in this lawsuit.
[14] There simply was no evidence to ground BTL’s submission that the parties’ agreement was tainted by criminality or that BTL’s obligation to pay its debt was unenforceable.
[15] Moreover, the Supreme Court has emphasized that public policy considerations should be relied on “sparingly” and has cautioned against expanding the heads of public policy for setting aside contractual provisions: Uber Technologies Inc. v. Heller, 2020 SCC 16, at para. 109, per Brown J. (concurring).
[16] The trial judge stated, at para. 36, “I reject BTL’s argument that a perceived risk of prosecution under the CFPOA absolves BTL from paying the legitimate outstanding debt owed to KTPL or delays payment of that debt.” We see no error in the trial judge’s rejection of BTL’s argument that it should be relieved of paying its acknowledged debt to KTPL. In addition, even if judicial notice as requested had been taken, it would have had no impact on the outcome of this case.
C. Disposition
[17] For these reasons, we dismiss the appeal.
[18] As agreed by the parties, BTL shall pay KTPL $15,000 in costs, inclusive of disbursements and applicable tax.
“Fairburn A.C.J.O.”
“S.E. Pepall J.A.”