COURT FILE AND PARTIES

COURT FILE NO.: 10-17240
DATE: 2012-01-17
SUPERIOR COURT OF JUSTICE - ONTARIO

RE: CATEGORY 5 IMAGING LTD., Plaintiff

AND:

ANGELO ANTONIADIS and CLARKE PRODUCTIONS (1982) LIMITED,

Defendants

AND BETWEEN:

ANGELO ANTONIADIS, Plaintiff by Counterclaim

AND:

CATEGORY 5 IMAGING LTD. and WAYNE NARCISO,

Defendants by Counterclaim

BEFORE: The Honourable Mr. Justice D. S. Crane

COUNSEL: Mr. M. Jaeger, Counsel for the Applicant Antoniadis

Mr. L. Frapporti, Counsel for the Respondent Category 5

Mr. M. Emery, Counsel for Clarke Productions

HEARD: 22 December, 2011 and reserved for Decision

ENDORSEMENT

CRANe, j.

[ 1 ] The Defendant/Plaintiff by counterclaim, Angelo Antoniadis, brings a motion to this court for partial summary judgment for the relief claim at paragraph 31, being the first paragraph of his counterclaim. The respondent to this motion is the defendant by counterclaim, Category 5 Imaging Ltd.

[ 2 ] The applicant claims upon his motion that he is legally entitled to payment of the sum of $144,000.00 in liquidated damages for non-payment by the respondent of a promissory note made by the respondent payable to the applicant, executed on December 9, 2009.

[ 3 ] On December 9, 2009 the parties to this motion, in order to resolve their differences executed the following documents:

(a) Agreement to purchase the applicant’s shares in the respondent.

(b) Non-competition, non-disclosure and non-solicitation agreement and

(c) A Promissory Note with conditions.

[ 4 ] The item (a) purchase agreement is found at page 60 of the motion record. This agreement contains clause 8.2 at page 68 of the motion record creating a restriction of the parties’ legal remedies to that of seeking indemnity from the other party on a breach of that other party of any of the aforesaid three documents.

[ 5 ] The item (b) agreement is found at page 47 of this motion record. This document contains at page 58, a “Schedule “B Employee List” and at page 50 of the Record, clause 1.9, an extraordinary provision based on the ‘belief’ of the respondent of the applicant’s default.

[ 6 ] Item (c) Promissory Note is found at page 81 of the motion record. The Promissory Note is signed by the defendant Wayne Narciso in his capacity as President of the plaintiff/respondent, Category 5 Imaging Ltd. The document appears to be an unconditional promissory note in customary form except for the following paragraph:

“This note is given by the undersigned under the terms and conditions of a share purchase agreement made as of the date hereof between the undersigned and the Seller and is subject to the terms and conditions of that agreement. This note is also subject to the terms of Section 1.9 of a non-competition, non-disclosure and non-solicitation agreement made as of the date hereof between the undersigned and the Seller.”

RESOLUTION

[ 7 ] Upon the analysis that follows, the short answer on the determination of this motion is that the applicant has agreed to abrogate his right to payment by enforce of payment of the promissory note, subject to the broader rights and obligations of these parties under each of the aforesaid agreements. The respondent has produced evidence on the record that the applicant has breached the non-solicitation agreement and the non-competition agreement and the non-disclosure agreement. The applicant has failed to adduce such evidence that would render a trial of these issues unnecessary.

[ 8 ] I find that there are triable issues as to whether Mr. Antoniadis was in breach of his non-competition agreement with the respondent during the stated period of 9 December, 2009 to 9 September, 2010. The evidence is that the applicant consulted with Clarke Productions, among other things, for the purchase by Clarke of a digital printing system similar to that of the respondent, which I find, would with such equipment, place Clarke Productions in direct competition with the respondent.

[ 9 ] The applicant accepted by his execution of the document, a provision of the non-competition, non-disclosure and non-solicitation agreement, clause 1.9;

“In the event that the Corporation believes that the Seller is in breach of the provisions of this Agreement, it shall be entitled to make any payments under the Note into trust with the solicitors of the Corporation.”

[ 10 ] The respondent has purported to act upon this provision. The applicant objects and, accordingly, it would follow that interpretation of exercise of the respondent’s belief cannot be resolved on a summary judgment motion.

[ 11 ] There is a list of employees accepted by the parties in the non-solicitation agreement. There is evidence that a number of these persons left the respondent and became employees of Clarke Productions during the term of the subject agreement. “Employee” defined under clause 1.3 of the Agreement includes independent contractors as listed in Schedule “B”.

[ 12 ] Mr. Brad Sing is listed in Schedule “B” and there is evidence on this record that Mr. Sing left the respondent and whose services were engaged by Clarke Productions. There is evidence that Mr. Kye Elsden left the respondent’s employment for that of Clarke Productions in the subject non-solicitation period allegedly through the offices of the applicant and/or Brad Sing. The respondent asserts the applicant was involved.

[ 13 ] The list of customers is accepted by the applicant. There is evidence that firms that are on that list allegedly moved business from the respondent to Clarke Productions through the services of Brad Sing, during the period of the non-solicitation agreement.

[ 14 ] Counsel for the respondent submits that the share purchase agreement contains an acknowledgement of the applicant that the respondent would not have purchased his shares but for the applicant’s compliance with the subject agreements and, accordingly, it follows that should the respondent establish a breach of any of the terms of these agreements that opens the remedy of a rescission as “damages” to the respondent in the action.

[ 15 ] In the result, the relief that the applicant seeks, namely the payment to him of the $144,000 promissory note cannot be resolved upon this motion as the evidence fails to meet the full appreciation test of Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764, at paragraph 50, namely the test for exercising the powers conferred by Rule 20.04(2.1) is whether the full appreciation of the evidence and issues that is required to make a dispositive of findings is possible on a motion for summary judgment”.

[ 16 ] The motion is dismissed. The issue of costs of the motion are reserved for written submissions.

CRANE, J.

Date: January 17, 2012