ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 07-CV-330014 PD3
DATE: 20130319
BETWEEN:
MARK BRENNAN
Plaintiff
– and –
ADMIRAL BAY RESOURCES INC.
Defendant
Andrew Suboch, for the Plaintiff
No one appearing for the Defendant
HEARD: March 18, 2013
Carole J. Brown J.
JUDGMENT
[1] The plaintiff, Mark Brennan ("the plaintiff"), brings this action as against Admiral Bay Resources Inc. ("the defendant") for payment of $250,000 US as liquidated damages, owing under an Independent Contractor Agreement dated November 4, 2005, entered into between the parties.
[2] At the commencement of trial, counsel for the plaintiff, Andrew Suboch, advised that he had been notified by facsimile from the defendant’s offices on March 15, 2013, that defendant’s counsel had been removed from the record by Order of the Master dated March 1, 2013, and issued and entered by the Court on March 4, 2013. No one was in attendance on behalf of the defendant. I requested that the defendant’s former counsel attend to provide additional information with respect to the Order of removal from the record, given that there was nothing before me in this regard and that the Order had been granted two weeks prior to the scheduled trial. Defendant’s former counsel provided the motion record, filed, regarding the removal from the record, which contained correspondence from the defendant's President and CEO, Steven Tedesco dated February 26, 2013. The letter stated that "Admiral Bay Resources Inc. has no further interest in defending the action brought against it by Mark Brennan. Accordingly, we consent to an Order removing your firm as solicitors of record in action number 07-CV-330014PD3." The motion materials further indicated that the defendant had ceased to carry on business. Given the Order and the explanation provided, defendant’s former counsel thereafter left the courtroom.
[3] Based on the foregoing, I determined that this trial should proceed, that the statement of defence and counterclaim should be struck, and that the matter should proceed as an undefended claim.
The Claim
[4] Mr. Brennan testified that he had been brought in to the defendant Corporation, which carried on business in Ontario and was listed on the TSE, in the spring of 2003 in order to turn around the operation. The Corporation, a junior resource company, had initially operated a mineral exploration enterprise in Mexico. He determined that the corporation should be changed from mineral exploration to production of coal bed methane gas.
[5] Mr. Brennan served as CEO and President of the Corporation and, brought in Steven Tedesco as a consultant.
[6] As of 2005, Steven Tedesco took over as President and Mark Brennan became CEO and Chairman of the Corporation. As of the Fall of 2005, the relationship between Mr. Tedesco and Mr. Brennan had begun to deteriorate and, in October of 2005, Mr. Tedesco relinquished his role as CEO and Chairman.
[7] As of November 4, 2005, Mr. Brennan entered into an Independent Contractor Agreement dated November 4, 2005, pursuant to which Mr. Brennan was to provide consulting services to the Company and was to serve the Company in such consulting capacity as may, from time to time, be determined by resolution of the Board of Directors of the Company. Pursuant to the Agreement, Mr. Brennan’s services were to be paid at a rate of one dollar per year, essentially an unpaid position, and as consultant, Mr. Brennan was entitled to maintain his options in the Corporation.
[8] The Consulting Agreement which, pursuant to the evidence of Mr. Brennan, was drafted by the Corporation's lawyers, was for a definite term from November 4, 2005 to December 31, 2007, "subject to the termination provisions in paragraph 8". Clause 8 of the Agreement provides as follows:
Prior to December 31, 2007, the Company may terminate this Agreement by making a payment to the Consultant equal to the greater of: (a) the market price of the Company's shares; or (b) the exercise price of the options to purchase common shares of the Company held by the consultant, with that greater number multiplied by the number of options to purchase common shares of the Company held by the Consultant, plus an additional payment of US $250,000. Such payment by the Company will terminate the options held by the Consultant.
[9] While the Agreement entered in evidence was unsigned, it was Mr. Brennan's testimony that both he and Steven Tedesco, on behalf of the Corporation, had signed the Agreement, although he did not have a signed copy. I note further that, in the defendant's statement of defence, they admit that the parties had entered into the Consulting Agreement referenced in the Statement of Claim.
[10] As a consultant, Mr. Brennan's role included maintaining investor confidence in the Corporation by continuing to interface with the large investors. As well, he was requested to provide assistance from time to time, and also was requested to assist with litigation, which he did.
[11] By letter dated February 21, 2007, which was entered as Exhibit 1 at the trial, the defendant purported to terminate the Independent Contractor Agreement on the ground that Mr. Brennan had breached the Agreement by charging expenditures for travel with significant investors of the Corporation to Mr. Brennan's Admiral Bay corporate credit card. Mr. Brennan testified that these expenditures were in fact, incurred while he was still CEO and Chairman of the Corporation, with full authority to make such expenditures, and were incurred prior to the Agreement being concluded. Moreover, the expenditures had been submitted on November 15, 2005, without any questions being asked by the Corporation or its Board. The purported termination was also documented in correspondence from Mr. Suboch to Admiral Bay Resources on March 15, 2007 (Exhibit 2) and correspondence from their lawyers to Mr. Suboch on March 21, 2007 (Exhibit 3). I note that the defendant sought reimbursement for these expenditures in the amount of $17,986.30 Cdn. in its counterclaim, which has been struck.
[12] The uncontradicted evidence of the plaintiff indicates that he was terminated on February 21, 2007, prior to the expiry of the definite term of the Independent Contractor Agreement which definite term was to end December 31, 2007. The uncontradicted evidence indicates that Clause 8 of the Agreement, as set forth above at para. 8, above, was operative in such circumstances. I further accept the evidence of the plaintiff that he had fulfilled his responsibilities pursuant to the Agreement and that there was no breach thereof.
[13] I find that Mr. Brennan is entitled to payment of $250,000 US, as set forth in the subject agreement. Mr. Suboch advises that the plaintiff does not seek any amounts pursuant to the market price of the Corporation’s shares or the exercise price of its options, as these are no longer of any value.
Accordingly, I grant judgment to the plaintiff, Mark Brennan, payable by the defendant, Admiral Bay Resources Inc., in the amount of $250,000 US, to be paid, pursuant to the Courts of Justice Act, section 121 in an amount in Canadian currency sufficient to purchase the amount of $250,000 US at a bank in Ontario listed in Schedule 1 of the Bank Act (Canada) at the close of business on the first day on which the bank quotes the Canadian dollar rate for purchase of the foreign currency before the date payment of the obligation is received by the creditor.
Costs
[14] I would request that plaintiff’s counsel, Mr. Suboch provide costs submissions in writing, to be limited to three pages, including the costs outline. The submissions may be forwarded to my attention, through Judges’ Administration at 361 University Avenue, within thirty days of the release of this Endorsement.
Carole J. Brown J.
Released: March 19, 2013
COURT FILE NO.: 07-CV-330014 PD3
DATE: 20130319
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MARK BRENNAN
Plaintiff
– and –
ADMIRAL BAY RESOURCES INC.
Defendant
JUDGMENT
Carole J. Brown J.
Released: March 19, 2013