Court File and Parties
COURT FILE NO.: CV-13-494071
DATE: 20140530
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: FRENY F. IRANI, Plaintiff
AND:
WINSON (VINCENT) CHEUNG, ICON INTERNATIONAL HOLDINGS PTY LTD. and ENERGYONE SOLUTIONS CORPORATION, Defendants
BEFORE: Mr. Justice Mew
COUNSEL:
Aaron Kreaden, for the Plaintiff
Alex Minkin, for the Defendant EnergyOne Solutions Corporation
HEARD: 26 May 2014
ENDORSEMENT
(Motion for Summary Judgment)
[1] In December 2012, the plaintiff agreed to lend $1,000,000 (US) to a recently incorporated Delaware corporation called Energy Co-Invest Mass I LLC (“Energy Co.”). The loan was effected by way of a convertible debenture (the “Debenture”).
[2] The purpose of the loan was to fund a solar panel project located in Massachusetts. The plaintiff’s participation in this investment was negotiated by her son, Sheroy Irani. He dealt principally with the defendant Winson (Vincent) Cheung and another individual, Tony McKee. Mr. McKee was presented to Mr. Irani as the President and CEO of EnergyOne Solutions Corporation (“EnergyOne”). Mr. Irani says that Mr. Cheung described EnergyOne as “his” company.
[3] During the course of due diligence leading up to the investment, Mr. Irani was provided with, inter alia, a copy of a procurement agreement between Energy Co. and EnergyOne according to which specified that EnergyOne would “manage and coordinate the Work” relating to the project.
[4] The amount specified in the Debenture was not paid directly to Energy Co. but, rather, was transferred to a trust account associated with the defendant Icon International Holdings Pty Ltd. (“Icon”), an Australian company located in New South Wales which, Mr. Irani alleges, was also said by Mr. Cheung to be “his” company. A Current Company Extract from the Australian Securities Commission shows Vincent Cheung as a director of Icon with an address corresponding with EnergyOne’s address (but with no reference to EnergyOne itself).
[5] The Debenture was due to mature in September 2013. However, in August 2013 Messrs Irani and Cheung agreed to revised terms which would increase the amount due on maturity from $1.3 million to $1.4 million and extend the maturity date to 15 October 2013.
[6] The outstanding amount under the debenture has not been repaid. The plaintiff now sues Mr. Cheung, Icon and EnergyOne claiming damages of $1.4 million (US) for breach of contract or, alternatively, unjust enrichment, conspiracy or conversion. The breach of contract claim is based on the allegation that at all material times Cheung acted as EnergyOne’s agent.
[7] Apparently no proceeding has been commenced against Energy Co.
[8] EnergyOne brings a motion for summary judgment seeking dismissal of the action against it on the grounds that:
It is not a party to the loan/investment agreement between Irani and Icon;
The terms of the loan are set out in the Debenture, the parties to which the plaintiff and Energy Co.;
It did not receive any of the money advanced by the plaintiff;
The plaintiff’s allegations that Energy Co. signed the Debenture on behalf of EnergyOne and that Icon received the funds on behalf of EnergyOne, are contrary to the clear wording of the Debenture and unsupported by the evidence.
[9] In determining whether summary judgment is available, the threshold question is whether or not there is a genuine issue requiring a trial. As stated by the Supreme Court of Canada in Hryniak v. Mauldin 2014 SCC 7, at para. 49, no genuine issue for trial will exist:
[W]hen the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.
[10] To reach a fair and just determination, the summary judgment process must give “the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute” (Hryniak v. Mauldin para. 50).
[11] It is well established that on a motion for summary judgment, “each side must put its best foot forward with respect to the existence or non-existence of material issues to be tried” (Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1996), 1996 7979 (ON SC), 28 O.R. (3d) 423 (Gen. Div.) at 434; Combined Air Mechanical Services Inc. v Flesch (2011), 2011 ONCA 764, 108 O.R. (3d) 1 at para 56, aff’d by Hryniak v. Mauldin 2014 SCC 7).
[12] The evidence put forward on behalf of the moving party, EnergyOne, comes in the form of two short affidavits sworn by Roderick Marnoch, who describes himself as an officer and director of EnergyOne. He denies that Mr. Cheung was ever a shareholder or principal of EnergyOne (although at one stage Mr. Cheung was a prospective owner of the company). He further denies that Mr. Cheung had any interest in EnergyOne, or has, or at any material time had, any authority to bind EnergyOne to any agreements.
[13] On cross-examination, Mr. Marnoch acknowledged that he had not been involved in the events giving rise to this dispute. He was not present at any of the meetings in which the Debenture, or the subsequent revised terms were discussed. To the extent that he proffers evidence about Mr. Irani’s discussions with Mr. Cheung and Mr. McKee, Mr. Marnoch does so on the basis of information and belief, with Mr. McKee as his main source.
[14] No explanation has been provided for the absence of any evidence from either Mr. Cheung or Mr. McKee. In the case of the latter, when asked about details of meetings that were attended by Mr. McKee, Mr. Marnoch’s response was that “you can get an affidavit from him and discuss it”. Mr. Marnoch also volunteered that Mr. McKee was “quite willing” to swear an affidavit in this proceeding.
[15] Mr. Cheung is separately represented in this action. He has defended the action and is represented, but was did not participate in the summary judgment motion. Nor was his evidence sought by either the moving or responding party on this motion.
[16] On a summary judgment motion it is open to the court to draw an adverse inference where a party relies on evidence provided on information and believe despite the availability of the source of such information and belief to give first hand evidence to the court: Rule 20.02(1).
[17] The plaintiff’s evidence consists of affidavits by Sheroy Irani and Jonathan Oxley, who was the managing director of a company called Energy Co Invest Corp.
[18] The deponents of all of the affidavits filed have been cross examined.
[19] At the risk of over-simplifying the plaintiff’s evidence, it says that Energy Co. was incorporated as a special purpose vehicle on instructions from EnergyOne. Energy Co. essentially signed the Debenture on behalf of EnergyOne. Meetings with Cheung and McKee occurred at EnergyOne’s business address. Mr. Cheung held himself out as a principal of EnergyOne. Accordingly, the plaintiff asserts that Cheung’s wrongs are EnergyOne’s.
[20] There is no evidence that, to the extent that Mr. McKee was present when Mr. Cheung was describing himself as a representative of EnergyOne, Mr. McKee made any comments or interventions that could be regarding as questioning Mr. Cheung’s authority to represent EnergyOne.
[21] The plaintiff concedes that at the present time it does not know where the $1,000,000 went and, in particular, that it has yet to adduce evidence that EnergyOne ultimately benefitted from the loan. It further acknowledges that its action against EnergyOne is likely to fail if it cannot show that EnergyOne benefitted from the transaction. But until discovery is obtained from Mr. Cheung and EnergyOne and efforts to obtain from Mr. Cheung an accounting for the application of the funds have been exhausted, the plaintiff submits that it would be wrong to deprive her of the right to a trial.
[22] EnergyOne, on the other hand notes that there is no evidence in the record to refute Mr. Marnoch’s assertion that it never received the funds provided by the plaintiff. In the absence of such evidence, it submits that there should be no reason to continue the action against EnergyOne.
[23] While it is, indeed, Mr. Marnoch`s uncontradicted evidence that EnergyOne does not have (and never did have) the proceeds of the Debenture, there remain many questions, which could yet implicate EnergyOne on one or more of the grounds advanced by the plaintiff.
[24] EnergyOne argued that the plaintiffs allegation that Mr. Cheung was EnergyOnes agent could not be sustained in the absence of evidence (other than the assertions of Mr. Irani and Mr. Oxley) and, in particular, any agency agreement. I disagree. The creation of an agency relationship can arise not only by express agreement but, also, by implication. In such circumstances the existence of an agency relationship will depend on the facts: Ontario College of Pharmacists v 1724665 Ontario Inc. (2013), 2012 ONSC 4295, 360 D.L.R. (4th) 299, per J. Wilson J. at para 100.
[25] Without the benefit of the evidence of either Mr. Cheung or Mr. McKee, the record is seriously lacking. It causes me to have limited confidence in the uncorroborated evidence of Mr. Marnoch. I cannot therefore reach a conclusion on the evidence available to me as to whether an agency relationship existed between Mr. Cheung and EnergyOne.
[26] To similar effect, the potential liability of EnergyOne on the pleaded claims of conversion and unjust enrichment may turn on the application of the corporate identification doctrine to the actions of Mr. McKee or Mr. Cheung. And the allegation of conspiracy against EnergyOne would also likely engage the evidence of those individuals.
[27] On the present evidentiary record I cannot, with confidence, find the necessary facts and, thus, apply the relevant legal principles so as to resolve the issue of whether EnergyOne is liable to the plaintiff. One is left with the instinctive feeling that the whole story is far from being before the court at this time.
[28] Although it would open to the court to deploy its powers to obtain oral evidence from Messrs. McKee and Cheung (Rule 20.04(2.2), I am unable to gauge whether that would result in a fair process. There has been no discovery of any sort from Mr. Cheung (Icon was recently noted in default). I could not be confident that the evidence of witnesses such as Mr. Cheung or Mr. McKee could be fully tested if they were to be ordered to provide oral evidence at this juncture.
[29] In short, I am not persuaded that summary judgment would be in the interest of justice at this time. The motion of EnergyOne is therefore denied.
[30] Each side provided costs outlines which yielded a commendably close assessment of the partial indemnity costs that would be claimed. EnergyOne should pay the plaintiff’s partial indemnity costs, fixed at $17,500 inclusive of disbursements and HST.
Mew J.
Date: 30 May 2014