1318847 Ontario Limited v. Laval Tool & Mould Ltd.

COURT FILE NO.: CV-12-18047

1318847 Ontario Limited v. Laval Tool & Mould Ltd.

COURT FILE NO.: CV-13-19542

2015 ONSC 2664

DATE: 20150522

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

COURT FILE NO.: CV-12-18047

1318847 Ontario Limited

Plaintiff

– and –

Laval Tool & Mould Ltd.

Defendant

Diana M. Edmonds, for the Plaintiff

James K. Ball, for the Defendant

BETWEEN:

COURT FILE NO.: CV-13-19542

1318847 Ontario Limited and Emmanuel Azzopardi

Plaintiffs

– and –

Laval Tool & Mould Ltd. and Alfredo Gatti

Defendants

Diana M. Edmonds, for the Plaintiffs

Myron W. Shulgan, Q.C., for the Defendant Laval Tool & Mould Ltd.

HEARD: September 17, 18, 19, 22, 23, 24,25 and 26, 2014

REASONS FOR JUDGMENT

Verbeem J.:

OVERVIEW

[1] These actions, which assert claims in contract and restitutionary quantum meruit, were tried together because they arise out of the same factual occurrences. The parties are intimately connected. The individual plaintiff Emmanuel Azzopardi (“Emmanuel”) is the principal of the corporate plaintiff 1318847 Ontario Limited. Laval Tool & Mould Ltd. (“LTM”), the defendant in both actions, was founded by Emmanuel’s father Loreto Azzopardi (“Larry”) and has continuously operated as an Azzopardi family undertaking with Larry, Emmanuel and several of Emmanuel’s siblings situated in key management positions at various times.

[2] Independent of LTM, Emmanuel pursued his own business interests, and eventually left LTM’s management team. For over a decade, LTM, at Larry’s direction, actively supported Emmanuel’s business interests. Later, Emmanuel engaged in activity that supported LTM’s business interests.

[3] While the claims are framed as traditional commercial disputes, the substance of these actions is really a story about the tumultuous relationship between a father and son. Emmanuel assisted the family business (LTM) without an expectation of compensation, admittedly, in order to acknowledge the debt of gratitude he felt he owed to his father and out of a sense of obligation he felt for his family.

[4] When his father passed away unexpectedly in November 2009 Emmanuel sought to retroactively recast his previously held expectations initially requesting and ultimately demanding compensation for his historical services in support of LTM. After his requests and demands were denied, Emmanuel commenced these proceedings seeking compensation for services dating back to 1999.

INTRODUCTION

[5] The plaintiffs in each of these actions claim compensation for tax consulting services allegedly performed by Emmanuel from 1999 to 2010 for the benefit of LTM. During that time, Emmanuel compiled the information and developed the analysis used by LTM in its claims for federal and provincial tax credits under the scientific research and experimental development (“SRED”) program.

[6] The plaintiffs allege that they are contractually entitled to compensation in the amount of $419,194.30 inclusive of HST, representing 25 percent of the tax-related benefits LTM received as a result of Emmanuel’s efforts during the relevant time period. Alternatively, they claim entitlement to the same amount, or other reasonable compensation, based on the principles of quantum meruit and unjust enrichment.

[7] 1318847 Ontario pursues its claims in action numbered CV-12-18047, which was commenced on June 21, 2012. Emmanuel pursues his claims in action numbered CV-13-19542, which was commenced on June 21, 2013. His claim against Alfredo Gatti was dismissed, on consent, prior to trial.

[8] LTM resists the plaintiffs’ claims for the following reasons: it denies that it contracted to compensate either plaintiff for Emmanuel’s SRED services; it concedes that it was enriched as a result of those services, but not unjustly so; it states that 1318847 Ontario never supplied SRED services to LTM, and therefore it is not a proper plaintiff; and it submits that the actions were commenced after the expiration of the applicable limitation periods and are therefore statute barred.

[9] At this stage, the parties request that the court determine the issues of the plaintiffs’ compensatory entitlement and the measure of compensation. Specifically, whether compensation is payable pursuant to contract as 25 percent of the tax benefits received by LTM or pursuant to quantum meruit and unjust enrichment as “fair value for the services provided”.

[10] In the event that there is a finding that either plaintiff is entitled to compensation, the parties request that a reference be directed to determine the specific quantum.

[11] A reference is not necessary. For the following reasons, I am not persuaded that the plaintiffs have demonstrated, on a balance or probabilities, that either of them is entitled to compensation for Emmanuel’s historic SRED services and, in any event, the limitation periods applicable to the vast majority of the claims asserted by both plaintiffs expired before each action was commenced. As a result, each action will be dismissed with costs presumptively to the defendants.

BACKGROUND

[12] The factual occurrences in these proceedings involve many members of the Azzopardi family, who I will respectively refer to by their given names for ease of reference.

[13] LTM is a mould manufacturer that was founded in 1978 by Emmanuel’s father Loreto Azzopardi (“Larry”). It produces moulds to the specifications of its customers, which are used in the production of plastic parts. LTM’s shares are owned by its parent company Laval Mould & Management (LMM). Larry controlled all of LMM’s voting shares.

[14] As LTM’s president, and indirect owner, Larry exclusively controlled every aspect of LTM’s operations. Larry had sole cheque signing authority, he had final approval over all of LTM’s quotes and pricing, and his prior approval was required for any contracts of substance to which LTM was a party.

[15] Larry passed away unexpectedly on November 22, 2009. At that time, interim control of LTM vested with his estate’s trustees, Alfredo Gatti and Diane Sauve.

[16] Historically, the management of LTM was an “Azzopardi family” undertaking. At various times, Larry, Emmanuel and five of Emmanuel’s siblings were part of the LTM management team, including his brother Tom Azzopardi (Tom) and his sister, Paula Gignac (Paula), both of whom testified at trial. The Azzopardi family members were employed by LMM, which supplied their services to LTM in exchange for management fees.

[17] Tom provided services to LTM from 1980 until 1989 when he was assigned to manage the Pilot House restaurant, one of his father’s other business ventures. In 1993, he returned to LTM and acted as its head controller until 1998 when that position was assumed by Paula. His employment with LMM was terminated in 2011 and he commenced litigation against Laval as a result. Overall, I found Tom’s evidence to be credible and balanced.

[18] Paula worked in the LTM accounting department for nearly two decades and ultimately replaced Tom as LTM’s head controller. She asserts that in 2011 she was “pushed out” of her accounting position by Larry’s estate trustees, her brother Jon who is LTM’s current president, and David Butler who was appointed as LTM’s CEO after Larry passed away. She has been on a medical leave since April 2012. She is a party in ongoing litigation involving Larry’s estate.

[19] Emmanuel is 53 years old. He graduated from university in 1985, with a Bachelor of Science (Honours) degree, and immediately joined the LTM management team. He last provided services to LTM, as an employee of LMM, sometime in 1999, when, according to him, he was removed from LMM’s payroll after a heated argument with his father, a relatively common occurrence between the two.

[20] While employed by LMM, Emmanuel provided administrative and technical services to LTM, and by 1995, he was tasked with managing LTM’s “special projects” which included purchasing, customs filings, the development of an employee evaluation system, WHMIS instruction, formulating various policies and procedures, implementing LTM’s CADCAM system and in his words, “doing whatever else was required.”

[21] While Emmanuel was employed by LMM, he was also actively involved in a separate business known as Hercules Moulded Products Inc. (HMP). HMP was founded by Larry in 1986 and carried on business as a plastic parts manufacturer until 2002. Shortly after incorporating HMP, Larry gifted its shares equally to Emmanuel, Tom and their sister Leanna. In the late 1990s, Leanna’s shares were redeemed, leaving Tom and Emmanuel as HMP’s sole and equal shareholders.

1. The Alleged HMP Debt

[22] From its inception until 1998, HMP carried on business in a portion of LTM’s operating premises and was charged rent. During that time, the synergy between LTM and HMP was well realized. Before releasing moulds to its customers, LTM frequently retained HMP to run part production “try outs” to ensure the moulds met all applicable specifications. It was not uncommon for LTM’s customers to retain HMP to produce their plastic parts, using LTM manufactured moulds.

[23] While HMP was situated at LTM’s premises, it had access to, and frequently utilized, LTM’s equipment and materials. The operation of HMP’s presses and equipment generated substantial utilities charges that were borne, at first instance, by LTM. At times, HMP also utilized LTM’s employees for its own purposes.

[24] The value of the services and benefits provided between LTM and HMP were recorded in an “intercompany loan account” maintained in LMM’s financial records. At most times the balance of that account reflected that HMP owed a net amount to LMM, as a result of the benefits that HMP allegedly received from LTM.

[25] There is little evidence with respect to the specific components of HMP’s alleged debt. The parties did not adduce a comprehensive set of annual financial statements for LTM, HMP or LMM for the time period relevant to these proceedings. That documentation would have been helpful in gaining a more precise appreciation of the circumstances surrounding the various transactions in issue in these proceedings.

[26] LMM’s annual general ledger listings for its fiscal years ended May 31, 2001 to its fiscal year ended May 31, 2008, inclusive, and its unaudited and unconsolidated financial statements for its fiscal year ended May 31, 2011, which were all filed as exhibits, together with Paula’s evidence, informs the following findings.

[27] During the 1990s the recorded amount of the debt owed by HMP to LMM reached $678,240, and at some point prior to May 2001, that indebtedness was written off by LMM as a bad debt. As a result, from at least May 31, 2001 to May 31, 2003 the loan account balance evidenced that LMM owed HMP $81,000. On June 1, 2003, LMM reasserted the full value of the amount it had previously written off, resulting in a recorded indebtedness of $597,240 owed by HMP to LMM. That amount has not changed since June 1, 2003. The plaintiffs now dispute the accuracy of the recorded amount of the HMP debt.

2. HMP’s Fire Loss Related Debt to LTM

[28] In approximately 1995, HMP secured its own premises, and operated simultaneously out of that premises and LTM’s premises for three years. In 1998 a fire occurred in the HMP occupied area of LTM’s premises causing significant damage to HMP’s tools and stock. LTM completed substantial repair work to remediate the fire damaged equipment.

[29] After the fire HMP operated exclusively from its own premises. HMP and LTM continued to provide services to one another, although not to the same extent as they did when they both operated from LTM’s premises.

[30] In 2002 HMP suffered another fire loss, which resulted in extensive damage to equipment and production moulds located at its own operating site. Throughout the latter part of 2002 and early 2003, LTM supplied goods and services to HMP, valued in excess of $500,000, in an effort to repair or replace the damaged equipment and moulds. LTM invoiced HMP for the goods and services it supplied.

[31] HMP did not challenge its indebtedness to LTM, in that regard, which was recorded in HMP’s financial records in a “vendor balance account” related to LTM, and not in LMM’s “intercompany loan account” with HMP.

[32] HMP’s vendor balance with LTM reflects that as of April 1, 2003, its total trade debt to LTM was $639,840.46, which was fully satisfied as of May 1, 2003. HMP acknowledges the legitimacy of that debt.

[33] HMP’s tenure as a plastic parts manufacturer ended with the 2002 fire, and it eventually evolved into a financial services business. There is no evidence that it had an ongoing active business relationship with LTM after that time.

3. The Nature of the SRED Claims

[34] The plaintiffs seek compensation for SRED related services supplied by Emmanuel to LTM over a number of years.

[35] Pursuant to the terms of the SRED program, which is enabled by federal tax legislation, certain corporations may qualify for specified tax benefits, including tax credits, for expenditures made in the innovation and development of new products and the experimental advancement of production methods. SRED claims are made on an annual basis, with respect to qualifying expenses incurred in a corporation’s respective fiscal year. If the qualifying expenses of a particular research and development project are incurred over a number of years, those expenses must be claimed in separate SRED claims referable to each fiscal year in which the specific portions of those expenditures arose.

[36] The SRED claim process is complex and detailed. The taxpayer pursuing an SRED claim is potentially subject to a fiscal audit regarding the expenditures claimed and a science audit regarding the proposed innovation and risk of failure alleged in the described “research, development and experimentation”.

[37] The SRED claim process is lengthy. The taxpayer must submit the SRED claim with its tax return within 6 months of its fiscal year end or through an amended tax return within 18 months of the end of the fiscal year to which the claim relates.

[38] The CRA must elect whether to accept the claim or conduct a fiscal audit and/or a scientific audit within 270 days of its receipt of an SRED claim. In the event of an audit, the taxpayer is notified and the audit must proceed within 12 months of notification. An official audit response typically issues between 2 to 12 months post-audit. Once the audit results are known, a federal notice of re-assessment is processed and the taxpayer receives a refund cheque, if applicable.

[39] In Ontario, if the SRED claim results in a federal tax refund, a corresponding provincial tax refund will necessarily follow a short time later.

[40] It is not uncommon for a taxpayer to have SRED claims for multiple years at varying stages of the process, outstanding at any given time.

4. LTM’s Introduction to SRED Claims

[41] Small and medium sized corporations, including LTM, became eligible to participate in the SRED program in the early 1990s, and, at that time, were permitted to make retroactive SRED claims dating back several years. LTM’s management team, including Emmanuel, elected to pursue SRED claims but sought out a specialized tax consultant for that purpose.

5. The Tax Marketing Consultants Contract

[42] In February 2003, LTM entered into a written contract with Tax Marketing Consultants (TMC) for SRED related services. TMC’s compensation was defined as a fixed percentage of all monies recovered by LTM arising from an SRED claim related to a specific fiscal year. TMC’s fees were payable upon LTM’s receipt of any SRED related tax refund.

[43] With Larry’s approval, Tom signed the TMC agreement on LTM’s behalf. In order to gauge the utility of TMC’s services, LTM allowed it to process an SRED claim related to a single past fiscal year. Emmanuel worked closely with TMC on this claim.

[44] Ultimately, Emmanuel and Tom were not satisfied with TMC’s performance. They sought and received Larry’s approval to terminate the TMC contract in 1995. Tom states, and I accept, that Larry’s prior authorization was required in order for LTM to enter into and subsequently terminate the TMC contract.

6. The Alleged Formation of the SRED Services Contract with Emmanuel

[45] With the termination of TMC’s contract, Emmanuel advised Larry that he could prepare the source material for further SRED claims made by LTM. Larry permitted him to do so.

[46] Emmanuel says that he and LTM, through Larry, agreed that he would supply LTM with SRED services in exchange for 25 percent of the related tax benefits resulting from each fiscal year’s claim. A written contract was not made and there is nothing else in writing evidencing the alleged agreement.

[47] Emmanuel claims that the oral SRED services contract included two implied terms:

(a) Emmanuel’s entitlement to compensatory payment from LTM was in the nature of a demand obligation. LTM was not obligated to pay him compensation for his supply of SRED services until he made a formal written demand through an invoice. Emmanuel posits that he was implicitly vested with unilateral discretion to defer payment of compensation by withholding demand for several fiscal years or more, as he chose. However, once he made a “demand”, he was entitled to immediate payment of all accrued compensation; and

(b) Emmanuel was entitled to invoice LTM through any corporate designee he chose without prior notice to, or approval by, LTM, regardless of whether the “invoicing” corporation was connected to the supply of SRED services or not.

[48] When Larry authorized him to process LTM’s SRED claims, Emmanuel was still employed by LMM as LTM’s special projects manager. Emmanuel is adamant that his supply of SRED services did not fall within his “special projects” portfolio, and that Larry agreed that LTM would pay him separate compensation for those services.

7. The Scope of Emmanuel’s SRED Services

[49] LTM makes a number of admissions, set out below, with respect to the scope of Emmanuel’s SRED claims work, which began in 1995:

1. Emmanuel Azzopardi (“EA”) was tasked to the exclusion of all others with preparing the Scientific Research and Experimental Development (“SRED”) claims for Laval Tool & Mould Ltd. (“LTM”).

2. EA collaborated with other managers to identify potential candidate projects, and EA made the final decision on which LTM’s jobs would be claimed under the SRED program based on his analysis of the technological uncertainty and cost and how that constituted scientific research and experimentation.

3. EA gathered and analyzed the information required to make the claims from a variety of sources, including family members, employees, customers and documentation.

4. EA directed the compilation of documents and evidence to support the claims for Canada Revenue Agency (“CRA”) audit purposes.

5. EA was solely responsible for preparing the technical write-ups in accordance with the CRA criteria for SRED and identifying related costs incurred in the scientific process.

6. EA articulated, defined, qualified and quantified LTM’s commonplace commercial activities as scientific research and experimental development acceptable to CRA under the SRED program for the purposes of making SRED claims.

7. EA defended the scientific and financial CRA audits resulting in acceptance of the SRED claims, and, or negotiated the acceptance or partial acceptance of SRED claims for LTM and CRA.

[50] Emmanuel estimates that he spent approximately 150 to 250 hours per year compiling the information and engaging in the analysis necessary for LTM’s SRED claims. Once the information and analysis for a particular fiscal year’s SRED claim was compiled, it was provided to LTM’s accountants who prepared the appropriate SRED claim documentation and filed it with CRA.

8. The Results of LTM’s SRED Claims

[51] LTM was advised of the final determination of its SRED related tax benefits for any particular fiscal year’s claim through a notice of reassessment which was typically received approximately two years after that fiscal year’s end.

[52] Emmanuel was advised of the results of LTM’s SRED related federal and provincial reassessments contemporaneous with LTM’s notification of same. Emmanuel confirms that once he received those results, he had all the information he needed to calculate the compensation he says he was entitled to receive for his SRED services related to any given fiscal year.

[53] Emmanuel says that LTM secured approximately $2.6 million in SRED tax credits for the period beginning July 1, 1987 and ending December 30, 2007.

[54] LTM received combined SRED related federal and provincial tax credits for its fiscal years ended June 30, 2000 to June 30, 2007 as follows:

LTM’s Fiscal Year End

Combined Provincial and Federal SRED Related Tax Credits

June 30, 2000

$104,000

June 30, 2001

$300,000

June 30, 2002

$52,000

June 30, 2003

$288,403

June 30, 2004

$177,915

June 30, 2005

$118,120

June 30, 2006

$192,585

June 30, 2007

$52,894

Total

$1,285,917

[55] There is no evidence establishing what, if any, tax benefits LTM received from its SRED claim for its fiscal year ended June 30, 1999.

[56] Similarly, there is no evidence before me that confirms what, if any, tax benefit LTM actually received as a result of its SRED claim for its “6 month” fiscal year ended December 31, 2007 (resulting from LTM’s change from a June 30 fiscal year end to a December 31 fiscal year end), or when LTM and Emmanuel received confirmation of that amount. In certain correspondence, Emmanuel predicted the value of those benefits to be $62,581, but there is nothing to confirm that is what LTM actually received.

[57] Finally, Emmanuel claims compensation for SRED services related to LTM’s fiscal year ended December 31, 2008, and says LTM received tax credits totalling $87,000 related to that year, although there is no evidence confirming that amount was received by LTM.

9. Emmanuel’s Compensation for LTM’s SRED Claims Prior to 2003

[58] Prior to May 2003, Emmanuel did not request nor receive any compensation for SRED services he supplied to LTM from 1995 to 1999. During that time, he prepared ten SRED claims for LTM’s fiscal years ended June 30, 1988 to June 30, 1998, inclusive. There is no evidence that he invoiced LTM for his services or made any effort to request or collect compensation during that time.

[59] Emmanuel was paid by LMM from 1995 until sometime in 1999, but maintains that his salary did not include remuneration for SRED services. He did not receive a salary or draw from LMM or LTM after 1999. Although documentation from LMM indicates that management fees of $30,000 were accrued to Emmanuel on an annual basis after 1999, those sums were not paid to him. He continued to be covered under LMM’s group medical benefits from 1999 to 2004 and again from 2006 to 2008.

10. Emmanuel’s Evidence Regarding His Compensatory Expectations

[60] Emmanuel states that he continually provided SRED claims services to LTM from 1995 to 2010 with the expectation that he would receive payment of 25 percent of the SRED based tax credits enjoyed by LTM. In each of its fiscal years prior to June 30, 2002, he neither rendered an invoice to LTM for his services nor otherwise asserted his entitlement to compensation despite LTM’s continued receipt of substantial tax refunds.

[61] Emmanuel says that he deliberately withheld formal requests for compensation because of family related reasons. He asserts that from 1995 to 2009, LTM experienced chronic cash shortages because Larry continuously used LTM’s cash to subsidize the Pilot House, which always operated at a loss. Emmanuel states that he withheld compensation requests for his SRED services in order to avoid placing additional stress on LTM’s fiscal health, since it was his family’s business. He says that he continued to process LTM’s SRED claims even though he had not been paid for his past services because the claims were time sensitive and he decided to worry about getting paid later.

[62] For reasons which are set out later, I do not accept Emmanuel’s evidence that LTM’s cash position was the reason he did not pursue payment of compensation for SRED services supplied to LTM, either before or after May 2003.

11. The 2003 “R&D” Invoice & Related Transactions

[63] During the 15 years that Emmanuel supplied SRED services to LTM, there is only one instance where consideration was apparently exchanged by LTM for those services. Unfortunately, the circumstances surrounding that transaction are murky and not fully explained. It is clear that Larry authorized the consideration advanced by LTM prior to Emmanuel causing an invoice to be rendered for his services. Emmanuel’s delivery of an invoice did not trigger the consideration from LTM. The details follow.

[64] On May 10, 2003, Emmanuel caused 1560944 Ontario Limited to render an invoice in the amount of $214,000 ($200,000 plus $14,000 HST) to LTM on account of what is described on the face of the invoice as an “R&D fee” because he felt it would be “prudent” to ask for compensation for past SRED claims. The invoice was ultimately “satisfied” through a reduction in the outstanding debt owed by HMP to LTM. In the result, it was HMP, which was owned equally by Emmanuel and Tom, that took the benefit of the SRED related compensation at the time.

[65] 1560994 Ontario Limited had no connection to LTM or to the supply of SRED services at all. It was incorporated 11 days before it invoiced LTM.

[66] The invoice does not specify the period of time to which it relates. Without an explanation or confirmatory evidence, Emmanuel says that the invoice related to SRED claims for LTM’s fiscal years 1987 to 1998. The invoice does not specify the basis for the amount claimed, whether contingency fee or otherwise. Emmanuel concedes that the face amount was not calculated in accordance with 25 percent of the value of LTM’s SRED related tax benefits for those claims. The amount was not arrived at by any identifiable method and Emmanuel cannot explain how it was “calculated”.

[67] He asserts that his actual compensatory entitlement for his SRED services for the period covered by the invoice was more than $400,000 but he “agreed” to bill a percentage of that amount on an “interim basis”. He offers no evidence with respect to the circumstances surrounding the alleged “interim account agreement” including when it was made, with whom it was made, or its terms and whether the forgiveness of $200,000 of HMP’s debt to LTM, as consideration for the supply of services invoiced, was contemplated as part of that agreement.

[68] There is nothing on the face of the invoice that indicates that it is an interim account. No further interim or final accounts were rendered by Emmanuel for services connected with SRED claims for LTM’s 1998 or previous fiscal years.

[69] I do not accept Emmanuel’s contention that the 2003 invoice was meant as an interim account nor his evidence that he caused the invoice to be sent to LTM because he felt it was prudent to do so. The events surrounding the 2003 invoice demonstrate it was not sent as a unilateral demand for payment of SRED related compensation. Instead, the sequence of events leading up to the invoice demonstrate that the invoice was part of a predetermined plan between LTM and Emmanuel to offset the invoiced amount against a portion of HMP’s trade payment debt arising out of LTM’s supply of goods and services to HMP after the 2002 fire loss.

[70] The limited evidence on the circumstances surrounding the invoice disclose the following sequence of events:

• April 17, 2003 – HMP allegedly makes 2 cheques payable to LTM, each in the amount of $84,401.23 as partial payment for the LTM 2002 fire loss related invoices (no evidence if negotiated);

• April 21, 2003 - HMP allegedly makes a cheque payable to LTM in the amount of $200,000 as partial payment for the LTM fire loss related invoices (never negotiated);

• April 22, 2003 – HMP allegedly makes 4 cheques payable to LTM, each in the amount of $50,000 and one cheque in the amount of $53,038 as partial payment of the fire loss related invoices (no evidence cheques negotiated);

• April 29, 2003 - 1560944 Ontario is incorporated;

• April 30,3003 – LTM makes a cheque payable to 1560944 Ontario in the amount of $214,000 for “R&D Consulting Fee:

• May 10, 2003 – 1560944 Ontario renders an invoice for $214,000 to LTM for “R&D Fee” (10 days after the cheque was made)

• Undisclosed time – 1560944 Ontario allegedly agrees not to negotiate LTM cheque and LTM agrees not to negotiate alleged HMP cheque dated April 21, 2003, and HMP’s debt to LTM is notionally reduced by $200,000.

[71] Paula states and I accept that she was instructed by Larry to make a cheque in the amount of $214,000 to 1560994 Ontario. I reject her evidence that she was told to do so after LTM received the R&D invoice rendered by 1560994 Ontario. That invoice did not exist at the time the cheque was made. Neither Paula nor Emmanuel could explain why LTM’s cheque preceded the invoice by 10 days.

[72] There is no clear explanation why the cheque made by LTM and the cheque made by HMP for $200,000 were not negotiated. Paula says that the cheques were offset because LTM had insufficient cash in its Canadian bank account to cover the cheque. Without other confirmatory evidence, I do not accept that explanation. If it is correct, it begs the question why the cheque would have even been made at that time, considering the invoice to which it related hadn’t been issued. Further, if all of the cheques made by HMP to LTM from April 17 to 22, 2003 were negotiated, LTM would have had access to $621,840. Paula did not explain why those proceeds were not available to cover LTM’s cheque to HMP. LMM’s general ledger listings for its fiscal year ended May 31, 2003 evidences that those funds were not diverted to Pilot House.

[73] The limited financial statements that were placed in evidence do not explain the transactions any further.

[74] The April 29, 2003 invoice is not reflected in the operative portion of 1560944 Ontario’s (the invoicing corporation) balance sheet for either its fiscal year ended April 30, 2003 or its fiscal year ended April 30, 2004. In each of those years the corporation’s accounts receivable, revenue and expenses were recorded as “zero”. A note in the adjusting journal entries in the financial statements for 1560944’s fiscal year ended April 30, 2004, reflects an account receivable debit and credit of $214,000 on account of consulting revenue from LTM. A further account receivable in the amount of $1,535,000 was debited and credited as an adjusting entry to record management fee revenue from HMP. There was no evidence with respect to whether that entry related to the invoice and HMP debt off-set transactions, in any manner.

[75] The notes prepared by LTM’s accountant with respect to its unaudited financial statements for its fiscal year ended June 30, 2004 (the entire statement was not produced), indicate that in 2003 LTM was invoiced by 1560944 Ontario Limited for $200,000 for consulting services related to research and development activities and the amount was not originally recorded in LTM’s 2003 statements due to a bookkeeping error. It was noted that the payable amount was offset against accounts receivable owed by HMP, as both corporations were owned by the same related party.

[76] HMP’s 2003 financial statements were not placed in evidence, however, it is clear that HMP is the only entity that received a compensatory benefit from the transactions, in the form of a reduction in the recorded amount of its debt to LTM.

12. LMM’s Reassertion of the HMP Debt to LMM

[77] Paula testifies, and I accept, that sometime in 2003, Emmanuel and Larry had a significant argument arising out of a suggestion by Emmanuel that he receive compensation for SRED claims, although she is uncertain if it was before or after the 2003 R&D invoice. That suggestion did not find favour with Larry who reminded Emmanuel that HMP owed LTM a significant debt as a result of their historical dealings. Shortly after this event, Larry instructed LTM’s accountants to reverse the write off of the HMP debt and the debt was reasserted in LMM’s general ledger listing by an adjusting entry on June 1, 2003, less than one month after the date of the R&D invoice. Once that was done, HMP’s recorded indebtedness was $597,240. LMM incurred an income tax liability as a result of its reassertion of the HMP debt.

[78] The debt allegedly consists of the value of the benefits conferred on HMP by LTM primarily when HMP operated out of LTM’s premises. Emmanuel acknowledges that the intercompany debt account was created by LMM’s accountants to show liabilities owed by HMP to LMM, but says that the historical amounts reflected in that account were inaccurate and intentionally overstated by LTM’s accountant, in order to “appease” Larry.

[79] Emmanuel alleges that many of the components of the alleged HMP debt are invalid. Without further evidence on the point, he alleges that: Larry caused LTM to invoice HMP for the manufacture of certain tools which LTM retained for its own use; Larry caused LTM to bill HMP for unauthorized consulting fees; and the rent charged by LTM for HMP’s use of its premises in the 1990s was an amount that his father simply “made up” after the fact. Emmanuel did not agree with LTM’s calculation of the HMP debt, but he always agreed to allow an amount to be recorded as a debt owed by HMP to LMM in order to “appease” his father.

[80] Tom, as HMP’s other shareholder, agrees that: HMP was historically indebted to LTM; the amount of the debt owed was recorded on LMM’s financial statements; he received copies of those statements on an annual basis; and he never contested the amount of the debt attributed to HMP in LMM’s financial statements. Unlike Emmanuel, he did not testify that the HMP debt was inflated or the unilateral invalid creation of his father or LMM’s accountants.

[81] Paula states she attempted to verify the components of the alleged HMP debt in 2010. She could not verify all components of the alleged debt but did not specify the amounts that she was able to verify.

13. No Compensation Requests from May 2003 – June 2011

[82] LTM continued to receive significant tax credits as a result of its SRED claims advanced for its fiscal years ending June 30, 2000 to June 30, 2007, inclusive, which were set out previously.

[83] Notices of reassessment specifying the tax credits and corresponding refunds were periodically received by LTM up to June 23, 2009 when it received confirmation of the federal and provincial tax credit referable to its June 30, 2007 fiscal year end. LTM provided Emmanuel with its notices of reassessment on receipt and advised him when it received the corresponding refunds.

[84] Based on Emmanuel’s evidence and limited number of LTM’s federal notices of reassessment that were filed as exhibits, I find that he was aware of the federal tax credits LTM received as a result of its SRED claims, as follows:

Fiscal Year End

Date Emmanuel Received Notice of LTM’s SRED related Tax Credits

June 30, 2003

September 1, 2005 (Exhibit 2)

June 30, 2004

February 28, 2006 (Exhibit 26)

Advised refund received June 30, 2006 (Exhibit 3)

June 30, 2005

March 30, 2007 (Exhibit4)

June 30, 2006

March 3, 2008 (Exhibit 6)

[85] Emmanuel acknowledges that he was aware of the LTM’s tax credits referable to its SRED claim for fiscal year ended June 30, 2007 by January 22, 2010.

[86] LTM’s SRED claims were submitted and processed chronologically. Accordingly, the amounts of the tax credits arising from LTM’s SRED claims in its fiscal years ending June 30, 2000 to June 30, 2002 were necessarily disclosed to LTM and Emmanuel prior to September 1, 2005, which is the date the tax credits for fiscal year ended June 30, 2003 were known.

[87] Traditionally, the annual R&D related provincial tax credits were disclosed shortly after the federal credits were known.

[88] Emmanuel was aware of the provincial tax credit for LTM’s fiscal year ended June 30, 2006 on April 3, 2008 (Exhibit 8). Since LTM’s provincial tax credit claims were submitted and processed chronologically, the amounts of the provincial tax credits arising from LTM’s R&D claims relating its fiscal years ending June 30, 2000 to June 30, 2005 were necessarily disclosed to LTM and Emmanuel prior to April 3, 2008.

[89] Despite his ongoing receipt of the information he required to assert a claim for compensation with respect to his SERD services for that year, Emmanuel did not invoice LTM or otherwise formerly request payment on account of his services after May 10, 2003 until June 24, 2011, when he caused the plaintiff corporation to render an invoice in in the amount of $419,194.30 for SRED services allegedly supplied from July 1, 1999 to late April 2010, when he stopped working on LTM’s fiscal year ended December 31, 2008 claim.

[90] Again, he suggests that he continually withheld formal compensatory requests because LTM had insufficient cash to pay him apparently at any time from 2003 to 2009, as a result of Larry’s continuous use of LTM’s cash to support Pilot House.

[91] There is no evidence LTM ever requested Emmanuel to withhold compensatory requests because of LTM’s cash position, or that Emmanuel advised LTM that he was withholding requests for compensation because of LTM’s cash position.

[92] Emmanuel states that after 2003 he was never concerned that he would not receive compensation for SRED services he supplied from 1999 to 2010 because:

a) He was dealing with family;

b) He believed that he would eventually become an “owner” of LTM/LMM; and

c) His father “promised” to pay him.

[93] According to Paula’s evidence, which I accept, Emmanuel raised the issue of compensation for SRED services periodically between 2003 and 2009. On each occasion that Emmanuel suggested he be remunerated for past SRED services Larry, would become enraged and tell Emmanuel, in effect, that he wouldn’t authorize SRED claim compensation because HMP owed LMM a substantial debt. Larry’s stated position on behalf of LTM was consistent and unequivocal each time the issue was raised.

[94] In Paula’s view Larry “knew” there was an obligation to compensate Hercules Moulded Products for SRED services but Larry also believed that HMP owed Laval money. She did not state the basis for her knowledge and belief with respect to these assertions and, as a result, I place very little weight on her evidence in that regard.

14. Emmanuel’s Unwillingness to Request Compensation When LTM Had Cash Available

[95] Prior to Larry’s death Emmanuel was unwilling to invoice LTM for SRED claim work, even when he received specific confirmation that LTM had excess cash on hand. In 2008 LTM received a $146,000 federal tax refund secondary to the SRED claim for LTM’s fiscal year ended June 30, 2006. Emmanuel confirms that Paula advised him about the refund and that their father was in a good mood. Emmanuel concedes at that time, LTM had available cash to pay what he says he was entitled to as compensation for his claims related services referable to that refund. However, for reasons he could not articulate, he chose not to pursue compensation at the time.

15. LTM’s Untimely Fiscal Year Ended December 31, 2007 SRED Claim

[96] In 2007 LTM changed its fiscal year end from June 30 to December 31. As a result, it had a “short” taxation year from July 1, 2007 to December 31, 2007, for which an SRED claim was prepared, but submitted to the CRA on an untimely basis by LTM’s accountants. Initially, the claim was denied in its entirety and efforts to appeal the denial were unsuccessful. In February 2010, Emmanuel, on behalf of LTM, signed a letter prepared by LTM’s accountants requesting that the claim be considered through the exercise of ministerial discretion. On September 14, 2010, LTM received notice that the claim would be processed, without a scientific audit, based on the exercise of ministerial discretion. The actual tax credits arising from that claim and the timing of notice of those credits were not disclosed in evidence.

16. Larry’s Untimely Passing

[97] Larry passed away unexpectedly on November 22, 2009. Al Gatti and Diane Sauve were named the estate trustees for Larry’s estate. Emmanuel believed that Mr. Gatti, in his role as an estate trustee, had complete control over LTM and LMM at that time. By January 2010, Mr. Gatti and Ms. Sauve constituted LTM’s Board of Directors. Emmanuel’s younger brother, Jonathan, was appointed president of LTM in December 2009.

17. Emmanuel’s Attempts to “Formalize” His R&D Relationship with LTM

[98] After his father died Emmanuel believed it was appropriate to “formalize” his “R&D relationship” with LTM. He shifted from the passive pattern of inaction that characterized his approach to SRED compensation while Larry was alive, to an active and increasingly aggressive posture with his siblings, Larry’s estate trustees and eventually LTM’s CEO

[99] In January 2010, he requested information from Tom, the CRA and LTM’s accountants about the specific amounts of LTM’s SRED related tax benefits and refunds dating back to the inception of LTM’s SRED claims submissions. He previously received this information contemporaneous to LTM’s receipt of its respective notices of reassessment generated by each fiscal year’s SRED claims and he did not explain why he did not have that information available to him in 2010. He says he gathered the historical SRED tax benefit information to illustrate the “value” of SRED claims to his siblings with a view to proposing an SRED services compensation system for LTM’s future SRED claims.

18. The HMP Letterhead Correspondence

[100] In early 2010, Emmanuel wrote a two-page letter to his siblings under HMP’s letterhead in which he: outlined a proposal for future SRED compensation (the terms of which mirror those of the contract he now alleges he made with LTM in 1995); requested that his siblings approve “some” compensation for his past SRED services; and acknowledged that his father refused to agree to his previous suggestions that he be remunerated for past SRED claims, and specifically stated:

On a separate issue, in the past, I suggested that I be remunerated for past Claims. This was agreed and accepted in principle by everyone except Dad.

With a sense of family obligation and acknowledging the debt of gratitude that I owed him, I let this go. I want to re-visit this with his passing.

[101] Emmanuel was uncertain if he actually sent this letter but Paula recalled receiving it in early 2010 and I accept it was sent. The letter is undated but contextually it appears it was sent prior to an April 19, 2010 follow-up e-mail that Emmanuel sent to his siblings.

[102] Over an objection by the plaintiffs, based on an assertion of settlement privilege, the letter was admitted into evidence. The plaintiffs did not establish that the letter was an attempt to resolve a litigious dispute. According to Emmanuel, the purpose of the letter was to educate his family (including two siblings who were not involved with LTM) about the value of SRED claims and his role in LTM’s past SRED claims, as well as to generate discussion about potential past and future compensation.

[103] Further, during his examination-in-chief, Emmanuel freely testified to the specifics of past and future compensatory schemes he proposed to his siblings during the course of a family meeting in early 2010. The terms of those proposals were the same as the proposals in the HMP letterhead correspondence. To the extent that settlement privilege attached to the information in the HMP letter, Emmanuel waived that privilege by deliberately disclosing that information during the course of his evidence.

[104] There is no evidence that Emmanuel’s siblings responded to the HMP letterhead correspondence or Emmanuel’s proposal for compensation. As a result, Emmanuel forwarded a follow-up e-mail to his siblings on April 19, 2010, in which among other

things, he stated that he had “patiently waited for a meeting for over one month about the R&D proposal that [he] put forward weeks before that”. He also wrote:

I have continued [without] an agreement to work on the 2008 and 2009 R&D claims. [A]nd represent us on the 2007 claim in good faith

He advised his siblings that until the issue of his compensation was resolved, he would stop all R&D submissions.

[105] That e-mail led to a meeting between Emmanuel and his siblings on April 22, 2010 during which Emmanuel again raised the issue of SRED services compensation. For “discussion purposes”, he proposed that he receive 25 percent of LTM’s tax benefit for a limited number of past SRED claims and all future claims, and requested a fixed payment of a specified amount to be paid over time, plus benefits, as compensation for the balance of the past SRED claims, dating back to 1999.

[106] Emmanuel says that during the meeting his siblings did not communicate a position on the terms of the proposal but he understood that all of his siblings agreed that he was entitled to some amount as compensation for past SRED services, with only the question of quantum remaining.

[107] Tom confirms that Emmanuel proposed SRED compensation during a family meeting in the spring of 2010, but that he did not explain why he did not bring his claim forward earlier. He says that after Emmanuel presented his proposal, “the family” made a decision not to offer him compensation for his past SRED claim services, and that their decision was communicated to Emmanuel during the meeting. Tom recalls that Emmanuel stated that he would not complete LTM’s 2008 SRED claim, which had to be filed by June 30, 2010, until he got a “handle on” whether he was going to be paid for past SRED claims. After Emmanuel left the meeting, the family decided to retain an independent consultant to prepare LTM’s 2008 SRED claim and, eventually, Al Gordon was retained for that purpose. Mr. Gordon completed the 2008 SRED claim prior to the filing deadline and did not use Emmanuel’s work product to do so.

[108] Emmanuel’s siblings did not engage in any SRED compensation negotiations or discussions with Emmanuel after this meeting nor did they make any offers to him in that regard.

[109] Emmanuel concedes he did not release his work product with respect to LTM’s 2008 SRED claim, because he says did not have an agreement with LTM for SRED compensation for its 2008 fiscal year.

[110] With his siblings unwilling to “negotiate”, Emmanuel brought the issue of SRED compensation to Mr. Gatti, in his capacity as one of Larry’s estate trustees, in May 2010. Mr. Gatti indicated he would look into the matter and advised Emmanuel to render an invoice if he felt he was owed compensation. Emmanuel did not do so at the time.

[111] Emmanuel next forwarded an email to Mr. Gatti and Ms. Sauve asserting that either he or HMP was entitled to compensation in the amount of $762,420.58 for SRED related services supplied for LTM’s fiscal years 1987 to 2008 together with a claim for 10 weeks of unpaid wages owing since 1999. Mr. Gatti solicited a detailed response to Emmanuel’s claim from some of Emmanuel’s siblings, which resulted in correspondence from them setting out a number of reasons why LTM would not entertain a payment of compensation to Emmanuel for past SRED claims, and unequivocally stated “We are offering nothing to Manny in his claim based on these facts.” That response was sent to Emmanuel by Mr. Gatti in July 2010. Emmanuel promptly responded bluntly expressing his disagreement with his siblings’ reasons, as stated.

[112] Emmanuel did nothing further until September 2010, when he wrote to Mr. Gatti to advise that he had not given up on his “claim” for the “outstanding” R&D “debt owed”, by LTM and, in Emmanuel’s view, Larry’s estate as well.

[113] In October 2010 he attended a scheduled meeting between LTM’s management team and its accountants, and was removed at the direction of Mr. Gatti. Next Emmanuel unsuccessfully attempted to reconstitute LTM’s Board of Directors. Then he retained counsel to explore initiating a passing of accounts to resolve issues in the administration of Larry’s estate.

[114] On June 24, 2011, Emmanuel caused 1318847 Ontario to render an invoice to LTM in the amount of $419,194.30, said to be 25 percent of the total tax benefits received by LTM as a result of SRED services supplied by Emmanuel for claims related to its fiscal years ended June 30, 1999 to December 31, 2008, excepting fiscal year ended June 30, 2007. 1318847 Ontario never supplied SRED services to LTM and it did not hold out that it was providing SRED services to LTM at any time before the invoice was sent. The invoice acted as 1318847 Ontario’s introduction to LTM’s SRED claims. Emmanuel states that he invoiced through 1318847 Ontario, which was incorporated in 1998, in order to secure a personal income tax advantage.

[115] LTM’s CEO, David Butler, wrote to Emmanuel in early August 2011 and indicated that LTM’s records reflected that it did not have liability to 1318847 Ontario, and he advised Emmanuel that LTM would take no further action until Emmanuel’s claim was substantiated through documentation. In his reply, Emmanuel provided a general explanation of why he felt he was entitled to compensation and, for the first time in his post November 2009 dealings with LTM, referenced the 2003 invoice. He cautioned Mr. Butler that the matter would be “vigorously pursued”.

[116] At the end of August 2011 Mr Butler wrote and asked for a bill detailing what Emmanuel felt he was owed. He wrote to Emmanuel again in September 2011 and indicated that he could not locate a contract, purchase order or any other written corroboration of the SRED compensation agreement with LTM that Emmanuel alleged. He also raised an issue of timeliness with respect to Emmanuel’s claim. He advised that he did not anticipate payment of the invoice by LTM unless it was directed to do so by the estate trustees. There is no evidence of any further communication between Mr. Butler and Emmanuel.

[117] Emmanuel then wrote to the estate trustees indicating he had received two letters from LTM’s CEO denying his invoice. Citing the 2003 invoice and the principle of “quantum meruit” he indicated he was considering his options and requested that the estate trustees pay the invoice to “avoid a costly legal battle.” There is no evidence that the trustees responded to that correspondence.

[118] Emmanuel wrote a subsequent letter to the estate trustees in the fall of 2011, again requesting payment for SRED services. He stated that he tried to deal with LTM’s CEO without success, because “he would not listen”. He also stated “Before this comes to a lengthy and costly legal battle that we are confident we will be successful, I am asking you to pay our invoice.”

[119] There is no evidence that the trustees responded to that correspondence. However, Mr. Gatti sent an email to Emmanuel on December 9, 2011 stating “Your request for payment was reconsidered at a meeting of the Board of Directors of Laval on December 8, 2011 and denied, largely on the basis of the reasons previously delivered to you.” There is no evidence that Emmanuel was advised that his compensation request would be brought up at a meeting of Laval’s Board of Directors, prior to this email.

[120] Nothing further appears to have happened until 1318847 Ontario commenced action CV-12-18047 on June 21, 2012. Emmanuel’s action in his personal capacity was commenced one year later.

19. Assessment of Emmanuel’s Evidence

[121] Overall, I view Emmanuel’s evidence disfavourably. I found aspects of it to be unreliable and other aspects of it to be incredible. For example:

• He testifies that he was never concerned about being paid for SRED services because his father promised he would be paid. However, in the HMP letterhead correspondence he wrote in 2010 he acknowledged that his father did not agree with or accept his suggestion that he receive remuneration for past SRED claims.

• He testifies that he never invoiced LTM for his SRED services because he was concerned with LTM’s cash position resulting from his father’s diversion of its funds to the Pilot House. The documentary evidence demonstrates that from June 1, 2005 to May 31, 2008 a total of approximately $5,200 was transferred from LTM to Pilot House. Credibly, that cannot be the reason he did not reason he refrained from seeking compensation during those years. Further, when presented with an opportunity to request compensation in 2008, when cash flow was not an issue, he did not do so and is unable to explain why.

• He testifies that he always expected to receive compensation for his SRED services but in the HMP letterhead correspondence he advised his siblings that when his father would not agree to his “suggestion” of remuneration he decided to “let it go” out of a sense of family obligation and a debt of gratitude.

• His evidence that his siblings agreed that he was entitled to compensation for past SRED claims during the April 2010 meeting is contradicted by Tom’s evidence, which I accept.

[122] Further, when attempting to prove the nature of the “2003 invoice” transaction, Emmanuel produced a document that he identified as an excerpt from HMP’s financial records concerning its trade payable account with LTM in 2003. Based on Emmanuel’s representation, the document was admitted, on consent, to evidence that as of April 17, 2003, HMP’s indebtedness to LTM was $811,114.25 (according to HMP’s records) and that HMP reduced the balance of this payable account by $200,000 on April 21, 2013 as an offset against the outstanding R&D invoice issued by 1510944 Ontario. However, during cross-examination, Emmanuel ultimately testified that the document was actually an excerpt from HMP’s unreconciled cheque register from April 2003, and simply showed that a cheque for $200,000 was made by HMP in favour of LTM on April 22, 2003, but not necessarily negotiated.

[123] This development left me with serious concerns about the reliability of Emmanuel’s evidence. This document, arising from records controlled by Emmanuel, was generated at his request during the course of the trial. I do not find that the document was intentionally misidentified, but it was produced by Emmanuel with a request that counsel and the court accept his representation with respect to its nature and content when neither was, in fact, what he warranted it to be. In my view, that suggests a disconcerting indifference to the accuracy of the evidence he tendered in support of the actions.

[124] Emmanuel was also needlessly evasive during his cross-examination and at times seemed intent on engaging in semantic debates with counsel, as opposed to offering candid accounts of events as he recalled them. For example, he was asked several questions about a website created at his request for “HMP International Inc.”, which is neither a valid corporation nor a registered business name. It is, according to Emmanuel, a pseudonym for all the companies he owns.

[125] The website sets out a chronology of important milestones that clearly reflects HMP’s corporate history. Although he admitted that every other entry in the chronology related to HMP, he refused to agree that one entry concerning the supply of SRED services in 1995 related to HMP, and insisted that single entry related to work he performed in his personal capacity and invoiced through a numbered company that he owned, which somehow fell under the moniker of HMP International. Ultimately nothing turns on the interpretation of the website content, but his response to the questions about it demonstrated his willingness to provide contextually absurd answers in order to avoid making perceived adverse admissions.

[126] Overall, I was left with the impression that Emmanuel was attempting to advocate his litigation positions rather than attempting to provide an accurate account of relevant events, throughout his evidence and in particular his cross-examination.

[127] For the foregoing reasons, I do not place significant weight or reliance on Emmanuel’s testimony.

20. Additional Evidentiary Issues

[128] Prior to analyzing the legal issues in dispute, I will address two additional evidentiary issues:

(a) My findings regarding Emmanuel’s suggestion that he withheld asserting his compensatory entitlement for SRED services for years because of LTM’s cash position; and

(b) My findings with respect to the inferences arising from the 2003 R&D invoice and surrounding transactions.

(a) LTM’s Cash Position As a Reason Not to Pursue SRED Compensation

[129] I do not accept Emmanuel’s explanation that he did not render invoices to LTM for SRED compensation between May 11, 2003 and November 2009 because LTM’s cash position was always insufficient to satisfy any compensatory claim he may have asserted during that time as a result of Larry’s diversion of funds to Pilot House.

[130] Emmanuel did not state the source of his belief during the relevant time period nor did he establish that his belief was accurate. There is no evidence, through financial statements or otherwise, establishing LTM’s annual revenue and net income during the relevant period. Without that evidence, I am unable to find that LTM was left with insufficient cash to pay the amounts of compensation that Emmanuel says he was otherwise entitled to.

[131] Emmanuel relies heavily on a series of LMM’s general ledger listings as evidence that the intercompany debt owed by Pilot House to LMM increased substantially from May 31, 2001 to May 31, 2008, while disputing the accuracy of other amounts set out in that documentation, including HMP’s debt to LMM and the account of his personal loan from LMM.

[132] The general ledger listings indicate that while the debt owed by Pilot House to LMM grew from $494,615 on May 31, 2001 to $1,327,316.96 on May 31, 2008, substantial amounts of cash were not injected into the Pilot House on an annual basis, with the exception of fiscal years ended June 30, 2004 and 2005, which each had increases in excess of $370,000. The remaining general listings demonstrate negligible to modest annual increases in Pilot House’s recorded debt, as follows:

Fiscal Year Ended

Increase in Recorded Intercompany Debt Owed by Pilot House to LMM

May 31, 2001

$13,500

May 31, 2002

$37,737

May 31, 2003

$31,211

May 31, 2006

$802

May 31, 2007

$4,000 (approximately)

May 31, 2008

$446

[133] Emmanuel’s stated reason for not pursuing payment of SRED compensation on a reasonably timed basis does not credibly explain why he did not actively seek some remuneration between June 1, 2005 and May 31, 2008.

[134] Further, the balance of the evidence does not confirm that the reason Emmanuel did not pursue compensation on a reasonably timely basis was LTM’s cash:

a. Emmanuel never advised anyone associated with LTM that he was withholding compensatory requests because of LTM’s cash position. LTM never requested that he refrain from seeking compensation because of its cash position.

b. Emmanuel did not articulate that he had consistently deferred requests for compensation in the past because of LTM’s cash position when he: made his compensatory proposal to his siblings in 2010; asserted his compensatory claim to the estate trustees in 2010; or corresponded with Mr. Butler in 2011.

c. Emmanuel did not seek compensation when LTM’s positive cash balance was confirmed by Paula in 2008.

d. Emmanuel suggested to his father that he receive remuneration for past SRED claims from time to time prior to November 2009, apparently despite his stated belief that LTM never had sufficient cash available to pay him compensation.

[135] Paula indicated that LTM’s cash was also being diverted to an entity known as Azzo Developments, which held land assets. The recorded debt owed by Azzo to LMM increased significantly from May 31, 2001 to May 31, 2008 but the reasons for that increase are not explained in the evidence. The annual general ledger listings for the Azzo debt reflect various line item entries that were not explained in Paula’s evidence, many of which are said to relate to draws by, and loan payments to, Val Azzopardi.

[136] I do not find that the amounts in the Azzo Developments loan account evidence Larry’s ongoing diversion of LTM’s funds. In any event, Emmanuel does not suggest that the Azzo debt accounted for his failure to formally pursue compensation from LTM.

[137] After considering the LMM general ledger listings and all of the circumstances of these proceedings, I find that LTM’s alleged cash position does not account for Emmanuel’s failure to pursue compensation on a timely basis.

(b) Inferences from the 2003 Invoice and Related Transactions

[138] The parties submit that certain inferences ought to be drawn from the 2003 invoice and related transactions.

[139] The plaintiffs suggest that the circumstances surrounding the 2003 invoice evidence a past practice from which the terms of the agreement between Emmanuel and LTM can be inferred. Specifically that: LTM recognized an obligation to pay compensation for Emmanuel’s supply of SRED services; LTM recognized that Emmanuel had the right to invoice through a numbered company that was otherwise not connected to the supply of those services; and LTM’s obligation to pay SRED related compensation was in the nature of a demand obligation.

[140] The defendant suggests that the 2003 invoice and surrounding circumstances evidence that any consideration to be exchanged for SRED services was to be in the nature of an offset of HMP’s outstanding indebtedness to LTM or LMM.

[141] All of the circumstances surrounding the 2003 invoice are not evidenced, in part, because Larry is not available to provide his insight into the 2003 invoice and the transactions surrounding it. Even with the evidence of Emmanuel and Paula, there is no explanation why the cheque to 1560944 Ontario was made several days before it rendered an invoice to LTM.

[142] There is also evidence that Emmanuel sent copies of LTM’s invoices to HMP for its work related to the 2002 fire loss remediation to an insurance adjuster, but no other evidence was adduced with respect to whether HMP received indemnity from an insurer as a result of the fire loss or subsequent remediation efforts, and if so, whether there is any interplay between the payment of insurance proceeds and LTM’s failure to negotiate the April 22, 2003 cheque. The potential for indemnification by an insurer simply illustrates that there were some issues raised but not explained by the evidence, in relation to the circumstances surrounding the 2003 invoice. It does not influence my determination of the issues in these proceedings.

[143] While Emmanuel places strong precedential value on this transaction in the context of these proceedings he did not raise the circumstances surrounding the 2003 invoice with his siblings or the estate trustees in 2010, when he made his compensatory requests and demands. Indeed, when he asserted an SRED compensation claim dating back to LTM’s 1987 fiscal year, he did not credit LTM with, or even reference, the $200,000 consideration enjoyed by HMP in 2003.

[144] In 2011, he raised the precedential value of the 2003 invoice transactions as a central argument in support of his compensatory demands. He did not explain why he did not reference that much sooner and more often.

[145] In the absence of evidence that similar transactions occurred between the parties before or after the 2003 invoice related events, I do not find that the parties’ dealings on that one occasion amount to “a course of past dealings” sufficient to draw the inferences that the plaintiffs request. The evidentiary value of the 2003 invoice and its surrounding circumstances, as known, must be determined in the context of the balance of the evidence.

[146] The 2003 invoice is not consistent with the plaintiffs’ assertion of a “percentage of SRED tax benefits” compensatory agreement. It does not evidence that any SRED liability that LTM had was in the nature of a demand obligation, as consideration was ostensibly advanced prior to formal demand being made in the 2003 transaction. Emmanuel did not generate the 2003 invoice with the intention of making a demand.

[147] Clearly, the transactions that preceded the invoice were predetermined and coordinated. Larry authorized the $200,000 cheque to the newly incorporated payee ten days before there was a request, in writing, for an R&D fee.

[148] Based on the evidence regarding LTM’s operating procedure, I draw the inference that Larry approved of the series of transactions that preceded the invoice before they were implemented. In the context of the evidence that establishes that Emmanuel did not formally assert his SRED compensation claims when Larry refused his suggestions for SRED remuneration, the circumstances surrounding the 2003 invoice confirm that the parties consistently contemplated that payment of SRED remuneration was contingent on Larry’s prior approval.

ISSUES

[149] The issues between the parties are as follows:

1. Did LTM contract with either plaintiff for the supply of SRED claim services?

2. Did Tom have ostensible authority to bind LTM to a contract for the supply of SRED claim services? If so, did he contract with either plaintiff?

3. If a contract existed between LTM and either plaintiff, what were its terms?

4. Can the corporate plaintiff advance an unjust enrichment claim for services supplied by Emmanuel in his personal capacity?

5. Is either plaintiff entitled to restitutionary compensation pursuant to the principles of quantum meruit and unjust enrichment?

6. Are the plaintiffs’ claims statute barred by operation of the Limitations Act, 2002?

7. Is the defendant, through its words or conduct, estopped from relying on the expiration of the otherwise applicable limitation periods in the defence of the claims against it?

8. What remedial directions should be given?

ANALYSIS

1. Did LTM contract with either plaintiff for the supply of SRED claim services?

[150] For the following reasons I do not find that there was a contract between LTM and either plaintiff for the supply of SRED services.

(a) No SRED Contract Between LTM and 1318847 Ontario

[151] 1318847 Ontario alleges that in 1999 it contracted to supply LTM SRED services in exchange for a fixed percentage of its SRED related tax benefits. There is no evidence to support that allegation. The only connection between 1318847 Ontario and the subject matter of these proceedings is Emmanuel’s decision to render an invoice through that corporation for personal income tax purposes.

[152] Further, according to Emmanuel, the SRED contract with LTM was made in 1995, which is three years prior to 1318847 Ontario’s date of incorporation.

[153] On the evidence, the contractual claim advanced by 1318847 Ontario fails.

(b) No SRED Contract Between LTM and Emmanuel

[154] In his statement of claim Emmanuel does not expressly allege that he entered into an SRED services contract with LTM, but LTM denies the existence of such a contract in its statement of defence.

[155] I accept that in 1995 Larry authorized Emmanuel to prepare material for use in LTM’s SRED claims. However, for the following reasons, I am not satisfied that Emmanuel has demonstrated, on a balance of probabilities, that Larry agreed that LTM would pay him compensation in an amount equal to 25 percent of the tax benefits it realized through its SRED claims. Instead, I find that the parties contemplated that Emmanuel’s anticipated SRED related services formed part of his portfolio as LTM’s special projects manager.

[156] The “percentage based” compensatory agreement, as alleged, was not reduced to writing and there is no other documentation evidencing its existence.

[157] The balance of the evidence does not persuade me that that there was an oral agreement between Emmanuel and LTM for the supply of SRED services, rather it contradicts Emmanuel’s evidence that a contract existed.

[158] Tom was present when Larry authorized Emmanuel to develop LTM’s SRED claims in 1995. He attests that Emmanuel requested percentage based compensation but he does not state that Larry agreed. Instead, his evidence suggests that Emmanuel’s compensation as LTM’s special projects manager included compensation for SRED claims services. Neither Tom nor Paula, both of whom served as LTM’s controller during the 10-year period in dispute, indicate they were aware of an SRED services contract between Emmanuel and LTM.

[159] There is no evidence that Emmanuel ever demanded, or LTM ever paid, compensation based on 25 percent of LTM’s SRED related tax benefits prior to Emmanuel’s demand to Mr. Gatti in his e-mail in May 2010.

[160] The amount of the “R&D Fee” invoiced in 2003 was not calculated in accordance with the terms of the contract Emmanuel now alleges. Nothing about the invoice evidences Emmanuel’s entitlement to percentage based compensation.

[161] Emmanuel’s initial conduct after Larry passed away are not consistent with the existence of the contract alleged.

[162] With his father’s passing, Emmanuel quickly brought the issue of SRED compensation to his siblings. I infer that had there been a contract between LTM and Emmanuel for the provision of SRED services, he would have advised his siblings about it when he first raised the issue of SRED compensation. He did not.

[163] In addition, there is no evidence, including Emmanuel’s testimony, that his proposals and requests to his siblings for SRED compensation in early 2010 were an attempt to ratify or affirm an existing contract for SRED compensation. By proposing a plan for percentage based SRED compensation to his siblings in 2010, Emmanuel was attempting to enter into a contract with LTM on terms identical to those of the contract he alleges he made with LTM in 1995. Had the alleged contract been made between LTM and Emmanuel in 1995, it would have been unnecessary for him to “propose” the compensatory scheme that he did in 2010 because it would already have been in place.

[164] Emmanuel acknowledged that he did not have an agreement with LTM for SRED services compensation in his e-mail to his siblings dated April 19, 2010. There, Emmanuel states that he has “continued without an agreement to work on the 2008 and 2009 SRED claims, and to represent LTM with respect to the issues relating the late filing of the 2007 SRED claim”. This statement is not consistent with his contention that he supplied SRED services to LTM continuously from 1995 to 2010 under the terms of a contract made in 1995.

[165] The only evidence that LTM entered into an SRED services contract with Emmanuel in 1995 on the terms he suggests, or at all, comes from Emmanuel, and for the reasons stated previously, I give that evidence very little weight.

[166] After considering and weighing all the evidence, I find the plaintiffs have failed to prove on a balance of probabilities that the contract they allege was made.

2. Did Tom have ostensible authority to bind LTM to a contract for the supply of SRED claim services? If so, did he contract with either plaintiff?

[167] Emmanuel asserts that Tom had the ostensible authority to contract with him on behalf of LTM for the supply of SRED services because Tom previously executed the TMC contract on behalf of LTM. Emmanuel submits that through his words or conduct, Tom bound LTM to pay him 25 percent of the tax benefits it obtained from its SRED claims, regardless of whether Larry approved of that term.

[168] I find that Tom did not have actual authority to bind LTM to a contract for the supply of SRED services without Larry’s approval and Emmanuel was aware of the limits of Tom’s actual authority at all times. Tom signed the TMC agreement with Larry’s prior approval. Emmanuel was a member of the LTM management team when the TMC contract was executed. He was directly involved in the events leading to LTM’s retention of TMC. As a result, he knew the limits of Tom’s actual authority when the TMC contract was executed; he knew that Tom was required to secure Larry’s prior approval to make and terminate the TMC contract; and he knew that he and Tom had to obtain Larry’s approval before Emmanuel could develop LTM’s SRED claims, after the TMC contract was terminated.

[169] Because Emmanuel was aware of the limits of Tom’s actual authority, he cannot rely on Tom’s ostensible authority to bind LTM to a contract for the supply of SRED services: see Fridman, Canadian Agency Law, 2nd ed., at p. 83.

3. If a contract existed between LTM and either plaintiff, what were its terms?

[170] A contract did not exist.

4. Can the corporate plaintiff advance an unjust enrichment claim for services supplied by Emmanuel in his personal capacity?

[171] Prior to considering the merits of the plaintiffs’ quantum meruit and unjust enrichment claims, I must determine whether 1318847 Ontario can assert unjust enrichment claims at all in the circumstances of these proceedings.

[172] 1318847 did not supply SRED services to LTM at any time; it did not confer any SRED related benefit to LTM at any time; and Emmanuel did not supply SRED services to LTM on behalf of 1318847 Ontario at any time.

[173] Nonetheless, the plaintiffs argue that it is appropriate to allow 1318847 Ontario to advance an unjust enrichment claim founded in the services Emmanuel supplied in his personal capacity because he owns and solely controls that corporation. They say he is the corporate plaintiff’s “alter ego”. They seek to wrap a corporate viel around the services Emmanuel personally supplied for the purpose of asserting a compensatory claim founded in those services.

[174] This rather unusual stratagem appears to be designed to validate the invoice rendered by 1318847 Ontario in June 2011 and to gain a stronger footing to answer the defendant’s claim that the actions are statute barred by operation of the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B., (“Act”) because 1318847 Ontario’s action was commenced one year before Emmanuel’s action.

[175] The plaintiffs rely on Juddav Designs Inc. v. Cosgriffe, 2012 ONSC 6493, 23 C.L.R. (4th) 140, for the proposition that where there is no contract between a plaintiff corporation and a defendant, an action based on unjust enrichment in respect of the services provided by the corporation’s “alter ego” may, nonetheless, succeed.

[176] The circumstances in these proceedings differ markedly from those in Juddav. In that case, the defendants sought an order in the nature of an appeal opposing the confirmation of a Master’s report resulting from a trial heard pursuant to the Construction Lien Act,

R.S.O. 1990, c. C.30. The court described the proceedings before the Master at paras. 5-6 as follows:

Judy Davies is the sole director of the plaintiff company. As a threshold issue, the Master considered whether the defendants had contracted with the plaintiff company or with Judy Davies carrying on business as JD Design.

As the plaintiff Juddav was not a named contracting party with the defendants, the Master held it was not entitled to collect monies owing to JD Design under the law of contract. She then considered whether the plaintiff could collect monies from the defendants based on principles of quantum meruit or unjust enrichment and found that the principle of unjust enrichment applied, noting that the parties agreed about the existence of a contract but disagreed as to the correct characterization of the contracting parties and there was no dispute that the services and materials claimed by the plaintiff were supplied. In doing so, she reviewed the relevant case law and statutory scheme and held that the remedy of unjust enrichment is available in actions brought under the [Construction Lien] Act. Moreover, she found that, in the circumstances of the case, the granting of an equitable remedy was just and fit.

[177] The defendants argued the Master ought to have dismissed the claim upon concluding that there was no contract between them and the corporate plaintiff. They also argued that the Master exceed her jurisdiction under the Construction Lien Act and erred in law by awarding a remedy for unjust enrichment.

[178] The court upheld the Master’s decision and found that on the “unique factual circumstances of [that] case” the Master properly considered the corporate plaintiff’s claim for unjust enrichment in order to “adjust the rights and liabilities of the parties” as contemplated by s. 51 of the Construction Lien Act; exercised her discretion appropriately under the Construction Lien Act; and issued an award consistent with the powers prescribed to her.

[179] The circumstances of this case are distinguishable from those in Juddav for the following reasons.

[180] In these proceedings the parties do not agree that there was a contract for the provision of services with the corporate plaintiff’s “alter ego” and I have found that the plaintiffs have failed to prove the contract alleged.

[181] Second, in Juddav, because of an error in the identification of the lien claimant during registration, it was necessary for the corporation, as the registered lien claimant, to bring the lien action, even though the relevant services were supplied by the corporation’s alter ego, in her personal capacity.

[182] If the corporate plaintiff’s unjust enrichment claim failed at trial, a windfall benefit would have enured to the defendants as a result of what the Master described, at first instance, as a “technicality”. The Master found that a serious injustice would result if the corporate plaintiff’s claim for unjust enrichment was denied: see Juddav at para. 22.

[183] The compelling circumstances in Juddav are not present here.

[184] It was not necessary for the original action to be brought by 1318847 Ontario because of an innocent error or the operation of a statute such as Construction Lien Act. Emmanuel deliberately pursued compensation for past SRED claims in the name of 1318847 Ontario in order to secure a personal income tax advantage.

[185] Nothing prevented Emmanuel from asserting a claim in his personal capacity for unjust enrichment in CV-12-18047. He did not. He eventually asserted his personal claim in a subsequent action, and accordingly, unlike Juddav, the party who actually supplied the services is before the court asserting his own remedial claim for unjust enrichment.

[186] Finally, I do not find that “technicality” based injustice will result if 1318847 Ontario is not permitted to advance a claim for Emmanuel’s supply of services in his personal capacity. 1318847 Ontario has no connection to the SRED services that Emmanuel supplied to LTM. Nonetheless, he chose to commence an action alleging that in 1999, 1318847 Ontario contracted with LTM to supply those services and thereafter, did supply those services. Those allegations are not accurate. Emmanuel also chose not to commence a proceeding in his personal capacity for claims related to unjust enrichment until one year after CV-12-18047 was commenced. Whatever consequences flow from those choices are not the result of “technicality based injustice” but rather the result of Emmanuel’s conscious decisions regarding the manner in which to assert those claims.

[187] In the result, I am not persuaded that in the circumstances of these proceedings, permitting 1318847 Ontario to assert a claim for unjust enrichment based on services supplied by Emmanuel in his personal capacity is either necessary or just. Instead, each of the plaintiffs’ respective claims shall be judged on its own merits.

5. Is either plaintiff entitled to restitutionary compensation pursuant to the principles of quantum meruit and unjust enrichment?

[188] For reasons that follow, I conclude that neither plaintiff is entitled to restitutionary compensation under the principles of quantum meruit or unjust enrichment in the particular circumstances of these proceedings. While benefits were conferred on LTM through Emmanuel’s supply of SRED services and Emmanuel suffered a corresponding deprivation, I conclude that there is a juristic reason for LTM’s retention of the benefits conferred that is founded in the parties’ reasonable expectations in all of the circumstances.

(a) Legal Principles Applicable to Quantum Meruit and Unjust Enrichment

[189] Quantum meruit is a cause of action, distinct from claims grounded in contract or tort, which contemplates a remedy for unjust enrichment or unjust benefit: see Consulate Ventures Inc. v. Amico Contracting & Engineering (1992) Inc., 2007 ONCA 324, 282 D.L.R. (4th) 697, at para. 95.

[190] Quantum meruit may apply where a valid contract is found to exist in fact and in law, but there is no clause expressly setting out the consideration for the contract. In such circumstances, the person who has rendered services may be awarded reasonable remuneration: see G.H.L. Fridman, Restitution, (Toronto: Carswell, 1992) at pp. 289-290.

[191] Having found no contract between LTM and either Emmanuel or 1318847 Ontario, as opposed to a finding that an intended contract was unenforceable, the remedy of contractual quantum meruit is not available: see Juddav Designs Inc. v. Cosgriffe, at para. 12. That finding does not preclude the consideration of quantum meruit, grounded in unjust enrichment in these proceedings.

[192] A pre-existing contractual relationship for the exchange of services and compensation is not a pre-requisite to a successful quantum meruit claim. To make out such a claim, it is sufficient for a party to establish that it provided services to the opposing party at the request, or with the encouragement or acquiescence, of that party in circumstances that render it unjust for the opposing party to retain the benefit conferred by the provision of the services: see Consulate Ventures, at para. 99. The principles applicable to the restitutionary doctrine of unjust enrichment inform that analysis.

[193] The doctrine of unjust enrichment focuses on restoring a benefit which justice does not permit one to retain: see Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269 at para. 31.

[194] Recovery for unjust enrichment will be permitted where the plaintiff can establish three elements:

1. An enrichment of or benefit to the defendant;

2. A corresponding deprivation of the plaintiffs; and

3. An absence of juristic reason for the enrichment.

[195] A straightforward economic approach applies to the determination of the first two elements of enrichment and corresponding deprivation. The disposition regarding those elements is not informed by the parties’ reasonable expectations. Other considerations such as moral and policy questions are appropriately dealt with at the juristic reason stage of the analysis: see Kerr, at para. 37.

[196] For the first element, the plaintiff must show that the defendant has been enriched by a benefit that can be restored to the plaintiff in specie or by money.

[197] For the second element, the plaintiff must show that it suffered a loss that corresponds to a benefit received by the defendant.

[198] The third element requires the plaintiff to demonstrate that there is no reason in law or justice for the defendant’s retention of the benefit conferred by the plaintiff. In Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, Justice Iacobucci endorsed a two-part approach to the “juristic reason” analysis as follows:

First, the plaintiff must show that no juristic reason from an established category exists to deny recovery. … The established categories that can constitute juristic reasons include a contract (Pettkus, supra), a disposition of law (Pettkus, supra), a donative intent (Peter, supra), and other valid common law, equitable or statutory obligations (Peter, supra). If there is no juristic reason from an established category, then the plaintiff has made out a prima facie case under the juristic reason component of the analysis.

The prima facie case is rebuttable, however, where the defendant can show that there is another reason to deny recovery. As a result, there is a de facto burden of proof placed on the defendant to show the reason why the enrichment should be retained. This stage of the analysis thus provides for a category of residual defence in which courts can look to all of the circumstances of the transaction in order to determine whether there is another reason to deny recovery.

As part of the defendant’s attempt to rebut, courts should have regard to two factors: the reasonable expectations of the parties, and public policy considerations. … In other cases, a consideration of these factors will suggest that there was a juristic reason in the particular circumstances of a case which does not give rise to a new category of juristic reason that should be applied in other factual circumstances.

[199] At the second stage of the analysis, it is appropriate to have regard to the mutual “reasonable” or “legitimate” expectation of both parties, not simply the expectations of either the claimant or the defendant, to determine whether the party’s expectations show that retention of the benefits is just: see Kerr, para. 124.

(b) Application of the Principles of Unjust Enrichment

[200] The first two elements of unjust enrichment are met with respect to Emmanuel’s claim. LTM admits that it received benefits arising from the SRED services Emmanuel supplied. I find that throughout the time Emmanuel supplied SRED services to LTM, it was aware that he was supplying those services and was aware that it was benefitting from those services. The deprivation suffered by Emmanuel in terms of the time he spent on the SRED claims corresponds to the benefits received by LTM.

[201] Conversely, 1318847 Ontario never supplied SRED claim services to LTM, never conferred an SRED related benefit to LTM and never suffered a deprivation related to LTM’s SRED claims. As a result, its unjust enrichment claim fails.

[202] There is no dispute that LTM benefited from Emmanuel’s efforts. The issue is whether it is “unjust” for LTM to retain those benefits, in all of the circumstances.

[203] The first step of the juristic reason analysis requires the plaintiff to demonstrate that there is no established categorical reason justifying the defendant’s retention of that benefit. I have concluded that LTM did not contract for the independent supply of SRED services. Until 1999 Emmanuel supplied SRED services to LTM as part of his duties as an employee of LMM. Emmanuel continued to supply SRED claims services to LTM after his employment with LMM ended in 1999. The evidence does not disclose the existence of any established category that can constitute a juristic reason for LTM’s enrichment from Emmanuel’s supply of SRED related services after he left LMM’s employ. Accordingly, Emmanuel has made out a prima facie case for the absence of a juristic reason.

[204] The second step in the juristic reason analysis requires the court to review all of the circumstances and determine whether there is any other reason to deny recovery, with particular regard to two factors: the reasonable or legitimate expectations of the parties and public policy considerations.

[205] At this stage, the defendant bears the burden of establishing that there is a juristic reason for retaining the benefit that does not fall within one of the existing categories. I find that it has done so.

[206] All things being equal and absent evidence to the contrary, if an arm’s length commercial relationship existed between LTM and Emmanuel, a finding that parties reasonably contemplated that Emmanuel would be entitled to ongoing reasonable compensation for his supply of SRED services to LTM after his employment with LMM ended in 1999 would be appropriate. In this instance, however, all things were not equal, and elements of the parties’ non-arm’s length relationship had a profound effect on the parties’ reasonable expectations in all of the circumstances.

[207] As detailed below, the evidence establishes that the reasonable expectations of the parties regarding the positive payment of SRED related compensation were informed and defined by: the nature of the relationship between Emmanuel and Larry; Emmanuel’s desire to appease his father; the interconnectedness of HMP and LTM and the resulting debt allegedly owed by HMP; Emmanuel’s belief that he would eventually become an owner of LTM; Emmanuel’s willingness to continue preparing LTM’s SRED claims despite Larry’s consistent and repeated position that LTM would not pay him SRED related compensation; and, ultimately, Emmanuel’s decision to let the issue of remuneration for past SRED claims go out of a sense of family obligation and in acknowledgement of a debt of gratitude he felt he owed his father.

[208] Emmanuel testifies that at all times he expected to be compensated in accordance with a “contingency fee arrangement” for the SRED claim services he supplied to LTM. Even though he did not formally seek nor did he receive compensation for his services from May 11, 2003 until June 24, 2011, he submits that he continued to provide SRED services unabated with the expectation that he would eventually be compensated because LTM was a family business and his father promised he would be compensated. Any concerns over the lack of payment of compensation he may otherwise have had were also tempered by his view that he would eventually become an owner of LMM and indirectly LTM.

[209] I do not accept that Larry promised or assured Emmanuel that he would eventually be paid compensation for his SRED claims services because: Emmanuel’s evidence in that regard is general, unconfirmed and self-serving; his actual conduct was inconsistent with that contention; for reasons stated earlier, I do not place significant weight on his evidence overall; and there is evidence that I accept which conflicts with Emmanuel’s evidence on the point.

[210] Apart from his evidence regarding the alleged formation of the SRED services contract in 1995, which I reject for reasons stated above, Emmanuel offers no evidence regarding when, where and under what circumstances Larry’s promises to pay compensation were made.

[211] The nature of the SRED compensation interactions between Emmanuel and Larry militate against finding that Larry assured Emmanuel he would be compensated. Paula testifies and I accept that whenever Emmanuel raised the issue of SRED compensation with Larry between 2003 and 2009, Larry heatedly advised Emmanuel, in effect, that LTM would not pay compensation for his SRED services because HMP owed LMM a significant debt, at least by Larry’s reckoning. She does not testify that Larry assured Emmanuel he would be paid compensation. In the 2010 HMP letterhead correspondence, Emmanuel confirms that his father did not agree that he should be remunerated for those services, and he admitted that his father did not agree to his suggestions for remuneration, during cross-examination. I do not find that Larry promised Emmanuel, at any time, that he would be paid for his SRED related services at an undisclosed future time.

[212] Prior to Larry’s passing, LTM repeatedly put Emmanuel on notice that it did not agree or accept that he should be paid remuneration for SRED claims services because of the HMP debt. Emmanuel did not expressly challenge LTM’s position, instead he continued to provide SRED related services to LTM related to each of its successive fiscal years without payment of compensation for his past services.

[213] I find that Emmanuel continued to supply SRED related services to LTM while he was aware that LTM consistently refused to agree to pay him remuneration for the supply of those services and I find that he reasonably ought to have known that LTM would continue to refuse to agree to pay him remuneration for SRED related services in the future. I find that his conduct in that regard informs the parties’ reasonable expectations in this instance.

[214] The corollary to the observation that Emmanuel continued to provide SRED services knowing that LTM had refused his suggestions for remuneration for past SRED claims is that LTM continued to accept Emmanuel’s supply of SRED services with knowledge that he had suggested compensation for his past claims.

[215] Based on the reasons that follow, I find that the defendants consistently communicated refusals to Emmanuel’s suggestions for remuneration was one of the predominate factors in shaping the parties’ reasonable expectations in the circumstances. On the occasions that Emmanuel suggested that he be remunerated for past claims, he was met with LTM’s unequivocal unwillingness to agree. It was Emmanuel that always deferred to LTM’s stated position, and it was Emmanuel that always, in his words, “let it go”.

[216] Emmanuel had the option of terminating his supply of SRED related services to LTM at any time, in response to its expressed unwillingness to agree that he should receive remuneration for past SRED claims. Eventually, that is what he did in 2010 (with respect to the preparation of the 2008 SRED claim), when his siblings did not engage in negotiations with him after he made his SRED compensation proposal. That course of conduct was available to him every time Larry refused to agree to his remuneration suggestions.

[217] Instead, Emmanuel continued to supply SRED services to LTM: without payment of compensation for his past services; knowing that Larry refused to authorize LTM to remunerate him for the services he previously supplied; and when he reasonably ought to have expected that Larry would not authorize LTM to make payment to him for future SRED related services. Objectively, these circumstances inform the parties’ reasonable compensatory expectations.

[218] While there is no evidence that Emmanuel expressly challenged the HMP debt when Larry relied on it to refuse his remuneration suggestions, he submits that it is not appropriate to consider the alleged HMP debt in the determination of whether there is a juristic reason for LTM’s enrichment. He says that the debt is not valid; the alleged debt is owed by HMP to LMM, neither of which are parties to this proceeding; LTM did not plead a set-off, and it did not prove the amount of debt. He also concedes that he permitted LTM to accrue certain unquantified components of the alleged HMP debt, as related party indebtedness owed by HMP to LMM, solely to “appease” his father.

[219] The plaintiffs’ position has merit in the event that the defendant is taking the position that a juristic reason for LTM’s retention of the SRED related benefits it received is founded in an express or implied set-off of the benefits conferred by LTM to Emmanuel or HMP as his privy, or in a “mutual or reciprocal enrichment” theory.

[220] In Wilson v. Fotsch, 2010 BCCA 226, 319 D.L.R. (4th) 26 the court undertook an extensive analysis of the various aspects of the unjust enrichment analysis including the elements establishing entitlement, potential defences and choice of remedy. The court observed the limited consideration that should be afforded to “mutual enrichment” in the juristic reason analysis at para. 9, as follows:

My review of the authorities persuades me that courts have found ways to off-set reciprocal enrichments for many years with unpredictable and at times inconsistent results. In my view, the proper approach to reciprocal benefits can be found in Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, where the Supreme Court explained that mutual enrichments should be considered at the juristic reason stage for the limited purpose of assessing the parties’ legitimate expectations; otherwise, they should be considered at the remedy stage. Jurisprudence predating Garland, including past decisions of this Court such as Toth v. de Frias (1996), 78 B.C.A.C. 34 (C.A.), must be approached cautiously in view of its conclusions.

[221] As I understand it, however, the defendant has not raised the HMP debt in order to advance a set-off claim as part of the juristic reason analysis. Instead, the evidence of LTM’s assertion of the HMP debt forms part of the narrative that, in my view, historically informed the parties’ reasonable and legitimate expectations, regarding the circumstances of Emmanuel’s supply of SRED services.

[222] Emmanuel knowingly continued to supply SRED services to LTM after being advised that LTM refused to agree to his suggestion that he be remunerated for past SRED services, therefore, I cannot conclude that Emmanuel’s ongoing compensatory expectation, as he deposed, was reasonable in the particular circumstances of this case. Further, I do not accept that he held that expectation, in fact.

[223] In my view, Emmanuel disclosed that he lacked a compensatory expectation in his 2010 HMP letterhead correspondence where he indicates that in response to his father’s refusal to agree that he be remunerated for past SRED claims he “let [the issue] go” out of “a sense of family responsibility” and to acknowledge the “debt of gratitude” that he owed his father. I find that the content of that correspondence is particularly significant in determining the parties’ historical reasonable expectations with respect to SRED services compensation in the factual circumstances of this case. I also find that it evidences that (prior to his father’s passing) Emmanuel consciously accepted that LTM refused to entertain payment of SRED services compensation and that he decided to continue providing those services to LTM without having an actual expectation that he would receive compensation.

[224] Turning to the surrounding circumstances, I infer that had the parties reasonably expected SRED services compensation would be paid, each would have taken steps to record the amounts of compensation owing on the success of each SRED claim. The evidence before me does not support that either did so. In 2010, Emmanuel obtained all of the information he relied on to make his compensatory proposal and later his demand for his past SRED services from third parties, not his own records.

[225] Emmanuel’s failure to take any steps to formally pursue any SRED compensation and LTM’s non-payment of such compensation for nearly a decade while services continued to be supplied also militates against a finding that the parties reasonably expected that compensation was payable. Emmanuel’s evidence does not credibly explain why he did not formally pursue compensation during this time.

[226] I remain mindful of the 2003 invoice for an “R&D Fee”. The circumstances surrounding the 2003 invoice were not fully explained but it is clear that related debt offsets between HMP and LTM occurred before the May 10, 2003 invoice was rendered, and therefore they did not result from the invoice. Neither Emmanuel nor Paula could explain the sequence of events leading up to the May 10, 2003 invoice, but it is apparent they unfolded as a result of a specific predetermined arrangement, the particulars of which were not evidenced. Without more evidence about the circumstances giving rise to the 2003 invoice, and without evidence that a similar set of transactions occurred before or after the events in April and May 2003, I conclude that the 2003 invoice and related transactions were the result of a single ad hoc event and were not indicative of the parties’ ongoing “reasonable expectations” up to 2010.

[227] Even Emmanuel placed little significance on the events surrounding the 2003 invoice when appealing to the estate trustees in 2010. In his e-mail to Mr. Gatti in mid-2010, Emmanuel failed to acknowledge the $200,000 benefit received by HMP in consideration for Emmanuel’s supply of SRED services up to LTM’s 1998 fiscal year end claim. It is difficult to accept that the events surrounding the 2003 invoice reflected or markedly influenced the parties’ reasonable compensatory expectations when they were not raised by Emmanuel in the context of his subsequent compensatory demand.

[228] Emmanuel also testifies that he was not concerned about LTM’s continuous failure to pay him ongoing SRED compensation because he believed that eventually he would become an owner of LMM and indirectly LTM. That evidence reveals that Emmanuel’s continued supply of SRED services to LTM was motivated by a degree of self-interest because he anticipated an ownership interest in the entity that benefited from his services.

[229] In the result, I find the following factors are relevant to the determination of the parties reasonable expectations in all of the circumstances of these proceedings: LTM did not contract to pay compensation for SRED services; LTM never received a formal request for payment of compensation that resulted in the actual payment of compensation; and whenever Emmanuel suggested that he receive remuneration for SRED services, LTM put him on notice that it refused to agree for a stated commercial reason. In response, Emmanuel did not: challenge LTM’s stated commercial reason; challenge its refusal to agree to his suggestion for remuneration; render an invoice for payment for his services; commence a proceeding for compensation; or stop providing SRED services. LTM and Emmanuel did not make contemporaneous records of the amount of his compensating entitlement for each fiscal year’s SRED claim. Emmanuel did not request compensation when he had the opportunity to do so in 2008. Emmanuel acknowledged that he let the issue of compensation for past SRED claims “go” before 2010 because of familial obligations and a debt of gratitude to his father. Emmanuel had an unexplained expectation that he would gain an ownership interest in LTM’s parent company.

[230] In my opinion, the defendant has discharged its onus under the second stage of the juristic reason analysis. I find as a fact that, objectively, it was not within the reasonable contemplation of the parties that the SRED claim services performed by Emmanuel would give rise to an after-the-fact claim for payment under the unjust enrichment doctrine. Therefore, Emmanuel’s restitutionary quantum meruit and unjust enrichment claim fails.

(c) Acquiescence

[231] Laches and acquiescence are defences to unjust enrichment: see Wilson, at para. 42. Acquiescence consists, in effect, of an affirmation of the impugned conduct by the plaintiff: see Allcard v. Skinner (1887), 36 Ch. D. 145 (C.A.); Peter D. Maddaugh and John D. McCamus, The Law of Resitution, Looseleaf Edition (Aurora: Canada Law Book Inc.) at pp. 3-54.

[232] In the event that the circumstances at issue in these proceedings did not give rise to a juristic reason for the retention of benefits by LTM, the facts as I have found them may be capable of supporting the defence of acquiescence. The parties did not argue the issue and, accordingly, I would have invited further submissions on the point before reaching a determinative conclusion.

6. Are the plaintiffs’ claims statute barred by operations of the [Limitations Act, 2002](https://www.canlii.org/en/on/laws/stat/so-2002-c-24-sch-b/latest/so-2002-c-24-sch-b.html)?

[233] The defendant suggests that if the plaintiffs are otherwise entitled to compensation, their actions are statute barred by operation of the Act.

[234] These proceeding encompass a series of alleged acts and omissions occurring from mid-1999 to mid-April 2010 and relating to separate and distinct SRED claims for 11 of LTM’s fiscal years. The earliest acts took place 12 and 13 years before the respective statements of claim were issued in June 2012 and June 2013.

[235] LTM submits that the distinct services supplied by Emmanuel for each of its fiscal years and its corresponding failure to pay compensation for those services gave rise to a series of discrete “claims” for the purposes of the Act. It observes that each statement of claim was issued more than two years after the last day that Emmanuel supplied SRED services to LTM in April 2010, and more than 2 years after he was aware of: his supply of services; LTM’s intention not to pay him for those services; and the information required to calculate the amount of compensation he asserts for each of LTM’s relevant fiscal years. As a result, LTM suggests that the limitation periods applicable to the claims for all of its fiscal years at issue expired before the actions were commenced and the proceedings are statute barred pursuant to the provisions of the Act.

[236] The plaintiffs submit that Emmanuel’s SRED services were supplied to LTM on a “continuous” basis. The lifecycle of an SRED claim for any particular fiscal year stretched over a number of calendar years. Since Emmanuel typically worked on more than one SRED claim in each calendar year his SRED efforts are best viewed as one on-going supply of services from 1999 to 2010.

[237] They argue that because of the continuous nature of the contract between Emmanuel and LTM, LTM’s liability was in the nature of a demand obligation and in accordance with s. 5(3) of the Act, therefore, their claims were only discovered once LTM failed to pay after demand for payment was made. Therefore the limitation period applicable to the plaintiffs’ claims did not commence until a formal demand for payment by invoice was made on June 24, 2011 and LTM communicated its unequivocal refusal to pay on December 9, 2011. Both actions were commenced within two years of the date of demand and within two years of LTM’s communicated refusal to pay.

[238] Based on the parties’ respective positions, the following issues must be determined:

a. Assuming that LTM was obligated to pay compensation for Emmanuel’s SRED services, was its liability in the nature of a demand obligation?;

b. When were the plaintiffs’ claims discovered?;

c. Do the transition rules set out in s. 24 of the Act, apply and if so to what effect?; and

d. Are the plaintiffs’ claims barred by operation of the Limitations Act, 2002?

[239] For a fulsome consideration of the “limitation period defence”, the claims at issue in these proceedings may be divided into two broad categories:

1. Those based on acts and omissions that took place after January 1, 2004, which attract a direct application of s. 4 and 5 of the Act; and

2. Those that are based on acts and omissions that took place before January 1, 2004, which attract an application of the transition rules in s. 24 of the Act and, based on when the claim was discovered, either the former limitation period applicable to the cause of action or ss. 4 and 5 of the Act.

[240] A common approach may be taken to the limitation period analysis for the plaintiffs’ SRED claims for fiscal years 2003 to 2006, inclusive. These will be discussed in section b) below.

[241] The plaintiffs’ claims arising out of the supply of services for LTM’s fiscal years ended June 30, 1999, June 30, 2007, December 31, 2007 and December 31, 2008, merit individual consideration for varying reasons. These will also be discussed in section b) below.

[242] A common approach may also be taken to the limitation period analysis for the plaintiffs’ SRED claims related to fiscal years 2000, 2001 and 2002. These will be discussed in section c) below.

(a) Assuming LTM was obligated to pay compensation for Emmanuel’s SRED services, was its liability in the nature of a demand obligation?

[243] For the following reasons, I do not accept that any liability LTM had arising out of Emmanuel’s supply of SRED services was in the nature of a demand obligation. Accordingly, s. 5(3) of the Act does not apply to determine when the plaintiffs’ claims were discovered.

[244] The parties agree that an invoice that is payable on demand pursuant to the contractual terms governing the parties can constitute a demand obligation for the purpose of s. 5(3) of the Act: see Artisan Developments Inc. v. Navaretta, 2011 ONSC 6054, 288 O.A.C. 336 (Div. Ct.). Emmanuel concedes that LTM did not expressly agree that its liability to pay SRED related compensation was in the nature of a demand obligation, but submits that a contractual term to that effect should be implied. However, LTM did not contract with Emmanuel for the provision of SRED services, and therefore, there is no contractual term prescribing that LTM’s liability was in the nature of a demand by invoice obligation.

[245] Had I concluded that the parties entered into a contract for SRED services in 1995, I have found that the contract did not include the demand obligation term urged by the plaintiffs.

[246] LTM’s SRED claims were fiscal year specific and each followed a specific process that ended with a notice of reassessment confirming the SRED related tax benefit enjoyed by LTM for that fiscal year. The services performed with respect to each fiscal year’s claim were distinct to that claim, and readily identifiable. The amount of compensation related to any specific fiscal year’s SRED claim was said to be calculated with reference to the tax benefit received for that specific year. The amount of compensation payable for services related to a specific fiscal year was not affected by the services related to, or results of, any other fiscal year’s SRED claims.

[247] Since the SRED services supplied and the corresponding amount of compensation owed were fiscal year specific, I find that if there was a contract (as the plaintiffs allege), the parties would have reasonably contemplated that LTM would incur a discrete payment obligation referable to each specific fiscal year’s SRED claim, and that obligation would be triggered with confirmation of the specific tax benefits as disclosed in LTM’s corresponding notice of reassessment for that fiscal year.

[248] For the following reasons, I conclude that LTM’s payment of compensation was not a demand obligation:

a. Larry asserted exclusive control over LTM’s flow of cash. I find that reasonably Larry would not have agreed to an SRED compensatory scheme in the nature of a demand obligation whereby control over the timing of the enforceability of a potential sizeable liability owed by LTM, would be ceded to anyone, including Emmanuel.

b. Emmanuel’s actual characterization of LTM’s liability is inconsistent with a demand obligation. In his first 2010 email to Mr. Gatti and Ms. Sauve, Emmanuel characterized his calculated amount of compensation for past SRED claims as “monies owed” to either him or HMP. In September 2010, he wrote to Mr. Gatti under the subject “R&D claim” and indicated that he had not given up on the “claim” against LTM and the estate “for the outstanding debt owed”. His reference to a claim for an “outstanding” debt owed for R&D in September 2010 is not consistent with his position that his claims were not discovered until he made demand for payment by invoice in June 2011 and LTM refused to pay.

c. The circumstances surrounding the 2003 invoice do not accord with the demand obligation that the plaintiffs advocate. In 2003, LTM’s cheque for $200,000, which was never negotiated, was made ten days before an invoice was made or sent to LTM for SRED services, and not as the result of its receipt of a demand invoice.

[249] In the result, I find that to the extent LTM was obligated to pay compensation for Emmanuel’s SRED services, the distinct services supplied by Emmanuel for each of its fiscal years and its corresponding failure to pay compensation for those services gave rise to a series of discrete “claims” for the purposes of the Act.

(b) When were the plaintiffs’ claims discovered?

[250] The Act, which came into effect on January 1, 2004, codifies the application of the discoverability principle to determine the date by which a proceeding must be commenced in respect of a claim to remedy an injury, loss or damage that occurred as a result of an act or omission defined as a “claim” in s. 1 of the Act.

[251] Specifically, the Act provides:

Basic limitation period

4. Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

Discovery

4. (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

Presumption

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.

[252] The plaintiffs’ claims for breach of contract fall within the definition of a claim in s. 1 of the Act. A claim for equitable relief, including a claim based on unjust enrichment, also fits within the broad definition of a claim in s. 1: see McConnell v. Huxtable, 2014 ONCA 86, 118 O.R. (3d) 561.

[253] For the claims asserted in these proceedings (whether for breach of contract, quantum meruit or unjust enrichment) that relate to acts and omissions that occurred on or after January 1, 2004, s. 4 of the Act applies and a proceeding “shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.”

[254] Pursuant to s. 5(2) of the Act, a “person with a claim shall be deemed to have known of the matter referred to in s. 5(1)(a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.” For the purpose of the plaintiffs’ claims in contract, the relevant omission is LTM’s failure to pay the contractually prescribed amount of compensation to the plaintiffs when it became aware of the tax benefits resulting from its respective SRED claims. For the plaintiffs’ quantum meruit and unjust enrichment claim, the relevant acts are the plaintiffs’ supply of services and the relevant omission is the defendant’s failure to compensate the plaintiffs for that supply, with respect to each of its respective fiscal years’ SRED claims.

[255] Had I found that LTM contracted to pay Emmanuel 25 percent of the value of the tax benefits it received as a result of each SRED claim, I would have concluded that the plaintiffs discovered a “claim”, with respect to each specific fiscal year’s SRED claim on the day after Emmanuel received confirmation of the amount of the resulting tax benefits. Upon receipt of that amount, he had all the information he required to calculate the compensation he was entitled to for that particular SRED claim. Similarly, on receipt of that amount, LTM would have had all the information it required to calculate its corresponding obligation to Emmanuel.

[256] On the evidence, the plaintiffs have failed to discharge their onus to disprove that the presumption set out in s. 4(2) of the Act applies. As a result, I find that the day after Emmanuel, or a reasonable person with Emmanuel’s abilities and in his circumstances, became aware of the amount of the tax benefit, he knew or ought to have known:

(a) he suffered a loss or damage because he did not receive the compensation to which he was contractually entitled;

(b) the loss or damage he suffered was caused by LTM’s failure to pay him compensation in accordance with the contract for his services related to that SRED claim; and

(c) that given the nature of the damage, a proceeding would be a legally appropriate means to seek to remedy the loss or damage he suffered.

[257] If I found that LTM contracted to pay Emmanuel 25 percent compensation for each SRED claim, I would not have found that a reasonably timed invoice was necessary to discover the claims in contract. Under the terms of the contract alleged by the plaintiffs, LTM could simply and precisely calculate the amount of compensation it owed for services related to any specific SRED claim. LTM did not require the plaintiffs to render an invoice in order to determine that amount.

[258] The plaintiffs would have suffered a loss on LTM’s omission to pay the contractually prescribed amount of compensation it owed, after it received the information required to calculate that amount from the CRA. Emmanuel’s loss would have been suffered the first day that he did not receive the compensation to which he was legally entitled, not the day that LTM unequivocally communicated that it refused to pay that compensation.

a. Fiscal Years 2003 – 2006

[259] I previously found that Emmanuel was aware of all of LTM’s provincial and federal SRED tax benefits for its fiscal years ended June 30, 2003 to June 30, 2006 by April 3, 2008 (and in most cases much earlier). In accordance with s. 4 of the Act, the limitation period for the claim arising out of the year-ended June 30, 2006 SRED claim expired on April 4, 2010 and the limitation period applicable to claims for SRED services related to 2003, 2004 and 2005 would have necessarily expired before that time.

[260] If I had concluded that the plaintiffs were unable to discover a claim with respect to SRED services supplied for a specific fiscal year without first rendering an invoice, I would have concluded that they were obligated to render an invoice within a commercially reasonable period of time once aware of LTM’s tax benefit for that year.

[261] If I found, on the evidence before me, that Emmanuel was reasonably required to render an invoice before the claim was discovered, then a separate invoice with respect to each distinct SRED claim ought to have been rendered within 30 days of the date Emmanuel became aware of the tax credits. The calculation required to determine the amount of compensation was simple and a longer period of time to render an invoice was not necessary. Given the relationship of the parties, I find that Emmanuel would have been advised within days of rendering an invoice whether he would be paid. That is not to suggest that any invoices sent by Emmanuel would have been in the nature of a demand obligation for the purpose of the Act.

[262] In the event that a commercially reasonably timed invoice was necessary to discover a claim, I find that the plaintiffs did not exercise reasonable diligence in that regard. The plaintiffs did not render an invoice or take any other definitive steps to assert their claim for SRED compensation for over eight years between May 10, 2003 and June 24, 2011. It was not open to them to forestall the expiration of the applicable limitation (by withholding invoices for several years), while hoarding an ever increasing compensatory claim. Doing nothing for nearly a decade cannot equate to due diligence.

[263] In addition, I am not persuaded that the circumstances surrounding the 2003 invoice would have assisted in the determination of when the contractual SRED claims were discovered.

[264] The circumstances surrounding the 2003 invoice and the alleged consideration for same are convoluted and atypical. They are not reliably indicative of a pattern of past practice that defines the commercial parameters of the parties’ relationship, unlike the circumstances in G.J. White Construction Ltd. v. Palermo (1999), 2 C.P.C. (5th) 110, 7 C.L.R. (3d) 13.

[265] Had I found that the plaintiffs were contractually entitled to compensation as alleged, and had I found that a reasonably-timed invoice ought to have been sent before the claim was discoverable, I would have found that the limitation period for fiscal year ended June 30, 2006 would have expired on May 15, 2010. This time frame allows for a reasonably timed invoice (and a reasonably timed reply) because Emmanuel was aware of the tax credits arising from that SRED claim on April 3, 2008.

[266] For the same reasons, I would have concluded that the limitation periods related to fiscal years ended prior to June 30, 2006 would have expired before May 15, 2010.

[267] Had I found the plaintiffs were entitled to restitution through the application of quantum meruit because LTM was unjustly enriched by Emmanuel’s SRED services, I would have concluded that their claims for fiscal years ended June 30, 2003 to June 30 2006 were statute barred pursuant to the Act.

[268] The supply of SRED services for each of LTM’s specific fiscal years would have constituted its own discrete claim because each resulted in a distinct and identifiable benefit to LTM, as measured by the corresponding tax credits. Similarly, the deprivation related to each fiscal year’s SRED claim is also distinct and identifiable, as measured by the time spent on each year’s claim and related science audit.

[269] The parties requested that specific remedial findings not be made at this stage of the proceedings. Therefore, the parties have not led evidence or made submissions on the appropriate measure of compensation for unjust enrichment in this instance. I am unable to find that the specific amounts of the tax benefits conferred on the defendant as a result of the various SRED claims are not relevant in determining a fair and reasonable model of restitutionary compensation.

[270] As a result, I would have found that claims for unjust enrichment, if viable, were not discovered until Emmanuel was aware of the specific tax credits arising from the corresponding fiscal year’s SRED claims and a reasonably-timed invoice was sent and a person with Emmanuel’s abilities and in his circumstances ought to have been aware of whether the invoice was accepted or refused. While I do not find that such invoices would have evidenced demand obligations within the meaning of the Act, I do find that they would have been necessary elements in the discovery of these specific claims.

[271] My findings with respect to the plaintiffs’ obligation’s to exercise due diligence to discover their potential claims in contract apply equally to their potential claims in quantum meruit and unjust enrichment. I find that in the absence of a contract, an invoice related to compensation for SRED services supplied for a specific fiscal year would reasonably have been sent within 60 days of the date Emmanuel became aware of LTM’s SRED tax benefits relating to that year, in order to allow sufficient time to document the amount of compensation claimed for that fiscal year, if it was determined by a non-percentage based measure. I find that Emmanuel would have received a response to a reasonably timed invoice within 45 days of receipt, as the terms of the invoice rendered by 1318847 Ontario in June 2011 was “payable on receipt”. If Emmanuel or a reasonable person in his place did not receive a response within 45 days, they ought to have known that payment would not be made.

[272] My findings with respect to the date Emmanuel became aware of the results of LTM’s historical SRED claims are set out above. Generally, I find that the plaintiffs’ claims in quantum meruit and unjust enrichment for the purposes of the Act, would have been discovered 105 days after the dates Emmanuel became aware of those amounts, respectively.

[273] Therefore, at the latest, the limitation period for the claim related to the SRED services supplied for LTM’s fiscal year ended June 30, 2006 expired 105 days after April 3, 2010 because Emmanuel was aware of the SRED tax benefits for that fiscal year by April 3, 2008. The claims arising out of services supplied for LTM’s fiscal years ended June 30, 2003 to June 30, 2005 necessarily expired earlier than that date. Therefore, the claims for compensation for services supplied with respect to LTM’s fiscal years ended June 30, 2003 to June 30, 2006, inclusive, were asserted in these proceedings after the expiration of the applicable limitation periods.

b. Fiscal Year Ended June 30, 2007

[274] In its June 2011 invoice, 1318847 Ontario did not include a claim for any compensation for services related to LTM’s SRED claim for fiscal year ended June 30, 2007. There are no allegations in either statement of claim expressly seeking a remedy for the failure to pay SRED compensation for fiscal year ended June 30, 2007. Instead, compensation is sought for the amount as invoiced in June 2011 which does not, by Emmanuel’s admission, include compensation related to that fiscal year. Despite Emmanuel’s evidence, the plaintiffs did not request leave to amend their respective statements of claim to include a claim for compensation for that fiscal year. Therefore, I conclude that neither plaintiff has pled or pursued a claim for SRED services supplied to LTM related to that fiscal year in these proceedings.

[275] Even if claims for compensation related to the June 30, 2007 fiscal year SRED claim were before me, I would have concluded that the proceedings with respect to these claims were commenced after the expiration of the applicable limitation period. Emmanuel admits that he was aware of LTM’s resulting tax benefits for that SRED claim by January 22, 2010. Accordingly, the limitation period applicable to the plaintiff’s claims in contract for that fiscal year would have expired on January 23, 2012 or, if a reasonably timed invoice was required, on March 1, 2012 (allotting one month to draft and send the invoice and one week to receive a response).

[276] The limitation period applicable to the plaintiff’s claim for unjust enrichment and quantum meruit would have expired on May 7, 2012, which is 105 days after January 22, 2010.

c. Fiscal Year Ended December 31, 2007

[277] The determination of the tax credits received by the SRED claim for LTM’s fiscal year ended December 31, 2007 were delayed as a result of LTM’s accountants’ filing error and the CRA’s initial rejection of the claim. LTM was advised by the CRA on September 14, 2010 that the claim was accepted for processing, without a science review, based on the exercise of ministerial discretion. Emmanuel received that information on September 27, 2010.

[278] In general, I have concluded that the plaintiffs were not in a position to discover their claims, in contract, until Emmanuel was aware of the amount of SRED tax benefits for a particular fiscal year.

[279] There is no evidence establishing when LTM received confirmation of the amount of the SRED tax benefits for its fiscal year ended December 31, 2007, or when, if ever, that information was provided to Emmanuel.

[280] However, Emmanuel included a claim for compensation for the services related to this fiscal year in the June 2011 invoice and both plaintiffs advanced claims for those services in their respective actions. Apparently, the plaintiffs did not need to know the specific amount of LTM’s tax benefits arising out of that SRED claim in order to discover their claims relating to services supplied for that particular SRED claim. Instead, the claims for those services were discovered on September 27, 2010, when Emmanuel received confirmation that the December 31, 2007 SRED claim was accepted for consideration by the CRA.

[281] As a result, the limitation period for the claims arising out of services supplied with respect to that year expired on September 28, 2012, in contract and January 20, 2013, which is 105 days after September 27, 2012, in quantum meruit and unjust enrichment.

[282] Accordingly, had I found that 1318847 Ontario had an otherwise valid claim in contract or unjust enrichment, I would have allowed its claim for SRED services supplied to LTM for its fiscal year ended December 31, 2007. I also would have concluded that Emmanuel’s action for compensation for this fiscal year was commenced after the two-year limitation period expired, whether in contract or unjust enrichment.

d. Fiscal Year Ended December 31, 2008

[283] Had I found that Emmanuel was generally entitled to compensation from LTM for SRED claim services, for any reason, I would not have allowed his claim for compensation for services related to LTM’s 2008 fiscal year because he withheld his work product from LTM and, ultimately, it was not used to prepare that fiscal year’s claim. Any tax benefits received by LTM arising from an SRED claim for its 2008 fiscal year were not attributable to Emmanuel’s services.

(c) Do the transition rules set out in [s. 24](https://www.canlii.org/en/on/laws/stat/so-2002-c-24-sch-b/latest/so-2002-c-24-sch-b.html) of the [Act](https://www.canlii.org/en/on/laws/stat/so-2002-c-24-sch-b/latest/so-2002-c-24-sch-b.html), apply and, if so, to what effect?

[284] The subject matter of these proceedings include claims for compensation for SRED services that were supplied before the Act came into effect, specifically from July 1, 1999 to December 31, 2003, relating to LTM’s fiscal years ended June 30, 1999 to June 30, 2003. Section 24 of the Act, sets out transition rules applicable to claims arising from acts or omissions that occurred before January 1, 2004 and in respect of which no proceeding has been commenced. Unfortunately, there is no evidence that establishes specifically when LTM and Emmanuel received confirmation of the SRED related tax benefits arising out of LTM’s fiscal years 1999 to 2002.

[285] Section 24(3) of the Act, provides that if the limitation period that applied in respect of the claim before January 1, 2004 (the “former limitation period”) expired before January 1, 2004, no proceeding shall be commenced in respect of the claim.

[286] Section 24(5) of the Act, provides that if the former limitation period did not expire before January 1, 2004 and, if a limitation period under the Act would apply were the claim based on an act or omission that took place on or after that date, the following rules apply:

(a) If the claim was not discovered before January 1, 2004 the Act applies as if the act or omission had taken place on that date;

(b) If the claim was discovered before January 1, 2004, the former limitation period applies.

[287] Under s. 24(6) if there was no former limitation period and if a limitation period under the Act would apply were the claim based on an act or omission that took place on or after January 1, 2004, the following rules apply:

(a) If the claim was not discovered before January 1, 2004, the Act applies as if the act or omission had taken place on that date; and

(b) If the claim was discovered before January 1, 2004, there is no limitation period.

[288] If the claims were discovered before January 1, 2004, then the former limitation period applies. For the claims founded in breach of contract, the claims would have been governed by s. 45(1)(g) of the Limitations Act, R.S.O. 1990, c. L.15, which provided for a six-year limitation period, subject to the discoverability principle at common law.

[289] I questioned whether a limitation period was applicable to the equitable claims of unjust enrichment and quantum meruit prior to January 1, 2004 and I requested that counsel specifically address the transition rules. The plaintiffs submit that unjust enrichment is treated the same as breach of contract matters and the same may be said for actions grounded in quantum meruit: see Ellement v. Upenieks, 2006 CarswellOnt 2697 (ONSC); Forte Record v. Marshall, 2011 ONSC 2066 (Master

[290] In K.M. v. H.M., 1992 CanLII 31 (SCC), [1992] 3 S.C.R. 6, 96 D.L.R. (4th) 289, under the equitable doctrine of application by analogy, the Court held that it is appropriate that equity in some cases operate by analogy to the common law and adopts a statutory limitation period that does not otherwise expressly apply. A statutory limitation period applicable to a legal claim may be applied by analogy to an equitable claim if the legal claim is sufficiently similar.

[291] In Ellement, the essence of the plaintiff’s claim was for breach of contract and the limitation period applicable to that cause of action also applied by analogy to the unjust enrichment claim asserted by the plaintiff in that instance. Similarly, in this case, the essence of the plaintiffs’ claims is breach of contract or breach of quasi contract and it is appropriate that the former limitation period applicable to contractual claims (six years) apply to the claims founded in unjust enrichment and quantum meruit. In accordance with the plaintiffs’ submissions, I find that the former limitation period applicable to the plaintiffs’ claims for unjust enrichment and quantum meruit is, by analogy, six-years.

[292] While I cannot determine the dates upon which LTM and Emmanuel became aware of the tax benefits arising from LTM’s SRED claims for its fiscal years 1999 to 2002, there is some circumstantial evidence that assists in determining whether they became aware of those amounts before or after January 1, 2004. Emmanuel concedes that LTM’s SRED claims were submitted in successive chronological order. The evidence relating to the claims for the SRED claims for LTM’s fiscal years 2003 to June 30, 2006 demonstrate that LTM received confirmation of the tax benefits arising from the respective claims in successive chronological order. Further, the evidence related to those SRED claims demonstrates that the tax benefits were generally known 21 to 26 months after the date of the respective fiscal year ends.

[293] Applying that experience to LTM’s SRED claims related to its fiscal years June 30, 2000 to June 30, 2003, leads me to conclude that LTM and Emmanuel were aware of the tax benefits arising from the 2000 and 2001 SRED claims at some point in 2002 and 2003, respectively, and, therefore, Emmanuel discovered those claims before January 1, 2004.

[294] The tax benefits arising from LTM’s SRED claim for its fiscal year ended June 30, 2003 was necessarily discovered after January 1, 2004.

[295] There is no evidence that LTM received a specific tax benefit as a result of its SRED claim for its fiscal year ended June 30, 1999 (the SRED information from CRA at Exhibit 39 shows a blank for that year, and the parties did not admit that LTM received a specific tax benefit in that year).

[296] Applying LTM’s SRED claim experience for its fiscal years from June 30, 2003 to June 30, 2006, I find that the plaintiffs’ claims/causes of action with respect to LTM’s fiscal year June 30, 2000, were discoverable no later than September 1, 2002, and, therefore, the limitation period with respect to that claim expired on September 1, 2008.

[297] I find that the plaintiffs’ claims with respect to LTM’s SRED claim for fiscal year ended June 30, 2001, were discovered or discoverable by September 1, 2003 and, therefore, the applicable limitation period expired September 1, 2009.

[298] I find that the plaintiffs’ claims with respect to LTM’s fiscal year ended June 30, 2002, was discovered no later than September 1, 2004, and, accordingly, the limitation period with respect to those claims would have expired September 1, 2010.

[299] In the foregoing analysis I have not specifically addressed the impact of a reasonably timed invoice on the determination of when the claims for those three fiscal years would be discoverable or discovered. If the reasonably timed invoice was a necessary element of the discoverability of those claims, I would have found the same time parameters I set out previously in my analysis of the limitation periods applicable to the post January 1, 2004 claims and the respective limitation periods would have increased marginally. The result would be that the claims for services supplied for SRED claims for fiscal years 2002 and 2003 were statute barred at the time each of the statements of claim were issued.

[300] Without evidence before me concerning when the respective “pre-January 1, 2004” claims were submitted, and when the audits with respect to those claims took place, I cannot determine precisely when the last date services were supplied for those respective SRED claims. Without evidence before me concerning the specific dates that LTM and Emmanuel received the notices of assessment with respect to the fiscal 1999 to 2002 SRED claims, I cannot determine with precision the dates that those claims were discovered. However, it does not appear that the result would be any different if the claims arising from SRED services related to those fiscal years were discovered before or after January 1, 2004.

(d) Are the plaintiffs’ claims barred by operation of the [Limitations Act, 2002](https://www.canlii.org/en/on/laws/stat/so-2002-c-24-sch-b/latest/so-2002-c-24-sch-b.html)?

[301] For the reasons stated above, I have concluded that the limitation periods applicable to the plaintiffs’ claims related to LTM’s SRED claims for its fiscal years ended June 30, 2000 to June 30, 2007, whether in contract or in quantum meruit/unjust enrichment, expired prior to the commencement of either action.

[302] The compensatory claims related to LTM’s fiscal years ended June 30, 1999 and June 30, 2008 fail because of lack of evidence regarding LTM’s receipt of any SRED tax benefit, for the former, and LTM’s lack of reliance on Emmanuel’s SRED services, for the latter. The limitation period related to 1318847 Ontario’s contract and unjust enrichment claims for LTM’s fiscal year ended December 31, 2007 SRED claim did not expire before its action was commenced. However, the limitation period applicable to Emmanuel’s claims in his personal capacity for that year did expire before he commenced his action. Accordingly, I would conclude that the limitation periods applicable to the vast majority of claims at issue in these proceedings expired before either action was commenced.

7. Is the defendant, through its words or conduct, estopped from relying on any otherwise applicable limitation periods?

[303] The plaintiffs’ claim that from early 2010 to December 2011 Emmanuel engaged in a series of negotiations with several of LTM’s decision makers regarding the payment of compensation for his past SRED services. He states that LTM’s representatives engaged in conduct that was designed to cause and did cause him to refrain from bringing legal action to enforce his entitlement to compensation. As a result, he submits that LTM is estopped from relying on any otherwise applicable limitation periods in defence of the claims asserted in each action. I do not agree.

[304] In Maracle v. Travellers Indemnity Co. of Canada, 1991 CanLII 58 (SCC), [1991] 2 S.C.R. 50, 80 D.L.R. (4th) 652 at para. 13, Justice Sopinka set out the requirements for promissory estoppel as follows:

The principles of promissory estoppel are well settled. The party relying on the doctrine must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on. Furthermore, the representee must establish that, in reliance on the representation, he acted on it or in some way changed his position.

[305] As noted further at para. 16 of Maracle, an admission of liability is not sufficient on its own to be considered a promise or assurance that meets the first part of the test:

There must be something more for an admission of liability to extend to a limitation period. The principles of promissory estoppel require that the promissor, by words or conduct, intend to affect legal relations. Accordingly, an admission of liability which is to be taken as a promise not to rely on the limitation period must be such that the trier of fact can infer that it was so intended. There must be words or conduct from which it can be inferred that the admission was to apply whether the case was settled or not, and that the only issue between the parties, should litigation ensue, is the issue of quantum. Whether this inference can be drawn is an issue of fact.

[306] If a potential defendant enters into settlement negotiations with a potential plaintiff, before a proceeding is commenced, accepts liability and deliberately leads the potential plaintiff to believe that negotiations will continue until the matter is settled, notwithstanding the expiration of the applicable limitation period, that potential defendant may be estopped from relying on the expiration of the limitation period if a proceeding is ultimately brought: see Jenkins v. Bowes Publishing Co. (1991), 1991 CanLII 7183 (ON SC), 3 O.R. (3d) 154, 50 C.P.C. (2d) 292 (Ont. Gen. Div.), at para. 24.

[307] The evidence before me establishes that while Emmanuel suggested and later requested that he be paid compensation for his past SRED services, those suggestions and requests were consistently met with refusals from LTM. On the evidence that I accept, there were no words or conduct expressed on behalf of LTM that constituted a promise or assurance that LTM would not rely on any applicable limitation period in defence of a proceeding brought by Emmanuel or that constitutes an admission of liability to pay Emmanuel compensation for SRED claims related to its fiscal years from 1999 to 2008.

[308] Prior to November 22, 2009, LTM, through Larry, refused to agree to Emmanuel’s suggestion that he receive remuneration for the supply of SRED services. Emmanuel was aware of LTM’s position, and acknowledged that position in the HMP letterhead correspondence in the spring of 2010.

[309] After his father passed away, Emmanuel attempted many times, in many forums, to initiate negotiations designed to lead to the payment of a positive sum of compensation for past SRED claims, but no one on behalf of LTM reciprocated: not his siblings, not the estate trustees and not LTM’s CEO. Instead, Emmanuel was routinely advised that LTM would not pay compensation for past SRED claims, if he received a response at all.

[310] Emmanuel says that in early 2010 when he met with his siblings, he proposed payment of a specified sum for his past SRED services and all of his siblings agreed that he should be paid for those services with the issue of quantum to be negotiated.

[311] Emmanuel submits that his siblings’ collective admission that he was “entitled” to compensation for past SRED claims, combined with his expectation that negotiations regarding quantum would follow, satisfy the elements of promissory estoppel. For factual and legal reasons I do not share his view.

[312] The onus is on Emmanuel to prove the words and conduct he claims that gives rise to the estoppel. He has not done so.

[313] Both Paula and Tom say they were at the meeting and both felt Emmanuel should receive compensation for past SRED services. However, Tom also testifies that during the course of the meeting Emmanuel made a request for compensation for past SRED services, the request was denied, and the denial was communicated to Emmanuel at that time. Specifically, Tom recalls that Jon, LTM’s president, stated “I won’t authorize it” in reference to Emmanuel’s proposal, and in Emmanuel’s presence. I accept Tom’s evidence over Emmanuel’s on this point. Tom has no direct interest in the outcome of these proceedings and his recollection of the meeting was marked by some detail.

[314] Emmanuel did not call the balance of his siblings to give evidence nor does he testify to the manner in which they communicated their alleged agreement regarding his entitlement to compensation. I cannot conclude, as a matter of fact, that his siblings, through their words or conduct, promised not to rely on a limitation period without any evidence of the specific words or conduct upon which the plaintiff allegedly relied. In light of Tom’s evidence, I do not conclude that all his siblings agreed that Emmanuel should or would be paid compensation for past SRED services. Accordingly, I find that in relation to this meeting with his siblings, Emmanuel has not discharged his onus to demonstrate either element of the promissory estoppel test set out in Maracale.

[315] In any event, at the time of the meeting, his siblings did not have the authority to admit liability on behalf of LTM for the payment of SRED claims, nor to bind it to a promise not to rely on a limitation period. When he met with his siblings Emmanuel was aware that LTM’s affairs were controlled by Larry’s estate trustees, who had constituted its board of directors since January 2010. They were not at the meeting.

[316] In April 2010 Emmanuel advised his siblings that he had been working on LTM’s 2008 and 2009 SRED claims “without an agreement”, and until the issue of SRED compensation was resolved he would stop all “R&D submissions”. Still his siblings did not negotiate with him regarding SRED compensation.

[317] In May 2010 Emmanuel brought the issue of SRED compensation to the attention of Mr. Gatti in his capacity as one of Larry’s estate trustees. There is no evidence that Mr. Gatti promised Emmanuel that SRED compensation would be paid or that he promised that LTM would enter into negotiations for the payment of SRED compensation. Emmanuel says that Mr. Gatti said he would look into the matter, and advised him to render an invoice if he felt he was owed compensation. Emmanuel did not call Mr. Gatti as a witness. Emmanuel has not discharged his onus to demonstrate either element of the promissory estoppel test set out in Marcale, in relation to this discussion with Mr. Gatti.

[318] Mr. Gatti discussed the issues raised by Emmanuel with Paula and Jon and ultimately provided their detailed response denying liability for a number of reasons to Emmanuel in late July 2010. In that response it is unequivocally specified that LTM would not pay SRED services compensation to Emmanuel. Emmanuel immediately disputed the factual assertions of his siblings and followed up a little over a month later advising Mr. Gatti that he was not giving up on his “claim for the outstanding debt that was owed” by LTM and the estate on account of R&D. Neither Mr. Gatti nor anyone from LTM responded to Emmanuel’s correspondence, requested that he refrain from commencing litigation or promised to engage in any negotiations regarding the payment of SRED services compensation.

[319] Nine months later, Emmanuel caused the corporate plaintiff to deliver an invoice to LTM. There is no evidence that there were any SRED compensation “negotiations”, between Emmanuel and the estate trustees or anyone at LTM before or after the invoice was sent.

[320] LTM’s CEO requested clarification and additional information from Emmanuel on two occasions during the summer of 2011 in response to the invoice. However, the content of his requests do not amount to settlement negotiations or proposals. In fact, Emmanuel corresponded with Mr. Gatti indicating that the CEO had refused his request for compensation on two occasions.

[321] Emmanuel was advised in December 2011 that LTM’s Board of Directors had reconsidered his request for compensation and had not altered its position that it was refused.

[322] Prior to receiving Mr. Gatti’s email in December 2011, Emmanuel was not reasonably of the view that he had entered into a series of negotiations with LTM that would end in a settlement of his alleged compensatory claims, notwithstanding the expiration of a limitation period. He referenced potential litigation on at least two occasions in the fall of 2011.

[323] In the result, Emmanuel’s attempts to discuss compensation with any of LTM’s decision makers were consistently met with silence or refusals to pay compensation. A party’s unrequited desire to enter into negotiations with another does not equate to both parties actually engaging in negotiations. Clearly, Emmanuel hoped that someone on behalf of LTM would, at some point, make a proposal for payment of a positive sum for his past SRED claim services. That never happened.

[324] I find that LTM did not communicate an admission of liability to pay Emmanuel compensation for past SRED claim services at any point in the years leading up to or after Larry’s death. Further, I do not find that it would have been reasonable for Emmanuel to conclude that LTM was engaged in negotiations with him at any point for the payment of compensation for past SRED services.

[325] I do not find that LTM or anyone acting with authority on its behalf, by words or conduct, made a promise or assurance which was intended to affect LTM’s legal relationship with Emmanuel and to be acted on. Further, I do not accept that Emmanuel altered his position with respect to the commencement of a proceeding as a result of the words or conduct of anyone acting on behalf of LTM, with authority.

[326] The plaintiffs have not proven the elements of promissory estoppel, and my findings regarding the plaintiffs’ claims are barred by operation of the Act, remain unchanged.

8. What remedial directions should be given?

[327] I do not find that the either plaintiff is entitled to a monetary remedy and therefore, no remedial directions are necessary.

DISPOSITION

[328] For the foregoing reasons, each action is dismissed with costs presumptively payable to the defendant.

[329] Defendant’s counsel may submit separate costs outlines together with written submissions on costs, in the context of each action, within 45 days of the release of these reasons. Plaintiffs’ counsel may submit written submissions in response, within 45 days of receiving the second set of the defendant’s written submissions. The defendant may deliver written reply to the plaintiffs’ submission, in the context of each action, within 20 days of the date of service of the plaintiffs’ submissions. I request that in addition to any other relevant matters affecting the assessment of costs, the parties specifically address the issue of the defendant’s pleaded request that the costs of action CV-12-18047 be awarded against Emmanuel in his personal capacity and whether, and to what extent, the defendant’s choice to retain two counsel to participate on its behalf at trial should be taken into account in determining the appropriate quantum of costs in these proceedings.

Original signed by Justice Gregory J. Verbeem

Gregory J. Verbeem

Justice

Released: May 22, 2015

COURT FILE NO.: CV-12-18047

1318847 Ontario Limited v. Laval Tool & Mould Ltd.

COURT FILE NO.: CV-13-19542

2015 ONSC 2664

DATE: 20150522

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

COURT FILE NO.: CV-12-18047

1318847 Ontario Limited

Plaintiff

– and –

Laval Tool & Mould Ltd.

BETWEEN:

COURT FILE NO.: CV-13-19542

1318847 Ontario Limited and Emmanuel Azzopardi

Plaintiffs

– and –

Laval Tool & Mould Ltd. and Alfredo Gatti

Defendants

REASONS FOR JUDGMENT

Verbeem J.

Released: May 22, 2015