PART I – FACTUAL BACKGROUND

[1] The plaintiff, Robert Shewchuk, brings this action to claim redress for contractual breaches committed by his former employer, Blackmont Capital Inc. (“Blackmont”), now owned by the defendant, Richardson GMP. On April 11, 2006, Blackmont entered into an agreement with Shewchuk to reward him for any deals that he secured for the company. The dispute centres on the interpretation of that agreement and the scope of its intended application. In addition to his primary claim, Shewchuk lists a number of other claims against Blackmont including the negligent overpayment of commission to his former assistant, the refusal to award deferred stock units, and unjust enrichment.

The Blackmont Structure: Capital Markets and Retail

[2] Shewchuk is a registered stockbroker with a wealth of experience in the finance industry. He bought his first stock when he was 17 using money previously saved from his youth. His professional career began in 1986 and, a year later, he moved to a company named Yorkton Securities in Winnipeg. After a spell in Toronto, Shewchuk re-located to Yorkton’s Calgary office where he stayed for almost 27 years. Yorkton metamorphosed into several corporate identities as a result of a series of takeovers. The company became First Associates, then Blackmont, Macquarie, and finally Richardson GMP. It is whilst the name of Blackmont adorned the company letterhead that the claims in the current case arise. For the purposes of this judgment, the defendant shall be referrred to as “Blackmont”.

[3] At Blackmont, Shewchuk worked as a retail broker, placing private share deals for individual investors. His status in the company reflected his track record of success. In the 2005/2006 fiscal year, he generated $6 million in revenue for the company. For the majority of his tenure at Blackmont, he maintained a position at the very top of the retail broker rankings. Retail share trading, however, was not Blackmont’s sole commercial practice. A corporate finance or Capital Markets group also existed at Blackmont, working on much larger financings. The Capital Markets groups’ deals included initial public offerings (“IPO”) and merger acquisitions. Whilst retail stockbroker deals might range in value from $100,000 to $6,000,000.00, the value of transactions conducted by the Capital Markets group was much larger; their clients being investment banks and large scale institutions, rather than individual financiers. These transactions were generally multi-million dollar deals and, as Shewchuk testified, “bigger ones would be up to one billion”. Testimony from Peter Bacsalmasi, then Senior VP, described the Capital Markets group as being the “big dog” within the company.

[4] Blackmont also had a Retail Corporate Finance (“RCF”) arm, which operated when a retail broker became aware of a potential client in need of corporate finance transaction services. Although the RCF’s work was similar to that of the larger Capital Markets group, any transaction greater than $8 million would not be approved as a RCF transaction and would be diverted to Capital Markets. Due to the size of financing involved in its matters, The Capital Markets group would also look to form or join syndicates—groups of financial investors—when undertaking corporate financing projects. Such arrangements would help spread the risk involved in large financial transactions. By contrast, RCF would not typically become involved in any syndication process.

[5] The division between the retail and Capital Markets sectors of Blackmont could lead to tension between the two parts of the company. When an individual investor doing business with the retail side of Blackmont brought in a financial transaction requiring institutional involvement, the Capital Markets arm would become involved and take over the transaction. This led to a level of disharmony amongst retail brokers.

The Investment Advisor Compensation Plan (“the IA Plan”)

[6] The IA Plan was a document that administered payments to the brokers who worked at Blackmont. It contained the relevant provisions pertaining to “the grid” which determined what percentage of the gross fees would be paid out to individual brokers. The top level of payment in the years that Shewchuk worked at Blackmont was 52%. The payment would be reduced depending on the level of production of each broker. There is no dispute that Shewchuk was, at all material times, entitled to 52% of the retail deals that belonged to him.

[7] The IA Plan also contained a provision in the event that a retail broker acted on a transaction that also involved Capital Markets (“The Capital Markets Referral Provision”). If the broker or investment advisor referred a deal into Capital Markets group, they would earn a “referral fee” of up to 15%. The IA Plan also made it clear that the Private Client Group and Capital Markets Executives would determine the percentage payment on any specific transaction. In other words, it was possible for a broker to come to an understanding with Capital Markets on a specific deal that could result in a percentage above 15%. Critically, the IA Plan stipulated that the payments would reflect the value added by the investment advisor relationship and “any pre-existing relationships that [the broker] may have with the client.” The Capital Markets Referral Provision is relied upon to some extent by Blackmont in this case.

[8] Additionally, the IA Plan dealt with Blackmont’s Deferred Stock Unit (“DSU”) Bonus Program, which was determined by a complicated formula. Amongst other facts, the amount of DSUs awarded were impacted if a broker retired from Blackmont.

Shewchuk’s Dissatisfaction Comes to a Head

[9] Shewchuk was in a special position in this business matrix. His status at Blackmont reflected his successful financial dealings with clients. In 2005 for example, the company recognized him as the broker who had produced the most commission in the previous financial year: Exhibit 1, Tab 11. In many ways, Shewchuk was Blackmont’s “star” stockbroker.

[10] In addition to his retail practice, Shewchuk was involved in corporate financing and had four to five institutional accounts. According to Shewchuk, that number of corporate financing clients could generate 10 or $20 million depending on the situation. In 2005/2006, Shewchuk estimated that he had brought $6 to $7 million to Blackmont. He was paid according to the Compensation Plan grid, i.e. 52% of what he generated, with the remaining monies going to Blackmont.

[11] All was not well between the retail and Capital Markets groups. Some in retail, Shewchuk being a leading voice, believed that they were not being adequately compensated in deals they initiated but subsequently ended up in the hands of Capital Markets. At that time, Shewchuk was particularly bothered by what he felt was inadequate compensation for his involvement in two specific deals with organizations named Blue Pearl and Golden Valley. On January 14, 2005, Peter Bacsalmasi, Retail Branch Manager for the Calgary office, sought to allay the concerns of his retail investment advisers by submitting a memorandum outlining a new proposal for the division of revenue whenever retail worked with Capital Markets on a particular deal. This memorandum entitled “Discussion Paper for Local Calgary Issues” (“the Discussion Paper”) was sent to Stuart Raftus, who, at the time, was Blackmont’s CEO.

[12] Against this backdrop, Shewchuk began working with a client named Oilexco, which needed finance to drill for oil and gas in the North Sea. Blackmont made $6 to $7 million in broker warrants and financing fees on the Oilexco matter, with Shewchuk leading the financing. Normally, if broker warrants were cashed out, they would “go through the grid”, resulting in a 52/48 split between Shewchuk and Blackmont, as noted above. Broker warrants that were not cashed out would go into an inventory account that Shewchuk controlled on behalf of the firm. Eventually, Shewchuk would decide when to sell the warrants and, once redeemed, the profits would go through the grid. In Oilexco’s case, Shewchuk cashed out a substantial number of warrants immediately, but retained some million options for the strategic reason that, once the Oilexco project was fully established, the value of the options would increase. However, Blackmont’s management, worried about its finances, ordered Shewchuk to sell the warrants at a much earlier date. Despite Shewchuk’s protests, the warrants were sold for approximately $2.50 to $2.75, with Shewchuk receiving his 52% share of the profits. As Shewchuk had forecast, however, the value of the options would later rise to $19.50. Shewchuk estimated that he had lost between $10 and $15 million as a result of the premature sale.

[13] Shewchuk’s frustration came to a boil. The Oilexco decision, coupled with Shewchuk’s frustration that some clients that he brought to Blackmont were being “poached” by Capital Markets led him to approach the then chair of Blackmont, Stuart Raftus in late 2005 to start discussions on a new contract. Shewchuk let it be known that if matters were not resolved to his satisfaction he would leave the company.

The Initial Proposals

[14] On March 12, 2006, Shewchuk sent an email to Bruce Kagan, then head of the retail group, outlining a proposal. This email, Exhibit 1 Tab 41, was in turn forwarded it to Bacsalmasi and the Calgary retail managers, Keith Bekker, and Randy Bergh. The proposal set out a series of dates upon which advance payments would be made with respect to Shewchuk’s broker warrants. Additionally, Shewchuk requested certain stipulations to be honoured in the event of his departure: any deferred stock units (“DSU”) accrued up to his date of departure would be paid out in accordance with the IA plan, and none of his clients would solicited for a period of 60 days subsequent to his departure.

[15] Shewchuk sent a further proposal to Bacsalmasi on March 28, 2006 (Exhibit 1 Tab 44), which set out a different set of demands and included a 10% “finder’s fee” paid on the gross number of broker warrants paid to Blackmont “from deals sourced by” Shewchuk. A further demand included “[r]egular payout on deals sourced by other brokers at Blackmont”.

[16] On April 10, 2006, at Rockwater Capital Corporation’s Executive Committee Meeting, Kagan advised the other committee members that he and Bacsalmasi had been working on a deal with Shewchuk regarding his compensation. In Kagan’s view, a deal had been reached to ensure Shewchuk remained at the company.

[17] Kagan’s words would prove prophetic. Shewchuk entered into a new agreement with Blackmont the very next day. That contract, the “April 11 Agreement” is at the heart of this litigation.

The April 11 Agreement

[18] The final agreement was signed by both Shewchuk and Kagan, then Executive Vice President, Head of the Private Client Group. Peter Bacsalmasi was involved in the drafting. All three men were from the retail branch of Blackmont and the details of the agreement were confidential

[19] The content of that agreement is as follows:

Except Upon receipt of approval by Rockwater Capital Corporation's board of directors, Blackmont shall grant 100,000 deferred stock units ("DSUs") pursuant to the Rockwater DSU Plan for Investment Advisors (the "Plan") to you. Such grant shall be effective from March lt 2006. A copy of the Plan is attached for your reference and such grant shall be subject to the terms of the Plan. Following approval of the grant by the board, you will receive a separate confirmation of the DSU grant the DSUs shall vest as to 1/3rd on December 31, 2006, 1/3rd on December 2007, and 1/3rd on December 31, 2008. Each DSU shall entitle you to one Rockwater Capital Corporation share.
Except as outlined further below, payouts on broker warrants will be subject to Blackmont's standard investment advisor compensation plan (the "Broker Warrant Payments").
With respect to the broker warrants attributable to you for the transactions listed in Schedule "A" attached hereto and for all transactions (whether you are paid in the form of broker warrants, cash or fully paid shares) that are sourced directly by you following March 1,2006, Blackmont shall pay to you an additional 10% over and above that which is payable under Blackmont's standard investment advisor compensation plan (the "Finder's Fee").
In the event of your resignation prior to March 1,2009 or if Blackmont terminates your employment for cause at any time, all rights to Broker Warrants Payments, Finder's Fees and/or the portion of DSUs which are unvested at the time of your resignation or termination for cause shall be forfeited.
The parties agree that if you resign after March 1, 2009, or in the event of a change in beneficial ownership Blackmont shall honour your continued participation in your broker warrants at your enhanced cash grid level pertaining to Schedule “A”. All other payments will be forfeited.
Blackmont shall provide you with a travel budget of up to $20,000 per year for business travel expenses incurred by you in furtherance of Blackmont’s business.
Blackmont agrees that should Blackmont provide another investment advisor with compensation exceeding the Finder's Fee payable hereunder, Blackmont shall provide you with the same terms of compensation as such investment advisor provided that the circumstances and assets under administration of such investment advisor are substantially similar to yours.
You agree that this compensation arrangement is in full and final settlement of all compensation related issues in dispute between Blackmont and you up to and including March 1,2006.
You and your associate, Mr. Harris Watson, also agree that the terms of this agreement are strictly confidential and shall not be shared by you with any other person, other than your spouse/partner, professional advisor, or as may be required by law. You agree that if you or Mr. Watson breach this confidentiality clause that Blackmont shall be entitled to terminate this agreement immediately upon written notice and that thereafter, compensation payable to you shall revert back to Blackmont's standard investment advisor compensation plan.
Other than as specifically stated above, all other terms of your employment remain unchanged and shall continue to be subject to Blackmont's investment advisor compensation plan in existence at the relevant time.

Schedule A of the April 11 Agreement

[20] The list of transactions included in Schedule A of the April 11 Agreement clarified which transactions qualified for a Finder’s Fee and which did not. This schedule became a source of controversy as the trial progressed, principally because of a disagreement between the parties as to whether it described transactions or relationships held by Shewchuk.

Post-April 11 Agreement Disputes

[21] The April 11 Agreement was intended as the panacea for Shewchuk’s complaints. It did not, however, provide the solution that he was looking for.

[22] Shewchuk continued to have concerns with respect to his clients being taken by the Capital Markets group. Shewchuk testified that he contacted various management level representatives including Kagan and Chad Williams, the head of the mining division of Capital Markets. Shewchuk was so concerned about Capital Markets “going after” his accounts that he provided a list of names and contacts. According to Shewchuk, however, after the April 11 Agreement had been signed Williams and Mike Vernon, also of Capital Markets, began calling his clients.

[23] On November 5, 2006, Shewchuk sent an email, Exhibit 1 Tab 91, to Kagan and Gerry Throop, then head of Capital Markets, setting out the issues that he had with Capital Markets and the way they worked together. He felt that Capital Markets always wanted to dictate terms on referred retail deals. Moreover, he voiced his objections to the manner in which compensation for deals based on his “relationship with the issuer and my retail distribution” was being awarded. He wrote “If I bring in a retail deal though Toronto with little or no work, let me control the book, commissions and the B’s [sic] after all related expenses” He proposed that any deal that he brought to Capital Markets should be rewarded with a 15% finder’s fee after all costs had been paid and added, “but make this on a gross bases [sic] to keep it simple.” His conclusion was that a deal brought to Capital Markets by retail was a “win win situation for the firm and everyone is happy.” He urged Kagan and Throop to make it “black and white”. There was no reference to the April 11 Agreement in the email. Shewchuk had no recollection of a response by either Kagan or Throop.

[24] Shewchuk sent a second letter, Exhibit 1 Tab 207, to Wayne Adlam, Throop’s successor as head of Capital Markets, repeating, in a more expanded form, his concerns over compensation with respect to deals brought to the firm on the basis of his relationships. Shewchuk insisted that “we create a formal legal agreement drawn up by our counsel or independent counsel if necessary, that governs my fee and commission structure relating to the issues and concerns highlighted in this letter”. Again, there was no reference to the April 11 Agreement.

[25] Shewchuk met with Kagan, Throop, Bacsalmasi, Dan Gosselin (Executive Vice President, Retail Capital Markets) and Craig King (Director, Capital Markets) shortly afterwards to discuss his concerns. Gosselin sent an email on November 10, 2006, summarising the discussion, and the “retail syndicate deal process”. The summary concluded that Shewchuk’s relationships with issuers would result in more favourable compensation “on a case by case basis.” Responding on November 13, 2006, Shewchuk expressed his agreement with the summary but for the “case by case” suggestion. Shewchuk, in explicit terms, made it clear he did not want to argue about each deal he brought to Capital Markets. He claimed that he understood and believed that all commissions and broker warrants would be going “to grid” on a gross basis with a 52/48 percentage split. Later in the same email, Shewchuk referred to a deal involving a company called Intrepid that he claimed had been brought to Blackmont by his contact, Ian McDonald, but was taken over by Capital Markets. He wrote that “I guess I could argue for a finder’s fee but reality is [Laurie] Curtis called CM and did the deal and that is his choice. If I want a piece of this I have to now talk to Chad.” Once again, Shewchuk did not raise the April 11 Agreement in his arguments.

[26] Over the next two years, Shewchuk would be embroiled in battles with Blackmont over compensation with respect to deals and clients that he felt should result in financial recognition but did not cite the April 11 Agreement as a basis for his claims. The first explicit mention of the April 11 Agreement appeared in an email dated April 27, 2008. Shewchuk’s failure to refer to the April 11 Agreement is a significant factor and is discussed in detail below.

[27] Shewchuk failed, it would appear, to resolve issues in a manner that he thought was just. In late 2008, he began to consider departing Blackmont. In May 2009, after two decades of working at Blackmont in its various corporate guises, Shewchuk moved to a rival finance company, Canaccord.

PART II - SHEWCHUK’S CLAIMS

Overview of the Claims

[28] This action is concerned with a diverse number of claims made by Shewchuk in his dealings with Blackmont during the time that he worked at the company.

[29] Those claims can be identified under the following headings:

1. Specific Breaches of the April 11 Agreement

[30] Shewchuk alleges Blackmont breached the April 11 Agreement by failing to comply with its terms in relation to specific transactions brought to the company only because of his pre-existing relationships. As such, he claims that under paragraph 3 of the April 11 Agreement, he was entitled to be paid “through the grid” with an additional 10% finder’s fee, thus receiving 62% of the profit made by Blackmont.

[31] The disputed transactions are with the following companies:

(i) U308

(ii) Glencairn Gold Corporation (“Glencairn”)

(iii) Bridge Financing Corporation (“Bridge”)

(iv) Colossus

2. Negligence in Payments to Heather Charron

[32] Ms. Charron was employed as Shewchuk’s assistant, having been hired by Shewchuk in January 1, 2004. Her salary was paid by the firm but she received a bonus, which was calculated as a monthly payment of 1% of Shewchuk’s commissions. Shewchuk alleges that this percentage payment was supposed to be calculated as a percentage of net commission but Blackmont, through its own negligence, paid Ms. Charron on a gross commission basis. Shewchuk claims the monetary amount of the money overpaid to Ms. Charron through Blackmont’s miscalculation.

3. The Non-Vested Deferred Stock Units

[33] Shewchuk claims the value of all DSUs that had not vested at the time of his resignation in May 2009.

4. The Vested DSU Payments

[34] Shewchuk also claims any vested DSUs unpaid by Blackmont during his employment. Specifically, this claim centres on activities conducted in 2007 and includes the U308 and Glencairn transactions.

5. Unjust Enrichment

[35] As an alternative, if his claims under the April 11 Agreement are not proven, this court should find that Blackmont was unjustly enriched as a result of Shewchuk’s work.

The Disputed Transactions

(a) U308

[36] The origin of the U308 deal emanated from the relationship between Shewchuk and Tom Obradovich, the founder of the company. Obradovich was called at the trial and testified to the long standing nature of the business relationship between himself and Shewchuk stretching back to the early 1980s when Obradovich approached Shewchuk for advice and guidance on a raising capital for a mining property.

[37] Shewchuk and Obradovich worked together between 1996 and 1998 in preparing the IPO of Canadian Royalties, a venture so successful that Shewchuk continued to work with Obradovich in other financing deals.

[38] In 2005, Obradovich enlisted Shewchuk’s aid in the development of a uranium project in Guyana. That project would become U308. In 2006, an IPO for U308 was planned and Shewchuk informed Chad Williams and Gerry Throop of his involvement with the company and his role in the retail portion of the IPO. The syndicate subsequently formed to raise finance consisted of Blackmont, Canaccord, and Sprott Securities, with Sprott as the “book runner”, i.e. the member of the syndicate responsible for making calls and entering the finances.

[39] The total amount raised by the IPO was approximately $30 million of which Blackmont received a 6% cash commission, totalling $372,030.36, as well as 180,000 broker warrants. Shewchuk received what amounted to $115,000 in cash payable through the grid at the normal 52% calculation. He thus received $59,800 plus 12,000 of the 180,000 of the broker warrants issued. Ultimately, when Shewchuk exercised the warrants, he made $1.98 on each warrant.

[40] At trial, Obradovich made clear that the only reason Blackmont was included in the IPO was due to Shewchuk. Obradovich also testified that he was the person responsible for deciding who would be included within the syndicate. He had no relationship with anyone else at Blackmont and, on January 14, 2007, he wrote to Blackmont outlining his expectation that Shewchuk would get the majority of fees and warrants.

[41] Shewchuk takes the position that because this was a deal “sourced directly” by him, the April 11 Agreement applied. Therefore, he should have received 62% of the $372,030.36 fee received by Blackmont. In addition, he was entitled to 62% of the broker warrants received by Blackmont which would have totalled 118,000.

(b) Glencairn Gold Corporation

[42] Ian Macdonald, one of the founders of Glencairn, testified that he had known Shewchuk since 1988 whilst they were both working together at Yorkton Securities. McDonald was in the mining industry and he and his partner, Kerry Knoll, worked with Shewchuk extensively at Blackmont.

[43] In June 2006 Shewchuk participated in a financing involving Glencairn (“Glencairn I”). On October 26, 2006, McDonald wrote to Blackmont clarifying that Blackmont’s inclusion into the financing was as a result of Shewchuk’s request.

[44] A second financing was arranged in October 2007 and Blackmont was once again invited to participate. McDonald testified for Shewchuk in this trial and explained that this invitation occurred only because Shewchuk was at Blackmont and confirmed that he had sent a letter to Blackmont in October 2008 to ensure the company realised that fact. According to McDonald, there was no other reason to involve Blackmont. Without Shewchuk’s presence, the company would not have been asked to participate. There was no stock placed in this deal.

[45] The financing completed on October 22, 2007 and was a success raising $26 million for Glencairn. As part of a syndicate operation, Blackmont received $150,000 in cash and 1,369,950 in broker warrants. Of this amount Shewchuk received $52,955.79 in cash and 684,975 in broker warrants.

[46] Shewchuk claims that under the April 11 Agreement, he is entitled to 62% of the original $150,000 received by Blackmont and is therefore owed a further $40,044.21 on top of the funds he has already received. Moreover, Shewchuk claims an additional 164,394 warrants. Due to the fact that the broker warrants were units of 1 share and one half warrant, Shewchuk claims one half warrant component of the original warrants and the value of the share and one half of the warrant components of the units he never received.

[47] Shewchuk testified that he had a personal and professional relationship with Ron Brimacombe, a consultant employed by Bridge. Shewchuk knew Brimacombe when they were both employed at Yorkton in the late 1980s. After Brimacombe left Yorkton, he and Shewchuk worked together on numerous deals for different companies and continued to do so until Brimacombe’s death in 2013. Shewchuk testified to his relationship with Dave Antony who also worked with Brimacombe. Both Antony and Brimacombe became directors at Bridge and Shewchuk discussed financing plans with the pair advising that he could raise up to $10 million for their company.

(i) The First Bridge Resources Corporation Financing (“Bridge I”)

[48] In December 2007, Blackmont and Macquarie commenced financing of Bridge as co-leads. Shewchuk testified that the original idea was for Blackmont’s retail arm to carry out the financing but in October 2007, Capital Markets became involved through Jeff Lawson, who had recently joined Blackmont. Lawson, who was called as a witness by the defendant, cast some doubt on Shewchuk’s evidence that he had exclusively brought the Bridge I to Blackmont. However, what is not disputed is the fact that Shewchuk played a key role in the success of the financing project and that Lawson’s view was that Shewchuk “singlehandedly secured” Blackmont the lead on the financing.

[49] Shewchuk testified that he was unhappy with some of Lawson’s work, as he missed the opportunity to include a right of first refusal (“ROFR”) condition in the Bridge I agreement. A ROFR would have brought the next financing by Bridge back to Blackmont and, in Shewchuk’s view, provided more business for himself. According to Shewchuk, he discussed the absence of the ROFR with Brimacombe and Antony and was reassured that any subsequent Bridge financing would necessarily involve him.

[50] Shewchuk does not claim any damages from the Bridge I deal; however, the communication, compensation, and aftermath of Bridge I are of some significance to Shewchuk’s claim with respect to the second Bridge financing. As such, they are discussed in length later in this judgment.

(ii) The Second Bridge Financing (“Bridge II”)

[51] On June 27, 2008, a second Bridge financing deal was announced. This was led jointly by Blackmont and Wellington West, who was the sole book runner for the deal. Lawson testified that having only one book runner for a syndicate deal was the norm, as it avoided confusion and promoted efficiency.

[52] This was also a “bought deal”, i.e. one in which Blackmont bought stock and assumed the financial risk of that stock’s value being at or above the payment price when it was resold. Such deals were financially risky for Blackmont, but very appealing to the company seeking finance—in this case, Bridge—as it provided a greater level of certainty.

[53] According to Shewchuk, Blackmont did nothing on the deal, but received a fee of $990,889.35 in cash with no broker warrants. Shewchuk himself received no funds whatsoever.

[54] Shewchuk claims that since Bridge II would not have been possible without Bridge I—the deal that he brought to Blackmont through his relationship with Brimacombe and Antony — the April 11 Agreement applied to Bridge II. Accordingly, he is entitled to and claims 62% of the fee Blackmont received, or $614,351.40.

(d) Colossus

[55] Shewchuk brought Colossus to Blackmont through his relationship with Ari Sussman, founder of the company, whom he had met in 2004. Shewchuk had been involved with a number of financing deals for Colossus from 2006 to 2008.

[56] In February 2009, Blackmont was a member of a syndicate in another financing for Colossus. This syndicate was made up of Canaccord, GMP, Dundee, Haywood and Blackmont. It was led by Macquarie. The financing raised a total of $24.7 million and Blackmont received a cash fee of $60,383.30 with 34,500 broker warrants.

[57] Shewchuk was unhappy with respect to share distribution and complained to Thomas Kim. Ultimately Shewchuk received a net payment of $7,211 and no broker warrants.

[58] Shewchuk claims that under the terms of the April 11 Agreement he is entitled to 62% of both the cash fee, equalling $37,437.65, and broker warrants of 34,500, equalling 21,930. Based on the value of the warrants at expiry, Shewchuk claims $119,570.10 as the amount of profit he would have had the benefit of if he had properly received and cashed the shares.

PART III - THE LEGAL RULINGS

[59] Shortly before the close of Shewchuk’s case, Mr. Groia, raised two legal issues requiring determination. In order to ensure the expeditious continuation of the trial, I gave brief oral reasons with respect to both applications. These are my reasons for disposition of those issues.

Ruling No. 1 - Admissions Against Interest

[60] Mr. Groia, sought admission of a number of email messages (“the e-mail evidence”) from various employees of the Blackmont organization. These messages, technically fall under the hearsay rule as the makers of the statements have not been called as witnesses. A large number of documents have been tendered by both parties as part of their case. This court, with the urging of both parties, has operated under the principle that any message sent or received by a witness could be “marked as proven” i.e. considered as truth of the contents contained within the statement unless and until a party objects.

[61] The email evidence that is the subject of this application did not fall within this general rule. However, Mr. Groia advanced the position that the messages, having been sent and received by Blackmont employees, constituted admissions against interest and could not be characterised as hearsay. Mr. McLeod, on behalf of the defendant, disagreed and argued that the emails constituted hearsay utterances subject to the principled approach enunciated in R. v. Khan, 2001 SCC 86, and R. v. Khelawon, 2006 SCC 57. Since the twin criteria of necessity and reliability had not been met, the email evidence was inadmissible.

(a) The Documents

[62] The documents that Mr. Groia tenders for admission (“the hearsay evidence”) are as follows:

Exhibit 1 Tab 366: An email from Wayne Adlam to Bruce Kagan (respectively president and CEO of Blackmont) dated April 28, 2008. This email outlines Adlam’s “understanding” that, according to the “deal” made by Blackmont on “the six names”, all of the fees received by Blackmont were to be paid according to the grid, with 48% returned to Capital Markets. Adlam’s understanding is that the 10% did not apply;
Exhibit 1 Tab 176: An email from Kagan to Adlam dated October 3, 2007, expressing his view that that the key issue is whether they would have done the deal “with or without Shewchuk”. Kagan informs Adlam that “they have a written document giving him full economics” on Glencairn so Blackmont needs to tread carefully;
Exhibit 1 Tab 137: A series of emails on March 1, 2007 between Colin Larson and Peter Bacsalmasi where Shewchuk’s additional 10% payout is discussed after Harris Watson raises the issue;
An email from Colin Larson dated April 29, 2008, to Erlinda Amurao, informing her that $38,000.00 was to be added to Shewchuk’s net for April as his finder’s fee for Canadian Royalties;
Exhibit 1 Tab 370: An email from Colin Larson dated November 3, 2008, requesting the finder’s fee of 10% be added with respect to the Glencairn Gold transaction;
A series of emails from Larson to Harris Watson giving reassurances that despite the sale of Blackmont to Macquarie “nothing will change” and providing a list of items that are in inventory.

(b) Are the Emails Subject to the Necessity and Reliability Test?

[63] The test for the admission of hearsay is trite law and has existed in Canadian law since the early 1990s. In Khelawon, the Supreme Court of Canada revisited the jurisprudential landscape and re-affirmed the procedure by which out of court utterances falling outside of the traditional exceptions to the hearsay rule should be admitted into evidence. The party seeking admission of such utterances must demonstrate on a balance of probabilities that they are both necessary and reliable (“the principled approach”). In R. v. Starr, 2000 SCC 40, the Supreme Court of Canada brought the traditional exceptions of the hearsay rule—such as statements of intention or statements between co-conspirators—within the ambit of the principled approach. According to Starr, the traditional exceptions remain in place, however they may be subject to challenge on the basis that they are not supported by the indicia of necessity and reliability required by the principle approach and modified accordingly.

[64] In this case, Mr. Groia relied upon the doctrine of admissions against interest to permit the court to consider the email evidence. In doing so, he argued that the courts have recognized that admissions are not properly characterized as hearsay evidence and, accordingly, not subject to the strictures of the principled approach.

[65] In R. v. Evans, 1993 CanLII 86 (SCC), [1993] 3 S.C.R. 653, Sopinka J., explained the role of admissions at 664:

The rationale for admitting admissions has a different basis than other exceptions to the hearsay rule. Indeed, it is open to dispute whether the evidence is hearsay at all. The practical effect of this doctrinal distinction is that in lieu of seeking independent circumstantial guarantees of trustworthiness, it is sufficient that the evidence is tendered against a party. Its admissibility rests on the theory of the adversary system that what a party has previously stated can be admitted against the party in whose mouth it does not lie to complain of the unreliability of his or her own statements.

[66] The notion that admissions are not actually hearsay was the subject of further comment in R. v. Foreman, (2002), 2002 CanLII 6305 (ON CA), 169 C.C.C. (3d) 489 (C.A)., one of the first cases decided by the Court of Appeal for Ontario after Starr. Doherty J.A. writing for a unanimous court, referred to Sopinka J.’s observations in Evans at para. 37and explained that, even post-Starr, admissions “are admitted without any necessity/reliability analysis.” See also R. v. Osmar, 2007 ONCA 50, at para. 53.

[67] I conclude, therefore, that the admissions made in the email evidence do not fall within the hearsay rule and are therefore not subject to the Khelawon analysis. Whilst I appreciate Mr. McLeod’s concern that the content of the emails is, at times, vague or ambiguous, that factor goes to weight, rather than admissibility.

(c) Do the Emails Have to be Made to an External Recipient?

[68] Mr. McLeod resisted the admission of the email evidence on an alternative basis. Relying upon R. v. Strand Electric, (1969) 1968 CanLII 421 (ON CA), 1 O.R. 190 (C.A.), Mr. McLeod asserts that the rule relating to vicarious admissions operates only when the admission against interest is made by an agent as part of a conversation that he was authorized to have with a third party. Two other cases, R. v. Petro-Canada, [2008] O.J. No. 2390 (S.C.) and R. v. National Wrecking Co., 2005 CarswellOnt 8002 (Ct. J.) refer to Strand Electric with approval. Since these were internal communications made by Blackmont’s employees to each other, Mr. McLeod submits that they fall afoul of the rule in that case and should not be admitted. I note, however, that both Petro-Canada and National Wrecking Co. did not focus on the fact that the admission was made to a third party, but whether the agent of the company had authority to make the statement. None of the cases relied upon by Mr. McLeod deal with communications made by one employee of a corporation to another.

[69] In direct contrast, in Morrison-Knudsen v. British Columbia Hydro & Power Authority (1973), 1973 CanLII 1107 (BC SC), 36 D.L.R. (3d) 95 (B.C.S.C.), it was held that an admission made by a chairman of a company to the shareholders was admissible against the corporation as a whole as an admission against interest. Similarly, in Ault v. Canada (Attorney General), [2007] O.J. No. 4924 (S.C.), the court found that documents and memoranda made for and communicated between different public servants were admissible against the Government of Canada.

[70] In my view, Strand Electric does not preclude internal communications within a corporation as being admissions against interest. It would be a most bizarre result if an oral admission made by the chairman of one company to the chairman of another was admissible against the corporation, whereas a written memo from the chairman to an employee, saying the same thing, was not. My reading of Strand Electric leads me to conclude that it stands for the proposition that the company agent making the statement must have authority to speak on behalf of the corporation when communicating with a third party for that statement to constitute an admission against the company.

[71] In the circumstances of this case, the parties involved, Adlam, Kagan, Larson et al were all higher-level employees of the company tasked with Blackmont’s management. It could scarcely be said that they lacked the authority to make the statements they did. As such, Mr. McLeod’s argument, ably advanced, is rejected. As noted above, any deficiencies in context and clarity of the email evidence will affect the weight accorded to this evidence.

Ruling No. 2 - The Defendant’s Answers to Undertakings

[72] Mr. Groia brought a second application, this time to exclude rather than admit evidence. The controversial items were answers given to undertakings arising from the cross-examination at the discovery hearing of Peter Bacsalmasi on December 6 and 7, 2011.

(a) The Undertakings

[73] Three undertakings were at issue in this motion:

(i) Undertaking #5 was a request made by Shewchuk for clarification of what “deal” Wayne Adlam was referring to in his email to Bruce Kagan, dated April 28, 2008. In its initial response, dated June 2012, the defendant advised that the “deal” mentioned by Adlam was the April 11 Agreement. In an updated Answers to Undertakings dated January 2013, the defendant maintained that answer. However, in a subsequent Answers to Undertaking, the defendant provided a “Corrected Answer”. Based on “a further review of productions” the defendant concluded that Adlam was not referring to April 11 Agreement, but discussions and correspondence from November 2006.

(ii) Undertaking #4 was a request by Shewchuk to ascertain whether there were instances where Shewchuk was paid an additional 10% over and above the payment under the Blackmont Standard Investment Advisor Compensation Plan as contemplated by para. 3 of the April 11 Agreement. In Answer #1, the defendant informed Shewchuk’s counsel that the answer was “outstanding”. In Answer #2, the defendant provided Commission Adjustment Reports (“CAR”) which included the 10% payout. In Answer #3, however, the defendant provided a “Further Answer”, which amounted to a recitation of the defendant’s position that Shewchuk had been overpaid in several of the instances set out in the Commission Report.

(iii) Undertaking #10 related to Bruce Kagan’s email to Wayne Adlam referencing a “written document” giving Shewchuk “full economics from Gerry on Glencairn”. Clarification was sought by Shewchuk’s counsel as to what that “written document” was. In Answer #1, the defendant responded that Kagan was referring to the April 11 Agreement. In Answer #2, the defendant re-stated that position. In Answer #3, however, the defendant provided a “Corrected Answer” that Kagan was not referring to the April 11 Agreement but discussions and correspondence from November 2006. The defendant’s position was that Kagan was “mis-speaking” in expressing his view of the existence of a “written document” giving Shewchuk full economics on Glencairn.

(b) Should the Subsequent Answers to Undertakings be Excluded?

[74] Mr. Groia asked this court to hold the defendant to its original Answers to Undertakings and to ignore the “corrected” versions. With respect to the answers to Undertakings #5 and #10, Mr. Groia submits that the defendant had several opportunities to provide the answers and yet, when providing corrections, offered no affidavit evidence explaining in detail why the original answers were altered. With respect to Undertaking #4, Mr. Groia claims that the “Further Answer” given by the defendant is not a genuine answer to an undertaking, but an argument of its position. The CAR provided by the defendant constitutes the proper answer to Undertaking #4 and it is only that document that should be considered by this court when arriving at a verdict.

[75] Whilst I have some sympathy for Mr. Groia’s position, I also recognize the fact that the defendant was under an obligation to correct the original answers given as part of its undertaking at the discovery hearing. Rule 31.09 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, directs that where a party discovers that information given has subsequently found to have been incorrect, that party must provide inform all other parties to the proceeding. The defendant was thus mandated to provide the further, corrected answers. In Marchand (Litigation Guardian of) v. Public General Hospital Society of Chatham (2000), 2000 CanLII 16946 (ON CA), 51 O.R. (3d) 97 (C.A.), the court explained that under rule 31.09, the parties were obliged to correct their discovery answers, but the impact of those corrections remained a matter to be decided by the trial judge. The court also made clear that in such situations, a trial judge is entitled to consider both original and corrected answers. See also, Capital Distributing v. Blakey, 1997 CanLII 12173 (ON SC), [1997] O.J. No. 1913 (S.C.), at para. 13.

[76] I therefore conclude that the corrected answers shall be considered alongside the original answers to the undertakings given by the defendant.

PART IV - THE LEGAL PRINCIPLES

[77] The position advanced by Shewchuk in this trial is that the April 11 Agreement entitled him to 62% of any deal sourced by him. This entitlement applied even if the Capital Markets group did all the actual work on the deal, as well as assuming any financial risk pursuant to the “bought deal” concept.

[78] Blackmont’s response is that the April 11 Agreement was a document that oversaw Shewchuk’s dealings with the retail group and had no application to any transactions involving Capital Markets. Alternatively, they argue that, if the April 11 Agreement applied to the disputed transactions, Shewchuk has nevertheless failed to discharge his burden to demonstrate that the transactions fell within the April 11 Agreement.

[79] In his written argument, Shewchuk submits that the primary issue for this court to decide is whether the four transactions were “sourced directly” by Shewchuk. I disagree. In my view, the primary issue is whether the disputed transactions fell within the scope of the April 11 Agreement. In other words, was the April 11 Agreement simply a retail document created to compensate Shewchuk for work done as a retail broker or was it a much broader agreement including all transactions involving Capital Markets? It is only if I conclude that the latter scenario is what the parties envisaged when signing the April 11 Agreement that the issue of direct sourcing becomes relevant.

[80] The most recent Supreme Court of Canada jurisprudence on contractual interpretation is in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53. In Sattva, the court revisited the analysis required to determine contractual intention. Rothstein J., writing for the majority, observed at para. 47 that the “overriding concern is to determine the intent of the parties and the scope of their understanding.” He continued, at paras. 47-48:

To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract. Consideration of the surrounding circumstances recognizes that ascertaining contractual intention can be difficult when looking at words on their own, because words alone do not have an immutable or absolute meaning:

No contracts are made in a vacuum: there is always a setting in which they have to be placed. . . . In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating.

(Reardon Smith Line, at p. 574, per Lord Wilberforce)

The meaning of words is often derived from a number of contextual factors, including the purpose of the agreement and the nature of the relationship created by the agreement….

[81] Later in the judgment, at paras. 57-58, the court set out the limits of the use of surrounding circumstances:

While the surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowed to overwhelm the words of that agreement (Hayes Forest Services Ltd. v. Weyerhaeuser Co., 2008 BCCA 31, at para. 14; and [Hall, Geoff R. Canadian Contractual Interpretation Law, 2nd ed. Markham, Ont.: LexisNexis, 2012], at p. 30). The goal of examining such evidence is to deepen a decision-maker’s understanding of the mutual and objective intentions of the parties as expressed in the words of the contract. The interpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract (Hall, at pp. 15 and 30-32). While the surrounding circumstances are relied upon in the interpretive process, courts cannot use them to deviate from the text such that the court effectively creates a new agreement (Glaswegian Enterprises Inc. v. B.C. Tel Mobility Cellular Inc. (1997), 1997 CanLII 4085 (BC CA), 101 B.C.A.C. 62).

The nature of the evidence that can be relied upon under the rubric of “surrounding circumstances” will necessarily vary from case to case. It does, however, have its limits. It should consist only of objective evidence of the background facts at the time of the execution of the contract (King v. Operating Engineers Training Institute of Manitoba Inc., 2011 MBCA 80, at paras. 66 and 70), that is, knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contracting. Subject to these requirements and the parol evidence rule discussed below, this includes, in the words of Lord Hoffmann, “absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man” ([Investors Compensation Scheme Ltd. v. West Bromwich Building Society, [1998] 1 All E.R. 98], at p. 114). Whether something was or reasonably ought to have been within the common knowledge of the parties at the time of execution of the contract is a question of fact.

[82] Mr. McLeod for the defendant submits that subsequent conduct and extrinsic evidence may only be taken into consideration if an ambiguity exists in the wording of the contract. In support of this argument, he relies upon cases such as Lombard Canada Ltd. v. Zurich Insurance Co., 2010 ONCA 292, and Holmes v. Desjardins Financial Security Life Assurance Co., 2014 ONSC 4695. With respect, these cases pre-date Sattva. It is unclear whether the Supreme Court of Canada’s dicta has overtaken the principles cited by Mr. McLeod, but it certainly seems to me that if subsequent conduct demonstrates the mutual and objective intentions of the words in the contract, it is as valuable as any conduct pre-existing the making of the contract.

[83] However, in my view that issue is academic, as I disagree with both parties’ contention that there is no ambiguity in this case. Paragraph 3 of the April 11 Agreement (“the Finder’s Fee provision”) collides head on with the Capital Markets Referrals terms contained in the IA Plans. Paragraph 3 pays out a finder’s fee of 10% to “all transactions… that are sourced directly by [Shewchuk] following March 1, 2006”. The unrestricted nature of the provision implies that it applies to all transactions brought to Blackmont by Shewchuk, irrespective of the nature and extent of Capital Markets’ involvement. This is Shewchuk’s position. On the other hand, as the defendant observes, paragraphs 2 and 10 of the April 11 Agreement reaffirm the governing structure of the IA Plans, which include the Capital Markets Referrals and the discretionary nature of those payouts.

[84] This ambiguity can only be resolved by looking at the surrounding circumstances of the April 11 Agreement and what happened afterwards in its implementation.

PART V - DID THE APRIL II AGREEMENT APPLY TO THE DISPUTED TRANSACTIONS?

[85] At this point, I turn to the surrounding circumstances to determine whether the parties intended the April 11 Agreement to apply to the disputed transactions involving Capital Markets. I also look at the post the April 11 Agreement events to ascertain the parties intentions and understanding of the agreement.

1. The “Discussion Paper”

[86] The Discussion Paper sent by Bacsalmasi to Blackmont’s then CEO, Stuart Raftus, outlined a series of grievances felt by Blackmont’s Retail group. In an attempt to bridge the financial gap between retail and Capital Markets, Bacsalmasi set out a number of proposals which would regulate transactions between the two sections.

[87] In particular, Bacsalmasi wished to expand retail’s limit on financing to $15 million without having to seek permission from Capital Markets first. The document, marked as Exhibit 1 Tab 391A, referred to an incompatibility between retail and Capital Markets that had deleterious effects on the company in terms of both morale and recruitment. The Discussion Paper contained some strong language outlining the Calgary retail branch’s dissatisfaction with Capital Markets in Toronto. The paper remarked that the view that Capital Markets brought added prestige and value to transactions was “untrue”. Strikingly, the discussion paper noted that “one of the most damaging aspects of the current situation is that control of revenue is in Capital Markets’s hands.”

[88] Bacsalmasi “strongly” recommended that the introducing broker in a transaction have greater control over the allocation of revenue. According to Bacsalmasi, Shewchuk provided input on the Discussion Paper along with a number of other brokers at the firm. However, the Discussion Paper was signed by Bacsalmasi alone.

[89] At trial, Bacsalmasi sought to distance himself from the Discussion Paper, calling it a document that was full of rhetoric and was designed to capture attention. His attack on Capital Markets, he said, was a “little over the top”. On revenue sharing, he disowned paragraphs criticizing the “house” taking 50% of the “split” and the role of the syndicate teams.

[90] I found Bacsalmasi’s retreat from the views expressed in his discussion paper positions to be somewhat less than convincing. Whilst Blackmont points to the Discussion Paper as evidence that Bacsalmasi had no control over Capital Markets and could only “outreach” to them (and was therefore unable to bind them in any agreement), the real value of this paper is as a demonstration of the very real friction between retail in Calgary and Capital Markets in Toronto, and the corresponding demand for change. I also note that, as a counterbalance to Shewchuk’s argument that his view was shared by Bacsalmasi, the paper suggests raising the threshold approval ceiling of institutional financing to $15 million without seeking approval from Capital Markets but recognizes an exception for “bought deals”.

2. The Lack of Capital Markets Presence

[91] It is notable that although Shewchuk claims that the April 11 Agreement was binding on Blackmont and therefore its Capital Markets operations, there is no reference to Capital Markets in the April 11 Agreement. This oddity is particularly striking in light of the potential conflict between the Finder’s Fee Provision and the Capital Markets Referral sections in the IA Agreement.

[92] More significant, however, is the absence of any Capital Markets representative in the formation or signing of the April 11 Agreement. Bacsalmasi referred to Capital Markets as the “big dog” of Blackmont. Jeff Lawson confirmed the size and strength of Capital Markets within the company and how its transactions dwarfed those of the retail section. Shewchuk, himself, conceded the revenues generated by a Capital Markets syndicate financing were of a substantial nature. Despite the giant shadow cast by Capital Markets’ presence, the evidence discloses that the only Kagan, Bacsalmasi and Shewchuk were involved in the creation and construction of the agreement. All three were retail personnel. No Capital Markets representative was present. The glaring question that cries out for an answer is: why did “the big dog” of the company play no role in an agreement that significantly affected its revenue receipts?

[93] Yet not only did Capital Markets play no part in the creation of the April 11 Agreement, paragraph 9 forbade Shewchuk or Harris Watson to share the terms of the agreement with them. I find it inconceivable that this would be the case if the April 11 Agreement was intended to apply to Capital Markets transactions. Leaving aside the ethical implications: the impracticalities involved in resolving disputes, clarifying revenue sharing, and conducting basic discussions on the commencement of transactions sourced by Shewchuk would be immense.

[94] It simply makes no sense that a retail/Capital Markets contract would be drawn up in a manner that bound the Blackmont ‘s major operation to forfeit revenue without being informed.

3. The Use of “Bought Deals”

[95] A “bought deal” in the financial trading world would see Capital Markets assume the liability for the stocks or securities being issued by the client. In other words, Blackmont, either on its own or as part of a syndicate, would guarantee a fixed amount of revenue to be raised for the client, purchase the client’s stock for a fixed price thereby providing the client with the funds promised, and would then seek to sell the stock to recoup the money paid.

[96] Jeff Lawson explained that “bought deals” were extremely attractive to clients because they provided certainty, and were used in situations where several syndicates were vying for a client’s business. The upside for a company such as Blackmont was that a “bought deal” would very often clinch the business opportunity for them. The downside was that Blackmont would bear the risk of loss if the securities resale price was lower than the original value of purchase.

[97] In the Discussion Paper, Bacsalmasi recognized the unique difficulty faced by Capital Markets when handling a “bought deal” when he suggested an exception to raising the ceiling of retail finances to $15 million.

[98] If Shewchuk’s position regarding the April 11 Agreement is correct, he would receive 62% of Blackmont’s revenue in a “bought deal” where he had done nothing but introduce the client to Blackmont, with Capital Markets assuming all liability and workload. Once again, I find it bizarre that the parties to the April 11 Agreement would have intended such a result, particularly given no one from the Capital Markets branch was aware of the agreement or could even be told of it by Shewchuk.

[99] Two of the disputed deals were “bought deals”: Colossus and Bridge II. Shewchuk was cross-examined with respect to Colossus and its characteristics as a “bought deal” transaction. I found Shewchuk to be evasive on this issue and unwilling to answer questions in a direct manner. At one point, he claimed that he had assumed the risk in this transaction. When confronted with the lack of documentary evidence confirming this fact, Shewchuk changed his testimony and stated that he “could have accepted the risk”, but did not “because investment bankers did not have capital, they required permission from the firm to “accept anything.”

[100] However, in his examination for discovery, read in at the trial, Shewchuk gave the following contradictory answers:

Q. You’ll agree with me sir, that while you were at Blackmont Capital in the material time, you had no authority to commit the firm’s capital?

A. No.

Q. And, similarly, you had no authority to assume any risk on behalf of the firm?

A. That’s correct.

[101] I reiterate my view that the very nature of the “bought deal” is further evidence that the April 11 Agreement could not have been intended to apply to Capital Markets deals.

4. The Continuing Operation of the IA Plan

[102] The April 11 Agreement was explicit, in paragraph 10, in declaring that the IA Plan continued to govern all terms of Shewchuk’s relationship with Blackmont unless specifically provided for in the agreement. The Capital Markets Referral Provision therefore must have been intended to continue to oversee relations between Shewchuk and Capital Markets in any joint transaction. If the April 11 Agreement superseded the Capital Markets Referral Provision, one would have expected an explicit statement to that effect. However, neither Capital Markets nor the Capital Markets Referral Provision are even mentioned in the agreement. The specific inclusion of paragraph 10 is a further indication that the April 11 Agreement was a retail document and not intended to apply to Capital Markets deals.

5. The November 5 Proposal

[103] Shewchuk testified that after the April 11 Agreement had been signed, Capital Markets executives, Chad Williams and Mike Vernon, continued to solicit his clients. In his words, “it just continued to be a problem thereafter.” Shewchuk testified that he complained about it “vigorously” over the next few years.

[104] At this point, I pause to consider the question of why Shewchuk would be complaining about Capital Markets soliciting his clients. Surely, if the April 11 Agreement applied, he would be more than happy to be the recipient of a 62% payment of Blackmont’s gross revenue in deals involving those clients. When I put this question to Mr. Groia, his response was that his client’s dissatisfaction stemmed not from the solicitation of clients but Blackmont’s refusal to honour the April 11 Agreement. The difficulty with this argument is that whilst complaining “vigorously” to Blackmont, Shewchuk did not once, over the next two years, ever mention the April 11 Agreement in course of his complaints respecting client solicitation.

[105] Shewchuk, however, did attempt to take steps in rectifying what he perceived as being unfair practices on the part of Capital Markets. On November 5, 2006, Shewchuk sent an email to the retail and Capital Markets management outlining his ideas for the division of compensation on deals that he brought to Capital Markets. The email had the following headline: “This is what I propose.” Shewchuk went on to declare that “Over the past 20 years, I have never seen Capital Markets and retail figure out how to work together” even though, according to him, he had signed an agreement 9-months earlier that appeared to be the framework for how he and Capital Markets were to co-operate with each other.

[106] Shewchuk’s proposal included a term that he be paid a 15% finder’s fee “on what I do only” for all deals he brought to Capital Markets. He requested that the fee be paid on a gross basis to keep it simple. The entire content of the email is at odds with the notion that the April 11 Agreement already governed any transaction brought to Blackmont by Shewchuk. It also belies the argument, strenuously put forward by Shewchuk, that his relationship with Capital Markets had been resolved in the April 11 Agreement.

[107] If that had been the case one might ask, amongst other things:

Why did Shewchuk suggest a 15% finder’s fee when the April 11 Agreement had already specified a figure of 10%?

Why did Shewchuk feel the need to put forward new proposals when an agreement was already in place?

Why did Shewchuk address the email to figures in Capital Markets and retail when all he needed to do was contact Kagan and Bacsalmasi, the co-creators of the April 11 Agreement to remind them of Blackmont’s obligations?

Why is there no mention of the April 11 Agreement?

[108] Shewchuk’s evidence on this point was hardly credible. His explanation for sending these emails was, in his words “because what’s happening for my April 11th contract, they’re not abiding by it.” It is hard to discern any breaches of the April 11 Agreement because, the defendant points out, the disputed transactions at issue in this case had not even arisen.

[109] When challenged about the “proposals”, he agreed that the purpose of the email was to protect the deals that he brought to Blackmont. When he was asked where in the email he referenced the April 11 Agreement, his response was: “I don’t know. There would be other emails around besides this one right here.” The problem for Shewchuk is that there are not. When cross-examined about his statement about being able to “resolve our problems” Shewchuk responded with the following:

Well, like I was telling you earlier, when - if you brought a hundred million dollar deal or what that retail can do on their own and you brought it to corporate finance and they said, wow, that's a great deal, we're going to get out research involved here, we’re going to get our salespeople, we’re going to take this all to our clients, we’re going to raise the funds and do all the work, it becomes their deal because they're placing all the stock. It's not a syndicated deal where they don’t do anything. This is something they have to work on. And for that you normally got a finder’s fee. So there was two kinds of-those-you know, it's a finder’s fee for bringing them business that they could actually do and place with their clients. So then you will get a finder’s fee of 15%. It could be 10%, depending on how-you know, how active you were in that deal. That's what we’re talking about.”

[110] Later on, Shewchuk added: “We’re talking about bringing large deals to corporate finance where they do all the work.”

[111] In my view, Shewchuk’s testimony is inconsistent with his position at trial. More compellingly, the email containing the November 5 proposal demonstrates, for the reasons set out above, that months after the April 11 Agreement, Shewchuk knew that the agreement had no application to transactions conducted with or by Capital Markets.

6. The November 2006 Meeting

[112] On November 10, 2006, Dan Gosselin sent a “Meeting Summary” to Shewchuk setting out the positions taken at a meeting that had occurred as a result of the November 5, 2006 email. As the summary states, Kagan, Throop, Bacsalmasi, Craig King, Gosselin and Shewchuk were in attendance. Gosselin outlined a series of resolutions that would be implemented, although he acknowledged that the results “fell short of [Shewchuk’s] original proposal.” He concluded the summary by promising Shewchuk that the relationships he had maintained over time would be “leveraged” on a “case by case basis.”

[113] Shewchuk responded that he agreed with Gosselin’s summary except for the “case by case basis” aspect of future transactions. He expressed his reluctance to enter into disputes over deals that he had brought “into a syndicate where there is a prominently retail distribution”. He also provided a list of companies with which he had a “long relationship”.

[114] Shewchuk’s response is revealing in two significant ways. First, the importance of “predominantly retail distribution” transactions are distinct from the April 11 Agreement which Shewchuk argued applied to all transactions. Secondly, the list of relationships is a different animal than the list of transactions that appeared in the April 11 Agreement’s Schedule A. Once again, the email exchange appears to reveal that Shewchuk is attempting to negotiate a distinct agreement with Capital Markets. That effort, of itself, reveals an acknowledgement that the April 11 Agreement did not apply to all transactions or to any involving Capital Markets. At the risk of repeating myself, I note that, once again, the April 11 Agreement is never mentioned in these exchanges.

7. The Glencairn I Deal

[115] There are a number of similarities between the Glencairn and Bridge deals, particularly in the bifurcated nature of the deals and the negotiations undertaken by Shewchuk.

[116] Glencairn II, like Bridge II, had been preceded by an earlier deal taking place in early 2006. Mr. McDonald, as noted earlier, testified on behalf of Shewchuk, supporting his assertions that Blackmont was only included in the Glencairn syndicate because of his pre-existing relationship with Shewchuk. Glencairn I, like Bridge I and II, were deals where Capital Markets were involved as syndicate partners.

[117] Mr. Campbell, for Blackmont, cross-examined Shewchuk extensively on the details of the Glencairn deals, challenging his credibility on a number of issues.

[118] The first was Shewchuk’s reliance on both Ian McDonald and Kerry Knoll’s role in choosing Blackmont as a member of the syndicate for the second deal. In his pleadings, Shewchuk described McDonald and Knoll as CEO and Chairman of Glencairn, respectively, at “all material times”. Shewchuk, however, was forced to concede that this claim was untrue. In May 2006, Glencairn’s CEO was actually Peter Tagliamonte. When it was put to Shewchuk that Tagliamonte was running the company, Shewchuk, implausibly, appeared to indicate that Tagliamonte’s expertise was not on the fundraising side so “Kerry and Ian remained as the people that, the main people to raise funds…” Eventually, Shewchuk had to agree that as CEO, Tagliamonte had to have a role in financing the company.

[119] Next, Mr. Campbell confronted Shewchuk with a series of emails (Exhibit 1 Tab 61) regarding the Glencairn I deal, demonstrating that Shewchuk was proposing his terms of compensation arising out of the revenue obtained from Glencairn, as was the case with Bridge I. Those terms were very different from the April 11 Agreement, with Shewchuk suggesting that his share of Blackmont’s gross revenue from the deal be 45%. If, as Shewchuk now claims, Blackmont was only involved in Glencairn I because of his relationship with McDonald and Knoll, the deal would satisfy the criteria of the April 11 Agreement and Shewchuk would be entitled to 62% of the gross revenue. Why then was he negotiating a less favourable deal?

[120] Shewchuk sought to explain the discrepancy by claiming that discussion on the deal pre-dated the April 11 Agreement. This explanation makes no sense. A press release tendered as Exhibit 1 Tab 56 announced the Glencairn deal as taking place on May 30, 2006. Further, the deal was not placed on Schedule A of the April 11 Agreement.

[121] In an email sent by Rick Vernon Managing Director of Capital Markets dated June 1, 2006 Vernon wrote:

Bob as you know GGG [Glencairn] needs to raise $12.5mm to complete their acquisition of some properties from Yamana. I would like Blackmont involved in the financing and am interested in your views both on the deal and how I should go back [sic] the management on what role we can and more specifically what role you would like to play?

[122] Later on, Shewchuk contacted Chad Williams at Capital Markets on June 5, 2006, complaining that Vernon was not returning his calls and asked:

Do you have any direct interest at this point? I have talked Glencairn and can get 5-10% of the fees with Orion placing the paper from what I understand but Vernon is not returning my calls. I am ready to call Glencairn and tell them to scrap the fee and we can square up with them on the next deal. What do you think?

[123] This correspondence, also found at Exhibit 1 Tab 61, would be proof that the discussion regarding Shewchuk’s role in the financing commenced in late May/early June. It also demonstrates his willingness to depart from the more favourable terms of the April 11 Agreement to which he would have been entitled. Shewchuk was extremely evasive in answering questions on this issue; at first agreeing that the June 2006 conversations were the start of discussions regarding compensation, but insisting that discussions regarding the deal began in March.

[124] I disbelieve Shewchuk with respect to his testimony on when the discussions regarding Glencairn commenced. It is clear that they began after the April 11 Agreement and, as a result, Glencairn I would have been subject to its terms if it applied in the manner that Shewchuk now argues. Shewchuk actions reveal that he did not believe the terms of the agreement applied, because there was no mention of the April 11 Agreement and the fee he proposed was substantially less.

8. The Bridge I Deal

[125] Although the Bridge I transaction is not one of the disputed transactions in this case, the email communication that followed the deal is of some relevance to the question of the scope of the April 11 Agreement. As we have seen, Shewchuk claims that the Bridge I financing was only brought to Blackmont because of his relationship with Brimacombe. It should be remembered that Jeff Lawson also testified to a relationship with Brimacombe. For the purposes of this trial, however, I am prepared to accept that it was Shewchuk’s friendship with Brimacombe that persuaded him to come to Blackmont.

[126] What is striking, however, is how Shewchuk was compensated for this deal. Since Shewchuk had “directly sourced” the deal through his relationship with Brimacombe, the April 11 Agreement, according to Shewchuk, would govern his compensation. Yet the terms of Shewchuk’s compensation were very different.

[127] Rather than receiving 62% of the gross revenue, it would appear, from an email communication tendered into evidence as Exhibit 1 Tab 205A, that Shewchuk confirmed to Wayne Adlam, head of Capital Markets in Toronto, that he had negotiated a different agreement with Lawson. He wrote: “It took us about 30 seconds and a handshake to figure out an equitable fee structure. This is how our business should be done.” Later on, in an email dated January 11, 2008, Shewchuk expressed his gratitude to Lawson for arranging an additional 1% payment on the Bridge I financing. Shewchuk is clearly delighted at getting the additional increase as he concludes the message with the words: “I’m sure you had something to do with that. Thanks, very much, Bob.” The gratitude expressed by Shewchuk related to the fact that, as Harris Watson testified, other brokers had received a 5% commission on shares placed in the deal whilst Shewchuk was awarded 6%.

[128] Why then, did Shewchuk negotiate a deal with less favourable terms than the April 11 Agreement if that agreement applied? Why would Shewchuk be grateful to Jeff Lawson for arranging the additional increase of 1% when he could have been walking away with 62% of Blackmont’s gross revenue of the deal under the terms of the April 11 Agreement? Why did he remark to Adlam that “this is how our business should be done” when his position at trial is that the April 11 Agreement governed the relationship between himself and Capital Markets?

[129] When cross-examined, Shewchuk explained the anomalous situation by claiming that Lawson’s participation made the April 11 Agreement inapplicable. According to Shewchuk “there’s a difference between me bringing a syndicated position or a lead financing that I was doing versus him actually participating in that financing and doing something. So that would be different. We’re both going to be working on it.”

[130] Shewchuk’s explanation is almost a complete repudiation of his position at trial where he claims that any deal brought to Blackmont by him was subject to the April 11 Agreement irrespective of the amount of work done by himself or Capital Markets. The distinction he draws—that both he and Lawson “were both going to be working on” the Bridge I deal—would apply to any transaction where Capital Markets was involved. Indeed, it is hard to draw any meaningful distinction between Bridge I and II, other than the fact that in the latter transaction Shewchuk did nothing at all by way of share placement.

[131] The Bridge I transaction is powerful evidence that the April 11 Agreement did not apply to transactions where Capital Markets participated.

9. Negotiations over Bridge II

[132] The facts of Bridge I become even more important when examining Shewchuk’s claim that the April 11 Agreement applied to Bridge II.

[133] There is ample evidence that Shewchuk played a significant role in bringing Bridge I to Blackmont. I am not persuaded, however, that the same could be said for Bridge II. I rely on the testimony of Jeff Lawson who testified about the events that took place between the two Bridge financings. I found Lawson to be an impressive witness. His short tenure with Blackmont before his departure to Peters & Co, a boutique energy investment bank, made him the least partisan of the witnesses called at trial. He was honest in his praise for Shewchuk’s qualities as a stockbroker and candid about Shewchuk’s role in Bridge I. He made it clear that Shewchuk was a highly valued asset at the company. In short, he was a very credible witness.

[134] Lawson’s account of Bridge II was that, far from being a sure thing, and despite the success of Bridge I, Ron Brimacombe was poised to take Bridge II to a competitor: Canaccord. Good fortune, and not Shewchuk, brought Blackmont back into the frame. As Lawson testified, Brimacombe “dropped the ball entirely” and the deal with Canaccord fell apart. Bridge Corporation, frustrated with Brimacombe, told him that their relationship was over and turned to Blackmont and Wellington West to pick up the pieces. Thus, while in some sense Brimacombe might have caused Blackmont to become the beneficiary of a second deal, it was not his relationship with Shewchuk that mattered, but his failure to deliver a deal with Canaccord. Lawson’s view, which I accept, was that it was Blackmont’s relationship with Bridge’s executive management, developed over a lengthy period of time, that allowed them to fill the gap after the Canaccord deal failed to materialise. In fact, according to Lawson, the retail group, to which Shewchuk belonged, was proving a detriment to getting the business, as it was driving down the stock price. This fact is reflected in an email exchange between Shewchuk and Lawson on July 23, 2008 (Exhibit 1 Tab 451).

[135] Regardless of the sourcing of the deal, the communications following Bridge II provide the most cogent evidence that Shewchuk, above all others, recognized that the April 11 Agreement did not apply to this transaction. The emails sent after the Bridge II deal demonstrate Shewchuk’s eagerness to negotiate an agreement with Lawson. Strikingly, there is no reference to the April 11 Agreement. For example, in an email from Shewchuk to Lawson dated November 11, 2008, (Exhibit 1 Tab 498) Shewchuk remarked as follows:

If you’re refusing to pay us on the second Bridge financing and our client that Wellington West ticketed, I think you should consider paying us on all retail, Blackmont and others for NewAir (with the exception of Corina) to make up for part of the Bridge.

[136] Shewchuk met Lawson on July 22, 2008. The purpose of the meeting was to determine Shewchuk’s compensation arising out of Bridge II. A note was taken of that meeting by Harris Watson who recorded that “Bob wants a split of fee because BCI was not lead and didn’t place stock.” Once more, there is an absence of any reference to the April 11 Agreement.

[137] Finally, in a heated email exchange over Bridge II (Exhibit 1, Tabs 451 and 460), Lawson and Shewchuk put their own perspectives on the sourcing of the Bridge II deal and how it should be paid out. Not once did Shewchuk direct Lawson’s attention to the April 11 Agreement. In fact, later on in Exhibit 1 Tab 460, Shewchuk informed Lawson that “I would never in a million years bring another deal to you like Bridge if I knew I might not get paid.”

[138] An objective review of these communications raises the following questions:

• Why did Shewchuk initially suggest a split fee in his meeting of July 22, 2008 if the April 11 Agreement applied?

• Why did Shewchuk not, at any stage, draw Lawson’s attention to the April 11 Agreement which would have obviated the need for any negotiation?

• Why did Shewchuk negotiate with Lawson and not simply go directly to Bruce Kagan or Peter Bacsalmasi?

[139] In argument, Mr. Groia relied upon the confidentiality clauses within the employment agreement to explain Shewchuk’s silence in his discussions with Lawson. This submission, however, does not stand up to scrutiny in light of Shewchuk’s subsequent message to Kagan dated September 2, 2008, (Exhibit 1 Tab 474), where Shewchuk complained about his lack of compensation on Bridge II and requested a meeting with Kagan. The April 11 Agreement, once again, is absent from the correspondence, even though Kagan, one of the signatories of the April 11 Agreement, is the sole recipient of the email.

[140] Nor does an objective assessment of the Bridge II deal offer any support for Shewchuk’s argument. Bridge II was a “bought deal”, with Capital Markets on the hook for the purchase price. Shewchuk took no risk whatsoever. It makes no sense that the April 11 Agreement would not apply to Bridge I, where Shewchuk was actively participating, but would apply to Bridge II, where Shewchuk did nothing. Moreover, if the April 11 Agreement had applied to Bridge II but not Bridge I, Shewchuk would be in the position of being paid substantially more than Bridge I for doing substantially less. This defies common sense.

[141] Finally, I note that Watson testified that, in the interests of working with Lawson, the April 11 Agreement was “set aside” for the Bridge I transaction. If that were the case, why would it suddenly be re-activated for Bridge II, which according to Shewchuk was borne out of Bridge I?

[142] I am of the view that the April 11 Agreement did not apply to Bridge II and, moreover, even if it did, that Shewchuk could not claim compensation under the agreement as he did not directly source the deal.

10. Shewchuk’s Dealings with Jeff Lawson

[143] Additional exchanges between Shewchuk and Lawson offer further insight into his understanding of the April 11 Agreement.

[144] On February 28, 2008, Shewchuk authored an email to Lawson about the tension between retail and Capital Markets (Exhibit 1 Tab 330). He ended the email with the following suggestion:

Let’s give this a lot of thought and get the formula right. If we do I think, in the long run, our credibility and reputation with retail will get us bigger and better deals which will increase our revenue dramatically. We have to give a little to get a loss and that is what Toronto will never understand. Let’s talk further about this next week.

[145] In his testimony, Lawson explained that Shewchuk was attempting to work out a method of splitting a deal between retail and Capital Markets. Lawson testified to other occasions between 2007 and the autumn of 2008 where Shewchuk had approached him about how “economics would work over different deals.”

[146] For example, in or around February 2008, Shewchuk sent Lawson a document that appears to encourage him to adopt a structure of commission payments for broker warrants (Exhibit 1 Tab 472). On the second page of that document, under the title “Proposed Structure”, Shewchuk wrote that “[i]f our groups are jointly participating in deals I believe we should have a set payout structure that is fair and reciprocal.”

[147] Another document, also contained in Exhibit 1 Tab 472, outlined various compensation structures depending on whether the deal was sourced by Shewchuk or “the Lawson Group”. The document had, as its conclusion, the following statement: “This is for discussion purposes only and these numbers above are simply an example. They can be adjusted to whatever makes sense for the two of us as long as it’s reciprocal.”

[148] Lawson testified that he believed that he had seen these documents (or some very similar) because he recalled a discussion initiated by Shewchuk on the topic. The email sent by Shewchuk on July 29, 2008 (Exhibit 1 Tab 451) seems to confirm that the documents were sent to Lawson.

[149] These communications demonstrate Shewchuk attempting to build a framework agreement where the retail and Capital Markets arms of the company intertwine on a deal. Nowhere in the discussions is the April 11 Agreement ever referenced, as one might expect if that agreement were actually intended to govern any deal sourced by Shewchuk.

11. The June 5, 2008 Meeting

[150] On June 5, 2008, Shewchuk met with Kagan, Bacsalmasi, Thomas Kim and Bill Holland, CEO of what was at that time Blackmont’s parent company, CI.

[151] Harris Watson, Shewchuk’s associate made notes of the meeting after it had taken place. The notes were not official minutes but made as part of Watson’s task of assisting Shewchuk. They are tendered as Exhibit 1 Tab 381.

[152] Watson wrote that “the 2006 Agreement is not as comprehensive as it should be”, which would indicate that, at the time of the meeting, Shewchuk felt that the agreement did not cover all transactions. This is at odds with what Shewchuk now argues at trial and is more consistent with Blackmont’s position that Shewchuk was, by virtue of the Capital Markets Referral Provision, creating separate and distinct deals with Capital Markets.

[153] Watson sought to explain the phrase by claiming that it meant there was no mechanism to update Schedule A. Moments later, however, Watson testified that updating that mechanism was not the purpose of the meeting: a clear reversal of his earlier testimony. When pressed by Mr. McLeod on whether Shewchuk had simply tried to contact Kagan to add new clients to Schedule A, Watson said he had not.

[154] On page 4 of the notes, a heading entitled “Written Understanding” is followed by the phrase: “Covered in the C.M. discussion. It is open but nothing For [sic] sure has been decided.” When asked whether this related to a request to create a written agreement with Capital Markets governing the two parties’ relations, Watson replied that it was “my belief” that the entry reflected Shewchuk’s desire to “better explain” what they had writing from 2006. He said that clarification was required because Blackmont was breaching the April 11 Agreement. Watson did not, however, record any breaches in the notes. Indeed, at trial, when given the opportunity, he was unable to identify the breaches he claimed to be writing about.

[155] What is striking about Watson’s evidence is that two of the deals alleged to be in breach of the April 11 Agreement in this action—U308 and Glencairn—had occurred by the time of this meeting but were neither recorded in these notes, nor identified by him in court. Watson’s evidence had very little to commend it in terms of reliability or credibility and I simply give it no weight.

[156] The final part of the notes covers “Key points overall”. The notes record that:

(1) “Holland agreed 100% with us” that Capital Markets should not be claiming fees for “doing nothing”;

(2) “Ideally, all our CM will be going through Jeff Lawson eventually”; and,

(3) “CM [Capital Markets] and Institutional is nowhere near they want it.”

[157] Absent from these “key points” is any reference to Blackmont’s alleged breaches of the April 11 Agreement or Holland’s reaction to it. There is no suggestion that Shewchuk ever claimed that the April 11 Agreement gave him any rights to resolve conflicts with Capital Markets. There is no notation of Shewchuk requesting that Holland intervene to enforce the April 11 Agreement. In short, there is no indication that, at one of the most opportune moments, the April 11 Agreement was raised, other than to complain of its limitations. Watson’s response was that these notes reflect Holland’s position. That is not a credible claim, however, as the notes clearly indicate Shewchuk’s own views and positions; Holland’s view appears only in point 1.

[158] Watson also testified that the Capital Markets discussion lasted 35-40 minutes, taking up the lion’s share of the time allotted to the meeting. Yet there is no reference to any of the allegations made at trial.

[159] If there ever was an opportunity to rectify any ills wrought by Blackmont in its failure to observe the April 11 Agreement, this was it. Shewchuk was face to face with the president of Blackmont’s parent company and someone who, according to Watson’s notes, had very little time for Capital Markets. The whole point of the meeting appeared to be about compensation and Shewchuk’s complaints about Capital Markets pursuing his clients, so there would be every reason for Shewchuk to raise an agreement that allegedly governed those situations. Yet, Shewchuk did not do so. In fact, the notes record that when Shewchuk raised U308 and Glencairn, Kagan and Kim told him that “in their minds, [the matter] was already settled and we shouldn’t be going back there again.” Why, at this point, do the notes not record Shewchuk stating the matter was very much alive because he had not been appropriately paid out?

[160] I conclude that there were no such complaints because there was no breach. If U308 or Glencairn were deals that fell within the 2006 agreement, Shewchuk would have demanded the compensation he was entitled to under the April 11 Agreement.

[161] In my view, the June 5, 2008 meeting was the culmination of months of frustration for Shewchuk. Shewchuk’s exasperation was caused by what he perceived as his failure to get a slice of Capital Markets’ financial pie. Rightly or wrongly, Shewchuk felt that his relationships had resulted in substantial profits for Blackmont. He wished to have a written framework to govern those deals as none yet existed. He had had discussions with members of Capital Markets group but needed a formal document. This is evidenced by his November 16, 2007 letter to Wayne Adlam (Exhibit 1 Tab 205), where he states the following: “I think we are now at a crossroads and insist that we create a formal legal agreement drawn up by our counsel or independent counsel if necessary that governs my fee and commission structure relating to the issues and concerns highlighted in this letter.” No such formal agreement governing Capital Markets deals sourced by him had been created. This is why the matter was brought up again in the June 5, 2008 meeting with Holland when Shewchuk suggested that “we should look at doing something in writing that encompasses more what we verbally discussed.” Both Shewchuk and Watson realised that “a document that’s much more detailed is required.”

[162] As I noted above, I found Harris Watson to be completely lacking in credibility. He was evasive, inconsistent, and appeared to be more interested in advocating for Shewchuk than describing events in an impartial manner. Accordingly, and for the reasons set out above, I conclude that these notes constitute cogent evidence that the April 11 Agreement did not apply to Capital Markets transactions and certainly not to the U308 or Glencairn deals.

12. Shewchuk’s Silence Regarding the April 11 Agreement

[163] I have made it very clear that a key feature of the this case was Shewchuk’s failure to raise the April 11 Agreement in his many disputes with Blackmont. I agree with Blackmont that if Shewchuk had thought that the April 11 Agreement was the “panacea” to all his ills when signing the agreement it would have been raised on each and every occasion. Shewchuk was a pre-eminent investment advisor not afraid to complain on his own behalf. No one could accuse Shewchuk of being passive in the face of perceived injustices. His failure to mention his entitlement under the April 11 Agreement until April 2008 must be considered in that context.

[164] Mr. Groia sought to answer this paradox in two ways. The first was that paragraph 9 of the April 11 Agreement containing the confidentiality clause forced a silence on Shewchuk prohibiting him from mentioning the April 11 Agreement to anyone other than Kagan or Bacsalmasi. Secondly, he argues that since relations between Blackmont and Shewchuk were cordial up until 2008, there was no reason to raise it.

[165] The confidentiality clause is no answer, as Shewchuk could always have gone directly to Bruce Kagan and Peter Bacsalmasi to remind them of their agreement. He never did so. Moreover, when cross-examined upon his failure to explicitly rely upon the April 11 Agreement prior to April 2008, Shewchuk never placed reliance on the confidential nature of the agreement. Early on, when challenged by Mr. Campbell on the absence of emails containing any reference to the April 11 Agreement, Shewchuk indicated that there were other emails in existence.

[166] In fact, in an email addressed only to Kagan dated June 2, 2008, (Exhibit 1 Tab 386), Shewchuk outlined his vexations regarding his alleged treatment and reminded Kagan that he had “agreed to our written deal in April 2006 and our verbal agreements regarding my contacts with you, Dan Gosselin and Corporate Finance.” Shewchuk thus implicitly acknowledges that the April 11 Agreement was distinct from any deals involving both his contacts and Capital Markets; those latter deals being covered by separate “verbal agreements”. The following paragraph contains a diatribe relating how Shewchuk has, in his view, lost millions as a result of broken promises. I would expect the April 11 Agreement to be writ large across Shewchuk’s argument but, once again, it is absent.

[167] Kagan arranged the previously discussed June 5, 2008 meeting in response to this email and informed Shewchuk of the attendees. Rather than remind the person who had signed the April 11 Agreement of his obligations in advance of a critical meeting to determine his compensation, Shewchuk, on June 3, 2008, sent him the Discussion Paper written by Bacsalmasi (Exhibit 1 Tab 391). This is not the action of someone who understands the April 11 Agreement to bind Blackmont in all transactions sourced by himself.

[168] Shewchuk’s telling silence with respect to the April 11 Agreement is matched by his consistent demands to negotiate new written agreements, evidenced by the previously discussed communications he had with Wayne Adlam and Jeff Lawson referred.

[169] In his November 16, 2007 letter to Adlam, Shewchuk informed Adlam that “Bruce Kagan has done what he can to reimburse me for part of my lost revenue and to help foster a more positive working relationship between Corporate Finance in Toronto and the Calgary office.” This is not the sentiment expressed by Shewchuk at this trial. It should be remembered that the U308 and Glencairn deals that had taken place by this time, with the latter being explicitly referred to in the letter. Far from claiming any breaches of the April 11 Agreement, Shewchuk appeared, in this sentence, to recognize that the April 11 Agreement did not apply.

[170] In my view, the letter demonstrates that Shewchuk knew that Blackmont had done what it could to compensate him for deals originating through him and that they did not, contractually, owe him more. He was looking for a framework to open a new revenue stream: hence, his desire to “create a formal legal agreement” that governs his fees and commission structure in relation to transactions where Capital Markets participated.

[171] That framework was required because none was in place as the April 11 Agreement applied only to retail transactions.

[172] I also note Shewchuk’s email to Kagan dated May 23, 2008 when he acknowledges the “commission payout” of funds “as being 100% of the proceeds from U308 and some of my Oilexco Inc. options.” This payment was made in order to settle prior grievances with Blackmont. He adds: “I do not expect to receive payout beyond 100% on these particular items.” It makes no sense that he would now make a further claim on the U308 deal when he recognised that this had already been paid out.

PART VI – BLACKMONT’S ACTIONS TOWARDS SHEWCHUK

1. The “Incriminating” Emails

[173] As noted earlier, as part of my pre-trial rulings I admitted a number of email messages between various members of management who worked at Blackmont at the relevant time. These emails contained admissions relating to various aspects of compensation that might be owed to Shewchuk.

[174] Mr. Groia and Mr. Richard very skilfully advocated that these emails demonstrated Blackmont knew of its obligations under the April 11 Agreement to pay Shewchuk for any directly sourced transactions, notwithstanding Capital Markets participation. Mr. Campbell and McLeod, with equal skill, argued that the communications were “red herrings” that, in reality, referred to other agreements made by Shewchuk under the Capital Markets Referral Provision of the IA Plan.

[175] At first blush, I found the arguments made on behalf of Shewchuk attractive. The emails, in a sense, could be defined as the equivalent of a “smoking gun” as it made sense that Blackmont would only honour the terms of the April 11 Agreement those terms actually applied.

[176] However, for the reasons set out below, I am persuaded by Blackmont’s submissions that the communications referenced a variety of other agreements, rather than the April 11 Agreement.

(a) The March 1, 2007 Communications – (Tab 137)

[177] This exchange, between Harris Watson, Bacsalmasi, and Larson, centres upon payments made with respect to Golden Valley Mines, U308, and Oilexco. Upon Watson’s request for an additional 10% payment, Larson wrote to Bacsalmasi to confirm that the payment should be made. Bacsalmasi told him that the extra commission applied only to “Bob’s deal where he is the principle player. Not necessarily all warrants. The 100%ers cannot be more than 100%. No bonus applies.”

[178] Shewchuk, at one stage, argued that this response from Bacsalmasi was an admission, because he appeared to exempt the deals in question—one of which was U308—on the basis that Shewchuk had to be the principal player, rather than the fact that Capital Markets deals were not subject to the April 11 Agreement.

[179] I confess that I find this email to be of little assistance. It is both vague and ambiguous. Larson admitted he has not seen the April 11 Agreement and therefore could not confirm the finder’s fee applied to the requested transactions. It is unclear what Bacsalmasi’s two line response actually means when he stated “not necessarily on all warrants.” Nor did Bacsalmasi explicitly identify the transactions referred to: he simply dismissed all under the same heading.

(b) The October 2007 Communications - (Exhibit 1 Tab 176)

[180] This email exchange, involving Dan Gosselin, Thomas Kim, Wayne Adlam, and Bruce Kagan, provides much of the firepower for Shewchuk’s argument. The communication revolves around the Glencairn deal. There are several references by Gosselin and Kagan of a deal that gives Shewchuk “full economics” with regard to that transaction. For example, Gosselin, in an email to Kagan, Adlam, and Kim, warned of a “dust up” with Shewchuk over Glencairn economics. Gosselin remarked “Bear in mind that this was one of the exempt issues on Bob’s list which we historically agreed to pay out 100% of the economics and rebate Capital Markets 48%.” Kagan informed Adlam that the issue of whether they could have done the deal with or without Shewchuk is key, and that “we have a written document giving him full economics from Gerry [Throop] on Glencairn so we need to tread carefully.”

[181] On a first reading, I was of the view that, based on the terminology used, the participants in this exchange must have been referring to the April 11 Agreement. A more close reading, however, discloses that the deal being referred to cannot be the April 11 Agreement. I say this for the following reasons.

[182] Firstly, the payout contemplated by the April 11 Agreement was not 52% to Shewchuk and a rebate of 48% to Blackmont, but a 62% - 38% split. Secondly, the April 11 Agreement made no reference to Glencairn, so it is hard to understand how Kagan would identify it as the “written document” giving Shewchuk full economics on the deal. Finally, and most significantly, Gerry Throop played no part in the April 11 Agreement. Indeed, under paragraph 9 of the April 11 Agreement, Shewchuk was prohibited from disclosing the April 11 Agreement to Throop.

[183] For the reasons above, I accept the defendant’s argument that what is being referred to in Exhibit 1 Tab 176 is a separate agreement negotiated by Shewchuk with Gerry Throop of Capital Markets under the Capital Markets Referral Provision and not the April 11 Agreement.

(c) April 2008 Communications - (Exhibit 1 Tab 366)

[184] This was Shewchuk’s first citation of the April 11 Agreement in his disputes with Blackmont over Capital Markets transactions. Shewchuk demanded the finder’s fee with respect to transactions involving Canadian Royalties and Glencairn II. It is unclear why it took so long for Shewchuk to do so, given the disputes with Blackmont had lasted almost two years. It is equally unclear why Shewchuk raised the April 11 Agreement with Colin Larson, rather than Kagan or Bacsalmasi as by doing so, he breached the confidentiality clause.

[185] Larson sought clarification of the agreement by sending an email to Kagan, Kim, and Bacsalmasi. Kagan, in turn, asked Wayne Adlam for his views. Shewchuk, at trial, suggests that Adlam’s response is proof that Blackmont knew that the April 11 Agreement was applicable to deals directly sourced by Shewchuk, irrespective of Capital Markets’ involvement. Adlam told Kagan the following:

My understanding of the “deal” you and Gerry cut on Bob’s identified names (I.e. The six names only) was to make all of the fees received by the firm 100% payable to Bob against his grid, with a “rebate” to capital markets of 48%. Since I joined, I saw this take place on deals in both 2006 and 2007. I do not believe that the 10% also applied, since this was a lop sided deal to begin with. I do not support paying any more to Bob from capital markets.”

[186] Superficially, this exchange appears to be a candid admission that the April 11 Agreement applied to Capital Markets deals sourced by Shewchuk and had been applied in the past. In effect, it was the “smoking gun” in the hands of Blackmont management. This was certainly Shewchuk’s argument in support of his claims. The argument, however, is fatally flawed for the following reasons:

(a) As noted earlier, Gerry Throop played no part in the April 11 Agreement

(b) There was no list of “six names” contained in the April 11 Agreement

(c) It is difficult to understand why the 10% finder’s fee would not apply if this was an agreement that fell under the April 11 Agreement

(d) Adlam, under paragraph 9 of the April 11 Agreement, would have no knowledge of the April 11 Agreement, due to its confidential nature.

[187] In my view, Blackmont’s position on this email is more accurate. I accept that the agreement referred to by Adlam is not the April 11 Agreement but an agreement forged out of the November 2006 meeting referred to previously in this judgment where Throop and Kagan were involved and lists of names were exchanged.

The Canadian Royalties Email Exchange

[188] The most damaging set of emails from Blackmont’s perspective are those concerning Canadian Royalties as they appear to indicate that Shewchuk was actually paid in accordance with the April 11 Agreement. Bacsalmasi conceded the Canadian Royalties deal to be a “bought deal” involving Capital Markets and therefore, if Blackmont’s position is correct, it should not have been paid out in accordance with the April 11 Agreement.

[189] On April 28, 2008, (Exhibit 1 Tab 375) Thomas Kim informed Colin Larson that the Glencairn deal did not qualify for “an additional 10%” because Capital Markets had been involved and helped to secure the deal. He added, however, that the Canadian Royalties transaction did qualify for the enhanced 10% payment. Larson therefore directed that Shewchuk be paid the additional fee. Bacsalmasi agreed to defer Kim’s view that the April 11 Agreement applied even though it was a Capital Markets deal: Exhibit 1 Tab 369.

[190] In a later communication (Exhibit 1 Tab 372), Kim took the view that, on his interpretation of the agreement, Glencairn did not qualify under the April 11 Agreement because it “was not directly sourced by” Shewchuk.

[191] Bacsalmasi was cross-examined with some force by Mr. Groia on this issue. Mr. Groia pointed out that if Blackmont was of the view that the April 11 Agreement did not apply to Capital Markets transactions, Thomas Kim would have told Shewchuk that this was the case. As Mr. Groia was quick to demonstrate, Kim did the opposite. Furthermore, if Kim was wrong, Mr. Groia suggested that Bacsalmasi should have corrected him instead of deferring to him.

[192] Bacsalmasi sought to explain this discrepancy by testifying that Kim was unaware of the scope of the agreement. His deferral to Kim was an error. Bacsalmasi told the court that he had “taken his eye off the ball” because of the financial crisis that were gripping the global economy.

[193] In closing submissions, Mr. Groia asked this court to find that no errors had been made. He argued that these email exchanges demonstrated that Blackmont knew the agreement applied to Capital Markets transactions. Mr. Groia also relied upon the Jeff Lawson’s evidence where he testified the global crisis had not yet taken hold in April 2008 thereby casting doubt on Bacsalmasi’s explanation for the error. Mr. Groia suggested these emails show true state of affairs: that “no one at this time had dreamed up this explanation now being put forward by Blackmont.” Mr. Campbell, countering on this point, asked me to take judicial notice of the point that the global financing crisis had actually begun shortly before the Spring of 2008.

[194] These email exchanges are significant. I am not prepared to take judicial notice that the financial crisis that Bacsalmasi was referring to was already occurring by the time of these emails particularly in light of the fact that there is viva voce evidence in this trial to the contrary. I am, however, prepared to accept Bacsalmasi’s explanation that he and Kim were in error. Kim was not party to the April 11 Agreement or fully conversant with it.

[195] In my view the very passage that Mr. Groia relies upon as support for his position actually rebuts the allegation that Blackmont concocted the position it now takes. In his email dated April 28, 2008, Bacsalmasi, in response to Colin Larson’s query wrote:

I guess I’m a little fed up with this stuff. No one remembers the circumstances of the deal. Perhaps Wayne Adlam does? Why wasn’t Bob piping up right away and not so long after fact when we can’t recall the events. That’s not like him (perhaps it is).

According to Bob, everything is all about Bob, all because of Bob and all for Bob. I wonder what Chad Williams would recall. At any rate I do not recall this deal and nor did I remember this special pay-out for Bob’s generosity to the firm. I will defer to Thomas and the existing document on this, but it leaves a rotten taste.

[196] By April 28 2008, no one, including Bacsalmasi, appeared to have a clear understanding or recollection of the purpose of the April 11 Agreement. This confusion is exemplified by Bacsalmasi’s musing that Adlam or Williams might remember the details. According to the evidence, neither Adlam nor Williams, would have known the April 11 Agreement existed because of the prohibition mandated by the confidentiality clause.

[197] Whilst I am uncertain as to what factors caused Bacsalmasi to be distracted with respect to the Canadian Royalties transaction, I have no doubt that he was. The Canadian Royalties pay-out was an aberration caused by confusion and distraction. It is not the “smoking gun” that Shewchuk would have me believe.

[198] In coming to this conclusion, I do not consider the email exchanges described above in isolation but in the context of all of the evidence at trial. It is most telling that Shewchuk waited a year before making the Canadian Royalties claim. Moreover, the factors that I have identified - which point overwhelmingly to the fact that the April 11 Agreement did not apply to Capital Markets transactions - apply equally to the determination of whether Blackmont was in error.

The Blue Pearl Transaction

[199] Shewchuk relied upon the Blue Pearl Mining Transaction to demonstrate Blackmont’s award of an additional 10% even though the deal involved Capital Markets participation. Shewchuk’s contacts at Blue Pearl were, once again, Ian MacDonald and Kerry Knoll. Shewchuk pointed to an email from himself to Bruce Kagan, requesting pay-out on the Blue Pearl Mining transaction (Exhibit 1 Tab 92).

[200] Shewchuk wrote:

It looks like this will be paid out today. According to the numbers Craig King gave Harris Watson, these should be correct but verified first by Craig. I am to receive $37,001 gross for retail. What is left (CM Revenue) is still $311,026. Please pay this to me on a gross basis. That way it does not throw my bonus off at the end of the year. If the 311,026 goes through as gross I end up with 52% of it, with my bonus later. Also, please keep in mind Ian McDonald told Chad Williams, head of investment banking, that he would only include Blackmont in the syndicate if I got my pay-out and he agreed. You may want to speak to Chad if you wish. Thanks, Bob.

[201] The only direct evidence that Blue Pearl was actually paid through the April 11 Agreement came from Watson in his testimony on 2 March 2015. As noted earlier, I place little value on his evidence. There are no documents to suggest that the payment was ever made under the terms suggested by Shewchuk. Blackmont suggests that this payment was a bonus payment as evidenced by request for it to be paid on “a gross basis” so that it would not affect Shewchuk’s end of the year bonus.

[202] I reject the argument that the April 11 Agreement played any part in the Blue Pearl deal for the following reasons.

[203] In my view, the email is vague and ambiguous. First, there is no reference to the April 11 Agreement by Shewchuk even though the email is addressed to Bruce Kagan. Secondly, and in my view, decisively, Shewchuk, in an attempt to bolster his claims to a favourable sum, tells Kagan that McDonald told Chad Williams that Blackmont was only included if Shewchuk “got my pay-out and he agreed.” Since the April 11 Agreement demanded confidentiality of its terms, neither McDonald nor Williams would know of its existence. The “pay-out” referred to by Shewchuk must therefore have been a payment agreed by Shewchuk and Williams separately and apart from the April 11 Agreement.

Blackmont’s Answers to Undertakings

[204] For the reasons set out above, I conclude that Blackmont’s original Answers to Undertakings at the discovery hearings were errors made in good faith. A review of the evidence as set out above reveals that the corrected answers were indeed a more accurate view of what the various email participants were referring to in their correspondence.

Conclusion on the April 11 Agreement

[205] Robert Shewchuk was, and continues to be, a very successful stockbroker with a wealth of experience and contacts. In his previous two decades working for Blackmont in its previous corporate incarnations, he was, without dispute, a “star” stockbroker. His stardom and thirst for a greater share of Blackmont’s profits led to rifts within the company. Neither Blackmont nor Shewchuk benefitted from the disagreements that were festering within the working landscape. The April 11 Agreement was created to heal the rifts and reward Shewchuk appropriately. Unfortunately, it did neither.

[206] The April 11 Agreement did not override the IA plan; it co-existed with it. Both documents governed Shewchuk’s compensation with respect to transactions that he sourced. The April 11 Agreement, however, was exclusively a retail document: there were no Capital Markets signatories; there were no terms dealing with transactions which included participation by Capital Markets; Shewchuk was expressly forbidden from even mentioning the existence of the April 11 Agreement to Capital Markets.

[207] The IA Plan, on the other hand, permitted Shewchuk to make separate agreements with Capital Markets on any joint ventures. Those agreements could emulate or even exceed the terms of the April 11 Agreement but were not subject to it.

[208] Shewchuk was aware of these facts. He knew he could not rely on the April 11 Agreement in his dealings with Capital Markets and, at the outset, did not try to do so. He attempted to negotiate separate agreements and was, on occasion, effective in doing so. Bridge I, for example, was a triumph of his bargaining skills. Other efforts, however, proved less successful. Over time, Shewchuk became frustrated, angry and embittered by what he perceived as ill treatment and the deaf ears of management. He tried, in vain, to create an overarching agreement which would govern the split of compensation between himself and Capital Markets in cases where of institutional deals “sourced directly” by him.

[209] His final gambit, after almost 2 years of internal disputes, was to turn to the April 11 Agreement and rest his claims on the ambiguity of a paragraph written for his role within Blackmont’s retail section.

[210] For the reasons set out above, Shewchuk’s claim is without merit and fails in this action.

PART VII - DID BLACKMONT NEGLIGENTLY OVERPAY HEATHER CHARRON?

Background

[211] Heather Charron was Shewchuk’s assistant from 1 January 1, 2004 to the date of her resignation on January 2, 2008. Both she and Harris Watson, were paid in the same way; both would get a salary and bonus from Blackmont with additional remuneration based on a percentage of Shewchuk’s commission. This additional payment, based on commission and administered by Blackmont, was referred to as “the override”. Initially, the override would equal 1% but would be incrementally increased to 4%.

[212] Charron signed an agreement (“the Charron agreement”), written by Watson, to reflect the terms of her remuneration: Exhibit 1 Tab 245. Shewchuk testified that he told Charron that her payment would be calculated after his gross commission was run through the grid (“the net amount”).

[213] The Charron agreement, however, described the calculation of her remuneration in a different manner. It provided that:

Your appointment entitles you to a base salary of $40,000 per annum. You will be entitled to additional compensation in the form of a monthly bonus equal to 1.00% of the gross commission generated by those for whom you are acting as an assistant. [emphasis added]

[214] In November 2007, Shewchuk and Watson discovered that Charron had been paid out using the gross amount as opposed to the net amount. They confronted Charron and sought to recover what they now claim is “overpayment” of her income. Shortly thereafter, Charron resigned informing Shewchuk that she would be seeking the services of a lawyer.

Discussion

[215] Shewchuk argues that Charon’s “overpayment” occurred because of Blackmont’s negligence and seeks to recover the excess funds paid to her from Blackmont.

[216] I reject Shewchuk’s arguments for the following reasons:

(a) Charron’s Contract

[217] The most emphatic rebuttal of Shewchuk’s position is the Charron agreement. There is nothing ambiguous about the terms of payment which provide that Charron’s remuneration was 1% of Shewchuk’s gross commission.

[218] When questioned at trial, Shewchuk and Watson attempted to cast doubt on the agreement by labelling it as a “draft” even though it was clearly signed by Charron. Shewchuk produced no documentary evidence that a different agreement existed. I find that the signed agreement was the contract that both parties intended to apply.

(b) The Larson Emails

[219] The wording of the contract is supported by Shewchuk and Watson’s actions in respect of two email messages sent by Colin Larson, an administrator working at Blackmont.

[220] After they complained of the Charron payments, Larson sent Shewchuk and Watson an email (Exhibit 1 Tab 252) indicating that Blackmont had paid Charron 1% gross commission on the basis of Shewchuk’s instructions.

[221] One would expect a timely response to this allegation. When confronted with this email, however, Shewchuk was evasive. At first he said that he had spoken to Larson and then indicated his belief that “Harris would’ve I’m pretty sure.” He agreed that he had not specifically responded himself.

[222] When Watson was confronted with the email he was unable to confirm if a reply had been sent. In his words, “there may have been or may not have been a response”. Watson went on to testify that he believed Larson had written the email to cover up his error. Some time later, said Watson, Larson had admitted he had made a mistake.

[223] I do not believe either Shewchuk or Watson. It is inconceivable that they would not immediately respond to Larson to answer his allegations that the payment to Charron was made on Shewchuk’s instructions. Shewchuk himself recognised the need to do so. For Watson, the author of the Charron contract, to testify that “there may have been or may not have been a response” is simply incredible.

[224] Whatever remains of Watson’s credibility is further damaged by the fact that Larson sent a second email repeating the assertion that Watson had instructed him to pay Charron on a gross amount basis. Watson responded to the email but, tellingly, did not deny or correct Larson’s allegation.

[225] This conduct is further evidence that Charron’s override payment was not the product of any negligence on Blackmont’s part but was made on Shewchuk’s instructions.

c) Blackmont’s Possession of the Charron Contract

[226] Watson also testified that Blackmont did not even have a copy of the Charron contract. If that was the case, it would be some coincidence that Blackmont would pay Charron on the same terms contained in the contract unless Shewchuk and/or Watson verbally instructed Blackmont to pay Charron that way.

Conclusion

[227] For the reasons set out above, I reject Shewchuk’s claim of negligence against Blackmont regarding the Charron contract. Charron was paid 1% of Shewchuk’s gross commission because she was entitled to it under the terms of her employment contract, written by Watson.

[228] My conclusion on the negligence allegation means that that it is unnecessary to deal with Blackmont’s limitation period argument.

PART VIII - THE REMAINING ALLEGATIONS

Unjust Enrichment

[229] Shewchuk claims unjust enrichment with respect to the breaches of the April 11 Agreement and the unpaid DSUs. In Garland v. Consumer’s Gas Co., 1 S.C.R. 629, the Supreme Court of Canada identified three elements required to succeed under this ground: (1) enrichment of the defendant, (2) deprivation of Shewchuk, and (3) an absence of juristic reason for the enrichment.

[230] In proving the third element, Shewchuk must demonstrate no juristic reason from “an established category” exists to deny recovery. Contractual obligations are an item which fall within the definition of an established category and the claim of unjust enrichment, in this case, is tied to the claim of the breach of the April 11 Agreement. Since I have already decided that Shewchuk has not established any breach of contract, the necessary corollary is that Blackmont did act with juristic reason in depriving Shewchuk of enrichment. The claim for unjust enrichment is therefore dismissed.

Blackmont’s Bad Faith

[231] In making this argument, Shewchuk relies on the Supreme Court of Canada’s decision in Bhasin v. Hrynew, 2014 SCC 71. In Bhasin, the court emphasised the necessity of good faith performance of contracts and placed an obligation on parties to perform contractual duties honestly and reasonably. Shewchuk claims that Blackmont failed to discharge its common law duties by acting capriciously towards him in its implementation of the April 11 Agreement.

[232] I reject this argument as groundless. I have already found that the April 11 Agreement was only a retail agreement and did not apply to any transactions involving Capital Markets. The evidence in this case illustrates two parties whose long history together produced financial rewards for both. Far from undermining Shewchuk’s legitimate contractual interests, Blackmont enhanced them. The April 11 Agreement, borne out of Blackmont’s desire to address Shewchuk’s dissatisfaction with the compensation process, demonstrates Blackmont’s attempts to improve Shewchuk’s financial rewards. Shewchuk became Blackmont’s highest paid investment adviser as a result.

[233] When Shewchuk voiced complaints to his employer over compensation, Blackmont responded by meeting and communicating with him to listen to his concerns. The fact that they did not agree with Shewchuk or concede to his demands is not evidence of bad faith. Blackmont were simply doing what they were entitled to do. I have held that, on one occasion, in an attempt to redress a perceived wrong doing, Blackmont erroneously awarded Shewchuk the enhanced finders fee in the Canadian Royalties transaction. These are not the actions of a party acting in bad faith as defined in Bhasin.

[234] Shewchuk has failed to produce any evidence which indicates that Blackmont sought to undermine Shewchuk’s legitimate contractual interests. Accordingly, this claim fails.

The Non Vested Deferred Stock Units

[235] Shewchuk claims the value of Deferred Stock Units that had not vested at the time of his departure from Blackmont. For the reasons set out below, I dismiss his claim on the basis that Blackmont had a contractual right to cancel the unvested DSUs in question and Shewchuk was fully aware of that fact.

[236] Shewchuk’s right to unvested DSUs arises from the deferred stock unit bonus program contained in the IA agreement. The total amount of DSUs awarded was calculated on Shewchuk meeting certain production targets. The DSUs would be given to Shewchuk after the end of the fiscal year based on his production. Each award was conveyed over a three year period with Shewchuk receiving one third for the next three calendar years. The IA Agreement also made clear that Blackmont had a discretion to cancel any unvested DSUs if Shewchuk left the company to join a competitor. The idea behind this particular condition was to promote loyalty to Blackmont and encourage successful investment advisers, such as Shewchuk, to stay with Blackmont.

[237] In July 2009, however, Shewchuk resigned from Blackmont to join Concord, a rival company. By so doing, Shewchuk forfeited his right to the remaining unvested DSUs that he now claims.

[238] Shewchuk testified that he was fully aware of this provision and, as evidenced by Exhibit 1 Tab had reviewed the IA agreement with Watson to analyse the consequences of his departure weeks some months before he resigned. Shewchuk felt that he was owed the outstanding DSUs because he was forced to leave by Blackmont’s refusal to pay him on other deals he was bringing to the company. My previous findings address Shewchuk’s complaints in that particular regard. Shewchuk was not “forced” to resign but did so because he felt he was not being adequately compensated. His choice to join one of Blackmont’s competitors carried with it the risk that Blackmont would refuse him the non vested DSUs - a fact that Shewchuk was fully aware of when he joined Canaccord. Once he did so, Blackmont was contractually entitled to cancel the non-vested DSUs. Accordingly, Shewchuk’s claim fails.

The Vested DSUs

[239] Shewchuk also claims the award of DSUs in 2007 which he argues were improperly excluded from his 2007 compensation. This argument was not fully expanded at trial and is difficult to understand. Only Harris Watson testified – albeit in vague terms – on the issue. It would appear from Watson’s evidence that this claim emanates from Shewchuk’s proposal sent to Bruce Kagan and Randy Bergh (Exhibit 1 Tab 379) where he sought further DSU awards on transactions for which he had already received payments. There was no contractual entitlement to these awards. Accordingly, Shewchuk has failed to persuade me of the merits of this claim and it fails.

PART XI - CONCLUSION AND COSTS

[240] For the reasons set out above, Shewchuk’s action is dismissed.

[241] If the parties cannot agree on costs, I invite Blackmont to submit a written application for costs no longer than 5 pages within 30 days of these reasons. Shewchuk is to file written reasons of the same length within a further 30 days.

[242] In closing, I would like to commend both sets of counsel for their skilful advocacy and co-operation in ensuring an expedient trial.

S.A.Q. Akhtar J.

Released: August 14, 2015

COURT FILE NO.: CV-09-393658

DATE: 20150814

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ROBERT B. SHEWCHUK

Plaintiff

– and –

BLACKMONT CAPITAL INC.

Defendant

REASONS FOR JUDGMENT