Court File and Parties

COURT FILE NO.: 14-10635-00CL DATE: 20180731 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: EXTREME VENTURE PARTNERS FUND i LP, EVP GP INC., RAVINDER KUMAR SHARMA, IMRAN BAHSIR and KENNETH TESLIA, Plaintiffs/Responding Parties

AND:

AMAR VARMA, SUNDEEP MADRA, VARMA HOLDCO INC., MADRA HOLDCO INC., CHAMATH PALIHAPITIYA, EL INVESTCO 1 INC., EXTREME VENTURE PARTNERS ANNEX FUND I LP, EVP GP ANNEX FUND I INC., CASSELS BROCK & BLACKWELL LLP, and SEVEN HILLS GROUP LLC, Defendants

BEFORE: S.F. Dunphy J.

COUNSEL: Won Kim, Megan McPhee and Aris Gyamfi, for the Plaintiffs/Responding Parties David Lederman and Michael Wilson, for the Defendants/Moving Parties Chamath Palihapitiya and El Investco 1 Inc.

HEARD at Toronto: May 30, 2018

Reasons for Decision

[1] This is a motion for summary judgment brought by two of the defendants to this action: Chamath Palihapitiya and his holding company El Investco 1 Inc. It is their position that the plaintiffs simply have no evidence to make good their claims against them that the interests of justice require a trial to determine. For them, this case is a simple instance of seller’s remorse fuelled by envy of the large profits the defendants subsequently earned when they sold the shares they purchased, but without any proof of wrong-doing. The plaintiffs on the other hand suggest they have found plenty of smoke and submit that, in the interests of justice, they deserve the chance to go to trial to see if the source of the flame can be found. They also submit that their conspiracy claims against the moving parties cannot be severed from their claims against the defendants who are not parties to this motion.

[2] While I agree with the moving parties that the plaintiffs are not entitled to resist summary judgment on the chance that they might assemble a more persuasive case against these defendants on the evidence at trial than they have been able to do on a “best foot forward” motion for summary judgment, the last argument raised by the plaintiffs is a persuasive one. The disposition of the conspiracy claim, as inelegantly pleaded as it may be, requires findings of fact and of law to be made in respect of the plaintiffs’ claims against other defendants who are not party to this motion. Those matters will necessarily be before the trial judge when the case against the remaining defendants is tried next year.

[3] In my view, I am bound by the comments of the Court of Appeal in Butera v. Chown, Cairns LLP, 2017 ONCA 783 which was very recently re-confirmed by that court in Larizza v. Royal Bank of Canada, 2018 ONCA 632. This motion at this time and with this limited number of moving parties risks introducing inefficiencies and raises the potential of conflicting findings and multiple appeals.

[4] The moving parties object that they are the only parties against whom a claim for conspiracy is advanced and there is no reason why I cannot assess the merits of that claim. The inept wording of the Fresh as Amended Statement of Claim makes that argument appear attractive at first blush. The moving parties are indeed the only parties against whom any damages for conspiracy are claimed. Nevertheless, paragraphs 51 and following and paragraphs 95 and following of the Fresh as Amended Statement of Claim allege a specific conspiracy among the moving parties and four other defendants and plead a number of very specific actions taken in furtherance thereof. The lack of a separate damages claim as against the other four alleged co-conspirators can doubtless be laid at the feet of the fact that the alleged acts in furtherance of the conspiracy of those four defendants each form the foundation of separate claims made against those co-defendants for which the very same damages are claimed.

[5] I am unable to find that the issues I would be required to decide on this motion can be severed from the issues that will be before the trial judge. Substantially, the same factual matrix will be delved into and the issues of what duties if any were owed by Mr. Varma and Mr. Madra to the plaintiffs in the context of the transaction ultimately undertaken by the moving parties will be examined. I simply do not have all the necessary parties before me to ensure that any decisions I might be required to reach would be dispositive of the issues.

[6] The risk of conflicting decisions is apparent. The trial of this matter is only a relatively small number of months away. The interests of justice weigh against granting judgment in favour of one group of defendants in isolation when substantially the same factual matrix will before a judge in a very short time frame.

[7] I must accordingly dismiss the motion.

[8] While I have dismissed the motion, in all of the circumstances present here this is not a case where costs ought to follow the event. The trial judge will be better situated to consider the matter of costs and that trial is only a relatively small number of months away. The bulk of the effort put into assembling and preparing for this motion will have been relevant to trial preparation at all events. Costs of this motion reserved to the trial judge.

S.F. Dunphy J. Date: July 31, 2018