COURT FILE NO.: CV-18-4414-00 DATE: 2019 07 05 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Extreme Sandbox, LLC, Plaintiff AND: KGM Simulation Inc. and Fluid Motion Dynamics Inc., Defendants
BEFORE: TRIMBLE J.
COUNSEL: David P. Lees, for the Plaintiff Cizan Suliman, for the Defendants
HEARD: June 19, 2019
Endorsement
Summary Judgment Motion
The Motions:
[1] Extreme Sandbox LLC (“Sandbox”) moves for summary judgment in the amount of $100,000, plus costs and interest arising from Fluid Motion Dynamics Inc. (“Fluid Motion”) and KGM Simulation Inc.’s (“KGM”) breach of contract. In the alternative, Sandbox requests the return of the Plaintiff’s deposit of $40,425 USD (approximately $51,044.65 CAD). Sandbox also requests an order dismissing the Defendant’s counterclaim.
[2] Fluid Motion and KGM respond with their own request for summary judgment. Fluid Motion asks that the action be dismissed against it, the contract being between Sandbox and KGM. KGM seeks judgment in the amount of $8,002.50 USD and a dismissal of Sandbox’s claim. They also ask that the deposit be forfeited and costs be ordered.
Disposition:
[3] Fluid Motion’s motion for dismissal is allowed. The Plaintiff’s and KGM’s motions for summary judgment are dismissed.
[4] Whether Fluid Motion should be a party is amenable to resolution on summary judgment, justice can be done between the parties on summary judgment, and Fluid Motion is not a proper party.
[5] For the reasons that follow, I cannot decide the Plaintiff’s and KGM’s motions on summary judgment and do justice between the parties, on this record. There are issues of credibility which require a trial. Further, I cannot craft any procedure under the special powers conferred by Rule 20.04(2.1) of the Rules of Civil Procedure for resolution of the credibility question within this summary judgment motion that is any more economical than a trial of these two witness dispute.
Facts:
[6] Between January 18, 2016 and June 25, 2017, William Manteuffel (on behalf of Fluid Motion, originally, and then later KGM) had discussions with Randy Stenger of Sandbox with respect to the sale to Sandbox of certain equipment. Originally, the discussion involved not only the purchase of equipment but potentially acting as a distributor for Fluid Motion, and later KGM. Nothing came of the preliminary talks.
[7] By January, 2017, Mr. Manteuffel still conducted all discussions on the part of the vendor. However, he was now corresponding as a representative of KGM. Mr. Manteuffel did not say that Fluid Motion was out of the picture and that he was speaking only on behalf of KGM. In all correspondence between the individual actors, however, Mr. Manteuffel’s correspondence was on behalf of KGM. He used an email address clearly pertaining to KGM.
[8] In March 2017, discussions became more serious, and more focused on Sandbox’s possible purchase of four pieces of equipment for $85,000 USD.
[9] KGM, not Fluid Motion, made a proposal. Sandbox engaged in discussions about this quote, asking about delivery at the end of May or early June 2017, among other things. Mr. Manteuffel said that this was possible if they began work immediately. He offered a progress payment system to finance the project but Sandbox could not arrange financing. Presumably, the discussions with the finance company would have included sending the quote from KGM.
[10] Discussions ended in early April 2017 when Sandbox could not arrange financing for the purchase.
[11] Unknown to Sandbox, KGM had commenced work on the project. KGM requested that Sandbox pay $10,000 for the engineering work that was done but not completed. Sandbox never agreed to pay that sum.
[12] In June 2017, negotiations resumed. Sandbox sought a reduction in price from KGM to $80,000 USD. On June 25, 2017, KGM provided a quote for $80,850 USD for the sale of the machinery with price payable at 50% on receipt of the purchase order, a further 30% upon factory testing and notification of ability to ship, and the final 20% on delivery setup and completion of training at the Sandbox premises. Delivery was 8 to 10 weeks from the placement of the order.
[13] There is a disagreement as to when the contract was entered into, and hence, when the equipment ought to have been delivered. Hence, the contract date is a live issue.
[14] The proposal did not say explicitly when the contract was accepted. It provided that payment terms were 50% “on receipt of purchase order.”
[15] On June 27, Sandbox accepted KGM’s revised proposal. Sandbox told KGM, however, that it did not yet have financing and that KGM should not move forward until financing was confirmed. I infer that Sandbox gave this instruction in light of KGM’s previous demand for $10,000 for work it did on the quotation from in March 2017, which was never accepted, for which it demanded payment.
[16] On July 1, 2017, Sandbox advised KGM that financing was approved and asked for delivery of the equipment by August 31, 2017. Sandbox argues that the contract was effective on July 1, 2017. Sandbox also argues that since the contract provides for delivery in “8-10 weeks pending clarification of all technical material and commercial matters” delivery ought to have been made by mid to end of August.
[17] The first payment under the contract (of 50%) was not made by the finance company until July 18, 2017. Therefore, KGM argues that the contract was not effective until July 18, 2017. KGM argues that delivery ought to have been at the end of September for two reasons. First, that is 8 to 10 weeks after the contract was finally entered into. Second, there were “commercial matters” not yet completed, namely that the joystick controllers for the equipment would not be delivered until the end of August.
[18] There was correspondence throughout the life of the contract between the parties. Difficulty arose, however, beginning on August 28 and continued thereafter. Sandbox discovered that KGM was still waiting for parts and would not be able to meet the August 31 delivery deadline set by Sandbox at the outset and agreed to in the contract.
[19] In a series of emails on August 29, Sandbox indicated that it believed that KGM had the “go-ahead” to start work on July 1, 2017 when financing was approved, and that KGM should have been able to deliver by August 31. Sandbox was willing to negotiate a date for September 14, 2017, and was even willing to agree to a delivery date of September 30, 2017. Mr. Stenger of Sandbox said that if KGM was not able to confirm by the end of August that the equipment would be delivered by the end of September, Sandbox would consider “alternate options.”
[20] KGM agreed that a delivery date in mid-September was doable. In addition, Mr. Manteuffel of KGM stated on August 29, “ We should also look at processing the next progress payment for September to avoid any further delays in shipping once we are done.” (Emphasis added).
[21] Sandbox took this demand for a “progress payment” as a demand for a payment not specified in the contract. KGM argued that what Mr. Manteuffel meant by his reference was that Sandbox should start the necessary preliminary work so that the second payment under the contract in September could be made on time.
[22] Mr. Manteuffel’s reference to “progress payment” began a heated email exchange that gives rise to the present dispute about who breached the contract first. On August 29, Mr. Stenger responded expressing shock in the demand for a “progress payment.” He demanded that the equipment be delivered by the end of September at the latest, and wanted confirmation of that, otherwise he would need to look at “alternate options.” Mr. Stenger also refused to make a “progress payment”: “ I am a little shocked after all this you are asking for “progress payments” Based on this lack of communication and missing the original deadline date, I would not expect any more payments until these units are physically delivered .”
[23] August 31, Mr. Manteuffel responded to Mr. Stenger’s August 29 email. He said:
“I have been in business for over 25 years for a reason, we watch our bottom line. Our terms for custom projects is the same. 50% down payment on order. 30% progress payment 30 days in. Balance due upon factory testing and ability to ship. There are no exceptions, especially on international orders. We are not a finance company, we are in engineering firm.
I suggest we stick to the plan, and get this project finished ASAP. That will require the progress payment . Is not an option for you to change things because it is not what you want, or frustrated because it interferes with your plans. We have to work together, this is our first project and hopefully many more. We have interest here for a facility, and we also have US customers, that once you are done we will want to stop in and see your operations.”
[24] Later on the August 31, Mr. Stenger replied that the contract did not require progress payments, and Sandbox would not be making any progress payments.
[25] Mr. Manteuffel considered that Sandbox’s refusal to make any “progress payments” amounted to Sandbox’s refusal to make any further payments until the machinery was delivered to Sandbox. This, in Mr. Manteuffel’s opinion, was an application for credit by Sandbox from KGM, and was a breach of terms of the contract.
[26] The next round of relevant email came on September 7 when Kelly Gardner, KGM’s operations manager, wrote to Sandbox and said that KGM would not grant Sandbox’s application for credit for $40,000. She reiterated the position advanced by Mr. Manteuffel in his email of August 31, regarding progress payments. She then said that training would be provided at KGM’s shop, not in Sandbox’s, which is the opposite of what was specified in the contract regarding training.
[27] Correspondence that followed through to and including September 11 involved KGM’s allegation that Sandbox was now asking for credit, which KGM was not prepared to give. Sandbox continued to accuse KGM of changing the terms of the contract.
Issue
[28] There are two issues in this motion. The first issue, and one not argued vociferously, was whether Fluid Motion was a proper party. The main issue on this summary judgment motion is which of the parties, if any, breached the agreement first? Sandbox says that by his August 29 email, Mr. Manteuffel, on behalf of KGM, breached the contract by insisting on new terms and by implying that he would not deliver the equipment until the “progress payment” was made in September, even though the contract did not provide for progress payments. KGM says that by refusing to make the progress payment, Sandbox breached the contract.
Analysis
[29] Rule 20.04(2) of the Rules of Civil Procedure allows a court to grant summary judgment if the court is satisfied that a) there is no genuine issue requiring a trial with respect to a claim or defence, or b) the parties agree to have all or part of the claim determined by summary judgment and the court is satisfied that it is the appropriate test to grant summary judgment.
[30] In this case, the parties agree that this is a perfect case for summary judgment.
[31] There will be no genuine issue requiring a trial only when the judge is unable to make a fair and just determination on the merits on a motion for summary judgment based on the evidence before him or her. A fair determination can be made when the process allows the judge to make the necessary findings of fact, allows the judge to apply the law to the facts, and is a proportionate, more expeditious, and less expensive means to achieve a just result (see: Hryniak v. Mauldin, 2014 SCC 7, at para. 49).
[32] A motion for summary judgment may only be granted if the judge is confident that he or she is able to find the necessary facts and apply the relevant legal principles on the evidence before the court (see: Chambers v. Cobb, 2015 ONSC 5313 (SCJ), at para. 46).
[33] On a motion for summary judgment which is primarily document driven, requires few witnesses, and in which the evidence provided on the motion is similar to the evidence that would have been tendered at trial, the evidence on the motion will be sufficient for the court to fairly resolve the dispute and that there will be no genuine issue for trial (see: Fitzgerald v. Fitzgerald, 2017 ONSC 6209 (SCJ), at para. 55).
[34] The court is entitled to assume that the parties have lead all evidence that they would have lead at trial.
[35] Even when the parties agree that their case is an appropriate one for summary judgment, the court must still exercise its own judgment in determining whether summary judgment is appropriate (see: Rule 20.04(2)(b) of the Rules of Civil Procedure, and Gordashevsky v. Aharon, 2019 ONCA 297, at para. 6).
Is Fluid Motion a Proper Party?
[36] No.
[37] This issue is capable of being resolved on summary judgment. The facts are clear on the record. This issue does not require a trial.
[38] Where an individual conducts business through a number of companies, the individual must make it clear to contracting parties which corporation or corporations are party to the contract (see: Spoke v. Delinia Ltd., 2016 ONSC 1923 (S.C.J., at paras. 32 to 34)).
[39] Referring to Mr. Stenger’s evidence alone, I find that Mr. Manteuffel discharged his onus in this regard for the following reasons:
a. At all times after January 2017, Mr. Manteuffel’s correspondence was on behalf of KGM. b. The proposal that Sandbox accepted in July 2017 was from KGM. Fluid Motion is not mentioned. Fluid motion is not a party to the contract. c. There is no evidence of representations by Fluid Motion or KGM that Fluid Motion continued to be a participant in the negotiations. d. Mr. Stenger says that power point presentations Mr. Manteuffel provided in January 2017 as part of his sales pitch comprised work done by Fluid Motion. I disagree. The power point slides (Motion Record, Tab 2b) include only reference to KGM. Based on Mr. Stenger’s evidence alone, I do not accept that Fluid Motions made representations to him or Sandbox, that Mr. Manteuffel led Mr. Stenger to believe that Fluid Motion and KGM were the same company, or that the equipment was the product of Fluid motion, in whole or in part.
[40] I see no basis upon which to keep Fluid Motion in the action. The action against Fluid Motion is dismissed.
Who Breached the Contract First?
[41] In this case, I cannot accept the parties’ view that this issue is suitable for summary judgment because it is heavily document driven. There are issues in the action which are not answered by the documents. Indeed the documents reveal the issue that requires a trial.
[42] It appears from the submissions of the parties and from the email exchange that the question of whether either side breached the contract, and if so, which side, arises from Mr. Manteuffel’s use of the words “progress payment” on August 29.
[43] Mr. Stenger takes the position that a contract did not provide for any progress payments. Payments were specified on the happening of certain events. Sandbox says that it insisted on completion of the contract according to its terms. Therefore, the next payment would not be made until the units are factory tested and KGM notified of its ability to ship. KGM never delivered such notification. KGM’s insistence on new terms of the contract amounted to a breach.
[44] Mr. Manteuffel, on behalf of KGM, argues that when he used the phrase “progress payment,” he was referring to the second installment payable under the contract, and not “progress payment” as used in his standard contractual arrangements for new customers that he referred to in his email. KGM argues that when Mr. Stenger, on behalf of Sandbox, refused to make the “progress payment” demanded (by which phrase which Mr. Manteuffel says he meant the second payment under the contract), Sandbox thereby refused to make the second installment under the contract. This represented the breach by Sandbox.
[45] This issue of who meant what in the email exchanges arising after August 29, requires a hearing. While the contract, on its face, may be clear, what Mr. Manteuffel meant by the words “progress payment” is essential to determine who breached the contract. While he offers a detailed explanation of what he intended to say when he used the phrase “progress payment,” that determination involves issues of credibility not resolvable on a paper record.
[46] There is also the issue of when the contract was made, and turning on that determination, when delivery under the contract ought to have been made and when the further payments under the contract were due.
[47] In addition to the law of offer and acceptance, oral evidence is required with respect to the formation of the contract. The contract appears to suggest that the contract is binding upon the purchaser sending a purchase order, or inferentially, agreeing to the proposals. That would suggest a contract date of June 27, 2017. Mr. Stenger, on behalf of Sandbox appears to believe that the contract was not binding until July1, when he told Mr. Manteuffel that the finance company had approved financing. Mr. Manteuffel says that the contract is not binding until July 18, 2017 when the finance company paid the first instalment under the contract.
[48] Interpreting this aspect of the contract requires an appreciation of the full factual matrix, especially given that the January to March 2017 negotiations and proposal ended when Sandbox could not obtain financing, and given that KGM spent $10,000.00 in work on that proposal.
[49] Rule 20.04(2.1) of the Rules of Civil Procedure provides the court with broad powers on a summary judgment motion in terms of weighing evidence, evaluating the credibility of a deponent, and drawing any reasonable inference from the evidence.
[50] As I have indicated, I am unable to weigh the evidence and evaluate the credibility of either Mr. Stenger or Mr. Manteuffel absent a hearing.
[51] Rule 20.04(2.1) of the Rules of Civil Procedure also allows the judge to order that evidence be presented in the form of a mini-trial by one or more of the parties in order to help determine the issue.
[52] In this case, the trial of the action would involve hearing from two witnesses. Whether those witnesses are heard in a hearing ordered within the summary judgment motion or within the trial of the action, there would still be only the two witnesses. A trial or mini-trial would likely take the same time - less that 4 days. Therefore, there is no advantage, economically, to the parties in ordering a mini-trial or specially crafted procedure under Rule 20.04 of the Rules of Civil Procedure.
[53] Further, there is no advantage, procedurally, in ordering a mini-trial of an issue as compared to a regular trial. In Brampton, if counsel can certify that the trial will take fewer than four trial days, the parties may request a “week of” trial which, depending on when the request is made, it can result in an earlier trial date than would be available in the January or May civil trial sittings.
[54] What do the parties do now?
[55] The powers under Rule 20.04(2.1) of the Rules of Civil Procedure do not permit me to make an order with respect to the trial of the action, for example, ordering a simplified trial under Rule 76 of the Rules of Civil Procedure. The Rule only allows me to make an order for a mini-trial within the confines of summary judgment motion.
[56] I recommend, however, that counsel consider whether, on consent, they are prepared to try the case in fewer than four days, in which case they can obtain a “week of” trial date from the Trial Coordinator. I urge parties to consider whether, in the interests of proportionality and expense for their clients, the examinations-in-chief of the main protagonists at trial can be done by way of filing their affidavits on the summary judgment motion, with only a time-limited cross-examination at the trial. Proceeding in this way would mean, likely, that the trial would take two or three days.
TRIMBLE J.
Date: July 5, 2019
COURT FILE NO.: CV-18-4414-00 DATE: 2019 07 05 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN: RE: Extreme Sandbox, LLC, Plaintiff AND: KGM Simulation Inc. and Fluid Motion Dynamics Inc., Defendants
COUNSEL: David P. Lees, for the Plaintiff Cizan Suliman, for the Defendants
ENDORSEMENT Trimble J.