COURT FILE NO.: CV-18-00598529
DATE: 20190911
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Paul MacRae, Plaintiff
AND:
Maple Gold Mines Ltd., formerly k/a Aurvsita Gold Corporation, Defendant
BEFORE: Mr. Justice Chalmers
COUNSEL: A. Phillips, M. Irwin, for the Plaintiff
C. Tedesco, D. Carson for the Defendant
HEARD: July 16, 2019
ENDORSEMENT
OVERVIEW
[1] Paul MacRae, through his personal corporation Paul MacRae and Associates, entered into a services agreement with Maple Gold Mines Ltd., formerly known as Aurvista Gold Corporation (“Maple Gold”), on February 27, 2017. Pursuant to the agreement, MacRae was engaged to act as Vice President, Technical Services for Maple Gold.
[2] The other officers of Maple Gold in 2017 were Keith Minty, the Chief Operating Officer, and Bryan Keeler, the Chief Financial Officer. Minty and Keeler also entered into separate services agreements with Maple Gold. The agreements entered into by Minty, Keeler and MacRae each include a provision that the officer may be entitled to certain rights and benefits if there is a change in control of the Board of Directors.
[3] Paragraph 9.3 of the MacRae agreement provides:
9.3 MacRae may terminate his Agreement within 120 days following a Change in Control, for any reason or reasons. If MacRae terminates this Agreement, MacRae shall receive 1.5 times MacRae Then Annual Fees in a lump sum payment to be made within 30 days of the termination, together with payment of an amount equal to eight months of MacRae’s group health insurance and other Benefit Plan costs, if such a plan exists.
[4] The Minty agreement provides at paragraphs 9.2 and 9.4:
9.2 In the event of a Change of Control, if Minty is terminated within 120 days of the Change of Control, Minty shall receive 2 times the Employee’s Then Annual Fees in a lump sum payment to be made within 30 days of Minty’s termination.
9.4 If Minty is terminated pursuant to paragraph 8.1(a) above or is terminated or resigns following a Change of Control in accordance with paragraph 8.1(b) or 8.1(c) above, the Corporation will engage Minty as a consultant for a one year period ….
[5] The Keeler agreement provides at paragraphs 8.2, and 8.3:
8.2 In the event of a Change in Control, if Keeler is terminated within 180 days of the Change of Control, Keeler shall receive 2 times the Employee’s then-current annual fee in a lump sum payment to be made within 30 days of Keeler’s termination.
8.3 Keeler may terminate this Agreement within 180 days following a Change in Control, for any reason or no reason. If Keeler terminates this Agreement, Keeler shall receive 2 times Keeler then-current annual fee in a lump sum payment to be made within 30 days of the termination, together with payment of an amount equal to eight months of Keeler group health insurance and other Benefit Plan costs, if such a plan exists.
[6] The entitlement of MacRae, Minty and Keeler to benefits on termination or resignation turns on whether there has been a Change in Control, as that term is defined in the agreements. Similar definitions of Change in Control are found in each of the agreements.
[7] The MacRae and Minty agreements define Change in Control at paragraph 9.1(c):
9.1 Change in Control is defined as: …
(c) the current Aurvista affiliated directors of the Corporation (namely: Gerald P. McCarvill, Jean Lafleur, G. Edmund King, Robert A. Mitchell, and Sean Charland) ceasing to represent a majority of the members of its board of directors, as a result of a proxy solicitation other than by management.
[8] The Keeler agreement defines Change in Control at paragraph 8.1(c):
8.1 Change in Control is defined as: …
(c) the directors of the Corporation ceasing to represent a majority of the members of its board of directors, as a result of a proxy solicitation other than by management.
[9] On May 23, 2017, Matthew Horner joined Maple Gold as President and CEO. After he joined the company, Maple Gold’s management decided to make revisions to the directors proposed for election at the shareholders meeting, scheduled for June 22, 2017.
[10] In order to make the changes to the slate of directors proposed for election, it was necessary for Maple Gold to bring a motion to the Superior Court of Quebec for an order rescheduling the shareholders meeting to August 15, 2017. The motion was granted.
[11] Maple Gold sent out a Management Information Circular (“MIC”) for the rescheduled shareholders meeting. Under the section entitled “Election of Directors”, the MIC provides that management is nominating ten individuals to stand for election as directors.
[12] The shareholders meeting took place on August 15, 2017. The shareholders voted in favour of the nominees set out in the MIC. Only management proxies were solicited and voted on.
[13] Following the election of the new Board of Directors, Maple Gold terminated the agreements with Minty and Keeler. On December 11, 2017, MacRae delivered a letter to Maple Gold in which he took the position that he was exercising his rights pursuant to paragraph 9.3 of his agreement. In the letter, MacRae also provided notice that he was formally terminating his agreement.
[14] Minty, Keeler and MacRae each took the position that they were entitled to the termination payments and benefits set out in their agreements because there had been a change in control of the Board of Maple Gold. Maple Gold denied that there had been a change in control as that term is defined in the agreements, and therefore the provisions in the agreements which provided for payments in the event of a termination or resignation following a change in control did not apply.
[15] Minty commenced an action against Maple Gold pursuant to Court File No.: CV-17-587757 (the “Minty Action”). Keeler brought a separate action against Maple Gold; Court File No.: CV-17-587756 (the “Keeler Action”). Both the Minty and Keeler Actions were issued on December 4, 2017.
[16] Maple Gold brought a summary judgment motion in the Minty and Keeler actions. A Civil Practice Court appearance was scheduled to arrange a date for the hearing of the motion. Justice Archibald did not grant a hearing date for the motion and instead set a timetable and trial date for the actions to be heard together. The trial was scheduled for November 19, 2018 for five to seven days.
[17] Keeler passed away on August 16, 2018. As a result, the Keeler Action was stayed and the trial did not proceed as scheduled. The Order to Continue the Keeler Action was obtained on April 4, 2019.
[18] MacRae commenced his action against Maple Gold on May 25, 2018 (the “MacRae Action”). MacRae’s counsel argued that the MacRae Action should be joined with the Minty and Keeler Actions and a trial date be set for all three actions to be heard concurrently, however to date no motion for trial together has been brought.
[19] Maple Gold brings this motion seeking summary judgment dismissing the MacRae Action on the basis that there was no change in control as that term is defined in the agreement and therefore MacRae is not entitled to the benefits set out in paragraph 9.3 of the agreement. Maple Gold argues that there are no genuine issues requiring a trial and, as a result, the matter is appropriate for summary judgment.
[20] MacRae opposes Maple Gold’s motion on the basis that the issue of whether there was a change in control is a genuine issue requiring a trial. MacRae also argues that the issues in this action are the same as in the Minty and Keeler Actions, and that summary judgment may result in duplicative proceedings and inconsistent findings.
[21] For the reasons set out below, I find that this is not an appropriate case for summary judgment. I dismiss Maple Gold’s motion.
ANALYSIS
[22] Maple Gold brings this motion pursuant to Rule 20.01(3) of the Rules of Civil Procedure:
A defendant may, after delivering a statement of defence, move with supporting affidavit material or other evidence for summary judgment dismissing all or part of the claim in the statement of claim.
[23] A court may grant summary judgment if satisfied on the written record that there is no genuine issue requiring a trial: R. 20.04 of the Rules of Civil Procedure. A trial will not be required if the summary judgment process:
− Allows the judge to make the necessary findings of fact including any necessary findings of credibility;
− Allows the judge to apply the law to those facts; and
− Is a proportionate, more expeditious and less expensive means to achieve a just result: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 SCR 87, at para. 49.
[24] In Hryniak, the Court set out a two-part test for summary judgment. The first step requires the judge to determine whether there is a genuine issue requiring a trial based on the evidence contained in the motion records. There will be no genuine issue requiring a trial if the written record provides the judge with the evidence necessary to reach a fair and just determination in a process that is timely, proportionate and affordable: Hryniak, at para. 66.
[25] The second step is activated when the judge finds that there is a genuine issue requiring a trial. The judge must then determine whether the issues can be decided using the expanded fact-finding powers set out in R. 20.04(2.1) and (2.2) of the Rules of Civil Procedure. The additional powers are not to be used if they do not serve the goals of fairness, affordability and proportionality, in light of the litigation as a whole: Hryniak, at para. 66.
[26] In Hryniak, the Supreme Court of Canada noted that it may not be appropriate to use the expanded fact-finding powers if there is a risk of duplicative proceedings or inconsistent findings of fact:
For example, if some of the claims against some of the parties will proceed to trial in any event, it may not be in the interest of justice to use the new fact-finding powers to grant summary judgment against a single defendant. Such partial summary judgment may run the risk of duplicative proceedings or inconsistent findings of fact and therefore the use of the powers may not be in the interest of justice.: Hryniak, at para. 60.
[27] In Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438, the Court of Appeal held that the finding of partial summary judgment risked inconsistent findings with respect to the remaining issues:
In the complex situation in this case, it is therefore entirely possible that the trial judge who hears the trial of the issue on the validity of the promissory notes will develop a fuller appreciation of the relationships and the transactional context than the motions judge. That could force a trial decision on the promissory notes that would be implicitly inconsistent with the motions judge’s finding that the Third Release is fully valid and effective, even though the parties would be bound by that finding. The process, in this context, risks inconsistent findings and substantive injustice: Baywood Homes Partnership, at para. 37.
[28] There was a similar result in Canadian Imperial Bank of Commerce v. Deloitte & Touche, 2016 ONCA 922, 133 O.R. (3d) 561. The Court of Appeal held that the motion judge erred in dismissing the lender’s claim in negligence but allowing the action in misrepresentation to proceed to trial. The Court of Appeal noted that the factual determination made by the motions judge in dismissing the negligence claim would likely be in issue at the trial of the misrepresentation claim and as a result there was a risk of duplicative or inconsistent findings at trial. The Court of Appeal stated that partial summary judgment should not be granted unless there is “no risk of duplicative or inconsistent findings at trial and [when] granting partial summary judgment [is] advisable in the context of the litigation as a whole”: Canadian Imperial Bank of Commerce v. Deloitte Touche, at para. 4.
[29] In Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, the Court of Appeal noted that in addition to the risk of duplicative and inconsistent findings, partial summary judgment may be contrary to the stated objectives in Hyrniak. The court listed four factors:
(1) The motion may cause the main action to be delayed;
(2) The motion for summary judgment can be very expensive;
(3) Judicial resources are being used to hear partial summary judgment motion and write comprehensive reasons on an issue that will not dispose of the action; and
(4) The record available on the partial summary judgment motion will likely not be as expansive as the record at trial therefore increasing the danger of inconsistent findings: Butera, at paras. 30-34.
[30] Recently, the Court of Appeal provided further direction with respect to summary judgment motions:
With respect, the culture shift referenced in Hryniak is not as dramatic or as radical as the motion judge would have it. The shift recommended by Hryniak was away from the very restrictive use of summary judgment, that had developed, to a more expansive application of the summary judgment procedure. However, nothing in Hryniak detracts from the overriding principle that summary judgment is only appropriate were it leads to “a fair process and just adjudication”: Hryniak at para. 33. Certainly there is nothing in Hryniak that suggests that trials are now to be viewed as the resolution option of last resort. Put simply, summary judgment remains the exception, not the rule.: Mason v. Perras Mongenais, 2018 ONCA 978, at para. 44.
[31] Based on the cases referred to above, summary judgment is not appropriate if it does not result in the just, most expeditious, and least expensive determination of the proceeding on its merits. Summary judgment will not be ordered if there is a risk of duplicative proceedings or inconsistent findings: Butera v. Chown, at para. 34.
[32] The Minty, Keeler and MacRae Actions are based on the same factual matrix and will require an interpretation of agreements which contain similar terms. Each case will turn on whether there had been a change in control of the Board of Directors as a result of a proxy solicitation other than by management. Regardless of how the issues are decided on the summary judgment motion in the MacRae Action, the Minty and Keeler Actions will continue to trial at which time the same issues will be decided a second time.
[33] As stated in Baywood Homes, the judge presiding over the trial of the Keeler and Minty Actions may have a fuller appreciation of the matters in issue. The trial judge may make findings of fact with respect to the circumstances surrounding the change in control of the Board of Directors or may interpret the common terms of the agreements differently from what may be decided on a motion. As a result, there is a risk of inconsistent findings.
[34] Summary judgment in this case will not result in a cost-effective procedure. The motion judge in the MacRae Action and the trial judge in the Minty and Keeler Actions will be required to consider the same evidence as to the change in control of the Board of Directors and will be required to interpret similar provisions in the agreements. Having two proceedings which consider the same evidence and issues is duplicative and not cost-effective or a proper use of judicial resources: Joroga Real Estate Ltd. v. State Farm Fire and Casualty Company, 2019 ONSC 2730, at para. 50.
[35] I conclude that the summary judgment motion brought by Maple Gold does not meet the objectives set out in Hryniak. Regardless of the outcome of the motion, the Keeler and Minty Actions will proceed to trial where the issues will be litigated a second time.
DISPOSITION
[36] I dismiss the Defendant’s summary judgment motion.
[37] Pursuant to Rule 50.13 of the Rules of Civil Procedure, I order a case conference before a judge, to establish a timetable for the proceeding, and to determine whether the Macrae Action is to be consolidated or heard at the same time or immediately after the Keeler and Minty Actions. The case conference is to be scheduled within 30 days of the date of this endorsement.
[38] The Plaintiff was successful in opposing the motion for summary judgment and therefore is presumptively entitled to his costs of the motion. If the parties are unable to agree on costs, the Plaintiff may deliver written submissions of no more than 3 pages in length (excluding the Bill of Costs and case law) within 21 days of the date of this endorsement. The Defendant may deliver responding submissions on the same basis, within 21 days of receiving the Plaintiff’s submissions.
Chalmers, J.
Date: September 11, 2019