COURT FILE NO.: CV-18-595693
DATE: 20200403
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CORE INSIGHT STRATEGIES INC.
Plaintiff
– and –
ADVANCED SYMBOLICS (2015) INC.
Defendant
Natalie Schernitzki, for the Plaintiff/Responding Party
Sumir Sennik, for the Defendant/Moving Party
HEARD: December 11, 2019
Kimmel J.
Reasons for decision
[1] The defendant, Advanced Symbolics (2015) Inc. (“ASI”) moves for summary judgment and the dismissal of this action in its entirety. ASI primarily argues that the parties only made one agreement and it was fully performed. Thus, ASI says the plaintiff’s claims must fail in relation to what the it contends were aspirational further agreements that were never finalized between the parties.
[2] While neither party has included a copy of the statement of claim in their motion materials, the plaintiff, (“CIS”) describes its claims in its factum to be predicated upon alleged misrepresentations, breaches of contract, breaches of the duty of good faith and honesty in contractual dealings, loss of opportunity, quantum meruit and unjust enrichment, for which the plaintiff seeks punitive, aggravated and/or exemplary damages against ASI.
[3] CIS maintains that there are genuine issues requiring a trial regarding the terms of the three contracts that it maintains were agreed to, the last of which it seeks to enforce, and the representations that ASI made concerning the future business relationship between the parties upon which CIS relied in sharing its business contacts and industry knowledge that ASI took advantage of. CIS opposes this motion for the summary dismissal of its claims.
[4] I agree with CIS that a trial is required to resolve some of the issues raised in this action, and that this is not an appropriate case for partial summary judgment, so I am ordering a trial of issues. I will remain seized of this matter and will preside over that trial, based on the directions provided in these reasons or as may be subsequently provided, pursuant to Rule 20.05.
The Agreement(s) and Dealings Between the Parties Giving Rise to this Action
[5] The claim arises out of a business relationship that was initiated in November 2016 by CIS. CIS describes itself as a marketing and public opinion research and communications company. Dan Baril, the principal, deposes that he has 42 years of industry experience in quantitative and qualitative market research design, survey methodology, data analysis and reporting. His experience spans a number of business and government sectors, including: transportation/transit, banking, financial and credit card services and products, automotive, technology, retail, commercial real estate, transportation courier services, telecommunications and internet, human resources and employee research, branding and brand management, public relations, and political public opinion polling (the “Sector” or “Sectors”).
[6] ASI describes itself as a company that develops advanced artificial intelligence software that allows businesses and governments to better understand their audiences. CIS refers to this as Machine Deep Learning and Artificial Intelligence (“AI Technology”). Erin Kelly and Kenton White are the two principals of ASI.
[7] CIS approached ASI in November 2016 about ASI’s AI Technology and its capacities for descriptive, predictive and prescriptive analytics and the potential to exploit them with the benefit of the experience, contacts and relationships that CIS had, initially in the polling and market research Sectors. Both parties saw the potential advantages and benefits that their combined resources and expertise might generate across these and other Sectors.
[8] The parties entered into a verbal hand-shake agreement in January 2017. The parties disagree about what the exact terms of that agreement were. However, there is no dispute that, pursuant to that agreement, commissions were paid for approximately one year based on agreed upon percentages of gross revenues on a case by case basis for contracts that ASI acknowledges CIS helped it to obtain, including: an SRB contract and O&D survey for Quebec Regional Transit Corporation, and a City of Ottawa study and a Durham Regional Transit study. CIS refers to this as the “Initial Agreement” and ASI refers to it as the “Commission Fee Arrangement”.
[9] CIS claims that, even at the stage of the Initial Agreement, it was anticipated that there would eventually be revenue sharing across the Sectors as well as for any new industries introduced by CIS. CIS contends that there was a verbal agreement reached in May 2017 to expand upon the apportionment between the parties under the Initial Agreement.
[10] ASI maintains that this Initial Agreement was just a “Commission Fee Arrangement”. ASI acknowledges that there were discussions after this Initial Agreement/Commission Fee Agreement about a revenue sharing but maintains that the parties never reached any further agreement about the different formulas and structures they talked about. ASI maintains that it rejected outright the idea of any equity sharing, and points to an email dated March 18, 2017 as evidence of this. ASI acknowledges that the terms of potential written contracts were considered, but that no agreement was reached for a long-term and larger scope business arrangement, orally or in writing.
[11] CIS further contends that, following a joint capabilities and presentation tour that the parties embarked upon over the course of the spring and summer of 2017 (during which they made presentations organized by CIS with many of its contacts), the parties agreed during a five-hour meeting held at a restaurant on either September 9 or 12, 2017[^1] in Ottawa to what CIS describes as a “Fee/Equity Agreement”, that CIS says was documented in an email sent by CIS to ASI on November 7, 2017, but never confirmed in writing by ASI.
[12] ASI disputes that any agreement was reached at this meeting (or thereafter). ASI says that Baril indicated after this meeting later in September 2017 that he did not want to be an employee of ASI and maintains that all that was left open was the possibility of future discussions about a long-term business relationship. ASI points to email correspondence between the parties later in September 2017 to support this, including an email from Baril on September 27, 2017 in which he stated that: “Before taking the conversation further, I think I really need to clarify or more precisely state what I would like versus not like. […] We just need to agree on a formula and a method of payment.”
[13] After a disagreement that occurred in relation to a presentation that the parties made at a conference put on by the Canadian Urban Transit Association (CUTA), they met again on November 16, 2017. Prior to that meeting, CIS had sent an email on November 7, 2017 purporting to record an agreement reached at the September 2017 meeting. ASI says that it was communicated to CIS at the November 2017 meeting that the proposed terms in CIS’s November 7, 2017 email were not accepted, especially with respect to the proposed equity stake that Baril had provided for himself.
[14] CIS contends that at the November 16, 2017 meeting the Chief Data Scientist and one of the principals of ASI (Kenton White) proposed a new agreement that CIS accepted. CIS refers to this agreement as the “Strategic Alliance” and claims that it was left to White to document the terms, but when he did not do so, CIS did so and sent them to ASI on or about February 8, 2018. ASI again did not provide any written confirmation of the terms of this agreement. ASI terminated its business relationship with CIS shortly afterwards.
[15] ASI admits that terms were proposed by it at this November 16, 2017 meeting to focus on the public transit Sector with an 80/20 split for contracts upon which CIS would have certain duties. It maintains that it was proposed that CIS/Baril would have exclusivity in the transit Sector and that non-transit work would be split 90/10 for a different and reduced set of duties. ASI maintains that this meeting ended only with an agreement to try to document the terms that they had discussed. Various emails were sent by Baril after the meeting referencing the need to finalize their agreement.
[16] ASI explains that Kenton White, who was supposed to document the terms that had been discussed at the November 2017 meeting, fell ill so Baril was invited to do so. Baril subsequently wrote to ASI rejecting the contractual framework discussed at the November meeting in an email
dated December 5, 2017 and asked to present a different framework to ASI at a meeting on December 8, 2017. ASI says no new framework was presented at the December meeting and nothing was agreed to.
[17] CIS maintains that, in the absence of any further agreement having been reached, the proposal or offer that was made by AIS at the November 16, 2017 meeting and accepted by CIS amounted to an agreement. CIS claims that the essential terms were agreed to and it just needed to be documented.
[18] ASI saw things differently and informed CIS on January 10, 2018 that it wished to terminate their business relationship. However, ASI says it was persuaded to give Baril one final chance to reach an agreement for a long-term business arrangement between the parties. ASI says that the terms of that agreement were outlined by ASI in an email dated January 11, 2018. CIS did not accept or reject this proposal. ASI relies heavily upon the email exchange that ensued after this, in January 11, 2018 in support of its position that no agreement was reached:
a. Baril responded that the parties should “keep the onus where we left it, still on me, to draft a memorandum of understanding that could be used to form the basis of an agreement between our two firms. If we have an agreement in principle stemming from that memorandum of understanding, we could move to have the agreement formalized and executed.”
b. Erin responded to say that “my note outlies the basis for such an agreement, and the conditions under which we would be prepared to work. You have not, as requested, said whether you agree with these points or not.”
c. Baril further explained that he would prefer the agreement to read less like an employment contract and more like an agreement between two firms. To that end, he indicated “I have very concrete ideas on how to word an agreement that says what you conveyed in your note, but between ASI and CIS.”
[19] It was after this exchange that CIS presented the February 8, 2018 draft that CIS refers to as the Strategic Alliance, along with a spreadsheet purporting to outline the work in progress and prospective work. ASI maintains that this document did not align with the conditions of Kelly’s January 11, 2018 email and that no agreement was reached. ASI and CIS have not done any business together since February 14, 2018. ASI maintains that there was no contract to terminate because the only agreement was the Initial Agreement/Commission Fee Agreement that was on a case by case basis.
[20] CIS claims that, commencing in November 2016 and continuing until ASI terminated the relationship in January/February 2018, ASI represented that it was looking to enter into a long-term business arrangement involving revenue sharing within the Sectors, in exchange for CIS introducing ASI to its clients and business contacts within the Sectors and actively promoting the AI Technology and generating business for AI. These are representations said to have been made by ASI and relied upon by CIS. Specifically, CIS claims to have introduced ASI to its clients and business contacts in the transit industry, municipal government sector among other Sectors. CIS
also claims to have promoted the AI Technology as the way of the future, to replace the traditional analytics that CIS had employed successfully for many years, in order to develop business for ASI based on the promise of a long-term business association that would also benefit CIS.
[21] CIS also relies upon the evidence from one of its clients, Alain Mercier, to support its claims for misrepresentation and breach of the duty of good faith in contractual dealings. Mercier reported to Baril that White had told him it was ASI’s plan to use CIS to gain access to CUTA and that market, to allow CIS to make introductions and give ASI access to the Sectors, and then to cut CIS out. White denies that he said this. CIS argues that ASI induced it to make these introductions and grant ASI access to the market and Sectors through repeated representations that ASI intended to enter into a long-term relationship with CIS, but that it never intended to do so.
[22] CIS also contends that, before terminating the business relationship between ASI and CIS, ASI began secretly working with one of CIS’s competitors, Dillon Consulting Limited, on a new business arrangement to replace CIS. CIS alleges that ASI was acting in bad faith, or not acting in good faith, throughout their business dealings.
The Issues to be Decided in this Action
[23] The following issues arise and must be determined in this action:
a. Was there any agreement reached between the parties beyond the Initial Agreement/Commission Fee Agreement?
b. If there was a further agreement(s), what were the terms and were they breached?
c. Did ASI’s statements about its desires or intentions regarding a long-term business arrangement with CIS (beyond the Commission Fee Arrangement) amount to a representation that it was ASI’s intention to enter into such an agreement?
d. Was ASI negligent or did it intentionally mislead CIS by its statements about the prospect of a long-term business arrangement so as to induce CIS to introduce ASI to prospective clients in the Sectors?
e. Did CIS rely upon any such representation made by ASI by:
i. introducing ASI to business contacts and market participants in the Sectors? and/or
ii. Promoting ASI’s business to the detriment of CIS’s business?
f. Did ASI lose any business or suffer any other damages as a result of its reliance on any representation made to it by CIS?
g. Did ASI owe a duty of good faith to CIS?
h. If such a duty was owed, did ASI breach its duty of good faith by:
i. ASI leading CIS to believe that it intended to enter into a long-term business relationship when it did not have any intention of doing so?
ii. ASI negotiating a business relationship with a competitor of CIS?
iii. The manner in which it treated CIS during and upon the termination of their relationship?
i. If ASI is found to have breached any agreement or duty of good faith, or to have made any misrepresentation, did CIS suffer any damages as a result and what is the appropriate measure of CIS’s damages?
j. Did CIS lose any business opportunities of value and/or was ASI unjustly enriched as a result of any breaches or wrongful acts of ASI?
Summary Judgment Framework
[24] Rule 20.04 directs that the court shall grant summary judgment if:
a. the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or a defence; or
b. the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.
[25] The framework for determining summary judgment motions comes from the Supreme Court of Canada in the case of Hryniak v. Mauldin (2014 SCC 7, [2014] 1 S.C.R. 87, at para. 7). It requires that the judge be confident that the court has the evidence to make the factual findings required to adjudicate the dispute (by applying the law to the facts) and to reach a fair and just determination on the merits. The question to ask is whether there is a genuine issue “requiring a trial” and whether it is in the interests of justice for the judge to use the fact-finding powers to decide that issue. This can be considered in light of the goals of timelines, affordability, and proportionality.
[26] The procedure to be followed on a motion for summary judgment prescribed by the Supreme Court in Hryniak is in two stages:
a. the judge should first determine if there is a genuine issue requiring a trial based only on the evidence before him or her without using the fact-finding powers in sub-rule 20.04(2.1).
b. if there appears to be a genuine issue requiring a trial, Rule 20.04(2.1) permits the motion judge, at his or her discretion, to: (1) weigh the evidence, (2) evaluate the credibility of a deponent, or (3) draw any reasonable inference from the evidence unless it is in the “interest of justice” for these powers to be exercised only at trial: Hryniak, at para. 66.
[27] The court may use the expanded fact-finding powers available under Rule 20.04(2.1) to resolve these issues if that will leave no genuine issue requiring a trial (See Trotter v. Trotter, 2014 ONCA 841, at paras. 72 and 74-75; see also 2212886 Ontario Inc. v. Obsidian Group Inc., 2018 ONCA 670, at para. 34).
[28] In doing so, the court is entitled to assume that each side has put its best foot forward with respect to the evidence and that no other or additional or better evidence would be led at trial. See, for example, Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, at paras. 26-27, aff’d 2014 ONCA 878 and Da Silva v. Gomes, 2018 ONCA 610, at para. 18, cited recently by me in Lotin v. Gregor, 2019 ONSC 1510).
[29] The Supreme Court of Canada’s description of the “interest of justice” inquiry in the Hryniak case at paras. 58 – 60 directs the court to consider the consequences of the motion in the context of the litigation as a whole in deciding whether the court’s Rule 20.04(2.1) fact-finding powers should be exercised only at trial. The Supreme Court used the example that if some of the claims against some of the parties will proceed to trial in any event, “it may not be in the interests 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.”
[30] This underscores the concern about inconsistent findings at trial when a summary judgment motion is not dispositive of the entire case, as I found in the case of Avila v. Couto, 2019 ONSC 400, at paras. 32-33. This is precisely what the Court of Appeal has repeatedly said is not an appropriate case for summary judgment. (See Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438; Hamilton (City) v. Thier + Curran Architects Inc., 2015 ONCA 64, 45 C.L.R. (4th) 1; Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561; Mason v. Perras Mongenais, 2018 ONCA 978, and Healthy Lifestyle Medical Group Inc. v. Chand Morningside Plaza Inc., 2019 ONCA 6.)
Positions of the Parties on Summary Judgment
The Position of the Moving Party/Defendant - ASI
[31] ASI maintains that this is really just a claim for breach of contract. Although there is some controversy in the evidence on both sides about the precise terms of the Initial Agreement/Commission Fee Agreement, there is no dispute that all of the invoices remitted by CIS to ASI have been paid so the precise terms of this agreement do not need to be resolved to decide this motion.
[32] ASI contends that the Strategic Alliance Agreement never came into existence. This is the contract that CIS relies upon and alleges was breached in support of the claims for breach of contract that it is making in this action. ASI argues that there is no genuine issue that requires a trial about the existence of the Strategic Alliance Agreement. To the extent that the bald statements of Baril about the various “agreements” raise a genuine issue for trial, ASI argues that the issue can be resolved by resort to the court’s fact-finding powers.
[33] ASI contends that any reasonable interpretation of the exchange of drafts and correspondence between the parties cannot support a finding that an agreement was reached, beyond the Initial Agreement/Commission Fee Agreement. To the extent required, ASI urges the court to use its fact-finding powers to weigh the evidence which supports this conclusion. The court may also assess Baril’s and Kelly’s credibility based on the contemporaneous documents that ASI contends, at best, establish a prospective agreement on terms that were never finalized consistent with Kelly’s evidence, not Baril’s.
[34] ASI further argues that the evidence about its bad faith is inadmissible hearsay that has never even been affirmed by the recipient of the statement (who simply says that he told Baril this but does not attest to what Kenton White actually said to him). Further, it is directly denied by Kenton White, the one who is alleged to have made the statements relied upon, and his evidence about this was not challenged on cross-examination. ASI suggests that this conversation was staged between Baril and his long-time friend and business associate and the evidence about it should be approached with caution as unreliable. ASI is not arguing that there is no duty of good faith in the context of contract negotiations, but rather is arguing that no duty was breached.
[35] ASI also maintains that it did not have an exclusive deal with CIS the prevented it from dealing with CIS’s competitors.
[36] ASI denies that it made any representations to CIS that it relied upon. The introductions that CIS made for ASI were in furtherance of the Initial Agreement/Commission Fee Agreement. Some of these introductions resulted in contracts for ASI and some did not. CIS was compensated for the ones that did. ASI also maintains that its willingness to try to reach a long-term agreement for revenue sharing was genuine, and that was never misrepresented to CIS. The fact that this was held out in some emails does not amount to a misrepresentation and the evidence of further unparticularized “calls” in which promises are alleged by Baril to have been made by Kelly that a written contract would be entered into, without further particulars, are not a sufficient basis on which to ground a claim for misrepresentation.
[37] ASI further contends that CIS has not made out even a prima facie case for any loss of business or damages alleged to have been suffered by it as a result of any reliance it placed on the prospect of a long-term business association with ASI. ASI contends that the mere fact that ASI may be doing business with two parties (Mastercard and Hill & Knowlton) who CIS also did business with in the past is not evidence of this.
[38] ASI argues that there is no genuine issue requiring a trial to determine any of the claims made by CIS and that summary judgment is thus appropriate and the action should be dismissed.
Position of the Responding Party/Plaintiff - CIS
[39] CIS contends that there are significant credibility issues that will have to be resolved given the competing testimony of Kelly and Baril about what was agreed at the three key meetings at
which Baril says agreements were reached. CIS relies heavily on Kelly’s testimony in cross-examination about the November 16, 2017 meeting at which CIS alleges the Strategic Alliance was agreed to. Kelly confirmed on cross-examination that Baril seemed agreeable to what ASI was prepared to offer to him at this meeting and that, when they left, they said “Let’s put it down on paper.” CIS maintains that an agreement was reached at this meeting. It frames the dispute to be about what was agreed to and whose version of what was agreed to will the court accept, not about whether there was a meeting of the minds.
[40] CIS points to various inconsistencies in Kelly’s testimony about different contractual terms that were under negotiation, such as exclusivity and equity sharing. CIS urges the court not to rely on select statements from email correspondence without evaluating the full factual matrix of the alleged agreements and having an opportunity to assess the credibility of what the witnesses on each side are saying about both the existence and/or terms of agreements beyond the Initial Agreement, which it maintains will require a trial.
[41] CIS also maintains that a trial is required to determine the damages, although they are likely to be bifurcated because it requests that ASI first provide an accounting of its business so that CIS can determine which of ASI’s clients Baril made introductions to, and the value of that business, which is one way in which it would be entitled to measure its damages. At this time two have been identified by CIS, Mastercard and Hill & Knowlton. Many names of ASI’s clients with whom it has done business since January 2017 have been withheld due to non-disclosure agreements and concerns about confidentiality, CIS says it requires a proper accounting and audit before it can determine its damages.
[42] CIS has not yet committed to a theory of damages, which could include the value of the performance of the contract if one is proven, but could also be based on reliance damages and/or the value of the business that CIS lost to ASI as a result of CIS’s introduction and promotion of ASI to CIS contacts and clients, or quantum meruit for the value of the work that CIS did to develop business and promote ASI to CIS’s clients and for the value of the credibility that CIS says its backing gave to ASI within the various Sectors. There also may be a claim for unjust enrichment for business expenses incurred by CIS on behalf of ASI.
[43] CIS points to a series of emails on June 9, 2017 in which ASI acknowledges the introductions that CIS made for ASI and holds out the prospect of a longer-term agreement (even one that might include equity sharing). In Kelly’s words: “We like working with you. I’m sure we will come to a fair agreement.” CIS also relies on Kelly’s admissions on cross-examination that introductions were made and that ASI has entered into contracts with some of the Sector participants who CIS introduced it to.
[44] CIS claims that it has not been able to revert back to the business of more traditional polling and analytics that it had done for clients before its association with ASI because, during their association, clients were convinced of the benefits of the AI Technology that ASI has.
[45] CIS says that ASI breached its duty of good faith contractual performance by:
a. Trying to squeeze Baril/CIS out of deals;
b. Negotiating with a competitor, Dillon Consulting;
c. Holding out the prospect of a long-term agreement that it never intended to enter into, so as to induce CIS to introduce ASI to prospective clients;
d. Refusing to document agreement(s) in principle that were reached at meetings in September and November 2017;
e. The manner in which ASI announced it was terminating their relationship, by telling clients before telling CIS that it was doing so.
[46] CIS maintains that the credibility of Kelly and White will also have to be assessed and weighed to decide its contractual good faith claims and that those assessments should be made at the same time as their credibility is assessed in relation to the breach of contract and misrepresentation claims to avoid overlapping and potentially inconsistent findings. CIS asserts that no issue can be decided now in this case given the underlying credibility assessments that could impact the findings in respect of all of its claims.
Summary Judgment Analysis
[47] The Supreme Court’s analytical framework for a summary judgment motion requires me to consider:
a. Whether there is a genuine issue for trial and, if so, whether I can reach a fair and just determination on the merits using the enhanced fact-finding powers set out in Rule 20.04(2.1);
b. Whether the use of the enhanced fact-finding powers to decide the issue is in the interest of justice, without running the risk of duplicative proceedings or inconsistent findings of fact.
Genuine Issues for Trial and the Use of the Court’s Rule 20.04(2.1) Fact-Finding Powers
[48] There are a number of areas in which the evidence of Baril is at odds with the evidence of Kelly. The mere existence of credibility issues between Kelly and Baril does not necessarily amount to a genuine issue requiring a trial. They must be at odds on material issues that impact the outcome of the case.
[49] The credibility issues between Kelly and Baril in this case go to issues at the heart of CIS’s claims for breach of contract, misrepresentation and failure to negotiate or perform agreements in good faith. All of these claims turn upon what was discussed at certain key meetings between them on September 9 or 12, and November 16, 2017 and their conduct and communications before and after those meetings. The latter claims for misrepresentation and failure to act in good faith also depend on the intentions and motivations of ASI and require an assessment of whether ASI intended to enter into a long-term business relationship with CIS, which is the subject of a credibility assessment between witnesses on both sides.
i) Claims for Breach of Contract
[50] The contract claims which depend upon the proof of an agreement based on opposing evidence of Kelly and Baril about what was discussed and/or agreed to at meetings they had on September 9 and November 16, 2017 after the Initial Agreement/Commission Fee Agreement – raise a genuine issue for trial.
[51] The contract claims might on their own have been amenable to determination through the use of the court’s fact-finding powers, even though they would depend upon an assessment of credibility and whether to prefer Baril over Kelly’s evidence, because they could be considered in light of the contemporaneous emails and the conduct of the parties (factual matrix).
ii) Claims for Misrepresentation and Lack of Good Faith
[52] The claims regarding ASI’s intention to negotiate a contract for a long-term business relationship in good faith raise genuine issues for trial that are dependent upon the assessment of the credibility of Baril’s, Kelly’s and White’s evidence. I have concluded that it will not lead to a just and fair result for me to attempt to use the court’s fact-finding powers to resolve these claims because the credibility assessments that they depend upon are predominantly tied to the testimony of the individuals. There is very little in the way of contemporaneous documents or conduct against which to assess what these individuals say was discussed or represented, or what ASI says its intentions were.
[53] Beyond the question of what statements were made, the misrepresentation claim alleges that ASI did not have an intention to enter into a long-term business relationship with CIS. Kelly says she did hold this intention. The credibility of Kelly’s statement will have to be assessed. There will also have to be a credibility assessment regarding the discussion between Mercier and White, during which it is alleged that White indicated that ASI planned to gain access to Baril’s contacts and then terminate the business relationship with ASI; in effect, that ASI had no intention of entering into a long-term business arrangement with CIS. White denies that he said this, or words to this effect, to Mercier.
[54] ASI argues that Mercier’s evidence does not go far enough to raise a genuine issue for trial because of the way in which his affidavit is worded, when contrasted with White’s outright denial.[^2] This evidence requires a multi-layered analysis that, on one level, is asking the court to avoid a decision on the merits in favour of a decision based on the evidentiary burden to put a best foot forward on a summary judgment motion. That type of decision-making might be appropriate in a single-issue case but is problematic in a case such as this where there is a compounding effect of various credibility assessments across multiple issues, some of which I have determined require a trial.
[55] In this case, the court will have to determine whose version of what was discussed during the key meetings in September and November 2017 to believe. This will inform not only the assessment of whether there was a meeting of the minds on the essential terms of an agreement, but also the alternative assessment of whether the communications that ensued afterwards were good faith attempts on ASI’s part to reach an agreement for a long-term business relationship or designed to induce CIS to make introductions to prospective clients in reliance upon statements made in the course of those communications.
[56] As well, the question of whether ASI breached its duty of good faith and honesty in contractual performance might arise in the context of even the lesser “agreement to enter into an agreement” that ASI contends would be unenforceable as a contract. This duty may also arise in a case such as this where the parties had an existing agreement and the dispute is about whether they agreed to expand or build upon it. The point was not fully argued on this motion, but these circumstances might engage the organizing principle of good faith in dealings between contracting parties that the Supreme Court of Canada described in the case of Bhasin v. Hrynew, 2014 SCC 71, at para. 65.
[57] Other allegations are made about the good faith contractual performance that do not add anything to this summary judgment analysis, so I have not addressed them in these reasons.
The Interest of Justice
[58] I have determined that there are genuine issues requiring a trial, at least one of which requires the court to assess the underlying agenda that ASI is accused of having, to string CIS along based on the prospect of a long-term business relationship so that it could take advantage of CIS’s contacts and introductions to prospective clients in the Sectors. That assessment will depend upon credibility assessments of Kelly, Baril, White and Mercier.
[59] There is a risk of inconsistent findings of credibility, if I were to use the fact-finding powers as ASI asks me to do, to decide the contract claims, that will require me to prefer the evidence of the ASI witnesses over the CIS witnesses, when further credibility assessments of the same witnesses are expected to be made at the trial of the continuing claim for misrepresentation and failure to act in good faith.
[60] The words of the Court of Appeal in Butera (at paras. 30-33) resonate in this case. I have identified concerns about the potential for inconsistent findings, when some issues are going to trial and it is reasonable to expect that the record available on this motion is not as expansive as the record will be at trial. Once there is going to be a trial, only an issue that is truly severable from the continuing issues and claims should even be considered for what would amount to a partial summary judgment. “A motion for partial summary judgment should be considered to be a rare procedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost effective manner.” (See Butera, at para. 34).
[61] This case does not allow for the outcome that the Supreme Court of Canada was looking for in Hryniak (at para. 60). I am not satisfied that deciding some of the claims by summary judgment is a more expeditious and less expensive means to achieve a just result.
Disposition and Rule 20.05 Considerations
[62] The summary judgment motion is dismissed.
[63] ASI asks that if a trial of issues is ordered that this court remain seized and to make findings that can be made now to streamline that further hearing. For reasons indicated above, I do not consider it to be in the interest of justice for me to make findings now because of the risk of inconsistent findings at the trial of issues. As Rule 20.05 contemplates, I have outlined the issues that need to be decided at the trial in paragraph 23 above. I am ordering that the action proceed to trial expeditiously.
[64] I intend to provide directions and may impose terms to achieve this and to make the best and most efficient use of the affidavits and cross-examinations at the trial. Neither party was in a position to address the considerations in 20.05(2) at the hearing and both requested the opportunity to make submissions after the release of my decision on this motion. Accordingly, I am directing pursuant to 20.05(2)(m) that the parties arrange to appear on a chambers appointment before me as soon as the procedures under which the court is currently operating (due to the COVID-19 pandemic) allow. It can be conducted either by telephone conference or video conference if the Zoom courtrooms have been initiated and one is available.
[65] Prior to that chambers appointment, the parties are directed to review the issues to be decided as I have outlined them, and the other terms that are suggested in Rule 20.05(2) and attempt to reach agreement on as many of them as possible. The points of agreement and disagreement should be summarized and provided to me no later than 2 pm on the day before the scheduled chambers appointment.
Costs and Effect and Implementation of this Order
[66] Rule 20.06 allows the court to fix and order payment of costs on a substantial indemnity basis against the moving party on a summary judgment motion if that party is found to have acted unreasonably by making the motion or acted in bad faith for the purpose of delay. There is no basis for finding ASI to have acted in either of these ways.
[67] Having regard to the principles set out in Rule 57, and noting that I will remain seized of the trial and it is my intention to ensure, through the Rule 20.05 directions to be provided, that the evidence gathered for this motion be preserved for use at trial, I consider it to be an appropriate case to award costs of this motion payable in the cause. I find that it is fair and just that the costs follow the ultimate determination of the issues raised on this motion on their merits.
[68] Determining what those costs should be is a matter of discretion and cannot be determined by an allocation of time spent or hourly rates alone. The relevant factors to consider in quantifying costs of a step in a proceeding such as a summary judgment motion include an assessment of what is fair and reasonable. See Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R (3d) 291 (C.A.) and Zesta Engineering Ltd. v. Cloutier (2002), 2002 25577 (ON CA), 21 C.C.E.L. (3d) 161 (Ont. C.A. at para. 4).
[69] The parties have exchanged costs outlines. Each seeks costs of this motion from the other. Their partial indemnity costs are within a few thousand dollars of each other. ASI’s are $41,931.50 plus $2,29187 for prior counsel, and CIS’s are $47,539.12 (all inclusive of fees disbursements and taxes). I quantify and fix the partial indemnity costs of this motion to be $40,000.00, inclusive of all fees, disbursements and taxes, payable in the cause.
[70] Notwithstanding Rule 59.05, this Judgment is effective from the date it is made and is enforceable without any need for entry and filing. In accordance with Rule 1.04, no formal Judgment need be entered and filed unless an appeal or a motion for leave to appeal is brought to an appellate court. Any party to this Judgment may nonetheless submit a formal Judgment for original signing, entry and filing when the Court returns to regular operations.
Kimmel J.
Released: April 3, 2020
COURT FILE NO.: CV-18-595693
DATE: 20200403
CORE INSIGHT STRATEGIES INC.
Plaintiff
– and –
ADVANCED SYMBOLICS (2015) INC.
Defendant
REASONS FOR DECISION
Released: April 3, 2020
[^1]: Baril says this meeting took place on or about September 9, 2017 whereas ASI says it was on September 12, 2017. Nothing turns on the specific date of this meeting, although CIS notes that Kelly’s recollection of this meeting is sparse.
[^2]: ASI also raised some hearsay concerns about this evidence, although having the direct evidence of both White and Mercier would address any hearsay concerns that might have arisen if their conversation was being reported only by Baril.