COURT FILE NO.: CV-18-77838
DATE: 2020/04/23
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ERICA LESLIE and GRIP FAST STRATEGIES CORP., Plaintiffs
AND
ENCANTO POTASH TRADING CORPORATION, ENCANTO POTASH CORP. and STAVROS DASKOS, Defendants
BEFORE: Mr. Justice Stanley J. Kershman
COUNSEL: Stephane Hutt and Michel Sicotte, Counsel for the Plaintiffs
John E. MacDonell, for the Defendants
HEARD: January 30, 2020
ENDORSEMENT
[1] This motion is brought by the Defendants to strike the Plaintiffs’ pleadings or for summary judgement dismissing the Plaintiffs’ claim.
[2] Alternatively, the Defendants require that the Plaintiff, Grip Fast Strategies Corp. (“Grip Fast”), post security for costs.
Factual Background
Plaintiffs
[3] The Plaintiff, Erica Leslie (“Ms. Leslie”), was at all material times a consultant and registered lobbyist (#359211) with the Office of Commissioner of Lobbying of Canada.
[4] The Plaintiff, Grip Fast, is a corporation owed by Ms. Leslie.
Defendants
[5] The Defendant, Encanto Potash Corporation (“EPC”), is an exploration company engaged in the development of potash mines. Its head office is in Vancouver, British Columbia, and it trades on the TSX Venture Exchange.
[6] The Defendant, Encanto Potash Trading Corporation (“EPTC”), is a corporation registered under the laws of the Province of Ontario, with its head office in Toronto, Ontario.
[7] The Defendant, Stavros Daskos (“Mr. Daskos”), was at all material times a chief executive officer and president of either EPC or EPTC, or possibly both. The evidence on this is unclear.
History
[8] A draft consulting agreement was prepared by Ms. Leslie between EPC and Erica Leslie. It was dated September 16, 2016, and was forwarded to Mr. Daskos for his review and comments. He in turn provided Ms. Leslie with his version of the consulting agreement for signature between EPC and Erica Leslie. This was dated October 6, 2016.
[9] Ms. Leslie ultimately signed the version of the consulting agreement (“Consulting Agreement”) prepared by Mr. Daskos, between EPC and Ms. Leslie, dated October 7, 2016. Although the title of the Consulting Agreement is “Proposed Consulting Agreement – Erica Leslie”, this is the actual document signed by both EPC and Ms. Leslie in counterparts.
[10] A stock option agreement (“Stock Option Agreement”) was also entered into between EPC and Ms. Leslie, dated January 19, 2017, for one million common shares of EPC.
[11] Ms. Leslie provided services to EPC. Invoices totalling $106,714.69 were rendered to EPC. In her affidavit on the motion, Ms. Leslie said “I billed Encanto Potash for services rendered and related business expenses on account of the consulting agreement and received payment through Grip Fast from Encanto Potash in the amount of $106,714.69.” The Court notes that, in her affidavit, Ms. Leslie says that she, and not Grip Fast, billed Encanto Potash.
[12] In addition, in her pleadings, Ms. Leslie refers to EPC and EPTC collectively as Encanto Potash.
[13] A further series of invoices were submitted, this time by Grip Fast, to EPC for the period of June 22, 2017 to May 24, 2018. These totalled $135,600, an amount which remains outstanding. These invoices were billed to “Encanto Potash Corp. c/o Stavros Daskos, 65 Front Street, Suite 200, Toronto, Ontario M5E 1B5.”
[14] A demand letter was sent to EPC, EPTC and Mr. Daskos by Ms. Leslie’s counsel, dated July 11, 2018, in relation to monies owing by EPC.
[15] A Statement of Claim was issued and was answered by a Statement of Defence.
[16] An Amended Statement of Claim was issued on June 12, 2019, and was answered by an Amended Statement of Defence.
[17] To date, no discoveries have taken place.
[18] This motion was brought by the Defendants with a supporting affidavit from Tess Rohmann, a paralegal with the Defendants’ law firm. The Affidavit consists of four paragraphs and six exhibits.
Issues
Should there be an order pursuant to Rule 25.11 striking the pleadings of the Plaintiff, Erica Leslie, against some or all of the Defendants; or, alternatively, an order pursuant to Rule 20.04 for summary judgment dismissing the Plaintiffs’ claims against all of the Defendants?
Should there be an order pursuant to Rule 56.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 requiring Grip Fast to pay security for costs?
Issue #1: Should the Plaintiffs’ Claims Against All Defendants Be Struck Pursuant to Rule 25.11; or, in the Alternative, Should There Be an Order for Summary Judgement Dismissing the Plaintiffs’ Claims Against All of the Defendants?
Defendants’ Position
[19] The Defendants argue that Ms. Leslie admitted that EPTC is not a party to the Consulting Agreement.
[20] Furthermore, they argue that there is no evidence that Mr. Daskos signed the Consulting Agreement, either in his personal capacity or as guarantor for EPC.
[21] The Defendants also argue that the Plaintiffs’ Demand Letter claimed that the monies in question were originally owed by EPC.
[22] The Defendants also argue that the Consulting Agreement and the Stock Option Agreement were illegal contracts because they contravene Section 10.1 of the Lobbying Act, R.S.C. 1985 c. 44.
Plaintiffs’ Position
[23] The Plaintiffs argue that the Defendants are required to put their best foot forward on a motion for summary judgement. They argue that a two-page affidavit with four paragraphs, from a paralegal at the offices of the Defendants’ law firm, as well as the several exhibits attached to the affidavit, cannot be characterized as the Defendants putting their best foot forward in this motion. In support of this argument, they cite Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764, 108 O.R. (3d) 1.
Analysis
[24] Rule 25.11 of the Rules of Civil Procedure permits a court to strike all or part of an offending pleading. However, according to the case law, such a remedy should only be granted in the clearest of cases. Cases that are doubtful in law, or that are factually weak, should not be foreclosed: Wernikowski v. Kirkland, Murphy & Ain (1999), 1999 CanLII 3822 (ON CA), 50 O.R. (3d) 124 (C.A.), leave ref’d [2000] S.C.C.A. No. 98.
[25] Based on the facts of this case and the aforesaid case law, the Court is not prepared to strike out all or part of the Plaintiffs’ pleadings in this matter.
[26] Instead, the Court will use its powers contained in Rule 20.04 concerning summary judgement to deal with certain issues.
[27] On a motion for summary judgment, the moving party must provide supporting affidavit materials or other evidence in order for all or part of a claim to be dismissed: see Combined Air Mechanical Services Inc., at para. 10.
[28] The Defendants must therefore put their best foot forward in order to pursue a claim for relief on a summary judgement motion. The affidavit filed by the Defendants is that of a paralegal, and not from a defendant or an authorized representative of a defendant. At the same time, the evidence submitted by way of exhibits is helpful to the Court in analyzing this matter.
[29] The Plaintiffs’ claims are made against three defendants: EPC; EPTC; and Stavros Daskos. Each will now be considered in turn.
EPC
[30] It is clear that the Consulting Agreement was entered into between Ms. Leslie and EPC. What is unclear is whether that agreement was assigned by Ms. Leslie to Grip Fast and whether this was consented to by EPC.
[31] No discoveries have been held. Further information may be obtained on discoveries as to this issue.
[32] The other issue is that it is unclear whether there is money owing by EPC and, if so, how much and to whom.
[33] Finally, the issues of whether the Lobbying Act has been contravened in relation to the Consulting Agreement and the Stock Option Agreement are complex.
[34] The Court finds that a trial judge must have the benefit of oral evidence in order to decide the following issues: a) who owes how much to whom; and b) whether the Consulting Agreement and the Stock Option Agreement contravene the Lobbying Act.
EPTC
[35] No evidence has been presented by the Plaintiffs to show that EPTC either signed or guaranteed the Consulting Agreement.
[36] The Plaintiffs have attempted to cast a wide net, claiming that services were provided to “Encanto Potash” and the “Encanto Potash team”.
[37] In effect, the Plaintiffs are trying to make EPTC and Mr. Daskos parties to the Consulting Agreement based on the claims in the Amended Statement of Claim.
[38] The evidence is clear that EPTC did not sign or guarantee the Consulting Agreement.
[39] Therefore, the Court finds that EPTC is not a proper defendant to these proceedings. The Court grants summary judgement to the Defendants in relation to EPTC, and orders that all claims against EPTC in this action are dismissed.
Stavros Daskos
[40] The Court’s comments above are similar in relation to Mr. Daskos. Again, there is no evidence that he either signed or guaranteed the Consulting Agreement.
[41] Similarly, the Plaintiffs have attempted to cast a wide net by claiming in the pleadings and by their pleadings that Mr. Daskos is liable to the Plaintiffs.
[42] The Court finds that Mr. Daskos did not either sign or guarantee the Consulting Agreement.
[43] Therefore, the Court finds that Mr. Daskos is not a proper defendant to these proceedings. The Court grants summary judgement to the Defendants in relation to Stavros Daskos, and orders that all claims against him in this action are dismissed.
Issue #2: Should the Plaintiff, Grip Fast, be Required to Post Security for Costs Pursuant to Rule 56.01 of the Rules of Civil Procedure in this Action?
Defendants’ Position
[44] The Defendants argue that Grip Fast is not a party to the Consulting Agreement and has no ability to make a claim against the Defendants.
[45] The Defendants also argue that Grip Fast has no assets and, as such, should be required to post security for costs pursuant to Rule 56.01 of the Rules of Civil Procedure.
Plaintiffs’ Position
[46] The Plaintiffs argue that Grip Fast is a registered consultant and that it therefore has the right to make the claim.
[47] The Plaintiffs also argue that the Defendants have to show that the matter falls within one of the branches of Rule 56.01 for an order for security for costs to be made.
[48] The Plaintiffs argue in the alternative that, if the matter does not fall within one of those branches, the burden shifts to the Plaintiffs to show that the order for security for costs is not necessary, as it has sufficient assets in Ontario to satisfy the award.
Analysis
[49] The original Statement of Claim filed by the Plaintiff, Erica Leslie, specifically states that Grip Fast was incorporated in order to “specifically [perform] services to the Defendants”, and not for any other purpose.
[50] The Consulting Agreement entered into between Ms. Leslie and EPC was signed on October 7, 2016. Grip Fast was not incorporated until October 14, 2016, which is after the date of the signing of the Consulting Agreement.
[51] No evidence was provided that there was an assignment of the Consulting Agreement from Ms. Leslie to Grip Fast, which was acknowledged and approved of by EPC.
[52] The Court has reviewed the demand letter dated July 11th, 2018 (“Demand Letter”) and notes that there is absolutely no reference in it to Grip Fast. In addition, while the Demand Letter is addressed to EPTC, EPC and Stavros Daskos, it says that
Ms. Leslie has been consistently rendering lobbyist services and other related services (hereinafter collectively known as: “Services”) to Encanto Potash Corp. (“Encanto”) since approximately October 6, 2016. The services were rendered to Encanto, on behalf of Encanto, or for the benefit of Encanto in accordance with a Consulting Agreement which was executed by both parties in October 2016. In accordance with the Agreement, Encanto was unfailing invoiced monthly for services rendered in October of 2016. Unfortunately, a number of Ms. Leslie’s invoices, which were provided to you, are unpaid as of the date of writing of this letter, particularly….
[53] The Court notes that no mention was made in the Demand Letter of monies owing by the either the Defendants EPTC or Mr. Daskos. Furthermore, the Court notes that there is absolutely no mention of Grip Fast as a party to this matter in the Demand Letter.
[54] The Court was provided with very little financial information in relation to Grip Fast. The Court considers a disputed account receivable to be just that – disputed. That in turn affects its value. The Court finds that the account receivable is not evidence that Grip Fast has sufficient assets in the province of Ontario.
[55] The Court notes that no discoveries have been held to date.
[56] Based on the evidence on this motion, the Court finds that Grip Fast does not have sufficient assets in the Province of Ontario to satisfy any judgement for costs pursuant to Rule 56.01(1)(d).
[57] At the hearing of the motion, the Plaintiffs’ counsel acknowledged that Grip Fast was prepared to provide security for costs if the Court felt that this was necessary.
[58] Based on the particular facts of this case, the Court finds that security for costs are warranted. These shall be paid in the following amounts and by the following dates:
a. $5,000 within 30 days of the exchange of Affidavit of Documents;
b. $10,000 within 20 days after discoveries being completed, excluding undertakings and matters taken under advisement; and
c. $5,000 when the Trial Record is passed.
[59] Failure to comply with any of these steps can lead to the Defendants bringing a motion for sanctions.
Conclusion
[60] In conclusion, the Court finds that:
The claims against the Defendant, EPTC, are dismissed;
The claims against the Defendant, Stravos Daskos, are dismissed;
Grip Fast is required to post security for costs, which is to be paid to the Court in the following amounts and by the following dates:
a. $5,000 within 30 days of the exchange of the Affidavit of Documents;
b. $10,000 within 20 days after discoveries are completed, excluding undertakings and matters taken under advisement; and
c. $5,000 when the Trial Record has passed.
[61] Failure to comply with any of these steps in relation to security for costs can lead to the Defendants bringing a motion for sanctions.
Costs
[62] Costs outlines were submitted by each party. The Defendants claim costs on a partial indemnity basis of $5,861.85 and on a substantial indemnity of $8,498.59.
[63] The Plaintiff claims costs on a partial indemnity basis of $9,956.76 and on a full indemnity basis of $16,208.91.
[64] The Defendants were successful in having the claims against EPTC and Stavros Daskos dismissed. In addition, they were successful in having Grip Fast pay security for costs.
[65] Having considered the factors in Rule 57.01 of the Rules of Civil Procedure, the Court finds that the Defendants were more successful than the Plaintiffs on the motion. The Plaintiffs brought claims against EPTC and Stavros Daskos, which the Court dismissed. At the same time, the Defendants’ motion for summary judgment against the Plaintiffs was not successful.
[66] The Court finds that, in the circumstances, and in exercising its discretion, that the Plaintiffs shall pay the Defendants costs fixed at $4,500, inclusive of disbursements and HST, within 30 days. The Plaintiffs cannot take any further steps in this action until such time as these costs are paid.
[67] Order accordingly.
Mr. Justice Stanley J. Kershman
Date: April 23, 2020
COURT FILE NO.: CV-18-77838
DATE: 2020/04/23
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: ERICA LESLIE and GRIP FAST STRATEGIES CORP., Plaintiffs
AND
ENCANTO POTASH TRADING CORPORATION, ENCANTO POTASH CORP. and STAVROS DASKOS, Defendants
BEFORE: Mr. Justice Stanley J. Kershman
COUNSEL: Stephane Hunt and Michel Sicotte, Counsel for the Plaintiffs
John E. MacDonell, for the Defendants
ENDORSEMENT
Kershman J.
Released: April 23, 2020