COURT FILE NO.: 14-49521
DATE: 20201204
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Punch Integrated Communications Inc., Edward Roszczka, Patricia Roszczka and Rostel Realty Corp.
Plaintiffs and
Responding Parties on the Motion
– and –
2125426 Ontario Inc., Ric Agostini, Paul Montague, Scott Martin and Tom O’Rourke
Defendants and Moving Parties
on the Motion
Paul Marshall,
Counsel for the Plaintiffs
P. A. Gupta, Counsel for Defendants, 2125426 Ontario Inc., Ric Agostini, Paul Montague and Scott Martin
R. Andrew Biggart, Counsel for Tom O’Rourke
HEARD: November 20, 2020
REASONS FOR DECISION
Overview
[1] There were two motions before the court on November 20, 2020. One was brought by the defendant, Tom O’Rourke (“O’Rourke”); and the other by the remaining defendants. Both motions sought the dismissal of the plaintiffs’ action on the basis that it is statute-barred by operation of the Limitations Act, 2002, S.O. 2002, c. 24, Schedule B. In the alternative, if the plaintiffs’ action was not dismissed, the moving parties sought an order requiring the plaintiffs to post security for costs in the amount of $100,000, and $185,231.61, respectively.
[2] Central to defendants’ assertions that the plaintiffs’ action is statute-barred is that two of plaintiffs, Punch Integrated Communications Inc. (“Punch”) and Ed Roszczka (“Mr. Roszczka”), had sued the defendants in 2011 (the “2011 Claim”), seeking damages arising out of the same series of events that form the basis of this action (the “2014 Claim”). The plaintiffs did not serve or pursue the 2011 Claim, which was dismissed as abandoned in 2012.
[3] The 2014 Claim names two plaintiffs who were not named in the 2011 Claim: Mr. Roszczka’s spouse, Patricia Roszczka (“Mrs. Roszczka”); and Rostel Realty Corp., a corporation owned by Mr. and Mrs. Roszczka.
[4] After hearing the parties’ submissions on the limitation period issue, I granted the defendants’ motions and dismissed the plaintiffs’ action, with reasons to follow. These are the reasons. Having dismissed the action on the basis that it was statue-barred, I did not hear submissions on the alternate relief claimed respecting security for costs.
Background
[5] Punch was incorporated in 1997. Mr. and Mrs. Roszczka are the principals of Punch and the owners of the other corporate plaintiff, Rostel Realty Corp.
[6] According to Mr. Roszczka, in 2002, Punch bought vacant land on which it constructed an office building with 20,000 square feet of space. Rostel was incorporated to manage the construction of the building and the building itself.
[7] Punch came under financial pressure. It sought to restructure and to reduce costs by eliminating employees and replacing them with contractors. To that end, in January 2007, 2125426 Ontario Inc. was incorporated (formerly Catalyst Performance Management (“Catalyst”)). Ric Agostini, Paul Montague and Scott Martin (the “Individual Defendants”) and O’Rourke remained employees of Punch until March 30, 2007. The Individual Defendants were also Officers and Directors of Catalyst.
[8] On April 1, 2007, pursuant to a written Services and Management Agreement (the “Agreement”), Punch retained Catalyst to perform research and operational services for Punch. The Agreement could be terminated on six months’ written notice. While the parties disagree on whether the relationship between Punch and Catalyst was terminated in accordance with the Agreement, they all agree that the Agreement was terminated by Punch on June 11, 2009.
[9] The parties’ parting of ways was contentious. One area of friction between Catalyst and Punch was Mr. Roszczka’s merger discussions with Susan Easby (“Easby”), the president of Insight U – a company with technology platforms that Mr. Roszczka thought would be complementary to Punch’s business. That merger did not take place.
[10] Punch is no longer operational. On December 1, 2009, Punch entered into receivership. In addition, Punch defaulted on its lease obligations to Rostel, which, according to Mr. Roszczka, led to the sale of Rostel’s property prior to the end of its lease with Punch. The plaintiffs allege that Rostel suffered a capital loss of $700,000, together with lost rental income exceeding $2 million for the balance the lease term with Punch.
The 2011 Claim
[11] On June 14, 2011, Punch and Mr. Roszczka issued a Notice of Action naming Catalyst, the Individual Defendants, and O’Rourke as defendants. On July 14, 2011, the 2011 Claim was filed with the court. In it, the plaintiffs claimed damages of $10 million for breach of contract, breach of trust, and wrongful interference in economic relations.
[12] The facts alleged in the 2011 Claim included that the Individual Defendants were subject to the Agreement, and had been given confidential and proprietary information. The plaintiffs allege that Catalyst and the Individual Defendants “began to communicate with clients of Punch to the exclusion of Punch and Mr. Roszczka for the express purpose of appropriating commercial value of Punch’s confidential and proprietary information regarding its clients to the benefit of Catalyst.”[^1]
[13] The 2011 Claim also asserts that the defendants retained proprietary software belonging to the plaintiffs for “the express purpose and intention of competing and appropriating the goodwill of Punch to their own benefit contrary to their contractual and fiduciary duties under the Agreement.”[^2]
[14] The 2011 Claim further asserts the following:
• that the defendants intentionally ignored requests made by the plaintiffs for compliance with Agreement;
• that one of the Individual Defendants threatened Mr. Roszczka;
• that the defendants refused to “deliver up technical information that became proprietary to Punch;
• that the defendants’ remarks to Punch’s banker in April 2009, undermined the banks’ confidence in the plaintiffs, which was a factor in the “demise of Punch”;
• that one of the Individual Defendants admitted that the defendants intended to breach their covenants under the Agreement of non-solicitation and non-competition; and
• that, as a result of the conduct of the defendants, Punch lost “virtually its entire client” base and “its underlying economic value”, which “economic loss was entirely caused by the conduct of the defendants.”
[15] No steps were taken to pursue the 2011 Claim and it was not served. As a result, on February 6, 2012, the Registrar dismissed the 2011 Claim as abandoned.
The 2014 Claim
[16] On October 1, 2014, the plaintiffs issued the 2014 Claim. In the 2014 Claim, the plaintiffs seek damages of $12 million for breach of contract, breach of trust, and wrongful interference with economic relations – the same grounds that were claimed in 2011 Claim. Many of the material facts set out in the 2014 Claim are also found in the 2011 Claim.
[17] To assist the court, counsel for the moving parties, Catalyst, and the Individual Defendants, prepared a chart attached as Schedule “C” to their factum. This chart compares the material facts set out in the 2011 Claim with the material facts alleged in the 2014 Claim. A copy of the chart is attached to these Reasons for Decision as “Appendix 1”.
[18] Putting aside for a moment the new claims brought by Mrs. Roszczka and Rostel in the 2014 Claim, the 2014 Claim is essentially a repetition of the 2011 Claim with some factual additions that relate to information or events that occurred after 2011.
[19] While the claims brought by Mrs. Roszczka and Rostel in the 2014 Claim were not asserted in the 2011 Claim, they relate to events that occurred in or around 2009 and 2010.
Plaintiffs’ Response to the Motions
[20] Mr. Roszczka delivered two affidavits in response to the defendants’ motions. Neither affidavit squarely addresses why the plaintiffs did not pursue the 2011 Claim. In addition, despite the fact that the 2014 Claim is, in many respects, a reiteration of the 2011 Claim, Mr. Roszczka does not explain why, in his view, the limitation period had not expired by October 1, 2014 – the date on which the 2014 Claim was issued.
[21] In his affidavit sworn November 14, 2019, Mr. Roszczka states that in March 2013, Jill Slack, a former Punch employee, told him that, at a Catalyst staff meeting, an Individual Defendant bragged about how the Individual Defendants “took Punch down” and admitted to a precise plan of how to do irreparable damage to Punch’s business. Ms. Slack also apparently told Mr. Roszczka of a meeting between an Individual Defendant and Easby, at which Easby was warned not to continue her merger discussions with Punch or she would be sued.
[22] Mr. Roszczka states that, after speaking with Ms. Slack, he went through his records and discovered a spreadsheet dated September 10, 2006 entitled “New Co.”, which, he inferred, referred to the discussion described to him by Ms. Slack of the Individual Defendants’ plan to kill Punch’s business.
[23] Mr. Roszczka states that, until Ms. Slack spoke to him, he was only “suspicious” that he had been wronged by the defendants. It was only after speaking with Ms. Slack and checking Punch’s computer records that Mr. Roszczka claims his suspicions were confirmed. Accordingly, Mr. Roszczka asserts that this latter event was when the plaintiffs’ claims were “discovered” for the purposes of commencing the running of the limitation period under the Limitations Act.
[24] In his affidavit of November 19, 2019, Mr. Roszczka acknowledges that, although Punch’s Receiver took possession of its computers, he was permitted by the Receiver to take home Punch’s external drive and to upload the data from the drive onto his home computer. Paragraph 18 of Mr. Roszczka’s November 19, 2019 affidavit makes it clear that, by the end of 2011, he had a copy of Punch’s external hard drive.
[25] Mr. Roszczka describes that, after speaking with Ms. Slack, he started “a deep drilling” of his records. He went through the data files, which were organized by customer, account, and project team manager, and then under subfolders organized by project. He searched a “Home Depot” project docket and then the subdirectory of an account manager, and from there through to subfolders in which he found a folder entitled “New Co.” Mr. Roszczka disagrees with Ric Agostini and O’Rourke, who say in their reply affidavits[^3] that Punch’s computer records located by Mr. Roszczka were “easily accessible”.
[26] Attached as Exhibit “B’ to Mr. Roszczka’s affidavit sworn November 4, 2019, is a spreadsheet dated September 10, 2006 (the “New Co. spreadsheet”). Mr. Roszczka states that, from his discussions with Ms. Slack, he “inferred” that the New Co. Spreadsheet summarized the steps the Individual Defendants had taken “to kill Punch’s business”. Attached as Exhibits “C” and “D” to his November 4, 2019 affidavit are other documents that predate the New Co. spreadsheet. One is dated September 5, 2006, entitled “New Co. – Business Plan Summary”, and a second is dated September 8, 2006, entitled “New Co. Building the Business.”
[27] The evidence of Ric Agostini conflicts with the “inference” Mr. Roszczka suggests should be drawn from the documents identified as Exhibits “B’, “C” and “D”.
[28] In his affidavit sworn December 18, 2019, Mr. Agostini states that discussions took place amongst all the parties, including Mr. Roszczka, concerning a solution to Punch’s financial difficulties. Mr. Agostini’s version of events is supported by the emails exchanged between the parties on November 20, 2006 and December 8, 2006, canvassing a “soft receivership” as a way of dealing with Punch’s financial issues, and a Letter of Understanding entitled “Punch & NewCo”, which contemplates the creation of a separate company, “NewCo”, with which Punch would contract several of its general business operations (the “LOI”). The initials on the LOI include those of Mr. Roszczka.
[29] The evidence of Mr. Agostini is also supported by the undisputed fact that Catalyst was incorporated in 2007 and, shortly thereafter, entered into the Agreement with Punch.
[30] The evidence put forth by Mr. Roszczka on this motion simply cannot support his allegation that the defendants “concealed” their plan to create “NewCo” fraudulently, or at all. Firstly, the LOI and related emails show that Mr. Roszczka was a party to the discussions about the creation of NewCo. Secondly, the documents themselves were stored on Punch’s computer hard drive and, while they may have been organized in subfiles, they were not hidden or encrypted or in any way concealed. By his own evidence, Mr. Roszczka shows that all he had to do was to look for these documents in his own computer records that he had possessed since 2011.
[31] It is clear from what is set out in the 2011 Claim that Mr. Roszczka and Punch had determined that they had a basis to advance a claim against the defendants. The alleged discovery in 2013 of information and documents that Mr. Roszczka believes would assist him in proving his claim cannot – and does not – re-set the limitation period.
New Parties and Claims in 2014 Claim
[32] Mrs. Roszczka and Rostel are named as plaintiffs in the 2014 Claim, but were not named in the 2011 Claim. Mrs. Roszczka’s claims appear to be advanced on the basis that she is an owner of 80 Class B Convertible shares of Punch and is a shareholder of Rostel. It is unclear what cause of action Mrs. Roszczka might have as a shareholder of Punch and Rostel that is separate or independent of those two corporate plaintiffs.
[33] Reference is also made to personal guarantees required from Mr. and Mrs. Roszczka in 2009 by Punch’s banker, the Bank of Montreal (“BMO”). It is clear from the affidavit evidence given by Mr. Roszczka that Punch was experiencing financial difficulties due to the “market meltdown in 2008/2009”, in which the economy “nose-dived”, necessitating Punch to restructure in order “to survive an exceptionally dysfunctional business cycle”.[^4] That evidence alone would explain why BMO asked for personal guarantees from Punch’s shareholders.
[34] The allegation made by Rostel is that it suffered a loss when its tenant, Punch, defaulted on its monthly lease obligations, in or around 2009, when Punch went into receivership. It seems self-evident on this motion that, in late 2009 or 2010, Mrs. Roszczka and Rostel were aware of the circumstances giving rise to their claim.
[35] In addition, knowledge of the facts that were known to Mr. Roszczka, as evident by what was set out in the 2011 Claim, must be imputed both to Mrs. Roszczka, who was a shareholder of Punch and Rostel, and to Rostel.
[36] The moving parties submit that the 2011 Claim, itself, is irrefutable evidence that the plaintiffs had, in fact, “discovered” their claim by July 14, 2011, when the 2014 Claim was filed with the court. Accordingly, the claims set out in the 2014 Claim were statute-barred by operation of s.4 of the Limitations Act. The defendants seek summary judgment on that basis.
The Limitations Act
[37] Under s.4 of the Limitations Act, a proceeding shall not be commenced in respect of a claim after the second anniversary of the date on which the claim is “discovered”.
[38] Section 5(1) of the Limitations Act provides that a claim is discovered on the earlier of
(a) the day on which the person with the claim first knew,
(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,
(iii) that the act or omission was that of the person against whom the claim is made, and
(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and
(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a). 2002, c. 24, Sched. B, s. 5 (1).
[39] On this motion, the onus is on the plaintiffs to rebut the presumption set out under s. 5(2), which reads as follows:
A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.
[40] The plaintiffs seek to rely on the doctrine of fraudulent concealment to rebut the presumption found in s. 5(2). The plaintiffs submit that the doctrine of fraudulent concealment operates to prevent the commencement of the limitation period until the plaintiffs’ suspicions were “discovered” following Mr. Roszczka’s meeting with Ms. Slack in March 2013, followed by a “deep drilling” of Punch’s records.
[41] At para. 38 of the plaintiffs’ factum, they set out the three elements that must be established to make out the doctrine of fraudulent concealment:
(a) the defendant and plaintiff are engaged in a special relationship with one another;
(b) given the special or confidential nature of the relationship, the defendant’s conduct amounts to an unconscionable thing for the one to do to the other; and
(c) the defendant conceals the plaintiff’s right of action, (either actively, or as a result of the manner in which the act that gave rise to the right of action is performed).[^5]
[42] The equitable doctrine of fraudulent concealment was considered by the Ontario Court of Appeal in the recent decision of Zeppa v. Woodbridge Heating & Air-Conditioning Ltd.[^6] The court questioned whether the principle of fraudulent concealment has any application given the plain language of ss. 4 and 5 of the Limitations Act. At paragraph 72 the Court stated the following:
[72] If the defendant’s concealment of facts results in a lack of actual or objective knowledge by the plaintiff of the elements set out in s. 5(1)(a) of the Act, then the plaintiff does not discover his or her claim until the date the concealed facts are revealed to or known by the plaintiff, at which point time begins to run. That is to say, the analysis required by s. 5(1) of the Act captures the effect of a defendant’s concealment of facts material to the discovery of a claim.
[43] Zeppa adopts the elements of fraudulent concealment as set out by Perall J. in Colin v. Tan:[^7] for fraudulent concealment to be established, the defendant must “hide, secret, cloak, camouflage, disguise, cover-up the conduct or identity of the wrongdoing; … [and] if the plaintiff was unaware of his or her cause of action because of the wrong of the defendant, then the court will refuse to allow a limitation defence.”
[44] I accept that Zeppa correctly states the law respecting the onus that must be met when relying on fraudulent concealment to postpone the commencement of a limitation period.
Issues to Be Decided:
[45] There are two main issues to be decided on this motion:
(1) Is this an appropriate case for summary judgment? And
(2) if so, have the defendants established that the plaintiffs claim is statute-barred?
(1) Is this an appropriate case for summary judgment?
[46] For the reasons that follow, I found the defendants to be entitled to summary judgment on the basis that the plaintiffs’ claims are statute-barred, and the action ought to be dismissed.
Summary Judgment Law
[47] Rule 20.04(2)(a) of the Rules of Civil Procedure[^8] provides that the court shall grant summary judgment if it “is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.”
[48] Rule 20.04(2.1) of the Rules of Civil Procedure sets out the powers of the court on a motion for summary judgment:
(2.1) In determining under clause (2) (a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:
Weighing the evidence.
Evaluating the credibility of a deponent.
Drawing any reasonable inference from the evidence.
[49] The principles that govern a motion for summary judgment can be found in Hryniak v. Mauldin[^9]. Paragraphs 49–50 read as follows:
There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.
These principles are interconnected and all speak to whether summary judgment will provide a fair and just adjudication. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.
Does the Record permit the Court to find facts with confidence and to apply relevant legal principles?
[50] On a motion for summary judgment, the parties are required to put their best evidentiary foot forward[^10] and to persuade the court, through evidence, that there is no genuine issue requiring a trial.[^11] The court is entitled to assume that the evidence put forth on the motion will be the evidence at trial.
[51] As noted earlier in these reasons, the moving-party defendants made it clear that the primary ground of their limitation-period argument was that the 2014 Claim repeated many of the key allegations found in the 2011 Claim, which provided “incontrovertible” evidence that the plaintiffs had actual knowledge of the alleged claims no later than July 14, 2011.
[52] In response to the defendants’ motions, the plaintiffs put forth two affidavits, both sworn by Mr. Roszczka. Neither affidavit addresses the 2011 Claim.
[53] Counsel for the plaintiffs suggested that the 2011 Claim was not pursued because the plaintiffs did not have the evidence needed to prove their claims. From the evidence put forth by the plaintiffs on this motion, only one paragraph – paragraph 24 of Mr. Roszczka’s November 4, 2019 affidavit – was identified to support that suggestion.
[54] Paragraph 24 reads as follows:
It became exceedingly obvious to me that Montague, O’Rourke, Martin and Agostini had violated their duties and obligations as executive employees and that Catalyst, along with Montague, O’Rourke, Martin and Agostini, had breached the SMA [Agreement]. I only had a mere suspicion of this before Slack approached me.
[55] Even read generously, I cannot conclude that paragraph 24 responds in any meaningful way to the defendants’ assertion that the 2011 Claim clearly shows that the plaintiffs had “discovered’ their claims by July 14, 2011.
[56] The evidence put forth by the plaintiffs is that, until Mr. Roszczka spoke with Ms. Slack in March 2013, he was not aware that the computer files he had had in his possession since 2011 contained information confirming what had previously been “mere suspicions” of the defendants’ wrongdoing.
[57] Under Ontario law, a limitation period does not begin simply because a plaintiff believes or ought to believe that he or she has a claim. Rather, the limitation period begins when the plaintiff first knew – that is, the plaintiffs had an objective appreciation – that a proceeding would be an appropriate means to seek a remedy.[^12]
Is there evidence of fraudulent concealment?
[58] The plaintiffs allege that the defendants concealed facts from the plaintiffs, but offer no evidence to support that allegation. In fact, the plaintiffs’ evidence supports the opposite conclusion.
[59] The plaintiffs’ evidence is that, by 2011 at the latest, they physically possessed the evidence that they now say elevated their mere suspicions to something on which they could base a claim. However, Mr. Roszczka’s makes it clear that, had he chosen to look at Punch’s own data, he could have found, what he identifies as, key documents. However, even without those documents, the 2011 Claim makes it clear that the plaintiffs knew then that they had suffered a loss, that the loss was caused or contributed to an act or omission, that the act or omission was that of one or more of the defendants, and that a proceeding would be an appropriate means to seek to remedy it.
[60] The evidence put forth by the plaintiffs has not satisfied the elements of fraudulent concealment as set out in Zeppa. The plaintiffs have led no evidence to show that the defendants had hidden, secreted, cloaked, camouflaged, disguised, and/or covered-up the conduct or the identity of their alleged wrongdoings, and that plaintiffs were unaware of their cause of action because of the wrongs of the defendants. Before considering the implications that may be drawn from the 2011 Claim, the plaintiffs have failed to lead evidence that rebuts the presumption found in s.5(2) of the Limitations Act.
[61] At most, any alleged new information disclosed to the plaintiffs by Ms. Slack merely confirmed what the plaintiffs had already known in 2011. The jurisprudence is clear: the limitation period begins to run even if a plaintiff does not know the full extent of its loss. It is enough for the plaintiff to know that it was in a worse position by reason of the act or omission of the defendants.[^13]
[62] The inescapable conclusion that must be drawn from the fact that the plaintiffs’ commenced the 2011 Claim is that the plaintiffs had an objective appreciation that they had a claim, and that a proceeding against the defendants would be an appropriate means by which to seek a remedy.
Are there genuine issues requiring a trial?
[63] On a motion for summary judgment based on the limitations defence, the court must consider the evidence in the motion record to determine whether there is a genuine issue requiring a trial and, if so, determine whether it is in the interest of justice to use the enhanced powers under rules 20.04 (2.1) and (2.2) to determine the issue without a trial.[^14]
[64] The 2011 Claim provides irrefutable evidence that the plaintiffs, Punch and Mr. Rozczka, knew in July 2011 that they had a claim against the defendants and that a proceeding would be an appropriate remedy. In reaching that conclusion, I need not resort to any of enhanced powers available to me under rule 20. As set out above, the plaintiffs have not put forth any meaningful evidence that could challenge that conclusion or rebut the presumption under s.5(2) of the Limitation Act.
[65] The 2011 Claim, alone, allowed me to find with confidence that the plaintiffs in the 2014 Claim had discovered their claim no later than July 14, 2011. Therefore, the limitation period for the claims of any of the plaintiffs in the 2014 Claim commenced on or before July 14, 2011 and were statute-barred on the second anniversary of that date: July 14, 2013. Thus, by October 1, 2014, the plaintiffs’ claims were statute-barred.
[66] I conclude that the limitation period issue is properly and fairly determined on this motion for summary judgment and is determinative of the plaintiffs’ claim. Accordingly, there is no genuine issue requiring a trial.
Request for Security for Costs
[67] Having found that the claims in the 2014 Claim were barred by operation of s. 4 of the Limitations Act, I did not hear submissions with respect to the defendants’ claim for the alternate relief of an order for security for costs.
[68] For the same reason, although raised in the defendant’s motion materials, I did not consider the evidence put forth by the defendants that the plaintiffs had not prosecuted their claim with proper diligence; or that, as at the date motions were brought (October 2019), the plaintiffs had yet to respond to the defendant’s Request to Inspect and Demand for Particulars delivered in March and May 2016, respectively.
Order Granted
[69] For the reasons set out above, I granted the defendants’ motions and dismissed the plaintiffs’ action (the 2014 Claim).
Costs
[70] As the successful parties on their motions, the defendants are presumptively entitled to their costs.
[71] I would urge the parties to agree on costs. If they cannot do so, then costs submissions may be made as follows:
within 21 days of the date of the release of this decision each of the moving parties shall serve and file their written costs submissions, not to exceed 3 pages, double-spaced, together with a draft bills of costs and copies of any pertinent offers; and
the plaintiffs shall serve and file their responding submissions of no more than 3 pages, double-spaced, together with a draft bill of costs and copies of any pertinent offers, within 14 days of the service upon it of the defendants’ costs submissions.
[72] If no submissions are received within 35 days of the date of the release of these Reasons, the parties will be deemed to have resolved the issue of the costs and costs will not be determined by me.
Justice L. Sheard
Released: December 4, 2020
“Appendix 1”
SCHEDULE “C”
CHART RE IDENTICAL CLAIMS – 2011 CLAIM/2014 CLAIM
| No. | Material Fact | 2011 Court Action | 2014 Court Action |
|---|---|---|---|
| 1. | Catalyst entered into a service and management agreement with Punch on or about April 1, 2007 (the "Service and Management Agreement") under which Catalyst and the Personal Defendants were to provide integral services for research and the operation and functioning of Punch, specifically production, FL news media. research, creative, new business development and client services„ consistent with the services that had been previously provided by the Personal Defendants when they were employees of Punch. | 7 | 14 |
| 2. | Under the Service and Management Agreement. Catalyst and the Personal Defendants were obligated to duly and diligently perform the duties assigned to them by Punch. | 8 | 15 |
| 3. | Catalyst and the Personal Defendants had received confidential and proprietary information from the Plaintiffs, Punch and Ed Roszczka with respect to the clients, financial information and operational information of Punch for the purposes of carrying out their duties, firstly, in the case of the Personal Defendants, as employees of Punch, and subsequently, in the case of Catalyst, under the Service and Management Agreement which commenced on April 1, 2007. | 9 | 16 |
| 4. | Subsequent to entering into the Service and Management Agreement, Catalyst and the Personal Defendants began to communicate with clients and prospective clients of Punch to the exclusion of Punch and Ed Roszczka for the express purpose of appropriating the commercial value of Punch's confidential and proprietary information regarding its clients to the benefit of Catalyst. | 10 | 17 |
| 5. | In the course of carrying out its obligations to Punch and Ed Rosczcka under the Service and Management Agreement Catalyst became involved in the establishment and maintenance of a computer network that had been developed for the benefit of Punch for the purpose of servicing Punch's client, which network provided for network security, access, software enhancements and modifications (the "Proprietary Software"). | 11 | 18 |
| 6. | Catalyst and the Personal Defendants have retained the Proprietary Software to the exclusion of Punch and Ed Roszczka for the express purpose and intention of competing and appropriating the goodwill or Punch to their own benefit contrary to their contractual and fiduciary duties as former officers and directors of Punch and under the Service and Management Agreement. | 12 | 19 |
| 7. | Punch had from time to time made requests of Catalyst and the Personal Defendants to carry out various duties under the Service and Management Agreement for the benefits of its clients which Catalyst and the Personal Defendants intentionally ignored to undermine Punch's relationship with its clients. | 13 | 20 |
| 8. | On or about February 23, 2009, one of the Personal Defendants, Paul Montague Montague), verbally threatened the Plaintiff, Ed Roszczka, with physical violence in front of the other Personal Defendants. | 14 | 21 |
| 9. | Catalyst and the Personal Defendants, during the term of the Service and Management Agreement refused to deliver up to Ed Roszczka technical information that was proprietary to Punch despite repeated requests to do so. | 15 | 23 |
| 10. | During a crucial meeting with Punch's banker, the Bank of Montreal, on or about April 20, 2009, and despite being warned by Ed Roszczka, Montague made derogatory remarks to the bank representatives that Punch was "only a brand" and that Catalyst effectively ran the organization, which remarks undermined the bank's confidence in the Plaintiff, Punch, and was a factor in the subsequent demise of Punch. | 16 | 24 |
| 11. | In a meeting on May 1, 2009, Montague, in the presence of Punch management, indicated that he, Catalyst, and the other Personal Defendants intended to breach their covenants of non-solicitation and non-competition in breach of the Service and Management Agreement. | 17 | 26 |
| 12. | In June of 2009, Montague broadcast to his family, friends and business associates, an email, as Vice President of Punch, accusing Ed Roszczka of acting "unlawfully" without providing any particulars of the act which he described as being unlawful. | 18 | 27 |
| 13. | The Plaintiff, Roszczka, states that the Personal Defendants during 2008 and 2009 engaged in a course of conduct, contrary to their contractual and fiduciary obligations, that was designed to undermine the relationship between Punch and its employees, clients and financiers for the purpose of expropriating the economic benefit of their client base to Catalyst following the end of the contractual relationship between Punch and Catalyst. | 19 | 29 |
| 14. | As a result of the conduct of the Defendants, Punch lost virtually its entire client base and its underlying economic value, which the Plaintiffs state had a value of $6.5 million dollars. | 20 | 34 |
| 15. | The Plaintiffs claim that the economic loss suffered by Punch was entirely caused by the conduct of the Defendants. | 21 | 35 |
COURT FILE NO.: 14-49521
DATE: 20201204
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Punch Integrated Communications Inc., Edward Roszczka, Patricia Roszczka and Rostel Realty Corp.
Plaintiffs and
Responding Parties on the Motion
- and –
2125426 Ontario Inc., Ric Agostini, Paul Montague, Scott Martin and Tom O’Rourke
Defendants and Moving Parties
on the Motion
REASONS FOR DECISION
LS
Released: December 4, 2020
[^1]: 2011 Claim at paras. 8, 9 and 10. [^2]: Ibid, at paras 11 and 12. [^3]: Sworn October 3, 2019 and November 16, 2019. [^4]: Mr. Roszczka affidavit sworn November 4, 2019 at para 8 [^5]: See Giroux Estate v. Trillium Health Centre (2005), 2005 CanLII 1488 (ON CA), 74 O.R. (3d) 341 (C.A.). [^6]: 2019 ONCA 47, 144 O.R. (3d) 385, at paras. 71–72. [^7]: 2016 ONSC 1187, 81 C.P.C. (7th) 130, at paras. 44–47. [^8]: RRO 1990, Reg. 194. [^9]: 2014 SCC 7, [2014] 1 S.C.R. 87. [^10]: See Sanzone v. Schechter, 2016 ONCA 566, 402 D.L.R. (4th) 135, at para 3 [Sanzone]. [^11]: Sanzone, at para 24. [^12]: See Huang v. Mai, 2014 ONSC 1156, 119 O.R. (3d) 117, at para 38. [^13]: See Hamilton (City) v. Metcalfe & Mansfield Capital Corp., 2012 ONCA 156, 347 D.L.R. (4th) 657, at paras. 68–69. [^14]: See Collins v. Cortez, 2014 ONCA 685, 39 C.C.L.I. (5th) 1, at para 11.```