Court File and Parties
COURT FILE NO.: CV-20-00637440-0000 DATE: 20210309 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN: Poteck Power Corp., Plaintiff/Moving Party AND: 2465855 Ontario Ltd., Defendant/Responding Party
Counsel: David Shiller, for the Plaintiff Leon Li, for the Defendant
HEARD at Toronto: February 17, 2021
Reasons for judgment S.F. Dunphy J.
[1] Poteck Power Corp. was promised a fee of 30% of all refunds or credits it might succeed in obtaining for the defendant 2465855 Ontario Ltd. from local utilities based on “possible billing errors we will identify and subject to OEB regulations and Local Distribution Company (LDC) practices”. Poteck arranged for 246 to receive more than $1.2 million in rebates from Toronto Hydro and brings this motion for summary judgment to collect the fee claims it is due arising from these rebates.
[2] The respondent 246 admits that it received rebates and that it was unaware that it could claim the rebates in question. However, 246 submits that the contract should be construed against its maker Poteck. It argues that the contract does not apply to the rebates because they do not arise from “billing errors” but from a program that 246 was entitled to receive the benefit of on application. Further, 246 claims that Poteck failed to disclose the true nature of the work it was to perform and misled the defendant into believing that Poteck would perform forensic auditing work that it did not do. As such, 246 alleges that triable issues are raised as to whether the contract is ambiguous, the amount of rebates received to which the claimed fee applies and whether the plaintiff breached its duty of good faith and honest contractual performance.
[3] For the reasons that follow, I find that the plaintiff is entitled to succeed on this motion for summary judgment. The record before me is perfectly adequate to enable a proper contextual interpretation of the contract itself and I find that the contract fairly read in its context entitled the plaintiff to claim its fee. The respondent’s obligation faced with a motion for summary judgment is to put its best foot forward. Triable issues are not to be found based on speculation but based on actual evidence. The plaintiff’s evidence regarding the total amount of rebates received by the defendant is uncontested and compelling on its face. The claims advanced in argument regarding honesty and good faith performance of the contract were not pleaded directly or even indirectly. The evidence before me does not at all events raise a triable issue on the question.
Background facts
[4] The plaintiff describes its business as being “electricity audits and assisting business owners in obtaining rebates and recovering funds from utility companies”. The defendant operates a large commercial hotel in Toronto.
[5] On July 18, 2018, the plaintiff entered into a short, two-page letter agreement with the defendant 246. The first three paragraphs of this letter agreement are the focus of the dispute between the parties and are reproduced below:
It is possible that you are eligible to recover funds based upon the possible billing errors we will identify and subject to the OEB regulations and Local Distribution Company (LDC) practices.
We are prepared to complete the necessary applications and work on your behalf to obtain the monies which were wrongly charged from you.
The fee for this service is 40% + HST of the amount of all of the refunds/credits/recovered monies that we are successful in obtaining for you.
[6] The second page of the letter agreement is titled “Schedule B LDC Agent Authorization Form” and authorized Poteck to “deal with LDC’s in Ontario, Canada on my behalf” and gave Poteck “full authorization to act on my behalf in dealings with the LDC. This includes, but is not limited to, contact the LDC, discuss potential historical billing errors, and recover those funds on my behalf.” [Emphasis added.]
[7] The letter agreement was signed by the defendant’s general manager Mr. Didier Dolivet. The defendant initially challenged Mr. Dolivet’s authority to enter into this agreement on behalf of his employer, describing the letter agreement in its pleading as a mere proposal. That challenge was abandoned prior to the hearing of this motion, and for good reason.
[8] The President of the defendant, Ms. Feng, filed an affidavit on this motion disavowing the authority of Mr. Dolivet to have signed the letter agreement. She was carefully cross-examined on the point and maintained her sworn testimony quite pointedly and as a matter of certainty. Her sworn evidence – however confidently maintained – was utterly untrue. The defendant’s initial unsworn affidavit of documents included an email chain with Ms. Feng from the day prior to the signature of the letter agreement by Mr. Dolivet. For some reason, these emails – which utterly contradict the narrative in the Statement of Defence that the July 18 letter agreement was a mere proposal – did not manage to find their way into a second version of the defendant’s affidavit of documents. In the chain of emails, Mr. Dolivet forwarded the draft letter agreement to upper management for instructions. He asked for and received express instructions to sign it from Ms. Feng. When confronted with the chain of emails, Ms. Feng denied their authenticity only to confirm later via answers to undertakings that the emails were in fact genuine.
[9] This particular incident – although cleared up prior to the hearing – is not without significance. Either Ms. Feng was quite prepared to swear to – and then strongly re-confirm as a matter of certainty on cross-examination – something that she knew was untrue or she was prepared to assert with such certainty a helpful fact that she had no did not have a proper basis to assert with such certainty. Her oath provides no reason to attribute credibility to her either way and her reliability as a witness cannot be viewed other than as extremely weak in its best light and worse than that in most others. There are few instances in this case where credibility is a serious issue. The bulk of the plaintiff’s evidence was directed at the alleged subjective intentions of 246 in entering into the contract eight months after it actually did so. However, this witness’ evidence must be treated with extreme caution.
[10] The July 18 letter agreement was no “proposal”, it was a complete contract. Both parties began acting under it almost immediately. The defendant provided billing data to Poteck for review and Poteck proceeded to review it. That review brought to light the fact that the defendant was not receiving certain credits under the “Ontario Rebate for Electricity” or “OREC” program. Further questioning by the plaintiff brought to light the existence of sufficient long-term stays at the defendant’s hotel to justify an application for those credits.
[11] On October 22, 2019, Mr. Poteck had an in-person meeting with the defendant’s engineer, Mr. Ragan. The evidence concerning what occurred at this meeting is available from Mr. Poteck – who was present – and from the email that he sent later that day confirming the main points of the meeting, which email was – once again – forwarded to Ms. Feng. No evidence of Mr. Ragan was presented by either side. Mr. Poteck’s evidence regarding the events of the meeting is both consistent with events before and after and quite entirely uncontradicted by anyone with direct knowledge. It is in my view quite reliable.
[12] I will note at this juncture that the two affiants put forward by the defendant had little to no first-hand information about much of what they testified to nor, as far as can be seen, did they take the trouble to inform themselves of such matters by actually contacting former employees who did have such first-hand knowledge. Apart from Ms. Feng’s significant credibility deficit, a large part of the defendant’s evidence had little to no evidentiary value on its face. This motion for summary judgment must therefore be assessed on the basis of a near total absence of evidence from 246 as to any matter at issue. The plaintiff’s evidence on almost every material point stands alone and uncontradicted or, if contradicted, is contradicted by evidence that is of little to no value for the reasons already mentioned.
[13] Mr. Poteck’s uncontradicted evidence is that he met with Mr. Ragan (the defendant’s engineer) and discussed the findings arising from his review. He told Mr. Ragan he had formed the view that the defendant’s hotel would be eligible for an OREC credit applicable to residential developments, although more work was needed to fill in the gaps in the long-term stay data. Mr. Poteck gave Mr. Ragan an OREC application form to be signed to pursue the claim, informing him that potential refunds estimated at $250,000 to $400,000 could be obtained. Mr. Ragan told Mr. Poteck that he could not sign the document at that time. An email report was forwarded to upper management of 246 but no further action appears to have been taken as a result until March 5, 2019.
[14] I am satisfied from Mr. Poteck’s evidence that the application form that he left with Mr. Ragan was substantially identical to the one that Ms. Feng ultimately signed on March 5, 2019 that led to 246 receiving the rebates that are the subject-matter of this claim. Once again, there is no contradictory evidence.
[15] By way of summary, at this point Poteck had a contract with 246. Acting under the contract, it asked for and reviewed the historical billing information of 246 and other information regarding 246’s long-term stays and based on this information formed the view that 246 was entitled to significant credits that it had not until that point been claiming or receiving. Poteck provided the necessary form to make the claim. Without explanation, 246 declined to allow the claim form to be submitted at that time.
[16] A review of the claim form in question reveals that the credits to be claimed would expire if unclaimed within 24 months of a particular billing. Since the OREC programme began effective January 2017, rebate claims would begin expiring early in 2019 following the receipt of the January 2019 billing.
[17] On March 5, 2019, a further in-person meeting took place between Mr. Poteck and one of his associates (Mr. Adams) for the plaintiff and Ms. Feng and her assistant for 246. While the accounts of Mr. Poteck and Ms. Feng as to what occurred during this meeting conflict in many respects, there can be no question that two things did occur: (i) Ms. Feng negotiated and then signed an amendment to the July 18, 2018 letter agreement on behalf of 246; and (ii) minutes thereafter she signed the OREC rebate form prepared for her signature by the plaintiff.
[18] The amendments Ms. Feng negotiated resulted in the fee payable to Poteck being lowered from 40% of any refunds obtained to 30% and extended the period of time during which refunds would be subject to the fee from July 18, 2019 to December 31, 2020.
[19] I infer from the facts that (i) Mr. Ragan would not sign the claim form on October 22, 2018 but sent the email describing it (and likely containing a copy of the form as well) to Ms. Feng for her information and instructions; (ii) the fact that 246 did not take steps to sign and submit the form in the weeks and months that followed receipt of Mr. Poteck’s report of the meeting; (iii) the fact that Ms. Feng expressed the view that Poteck’s fee was “too high” and demanded (and received) a significant discount to the fee on March 5, 2019; (iv) within minutes of securing agreement to a reduced fee, Ms. Feng signed the claim form on behalf of 246 in the same or substantially the same form as the one that that 246 did not sign in October; and (v) that the claim form when processed produced a significant refund that these five facts are not unrelated. Ms. Feng learned in October that 246’s work under the letter agreement had unearthed a claim to a significant refund that could be claimed by signing the form that the plaintiff prepared and submitted to 246. She also had the view that the 40% fee Poteck stood to receive upon that claim being processed was “too high” and resolved to try to reduce it. It is not clear that she appreciated that the credits would expire if not claimed in time. At all events, she returned to the question in March 2019 at which time she understood that the credits being claimed arose by reason of the plaintiff’s work under the contract and she decided to negotiate a reduction in the fee that Poteck would receive from 40% of the refund to 30%. This she did and Poteck agreed to it. No other explanation is reasonable and consistent with all of the evidence that is reliable and admissible.
[20] Ms. Feng is not a native English speaker. She claims to have limited command of English and to be unable to read the language. There can be no doubt that she was able to make her demands for a reduction in the fee understood by Mr. Poteck. I make no finding one way or the other regarding her level of proficiency nor do I see any reason why this should be required here.
[21] Ms. Feng had either with her or readily available to her an assistant who was able to translate or clarify any written documents she needed help with. There is no evidence that Ms. Feng had any actual difficulty with either document she signed that day. She undoubtedly knew the subject-matter and broad outlines of both documents having seen and had access to them for months during which time she either sought or was able to seek such assistance as she desired. She specifically requested and successfully bargained for a lowering of the fee payable out of any rebates received when amending the contract. She knew that the OREC form she was subsequently given to sign was a required step to permit the rebates to be claimed – something which she also would have seen in October 2018. There is no question about any of these matters. She was not mistaken in any way. She knew that both documents were intended to have legal consequences. She was president of a significant company running a large hotel business in Toronto. There is no basis to doubt her assent to the legal terms of both documents she signed with her eyes wide open, intending to and receiving a considerable benefit as a result and having the knowledge and means to obtain any technical assistance she saw fit.
[22] Ms. Feng signed the OREC form, dated it March 5, 2019 and it was submitted thereafter to Toronto Hydro. This form as submitted resulted in the defendant receiving the rebates that are the object of this action and motion and Ms. Feng understood that this was the intended effect of the form she signed. She did not then understand why the defendant was eligible for the rebate but was relying upon the analysis and expertise of the plaintiff in approving the form and allowing it to be submitted. There is no suggestion that this reliance was misplaced – the form as submitted achieved quite precisely its intended and expected goal of generating rebates.
[23] To the extent that conduct subsequent to the contract being agreed to can inform a discussion of the intention of the parties with regard to the meaning of the contract they signed, all of the actions of the parties after July 18, 2018 are consistent with both parties expecting and understanding that the letter agreement applied to the OREC rebates that Poteck discovered had not been claimed but could be. The meeting of October 22, 2018 and the application form left with 246 at that time, the negotiation of a fee discount minutes prior to the application form finally being signed and submitted – all of this is entirely consistent with the parties expecting that the rebate being applied for was subject to the fee prescribed in the letter agreement. No other explanation is commercially reasonable.
[24] The review of the application took some time after it was submitted on or shortly after March 5, 2019. On September 9, 2019, Toronto Hydro advised that it had processed the application and was allowing a retroactive credit in the amount of $703,573.36 covering the period from February 1, 2017 until February 28, 2019.
[25] Poteck’s invoice of 30% of this initial rebate (plus HST) was $238,511.36 which amount was not paid. The defendant initially pleaded cash-flow difficulties and offered to pay through installments. These steps too are consistent with a common understanding that the letter agreement applied to the rebate claimed and ultimately received.
[26] A payment of $23,341.62 was ultimately made on January 29, 2021 shortly before the motion was heard.
[27] Pursuant to the letter agreement as amended, the plaintiff also claimed entitlement to receive its fee at the rate of 30% (plus HST) of “future savings” generated after the date of the initial rebate (the period ending February 28, 2019) until December 31, 2020. This amount requires calculations based upon the subsequent billing history (which the defendant produced after being ordered to do so).
[28] I find that the amount of “future savings” generated from March 1, 2019 until the program was altered to remove the eligibility of hotels in the defendant’s situation effective October 31, 2020 is $481,999.82. I have reviewed Mr. Poteck’s calculation of this amount which while somewhat involved is nevertheless quite straightforward. The defendant did not challenge it with any evidence.
[29] On the eve of the hearing of this motion, the defendant brought a motion seeking to amend its pleading by withdrawing an admission made that it owed the plaintiff $144,594.08 plus HST for the work performed pursuant to the contract. The affidavit in support of the motion alleged a misunderstanding as to the source of that portion of the rebate received from Toronto Hydro and whether that portion of the rebate was something inside or outside what the defendant described as the “Expected Work” under the contract.
[30] The plaintiff agreed that if it lost the motion for the whole claim under the contract, it would not seek judgment for the smaller admitted amount in the alternative and the defendant agreed that if the plaintiff succeeded in persuading me that it is entitled to judgment on the whole claim, the status of the smaller admitted amount would be moot. On this basis, I proceeded to hear the motion without hearing the motion on the proposed amendment. That motion would only be relevant were I to find that summary judgment is not appropriate in this case. Having found that summary judgment is appropriate, the proposed amendment is moot.
Issues to be decided
[31] The following issues are raised by this motion:
a. Does the letter agreement as amended apply to the rebates received? b. Has the defendant raised a triable issue regarding whether the plaintiff breached its duty of good faith? c. Has the defendant raised a triable issue regarding the interpretation of the contract?
Analysis and discussion
(a) Does the letter agreement as amended apply to the rebates received?
[32] The defendant’s position is that on a true construction, the letter agreement does not apply to the rebates identified by Poteck and claimed and received by 246 or at the very least there is ambiguity on this question that cannot be resolved on a summary judgment motion. The defendant views the rebate it received as an entitlement under a statutory program. The defendant submits that an existing entitlement cannot be characterized as a “billing error” in the language of the letter agreement. On the defendant’s construction of the letter agreement, the fee only arises from an identified “billing error” not an unclaimed entitlement. In addition, to the extent that more than one interpretation may apply, the doctrine of contra proferentem ought to be invoked to resolve any ambiguities in the language used against its drafter, the plaintiff.
[33] In my view, this argument ignores the commercial context of the agreement whose language I must construe and selectively ignores other portions of the agreement that are relevant and material.
[34] The commercial context of the agreement is that the plaintiff provides the service of examining utility bills, in this case Toronto Hydro electricity bills. While the basic driver of the bill is the result of a simple meter reading counting the number of electrons delivered and the times when they were delivered, the components of the bill – amounting to approximately $50,000 or more per month – reflect a dizzying variety of regulatory charges and adjustments.
[35] Toronto Hydro’s monthly bills in fact failed to reflect the correct state of affairs as regards the rates to be charged for the defendant’s consumption having regard to the applicable statutes and regulations. Whether Toronto Hydro knew it or not, the volume of long-term stays in the defendant’s hotel warranted a residential complex classification of the customer and this was not reflected on the bills rendered. The cause of the error does not affect the fact that the bills contained an error. Whether that “error” was a result of the fault of Toronto Hydro in failing to correctly characterize the nature of its customer’s consumption, the lack of diligence of its customer 246 in failing to inform Toronto Hydro of the pertinent facts necessary to make that determination or a combination of both is beside the point.
[36] Under the letter agreement, a fee is earned by the plaintiff if (i) the customer is in fact “eligible to recover funds based upon the possible billing errors we will identify and subject to the OEB regulations and Local Distribution Company (LDC) practices”; and (ii) the plaintiff is successful in recovering some or all of such funds. Both conditions are clearly satisfied here. In error, the bills charged 246 a different and higher rate than the lower rate that the true state of facts entitled 246 to receive the benefit of under the law and regulations. 246 was eligible to recover the excess funds paid as a result of that error but was unaware of that fact. The plaintiff succeeded in enabling 246 to recover more than $1.2 million in funds as a result of identifying this error that neither Toronto Hydro nor 246 was aware of and did so before the effluxion of time precluded a claim for the refund being made.
[37] The source of the error or the attribution of fault for it is not the gist of the agreement; the fact of an undiscovered error is. The plaintiff agreed to look for errors the discovery of which might recover funds that the defendant would not otherwise receive. Refunds arising from errors discovered by 246 or anyone else don’t generate a fee for the plaintiff. It is only where the plaintiff discovers an entitlement that the defendant did not and where the plaintiff is successful in recovering funds for 246 arising that a fee is earned. Further support for this broader view can be had by an examination of Schedule B that provides that the plaintiff’s authority to represent 246 “includes, but is not limited to” contacting the LDC and discussing “potential historical billing errors”.
[38] Contra proferentem is not a doctrine to be applied to defeat the commercial objects of an agreement but to give effect to it. The plaintiff offered to examine the defendant’s historic utility bills to determine whether it was entitled to refunds that by definition it was unaware that it was entitled to receive. To say that the plaintiff was already entitled to the rebate such that claiming it cannot be the product of an “error” turns the agreement on its head. The only subject of the agreement was refunds or rebates that the defendant was entitled to but not aware of.
[39] The foregoing analysis ought to be sufficient to dispose of this issue. The words of the contract when read as a whole and in their commercial context contain no ambiguity – the intent of the parties is clear and extrinsic evidence is neither necessary nor helpful. No issues requiring a trial arise. This conclusion requires no reference to the subsequent conduct of the parties however consistent that conduct may be with this construction.
[40] I shall nevertheless consider some of the additional points raised by the defendant despite the limited utility and relevance of conduct subsequent to the execution of the contract on July 18, 2018.
[41] The defendant sought to create an ambiguity in the contract through affidavit evidence describing the alleged subjective view of 246 as to the “Expected Work” that it understood the plaintiff would be performing to earn a fee as contrasted to the “Actual Work” that the plaintiff did which it characterized as being essentially nil. The evidence referred to in this regard by the defendant is as inadmissible and unreliable as the argument advanced on the strength of it is misguided.
[42] The evidence in question consists of affidavits of Ms. Feng and of another director of 246 (Zhujun Zhang). The affidavits proceeded from the entirely erroneous premise that the July 18, 2018 letter agreement was no more than a proposal. Thus, when they purported to describe the intentions of 246, they were both referencing an agreement that they claimed came into being on March 5, 2019. Neither of the amendments made at that time altered the scope of work to be performed by the plaintiff or the conditions under which a fee is earned. The events of that day do not impact the interpretation of the scope of work agreed to on July 18, 2018.
[43] At all events, the defendant’s evidence regarding its unilateral, self-serving and unspoken assumptions of additional auditing work allegedly expected to be performed after March 5, 2019 is both highly implausible and quite irrelevant.
[44] Neither Ms. Feng nor Ms. Zhang had any involvement in the negotiation of the July 18, 2018 letter agreement and, while both freely offer views as to what “246 intended” when it entered into the agreement (in March 2019 on their evidence), neither was able to ground such evidence upon any actual facts of which they had personal knowledge or of which they had received information from some named source who did. There is simply no evidence that is remotely reliable regarding the subjective intentions of 246 at the time the contract was created in July 2018 even if such evidence could be relevant in light of Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633.
[45] The suggestion that the plaintiff did not perform any auditing work to earn its fee in this case is clearly false. The defendant sent its billing data to the plaintiff for review. The plaintiff reviewed the data and made due diligence inquiries directed at an issue – long-term stays – that the plaintiff's expertise enabled it to focus upon. This in turn resulted in the conclusion that a claim could for a substantial refund could be successfully advanced. That conclusion was conveyed to the client on October 22, 2018 even if the client chose not to act upon it for several months. The contract contains no quantitative minima. There is no fee per hour expended. The contract is a pure contingent fee arrangement leaving to the expertise and experience of the plaintiff the task of deciding how much or how little effort is required to produce a result.
[46] The plaintiff did exactly enough work to discover that a probable claim existed. The plaintiff discovered that which the defendant had not and, in all likelihood, never would have discovered.
[47] The lack of co-operation of the plaintiff in identifying how many hours were spent or producing working papers of their audit activities is of no consequence because the inquiry itself was irrelevant.
[48] I attach exactly no weight to the evidence of the defendant’s two affiants regarding the subjective and uncommunicated intent of 246 for the reasons already given.
[49] Finally, the defendant sought to introduce evidence of an alleged industry practice in relation to helping clients claim the rebate for no fee. The evidence offered was subjected to cross-examination and proved to be quite a bit less than what it was claimed to be. The nature of the plaintiff’s business is to find opportunities for savings or rebates that others have missed. It is rather circular to describe how simple the process of submitting a claim for a rebate may be when entitlement to the rebate is already known and established. That is but the last step in the services the plaintiff provided – the crucial step being the identification of the claim in the first place. The claim in this case was an expiring commodity and none save the plaintiff had shown the skill and diligence required to identify it.
[50] The “industry practice” evidence is entirely beside the point. At all events such evidence cannot override the clear terms of the contract itself.
[51] The plaintiff has proved the existence of the contract from July 18, 2018 and I am satisfied from a review of the terms of the contract itself in its commercial context that the letter agreement was intended to and did provide for the claimed fee to arise in the case of the rebates that the plaintiff caused the defendant to claim and that the defendant received. The defendant has raised no genuine issues in relation to these findings that require a trial to be resolved. I have made but limited use of the enhanced fact-finding powers in rule 20.04(2.1) of the Rules of Civil Procedure. This I have done in relation to the lack of reliability and credibility of Ms. Feng’s evidence. Her cross-examination was reviewed by me in its entirety as were her affidavits. I conclude without hesitation that the interests of justice do not require a trial to examine that issue in further detail. She was given every possible opportunity to explain herself.
[52] None of the issues raised require a trial to secure a fair resolution: the construction of the contract is a matter of law turning upon the words employed viewed in their proper context. The reliable facts establishing that context are for the most part objective and are (or ought to be) non-controversial. The unreliable facts – primarily the self-serving ex post facto descriptions of the subjective intent of the defendant – are rather self-evidently unreliable or irrelevant and require no trial to be sorted through.
(b) Has the defendant raised a triable issue regarding whether the plaintiff breached its duty of good faith?
[53] There is a reason why pleadings are required in civil actions. They provide notice to the court and to the other side about what the parties intend to prove and help frame the boundaries of the dispute being resolved.
[54] In the present case, the respondent on this motion for summary judgment appears to have treated its own pleading as more of a guideline than an actual statement of the case it intended to present. The Statement of Defence in this case bears little resemblance to the factum or the oral argument made by the defendant on this motion for summary judgment.
[55] The principal defence pleaded was that the work performed by Poteck to generate the rebate form was outside the scope of work contemplated by the contract, a defence that I have considered and rejected in the preceding section of my reasons.
[56] Pointedly absent from the Statement of Defence is any suggestion that Poteck misled 246 (whether negligently or fraudulently) or any suggestion of bad faith or lack of honesty in the performance of the contract. These are, however, the themes presented as the main issues at the hearing of this motion. The defendant’s factum described the first issue on this motion as being “[w]hether the Plaintiff breached the duty of good faith and honest contractual performance in negotiating and performing the Contract”. Further allegations made in the factum in this same vein include “the Plaintiff knowingly omitted facts surrounding the Rebate Form and the rebate program and misled the Plaintiff into believing that filling out the Rebate Form was just the beginning of the Expected Work”.
[57] The central thrust of the defendant’s argument on this motion was thus directed at matters that lie entirely outside of the case as pleaded.
[58] I recognize that pleadings can be amended. I also recognize that pleadings ought generally to be read in a reasonably broad and liberal fashion. If a particular legal doctrine or theory is not referred to by name but all of the facts necessary to bring it into play are pleaded, for example, little prejudice can be attributed to the failure to identify the doctrine by name. None of these considerations apply here. None of the facts necessary to establish a breach of a duty of good faith or honest performance are pleaded; no explanation for the failure to plead these matters except by way of written argument filed on the eve of the hearing was offered. No relevant amendment to the pleading was proposed nor facts alleged that might justify bringing such a late amendment.
[59] It is often said that procedural rules must be the servant and not the master of justice. Indeed, that sentiment underpins Rule 1.04(1) of the Rules of Civil Procedure where a liberal interpretation of the rules “to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits” is commended. However, too lax an approach to enforcing the rules can just as easily pervert the course of justice as undue severity in their application.
[60] Motions for summary judgment are only scheduled for hearing in our court after being vetted in practice court, after a case timetable is put in place and very frequently after a case conference is held as well. Time allotted to their hearing is significant and in short supply. Parties have been warned over and over again that there is an onus upon them to put their best foot forward as the court will be called upon either to decide the case if there is sufficient evidence present to do so fairly or to prescribe a road map for its final adjudication if not. Ambush, surprise or saving trump cards for the last have no place in this procedure.
[61] Rule 20.04(1) of the Rules of Civil Procedure provides that I shall grant summary judgment if I am satisfied that there is no genuine issue requiring a trial with respect to a claim or a defence. Issues requiring a trial are issues contained in the pleadings and not floated for the first time in a factum delivered on the eve of a hearing. I cannot conclude that an un-pleaded issue raises a genuine issue for trial, particularly if the issue is raised in circumstances where an amendment is neither sought nor the grounds for permitting one advanced. For that reason alone, I can and do reject this late-breaking and ill-considered ground offered by the defendant to avoid judgment against it.
[62] As it turns out, however, a consideration of the evidence before me provides no reasonable grounds for considering the additional grounds of defence offered raises a triable issue even if it were pleaded.
[63] The starting point for my consideration of this issue is my conclusion on the first issue (whether the contract provides for a fee in the case of the plaintiff identifying and then claiming this rebate). The March 2019 amendments to the agreement had no impact upon the entitlement of the plaintiff to claim the fee in this case even if the amendments did affect the scale of the fee (reduced to 30% from 40%) and the time frame over which it may be claimed (extended to December 31, 2020).
[64] The defendant’s allegation of a breach of the duty of good faith and honest contractual performance in negotiating and performing the contract must be premised on the idea that the plaintiff had a pre-contractual and thus gratuitous obligation to advise the defendant of its entitlement to the rebate before the contract was signed – a rebate that was unknown to one of them and at best an untested possibility or hypothesis to the other.
[65] The plaintiff also appeared to ground its claim in this regard to some degree on Ms. Feng’s alleged unfamiliarity with English.
[66] Bearing in mind that the contract was entered into on July 18, 2018, the allegations regarding Ms. Feng’s understanding of what happened in a meeting almost eight months later is of no possible relevance. She had no direct involvement in the negotiation of the contract with the plaintiff, her sole established involvement being a remote email authorization to sign it. The validity of the contractual amendment she did sign in March 2019 is not in dispute.
[67] The one document that the defendant claims Ms. Feng signed without a full understanding is the March 5, 2019 application for an OREC rebate. There is no suggestion that the form was improperly or incorrectly filled out.
[68] Ms. Feng’s command of English does not enter into any of those questions. Her understanding of the nature of the OREC rebate or her speculation as to what amount of work Poteck would undertake to earn a fee in March 2019 does not make it more or less true that the contract her company signed in July 2018 applied on its face to the rebates she applied for in March 2019.
[69] If, as I have found, the contract entered into in July 2018 entitled Poteck to a fee for the rebate it caused 246 to apply for in March 2019, the suggestion that the duty of good faith performance extends to require the plaintiff to forego collecting the fee it earned is an absurd one. It is all the more absurd when one considers that 246 clearly had no idea that it was entitled to the rebate claimed and that the rebate was time limited (at least one month of rebate was lost to 246’s delay in signing the form until March 2019). In fact, 246 took no steps to advance its claim to a rebate in October 2018 even after Poteck advised it of its entitlement and linked this to the issue of long-term stays, estimated the amount that might be received and provided 246 with a form ready to be signed and submitted.
[70] The allegation of dishonest or bad faith performance of the contract was also extended in argument to include inferences I was asked to draw from the lack of disclosure by the plaintiff of all of its working papers in relation to audit work performed on the defendant’s Toronto Hydro billings. This issue is a red herring: there is no allegation here that something was missed in the billings by Poteck that ought to have been noticed. The contract does not tie Poteck’s entitlement to a fee to any particular volume of work performed. At all events, the evidence of the October 2018 meeting establishes that Poteck did in fact review the defendant’s bills and made due diligence inquiries regarding long-term stays. I am not required to measure the volume of work performed to assess either the claim or the defence raised. The results speak for themselves: the work performed was sufficient to achieve the result.
[71] There is precisely no evidence of dishonesty or sharp practice of the plaintiff connected with the negotiation or signature of the contract in July 2018. There is no evidence from the defendant regarding the actual contract formation. It denied the contract existed in July 2018 and failed to present any first-hand or even attributed hearsay evidence regarding the intention of the parties at the time the contract was entered into. Hindsight-fuelled musings of witnesses without personal involvement masquerading as evidence regarding the intention of the defendant about “Expected Work” under the contract is as irrelevant as it is valueless.
[72] Even if pleaded, the alleged departures from the standard of good faith and honesty do not raise an issue that requires a trial to determine. The record before me establishes that these claims are without merit.
Disposition
[73] I find no genuine issues requiring a trial with respect to either the plaintiff’s entitlement to collect the claimed fee or any of the defences raised.
[74] The sum of the initial rebate ($703,573.36) and the subsequent rebates received ($481,999.82) is $1,185,573.18. The plaintiff’s monetary claim is thus calculated at 30% of that total ($355,671.95) plus HST ($46,237.35) for a total of $401,909.31. From this total the payment on account of $23,341.62 must be deducted leaving a total amount owing of $378,567.69.
[75] Prejudgment interest should be calculated in two segments:
a. Prejudgment interest will run on the fee chargeable on the first rebate from the date which is 30 days after the rebate was received until the date of judgment; b. Prejudgment interest on the fee chargeable on the “future savings” being the balance of the amount awarded runs from January 30, 2021 until the date of judgment.
[76] For the foregoing reasons I conclude as follows:
a. The plaintiff is entitled to judgment on its claim as follows: i. The principal amount of $378,567.69; ii. prejudgment interest and post-judgment interest in accordance with the Courts of Justice Act, R.S.O. 1990, c. C.43, s. 128 and s. 129 calculated as described in the preceding paragraph; and iii. its costs of this action and motion.
[77] It follows from this decision that the defendant’s motion to amend the pleading by withdrawing the admission made is moot and does not need to be decided.
[78] I directed the parties to exchange outlines of costs after the close of argument. The parties shall have one week from today to attempt to resolve the amount of costs to be awarded to the plaintiff. Failing agreement, the plaintiff should deliver to me its outline of costs and submission regarding scale and amount of costs in writing within fourteen days of today’s date. The respondent defendant shall have a further seven days to deliver its responding submissions on the matter (along with its outline of costs). Reply – only if necessary – shall be brief and delivered within three business days thereafter.
[79] Written submissions should not exceed five pages exclusive of any outline of costs or, to the extent applicable, offer to settle. Case books are not necessary – a hyperlinked list of authorities is adequate. As this case is already on CaseLines, delivery may be effected by uploading on to CaseLines along with an email to the other side indicating that this has been done. No communication to me is necessary as I shall simply examine the newly-filed documents on CaseLines after the time allotted for filing has expired. My decision shall be communicated to you as soon as possible thereafter.
S.F. Dunphy J. Released: March 9, 2021