COURT FILE NO.: CV-18-595693 DATE: 20210308

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

CORE INSIGHT STRATEGIES INC. Plaintiff – and – ADVANCED SYMBOLICS (2015) INC. Defendant

Counsel: Daniel Baril, non-lawyer representative of the Plaintiff Sumir Sennik, for the Defendant

HEARD: January 25, 26, 27 and 28, 2021

Kimmel J.

Reasons for decision – SUMMARY TRIAL

Overview

[1] In reasons for decision dated April 3, 2020 on a motion for summary judgment by the defendant, Advanced Symbolics (2015) Inc. (“ASI”), I ordered a trial of issues to proceed based on directions that I provided pursuant to Rule 20.05 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. These are the reasons for decision from that trial, which was heard from January 25 to 28, 2021.

[2] Core Insight Strategies Inc. (“CIS”) maintains that three contracts were agreed to between the parties, the last of which it seeks to enforce. Alternatively, it claims that ASI made misrepresentations to it concerning the future business relationship between the parties upon which CIS relied in sharing its business contacts and industry knowledge and that ASI took advantage of and benefited from that, to CIS’s detriment. The plaintiff’s claims include breach of contract, misrepresentation, breach of the duty of good faith and honesty in contractual dealings, loss of opportunity, quantum meruit and unjust enrichment, for which the plaintiff seeks general, punitive, aggravated and/or exemplary damages from ASI.

[3] ASI maintains that the parties only ever reached agreement on ad hoc commissions to be paid to CIS for certain client contracts, which have been fully paid. ASI says the plaintiff’s claims must fail in relation to what it contends were aspirational further agreements that were never finalized because there was never a meeting of the minds between the parties on the essential terms of anything other than the ad hoc commission-fee arrangement. ASI says that business terms were discussed at various meetings, but CIS was never satisfied with what ASI suggested, and the written records of what transpired after each meeting demonstrate that no terms, beyond the ad hoc (project-by-project) commission-fee arrangement, were ever finalized.

[4] With leave of the court, granted on a motion brought after the summary judgment motion was dismissed and before the trial, the plaintiff was represented at trial by its President Mr. Daniel Baril, who was also the plaintiff’s main witness. [1] The plaintiff puts this case to the court as one that must be decided based on who is believed about what transpired at various meetings that took place between the parties. CIS asks the court to prefer Mr. Baril’s testimony over that of the representatives of ASI on all matters where they diverge on the basis that the ASI representatives are “knowingly not telling the truth” and are not credible. The plaintiff asserts that the defendant’s representatives are lying about some matters and therefore should not be believed on any matters of importance that the court must decide.

[5] The defendant paints a different picture. The defendant’s position is that Mr. Baril may be lying, but its position is not dependent on a finding to that effect. The court can reach the outcome that the defendant contends for based on a conclusion that the participants had different understandings coming out of their various meetings, and were never able to reach a final documented agreement because of that.

[6] The plaintiff has the onus of proof. It ultimately seeks to enforce the third of three oral agreements that are alleged to have been reached, on June 9, September 12 and November 16, 2017. In the absence of any written agreement, the court is assisted and informed by the surrounding contemporaneous emails exchanged between the parties, and the timing and sequencing of those emails with regard to the conduct of the parties: in other words, the factual matrix. The contemporaneous emails and events are not consistent with the plaintiff’s assertion of any of the alleged oral agreements having been reached, beyond the ad hoc commission-fee arrangements for specific client projects. The plaintiff has not met its onus in this case to prove the oral agreement it seeks to enforce. The claim for breach of contract therefore fails.

[7] The plaintiff’s other claims (for misrepresentation, breach of the duty of good faith, unjust enrichment and loss of opportunity) are all primarily predicated on the assertion that ASI set out to mislead CIS by stringing it along into believing that there would be a long-term business association between the two companies and inducing CIS to promote ASI’s methodologies to CIS’s clients and industry contacts, without ever intending to enter into a long-term business relationship.

[8] This factual predicate requires the court to accept the interpretation and account of a third-party witness and long time client (Quebec RTC) and friend of Mr. Baril, Alain Mercier, who says he was told by one of the principals of ASI (Dr. White, ASI’s Chief Data Scientist) that this was ASI’s plan all along. Dr. White denies saying this to Mr. Mercier. There is no recording of the conversation between Mr. Mercier and Dr. White, only a recording made by Mr. Baril of a subsequent conversation he had with Mr. Mercier reporting on his interpretation of the discussion with Dr. White.

[9] A careful examination of what is alleged to have been said in this conversation between Mr. Mercier and Dr. White and their testimony about that conversation does not establish, on a balance of probabilities, that Dr. White admitted to Mr. Mercier that ASI had all along intended to mislead CIS about the prospect of a business relationship in order to take advantage of introductions and industry contacts of CIS and Mr. Baril without intending to enter into a long-term business relationship. Dr. White and Ms. Kelly (the President and CEO of ASI) both testified, to the contrary, that they tried to negotiate a long-term business relationship with CIS despite the difficulties they had with Mr. Baril, but that they were unable to do so because Mr. Baril was not willing to commit to terms within the parameters of what they discussed at their various meetings.

[10] Further, even if that had been ASI’s plan all along, these claims carry with them the further problem that CIS has not established that it has suffered any loss or damage as a result of anything ASI said or did, which is an essential requirement of the causes of action that are said to flow from this. While Mr. Baril claims that he cannot conduct business as he did in the past after having promoted the ASI methodology to his clients and industry contacts (as better than his more traditional methods) he was able to secure and complete two projects after the “break up” and the only direct evidence of a customer who no longer will deal with CIS is the loss of Quebec RTC, which Mr. Mercier blames on this litigation and not specifically on anything that Mr. Baril did to promote ASI.

[11] Further, CIS has not established that ASI did business of any value as a result of introductions to customers by CIS, beyond the commission-fee contracts for which CIS was paid. I am not satisfied on a balance of probabilities that the plaintiff has established any of these other non-contractual causes of action.

[12] Accordingly, the plaintiff’s claims are dismissed, with costs.

The Dealings Between the Parties Giving Rise to this Action

[13] In my first decision, I summarized the dealings and relationship between the parties. I will repeat that summary here for convenience, with the benefit of the evidence I heard at the trial that re-affirmed many of these facts, correcting for any minor errors in my original account and supplementing it with the benefit of the more complete factual record that I now have.

[14] CIS describes itself as a marketing and public opinion research and communications company. Dan Baril, the principal, testified that he has forty-two years of industry experience in quantitative and qualitative market research design, survey methodology, data analysis and reporting. His experience spans a number of business and government sectors, including: transportation/transit, banking, financial and credit card services and products, automotive, technology, retail, commercial real estate, transportation courier services, telecommunications and internet, human resources and employee research, branding and brand management, public relations, and political public opinion polling (the “Sector” or “Sectors”).

[15] ASI describes itself as a company that develops advanced artificial intelligence software that allows businesses and governments to better understand their audiences. This has been referred to as “AI Technology”. Erin Kelly and Kenton White are the two principals of ASI.

[16] The business relationship between CIS and ASI was initiated in November 2016 by CIS. Dan Baril reached out to Erin Kelly by email on November 15, 2016 and they met for coffee in Ottawa on November 22, 2016. CIS was interested in ASI’s AI Technology and its capacities for descriptive, predictive and prescriptive analytics and the potential to exploit this technology, initially in the polling and market research Sectors in which Mr. Baril had experience, contacts and relationships. Both parties recognized the potential advantages and benefits that their combined resources and expertise might generate across these and other Sectors.

[17] There was a further breakfast meeting between Dan Baril and Erin Kelly on or about December 14, 2016 in Toronto. In January 2017, CIS and ASI started to work together. The parties disagree about the precise terms of their business arrangement. However, they agree that commissions were paid by ASI to CIS for approximately one year based on agreed upon percentages of gross revenues on a case-by-case basis for contracts that ASI acknowledges CIS helped it to obtain, including: an SRB contract and O&D survey for Quebec Regional Transit Corporation (“RTC”), a City of Ottawa study and a Durham Regional Transit study. CIS refers to this as the “Initial Agreement” and ASI refers to it as the “commission-fee arrangement”.

[18] Mr. Baril testified that, even at the stage of the Initial Agreement, his understanding was that the parties would be working towards apportioning fees (revenue sharing) across the Sectors as well as for any new industries introduced by CIS. Mr. Baril maintains that he and Ms. Kelly started talking about equity sharing arrangements in June of 2017.

[19] Ms. Kelly acknowledges that there were discussions after the Initial Agreement/commission-fee arrangement about revenue sharing, but only in the context of the percentage or sharing of fees for projects they worked on together, which could vary based on the nature of CIS’s involvement. While the terms of potential broader agreements were discussed and considered, Ms. Kelly maintains that the parties never reached any agreement about the different formulas and structures they talked about for a long-term and larger scope business arrangement. Ms. Kelly is firm that ASI rejected outright the idea of any equity sharing. This was made clear in an email written by Ms. Kelly dated March 18, 2017 and she maintains that ASI’s position on equity sharing never wavered whenever Mr. Baril brought it up.

[20] Ms. Kelly testified that that the only agreement between the parties was in relation to commission fees for individual projects. The commission amounts for the projects that the parties did work on were variable and negotiated and agreed to on a case-by-case basis.

[21] Mr. Baril says that he relied upon his understanding that he would have an equity stake in ASI in his pursuit of the joint capabilities and presentation tour that the parties engaged in over the course of the spring, summer and fall of 2017, during which they made presentations and pitches organized by CIS to the City of Ottawa, RTC, Statistics Canada, the City of Durham, TVO and Metrolinx. ASI was granted some contracts from these pitches and Mr. Baril assumed the role of project manager and/or client liaison. He was given business cards identifying him as a Director of Business Development for ASI and he was given an ASI email account and appointments calendar.

[22] Mr. Baril says he proposed a business plan to ASI on August 5, 2017 about polling and predictions for the upcoming Ontario election that he thought could create some publicity for ASI’s AI Technology. Ms. Kelly testified that she was not enthusiastic about this idea because ASI had done election polling in the past and did not see it as a profitable endeavour. She was convinced by Mr. Baril to meet with Steve Paikin [2] at TVO on September 30, 2017.

[23] Ms. Kelly testified that Mr. Baril led her to believe that there would be a budget to cover the costs of the polling and predictions for the Ontario election. Initially, Mr. Baril suggested there would be a budget of $100,000.00, which was later reduced to $75,000.000. Ms. Kelly testified that she told Mr. Baril that she would have to invest at least $30,000.00 in staff to ramp up for the election polling work. ASI began investing in the staff and to develop the modelling for the election in December 2017. The TVO budget did not ever materialize, but after having already sunk the costs into the polling for the Ontario election [3] ASI did the polling and predictions. Ms. Kelly appeared a few times on Steve Paikin’s show during the Ontario election in 2018 to provide polling predictions.

[24] Although Mr. Baril points to his introduction of ASI to Steve Paikin at TVO as an example of his business development on ASI’s behalf, ASI does not attribute any new work it has received to these appearances on TVO. ASI also did polling work for another client and provided other media commentary in the lead up to the Ontario election.

[25] Mr. Baril testified that the parties agreed during a dinner meeting held at Joe Badali’s restaurant in Toronto on September 12, 2017 to what CIS describes as a “Fee/Equity Agreement”. Ms. Kelly testified that this was a dinner meeting that was primarily social. She acknowledged that some business was discussed at this dinner meeting, but denied that they talked about a new business arrangement or reached any new agreement.

[26] Although Mr. Baril testified that he took comfort in (and relied upon) the equity arrangement that he claims was discussed in June of 2017 and agreed to at the September 12, 2017 meeting, in a subsequent email written by him on September 27, 2017 he stated that: “ Before taking the conversation further, I think I really need to clarify or more precisely state what I would like versus not like. […] We just need to agree on a formula and a method of payment. ”

[27] There is no contemporaneous record of an agreement having been reached at the September 12, 2017 meeting. There were text messages between Ms. Kelly and Mr. Baril on October 3, 2017 in which Ms. Kelly emphasized the need for a contract to be formalized between CIS and ASI and she suggested using ASI’s sales contractor agreement rather than starting from scratch. Mr. Baril agreed that they needed to have a contract and suggested they try to work on a joint initiative. He said he would propose something.

[28] By early November 2017, Mr. Baril and Ms. Kelly were not seeing eye to eye. They had a blow-up about their joint presentation that was planned for the Canadian Urban Transit Association (CUTA) conference being held in Toronto on November 5-7, 2017. Although the witnesses have different accounts of who was at fault for the blow-up between Ms. Kelly and Mr. Baril prior to their presentation, it was apparent to all that Mr. Baril and Ms. Kelly were not getting along. Both Dr. White and Mr. Mercier testified that they were displeased with how Mr. Baril and Ms. Kelly were interacting with each other around this time.

[29] Ms. Kelly was, by this point, having doubts about the ability of ASI and CIS to continue working together. Despite the tension and disagreement between Ms. Kelly and Mr. Baril, their joint presentation at the CUTA conference was positive. ASI decided to give CIS another chance and Mr. Baril and Ms. Kelly and Dr. White met again on November 16, 2017. That the joint CIS/ASI presentation at the CUTA conference was a success was a surprise to everyone and allowed new life to be breathed into their relationship, creating an opportunity for them to try again at the November 16, 2017 meeting.

[30] It was in anticipation of this November 16, 2017 meeting that Mr. Baril says there was a phone call on November 1, 2017; a phone call that he followed-up with an email on November 7, 2017 purporting to record an agreement reached at the September 12, 2017 meeting. This agreement was never acknowledged or confirmed in writing by ASI.

[31] Both Ms. Kelly and Dr. White testified that it was communicated to Mr. Baril at the November 16, 2017 meeting that the proposed terms in CIS’s November 7, 2017 email did not correspond with any agreement that had been reached previously and that these terms were not acceptable to ASI, especially with respect to the proposed equity stake that Mr. Baril was suggesting he be granted. Mr. Baril was told that he would not receive any equity in ASI. He expressed disappointment but a willingness to discuss alternative business terms.

[32] Both Ms. Kelly and Dr. White acknowledge that terms were proposed by ASI at this November 16, 2017 meeting to focus on the public transit Sector with an 80/20 split on contracts for which CIS would have certain duties. It was also proposed that if CIS wanted exclusivity in the transit Sector it would have to commit to quarterly revenue targets. ASI suggested that, for non-transit work, the split would be 90/10 for a different and reduced set of duties.

[33] Dr. White left this meeting early due to a pre-existing family commitment. Ms. Kelly testified that this meeting ended only with an agreement to try to document the terms that they had discussed in a “memorandum of understanding” or “MOU”. Ms. Kelly’s understanding was that they left it on the basis that they would try to write something up so that Mr. Baril could consider whether he was prepared to sign up for commissions and targets, as opposed to the equity that he had been seeking. If that structure was agreed to, then the commissions and targets still needed to be negotiated and Mr. Baril was to provide his suggested numbers for ASI’s consideration. Although the responsibility for drafting the MOU was initially put on Dr. White, he became ill and Mr. Baril later agreed to take it over. No written document was produced for the parties to consider until February 8, 2018.

[34] Mr. Baril testified that what Dr. White proposed at this November 16, 2017 meeting was less favourable to CIS, but that CIS nonetheless accepted the proposed terms. Mr. Baril testified that the essential terms of this agreement were all agreed to and that it was left to Dr. White to document them, based on his notes of the meeting. As a goodwill gesture and in the spirit of what Mr. Baril described as “the good discussions last night” he says he reduced his invoices on the ongoing City of Ottawa and City of Durham transit projects to reflect the agreement for an 80/20 split, despite earlier having agreed to a different split for these projects.

[35] CIS and ASI continued to work on the Quebec RTC projects and attended meetings in Montreal on December 1, 2017. Mr. Baril and Ms. Kelly continued to clash on various matters, including a disagreement on December 4, 2017 about how to deal with another prospective transit client.

[36] However, in a December 5, 2017 email, Mr. Baril wrote to ASI rejecting the contractual framework that had been discussed at the November 16, 2017 meeting and asked to present a different framework to ASI at a meeting on December 8, 2017. In his December 5, 2017 email Mr. Baril stated: “ Based on some of our recent work experience, and upon reflection, I don’t think the contract framework that we’ve been discussing will work. I think we should consider a different and simpler approach; one I think stands a better chance of success. I look forward to presenting my thoughts to you on Friday which I am confident will result in a better agreement for everyone involved and which I am equally confident can be executed in very short order. ”

[37] At the December 8, 2017 meeting, no framework was presented by Mr. Baril and no further progress was made towards the business arrangement. Instead, the discussion was focussed on concerns about problems with the project for the City of Ottawa, which Mr. Baril blamed on ASI staff, and Ms. Kelly blamed on Mr. Baril for not being present at key meetings where concerns and problems had been raised by the client, and for not following up afterwards.

[38] ASI took Mr. Baril’s email of December 5, 2017 as a rejection of the framework that had been discussed on November 16, 2017. Ms. Kelly and Dr. White concluded in December 2017 that they were not going to be able to reach an agreement with CIS.

[39] By early January 2018 significant concerns had been raised by the City of Ottawa about the project that Mr. Baril was managing for ASI. A meeting was arranged with the City of Ottawa on January 10, 2018 to address these concerns. At this point in time, the escalating concerns about this project combined with the lack of progress on the business arrangements had led ASI to the decision that it wished to part ways with CIS.

[40] Dr. White met Mr. Baril on January 10, 2018 before the planned client meeting with the City of Ottawa and informed Mr. Baril that ASI did not want to pursue their business relationship any further. Mr. Baril was advised that he need not attend the client meeting with the City of Ottawa. Mr. Baril asked for another chance to meet with Ms. Kelly, and convinced Dr. White to let him attend the client meeting that had been scheduled for that afternoon and to ask Ms. Kelly to meet that evening.

[41] After a positive meeting with the client, Dr. White contacted Ms. Kelly to ask her to meet with Mr. Baril. While still skeptical about any continuing relationship with CIS, Ms. Kelly agreed to meet with Mr. Baril that evening and was persuaded to give Mr. Baril one final chance to make a proposal to see if the parties could reach an agreement for a long-term business arrangement. Ms. Kelly described this in a text message to Dr. White as “taking one for the team”, despite her dislike of Mr. Baril, to see if Mr. Baril could come up with, and deliver on, targets.

[42] Ms. Kelly outlined the terms of the business arrangement that ASI envisioned in an email the next day, dated January 11, 2018. Some of the targets that ASI set for CIS under this proposal were recognized internally at ASI to be unrealistic, although Ms. Kelly and Dr. White discussed amongst themselves that if real progress was being made by CIS in upholding its end of the bargain, the targets would not be an obstacle to the continued relationship. Dr. White explained in his testimony that the objective of the targets was to put pressure on Mr. Baril to convert his promises into actions.

[43] The following email exchange ensued:

a. Baril responded on January 11, 2018 that the parties should “ keep the onus where we left it, still on me, to draft a memorandum of understanding that could be used to form the basis of an agreement between our two firms. If we have an agreement in principle stemming from that memorandum of understanding, we could move to have the agreement formalized and executed. ”

b. Kelly responded to say that “ my note outlines the basis for such an agreement, and the conditions under which we would be prepared to work. You have not, as requested, said whether you agree with these points or not .”

c. Baril further explained that he would prefer the agreement to read less like an employment contract and more like an agreement between two firms. To that end, he indicated “ I have very concrete ideas on how to word an agreement that says what you conveyed in your note, but between ASI and CIS .”

[44] Mr. Baril testified that during his meeting with Dr. White on January 10, 2018 Mr. Baril sought assurances from Dr. White that, if the parties were not able to come to an agreement and parted ways, both sides would take care of the clients and that the professional and personal reputations of both sides would be protected. Mr. Baril sent an email on January 12, 2018 along these lines, in which he stated that the parties were still trying to “ arrive at a mutually agreeable memorandum of understanding previously discussed and that we hope to have an understanding in principle before the meeting I arranged with Brampton for January 26, 2018 .” It is clear that both parties recognized by this point that the prospect of any business relationship going forward between CIS and ASI was in jeopardy.

[45] While working on his written proposal, Mr. Baril says that he wanted to show his good faith by continuing to make introductions to ASI, as he had been doing over the course of the past year. To that end, Mr. Baril arranged a meeting with Mastercard that took place on January 30, 2018. Once again, Mr. Baril and Ms. Kelly have different recollections and accounts of what transpired at this meeting and what was expected from it.

[46] CIS presented a February 8, 2018 draft of a Strategic Alliance, along with a spreadsheet purporting to outline the work in progress and prospective work. Baril says that he decided to call it a Strategic Alliance rather than an MOU because he felt that they were past the exploratory phase of their business relationship, but he insists that the change in title had no impact on the contents of what he says was agreed to back on November 16, 2017. Mr. Baril’s February 8, 2018 proposal appears to have been written without regard to his December 5, 2017 email, the intervening events including the January 10, 2018 meeting or the January 11 and 12, 2018 emails.

[47] The February 8, 2018 document did not align with the conditions of Ms. Kelly’s January 11, 2018 email. Mr. Baril did not outline how CIS would be paid or propose revenue targets. From ASI’s perspective, it contained inflated assessments of the value of ongoing and future work. The terms of the February 8, 2018 draft were never confirmed in writing or orally by ASI.

[48] In the meantime, an issue arose with the contract for Statistics Canada that CIS and ASI had been working on. This contract had been initially presented by Mr. Baril as a prospective $3 million project. On February 12, 2018 Statistics Canada offered $18,000.00, which both CIS and ASI recognized was not a sufficient budget to do any of the work that had been discussed with Statistics Canada, even on an incremental basis.

[49] Further concerns arose about the handling of the procurement process with Statistics Canada. Ms. Kelly and Dr. White testified that, at this point, they decided that they were not prepared to continue to try to negotiate the terms of a business relationship with CIS. To their minds, this was another potential contract that Mr. Baril had talked about for months, suggested would generate significant revenues and failed to deliver on; and he had still not followed through with the business agreement that had been discussed in January. Shortly afterwards, on or about February 14, 2018, they deactivated Mr. Baril’s ASI email account and calendar. ASI and CIS have not done any business together since then.

[50] Mr. Baril says he learned of ASI’s termination of its business relationship with CIS from a client on February 15, 2018, and not directly from Ms. Kelly or Dr. White. Mr. Mercier testified that he learned of the termination of the relationship from another CUTA board member on February 14 or 15, 2018 and that, when he called Mr. Baril about it, Mr. Baril indicated that he had not been notified directly of this by ASI. That said, Mr. Baril told Mr. Mercier that he had known enough to copy his files and emails from the ASI server before his access was terminated.

[51] Mr. Mercier called Mr. Baril after a discussion he had with Dr. White on February 18, 2018 about RTC’s ongoing project with ASI. There is a transcript of a contemporaneous recording of the call between Mr. Mercier and Mr. Baril following Mr. Mercier’s conversation with Dr. White that forms the basis of the plaintiff’s claims. Mr. Mercier was not aware at the time that this conversation was being recorded by Mr. Baril. Mr. Mercier explained in his trial testimony that he was attempting during this conversation to relay in his own words what Dr. White had said to him. There is no transcript or recording of the call between Mr. Mercier and Dr. White.

[52] Mr. Baril and Dr. White met on February 22, 2018. Mr. Baril testified that Dr. White was receptive to the possibility of the two of them going into business together without Ms. Kelly. Dr. White describes a different version of this meeting, at which three options were presented to him by Mr. Baril that Dr. White was left to consider, none of which he found acceptable. They were:

a. ASI would pay $2.7 million to CIS;

b. CIS would sue ASI into oblivion; or

c. Dr. White could dissolve his partnership with Ms. Kelly and join forces with Dan Baril.

[53] According to Mr. Baril, a fourth option was also proposed along the lines that Mr. Baril would start a lawsuit and Dr. White could use that as an excuse to get rid of Ms. Kelly. Dr. White denies discussing this fourth option at the February 22, 2018 meeting. Ultimately, Dr. White says he conferred with counsel and did not follow up because none of the three proposals presented were acceptable and it did not appear that they would be able to reach a settlement.

[54] Mr. Baril sent a without prejudice proposal to Dr. White that was copied to Ms. Kelly on February 23, 2018. That proposal was not accepted. This litigation then ensued.

Credibility Considerations

[55] In my decision on the summary judgment motion, I concluded that there were credibility issues going to the heart of CIS’s claims for breach of contract, misrepresentation and failure to negotiate or perform agreements in good faith. The court is being asked to make findings about whether oral agreements were reached at certain, key meetings between the parties on September 12, 2017, November 16, 2017 and January 10, 2018.

[56] The claims for misrepresentation and failure to act in good faith also depend on the assessment of whether the statements made at these meetings and the communications that ensued afterwards were good faith attempts on ASI’s part to formalize a business relationship or part of a plan to string CIS along in order to induce CIS to make introductions to prospective clients to gain access to CIS’s contacts and prospective clients in the various Sectors.

[57] At the trial, the parties focussed on particular meetings and events that they argued should inform the court’s determination of who to believe, not only in respect of these specific matters but more generally.

The February 18, 2018 Telephone Conversation Between Mr. Mercier and Dr. White

[58] CIS relies upon the evidence of Alain Mercier to support its claims for misrepresentation and breach of the duty of good faith in contractual dealings. This is based on a report from Mr. Mercier of a conversation he had with Dr. White in which Dr. White is said to have “let slip” that ASI had essentially been stringing Mr. Baril and CIS along with no intention of entering into a long term business arrangement. Mr. Mercier is portrayed by CIS as an objective third-party and by ASI as a friend and co-conspirator of Mr. Baril. The contemporaneous recording of the conversation between Mr. Baril and Mr. Mercier is presented as a “smoking gun” of sorts in the case against ASI.

[59] Mr. Mercier arranged to speak to Dr. White on Sunday, February 18, 2018 because he was concerned about how the ASI project for Quebec RTC, that was already behind schedule, would be completed if Mr. Baril (the project manager) was no longer working with ASI. Mr. Mercier acknowledged during his trial testimony that one of his objectives during this conversation with Dr. White was to see if Mr. Baril could be brought back in by ASI to complete the RTC project. Although Mr. Mercier maintains that his relationship with Mr. Baril was professional and not personal, they were long time business associates and had known each other for many years. It is apparent from the texts between the two men that Mr. Baril was relying on Mr. Mercier as a sounding board during this difficult time.

[60] Mr. Mercier reported to Mr. Baril that Dr. White had told him during their February 18, 2018 telephone call that it was ASI’s plan to use CIS to gain access to CUTA and the transportation Sector, to allow CIS to make introductions for ASI to clients in other Sectors, and then to cut CIS out. Mr. Mercier advised Mr. Baril that he understood from this conversation with Dr. White that ASI had formed the intention to replace CIS around the time of the CUTA conference and that it did not intend, at least from and after that point, to enter into a long-term business arrangement with CIS. Mr. Mercier acknowledged during his trial testimony that some of what was relayed by him to Mr. Baril was based Mr. Mercier’s interpretation of, or conclusions that he formed from, the conversation with Dr. White.

[61] Mr. Mercier testified that he was very frustrated at the time because he had stuck his neck out to advance payments to ASI using public (RTC) money at Ms. Kelly’s request after the CUTA conference, and upon the strength of his trust and relationship with Mr. Baril. Yet, he now found himself without Mr. Baril, found out that CIS had not been paid even though RTC had paid ASI and it was unclear how the RTC project would be completed based on the skill-set of the other ASI employees who had been working on this project, so he was seeking assurances from Dr. White in that regard. Mr. Mercier acknowledged that by this point he had formed a very bad impression of Ms. Kelly, as unprofessional and manipulative, and he communicated that view to both Dr. White and Mr. Baril.

[62] Mr. Mercier reported to Mr. Baril that Dr. White had also sought counsel during this conversation based upon Mr. Mercier’s negative comments about Ms. Kelly. This was perceived by Mr. Mercier to be an expression of concern by Dr. White about some of the things that Mr. Mercier had pointed out about Ms. Kelly’s conduct.

[63] Dr. White’s account of his February 18, 2018 conversation with Mr. Mercier during his trial testimony is different from Mr. Mercier’s in two key respects:

a. Dr. White denied that he said to Mr. Mercier that ASI had formed the intention to replace CIS around the time of the CUTA conference and that it did not intend thereafter to enter into a long-term business arrangement with CIS, or words to that effect. Dr. White denied that he said to Mr. Mercier that ASI had been stringing Mr. Baril along for his contacts; and

b. Dr. White testified that Mr. Mercier cautioned him during this conversation about Ms. Kelly and suggested to Dr. White that he part ways with Ms. Kelly. Dr. White asked Mr. Mercier what he would do in Dr. White’s shoes and Mr. Mercier suggested to Dr. White that he negotiate a shot gun into his agreement with Ms. Kelly.

[64] Dr. White testified that ASI was considering parting ways with CIS around the time of the blow-up between Mr. Baril and Ms. Kelly at the CUTA conference, but that they met afterwards, on November 16, 2017, and the framework for a business relationship was discussed that seemed to be workable so they decided to try to see if an agreement could be worked out along those lines. For her part, Ms. Kelly says she did intend, and did in fact, try to negotiate a business relationship with CIS, but that they were never able to come to an agreement on the essential business terms. She directly denies the nefarious intentions that are attributed to her.

[65] ASI argues that this conversation between Mr. Mercier and Dr. White was staged between Mr. Baril and his long-time friend and business associate and the evidence about it should be approached with caution as unreliable.

[66] I accept Mr. Mercier’s testimony that the impetus for this telephone call was his and was for the purpose of addressing his concerns about the Quebec RTC contract. There was a legitimate business purpose for this call and it was not a “set-up”, as ASI suggests. I do not need to go so far as to find that Mr. Mercier intentionally misrepresented to Mr. Baril what was discussed with Dr. White on February 18, 2018. He concedes that some of what he reported to Mr. Baril was based on his interpretation of remarks made by Dr. White. He did not attempt to hide his dislike for Ms. Kelly and did not deny that the discussion about Ms. Kelly’s business ethics and integrity was prompted by him, not by Dr. White. Nor did he deny that he would have preferred to have Mr. Baril back on the job. He did, however, have an agenda and perspective that might have influenced how he interpreted and reported what was discussed.

[67] To the extent Mr. Mercier reported to Mr. Baril that ASI had no intention of entering into a long-term business relationship with CIS after the CUTA conference and was just stringing CIS along, I find that he must have misinterpreted or misconstrued Dr. White’s comments about concerns that ASI had about continuing to do business with CIS after the blow-up that they all witnessed between Ms. Kelly and Mr. Baril at the CUTA conference. The fact of the matter remains that the parties did continue to work together and to try to come to an agreement on business terms thereafter.

[68] Mr. Mercier’s report to Mr. Baril of his February 18, 2018 telephone conversation with Dr. White does not prove that ASI had no intention of entering into a long term business relationship with CIS after the CUTA conference. I accept the testimony of Dr. White and Ms. Kelly that they held a genuine and good faith intention to try to do so, despite the tensions between Ms. Kelly and Mr. Baril, which were apparent to all and not secretly harboured by only one side.

The September 12, 2017 Meeting Between Ms. Kelly and Mr. Baril and Subsequent Meetings and Events

[69] Both sides suggest that the other’s account of the various meetings is not reliable because of the imprecise recollections of Ms. Kelly and Mr. Baril regarding the duration of their meeting at Joe Badali’s restaurant on September 12, 2017. Each says that their own lack of recollection is just a mistaken memory while the other’s lack of recollection is indicative of a larger lie and a general lack of credibility that can be carried over to other areas of disagreement in their evidence. Ms. Kelly testified that this meeting was primarily social, whereas Mr. Baril says it was the most important and productive business meeting that they had, at which they reached an equity sharing agreement.

[70] It is not uncommon for two people who participated in the same meeting to have different recollections of its duration and location, and different subjective perceptions of its purpose and effect. These types of differences do not necessarily lead the court to the conclusion that one or the other of them is lying. Although the difference in perspectives in this case about whether an agreement about equity sharing was reached is quite dramatic, I find that this was due to a fundamental misunderstanding rather than an outright lie by one or the other party.

[71] The source of the disconnect between the parties in this case can be traced to the different roles for CIS that were envisioned. Mr. Baril clearly saw himself and CIS as having an advisory/consultancy role, as a rainmaker, and he wanted to be compensated for that through equity sharing. Conversely, ASI was looking to Mr. Baril to secure projects with his industry contacts, generate revenue and for CIS to be compensated based on revenues received from the clients and projects that Mr. Baril was responsible for. This fundamental disconnect reinforces my conclusion (discussed in more detail later in these reasons) that there was no meeting of the minds and no long-term business agreement reached between the parties.

[72] Mr. Baril’s testimony that agreements were reached at both the September 12 and November 16, 2017 meetings is not borne out by his own emails afterwards, in which he refers to new or alternative frameworks and uses language that indicates that he was not yet satisfied with the terms discussed at those meetings and was seeking to introduce new terms and contractual frameworks.

[73] Mr. Baril’s testimony about the agreements he says were reached is further undermined by his attempts, months later, to purport to document these alleged agreements after incidents occurred that threatened the prospect of a continued business relationship between the parties, such as:

a. Mr. Baril’s email sent after the blow-out at the CUTA conference on November 7, 2017 purporting to document what had been agreed to almost two months earlier on September 12, 2017; and

b. After the November 16, 2017 meeting, first Mr. Baril indicates in his December 5, 2017 email that, upon reflection, he wants to present a different contractual framework than what had been discussed, but then when he failed to do so and was told on January 10, 2018 that ASI no longer wished to do business with CIS and gave him a final ultimatum of business terms that ASI would be prepared to consider, a month later and after further client set-backs he purported to document an agreement reached back on November 16, 2017.

[74] CIS insists that Ms. Kelly (and Dr. White) are lying about the agreements reached. I am not prepared to make that finding on the record before me. The accounts of Ms. Kelly and Dr. White are more consistent with the contemporaneous records which reflect continued negotiations and changing business terms without any agreement having been reached (all as described in more detail previously in these reasons). I find that the accounts of Ms. Kelly and Dr. White of these meetings are more reliable (and consistent with the conduct of the parties and the contemporaneous emails) than the account of Mr. Baril, where their accounts differ.

Other Credibility Considerations

[75] Mr. Baril has been shown to be prone to exaggeration. He emphasized in his testimony the benefits that he brought to ASI, but what he actually delivered tells a different story. For example, he talked about multi-million dollar contracts from Quebec RTC that Mr. Mercier testified he was not familiar with. He talked about prospects with the City of Montreal in the range of $3 million, that Mr. Mercier confirmed would only have been discussed to be in the range of $750,000.00 to $1.5 million. He talked about significant contracts with Statistics Canada that led only to a budget of $18,000.00 and he talked about TVO budgets for polling and election analysis in the $75,000.00-100,000.00 range that never materialized.

[76] As part of the credibility analysis, the plaintiff has referred to accusations made by Ms. Kelly after the fact of misogynistic and sexist comments and behaviours of Mr. Baril towards Ms. Kelly. Mr. Baril argues that Ms. Kelly’s allegations that he behaved in an inappropriate manner towards her, and professed that he had feelings for her and rubbed her back when they met for dinner in early December of 2017, are implausible given that Ms. Kelly would not have stood for this and would have put an end to their business relationship right then and there. He also suggests that the extent of Mr. Baril’s and Ms. Kelly’s overt dislike for each other (that both Mr. Mercier and Dr. White were witness to at the CUTA conference in early November 2017) adds another layer of implausibility to these accusations.

[77] Mr. Baril is asking the court to conclude that he would never make the types of comments that Ms. Kelly accused him of. He has drawn in Mr. Mercier as a character witness on this point. He suggests that these accusations were untrue and describes them as “the weapon de jour”. Mr. Baril argues that even though these accusations were not pursued by Ms. Kelly, they should cast doubt on Ms. Kelly’s credibility.

[78] When they were asked about this during cross-examination, both Ms. Kelly and Dr. White provided examples of what they considered to be inappropriate behaviour or comments on the part of Mr. Baril towards Ms. Kelly. Dr. White was cross-examined by Mr. Baril about a specific conversation that they had on this very subject and Dr. White stood firm in his testimony that he had raised with Mr. Baril on a number of occasions that Mr. Baril needed to avoid making comments to Ms. Kelly about her appearance.

[79] Although Ms. Kelly and Dr. White stand behind their accounts of these interactions, ASI considers these allegations to be irrelevant to the determination of the issues raised by the plaintiff’s claims. I agree. They have no bearing on the issues I must decide. I also do not consider the differing accounts of these personal interactions between Mr. Baril and Ms. Kelly to detract from Ms. Kelly’s credibility. Mr. Baril’s persistent statements that he would never behave inappropriately towards a woman, which Dr. White and Ms. Kelly contradicted when pressed by him, and his highlighting of these interactions and his behaviour towards Ms. Kelly, if anything, detracts from his own credibility.

Conclusion on Credibility

[80] On balance, and for the reasons outlined above, I find Ms. Kelly and Dr. White to be credible and prefer their testimony over Mr. Baril’s where it conflicts.

The Issues to be Decided in this Action

[81] The following issues were identified in my first decision for determination at this trial:

a. Was there any agreement reached between the parties beyond the Initial Agreement/commission-fee arrangement?

b. If there was a further agreement(s), what were the terms and were they breached?

c. Did ASI’s statements about its desires or intentions regarding a long-term business arrangement with CIS (beyond the commission-fee arrangements) amount to a representation that it was ASI’s intention to enter into such an agreement?

d. Was ASI negligent or did it intentionally mislead CIS by its statements about the prospect of a long-term business arrangement so as to induce CIS to introduce ASI to prospective clients in the Sectors and/or to promote ASI’s business to the detriment of CIS’s business?

e. Did CIS rely upon any such representation made by ASI by:

i. introducing ASI to business contacts and market participants in the Sectors? and/or

ii. Promoting ASI’s business to the detriment of CIS’s business?

f. Did CIS lose any business or suffer any other damages as a result of its reliance on any representation made to it by ASI?

g. Did ASI owe a duty of good faith to CIS?

h. If such a duty was owed, did ASI breach its duty of good faith by:

i. ASI leading CIS to believe that it intended to enter into a long-term business relationship when it did not have any intention of doing so?

ii. ASI negotiating a business relationship with a competitor of CIS?

iii. The manner in which it treated CIS during and upon the termination of their relationship?

iv. Although not part of the original list of issues, CIS would also like the court to consider whether such a duty was breached “since” the termination of their relationship as well?

i. Did CIS lose any business opportunities of value as a result of any breaches and/or wrongful acts of ASI?

j. Was ASI unjustly enriched?

k. If ASI is found to be liable with respect to any of the afore-mentioned causes of action, is CIS entitled to an accounting of all revenue earned by ASI, its successors and assigns, from clients in the Sectors, such accounting to be conducted by an independent third party upon reviewing all contracts entered into by ASI from the effective date of any further agreement or the date of termination of the relationship (February 14, 2018) to a date that is ninety (90) days plus five (5) years from the date of such agreement or date of termination and all related financial records and books in its possession or under its control?

l. If ASI is found to have breached any agreement or duty of good faith, or to have made any misrepresentation, did CIS suffer any damages as a result and what is the appropriate measure of CIS’s damages?

m. Did CIS lose any business opportunities of value and/or was ASI unjustly enriched as a result of any breaches or wrongful acts of ASI?

[82] At the summary judgment motion, CIS had not committed to a theory of damages. Possible theories identified included the value of the performance of the contract if proven, reliance damages and/or the value of the business that CIS lost to ASI as a result of CIS’s introduction and promotion of ASI to CIS’s contacts and clients, quantum meruit for the value of the work that CIS did to develop business and promote ASI to CIS’s clients and/or the value of the goodwill that CIS says its backing gave to ASI within the various Sectors. The possibility of a claim for unjust enrichment for business expenses incurred by CIS on behalf of ASI was also raised.

[83] After the summary judgment motion, it was agreed by the parties, and accepted by the court in a subsequent endorsement, that the measure and quantum of CIS’s damages, if any, arising from any of the alleged causes of action would be bifurcated and decided at a later date, if liability is established by CIS. Thus, no determination is sought by the parties on issues (l) and (m), or the particulars of issues (f), (i) and (j).

Analysis of the Plaintiff’s Claims

i) Claims for Breach of Contract (issues a) and b))

[84] Although there is some controversy in the evidence on both sides about the precise terms of the Initial Agreement/commission-fee arrangement, there is no dispute that all of the invoices remitted by CIS to ASI have now been paid. No issue remains to be decided in this regard.

[85] The plaintiff’s contract claim depends upon the proof of an agreement based on opposing evidence of Ms. Kelly and Dr. White on the one hand, and Mr. Baril on the other, about what was discussed and/or agreed to at the November 16, 2017 meeting, which is when CIS says the Strategic Alliance Agreement was made that Mr. Baril purported to document in his February 8, 2018 email. This is the contract that CIS relies upon and alleges was breached in support of the claims for breach of contract that it is making in this action.

[86] Both parties, for different purposes, have urged the court not to rely on select statements from testimony or email correspondence without evaluating the full factual matrix of the alleged agreements and having an opportunity to assess the credibility of what the witnesses on each side are saying about both the existence and/or terms of agreements beyond the Initial Agreement/commission-fee arrangement. I agree that the competing versions of events can and should be considered in light of the contemporaneous emails and the conduct of the parties (the factual matrix).

[87] CIS relies heavily on Ms. Kelly’s testimony during cross-examination, that Mr. Baril seemed agreeable to what ASI was prepared to offer to him at the November 16, 2017 meeting and that, when they left, they said “let’s put it down on paper.” CIS argues that this is an “admission” that the Strategic Alliance that Mr. Baril later purported to document was agreed to and that all that was left to do was put it down on paper. However, this was not the full extent of the testimony and cannot be considered in isolation. Ms. Kelly further testified that she left the meeting that day expecting to document the points that had been discussed and to modify the points, as necessary, so as to try to finalize an MOU. Dr. White also testified that he did not believe an agreement had been reached on November 16, 2017 because it had been left with Mr. Baril to decide whether he was prepared to work within this framework, and if so, to propose some commission and revenue targets so that those could then be negotiated and agreed to.

[88] Mr. Baril’s own emails of December 5, 2017 and January 11, 2018 are inconsistent with CIS’s position that an agreement was reached on November 16, 2017. They are consistent with the testimony of Ms. Kelly and Dr. White that the parties discussed terms that might form the basis of a contractual framework. That contractual framework was rejected by Mr. Baril in his December 5, 2017 email. Nor did CIS accept or confirm the deal terms discussed on January 10, 2018 and outlined in Ms. Kelly’s email of January 11, 2018.

[89] In this case, the parties were apart on the most fundamental aspect of the business model for their relationship, namely whether Mr. Baril was to be a consultant and advisor or a commission fee-based contractor to ASI. Even the basic premise of which company would be retained by the client and hire the other company was not settled. The closest they came to an agreement was ASI’s proposal on November 16, 2017 for Mr. Baril to agree to set commissions and sales targets, but that model never sat well with Mr. Baril and he never provided them with his proposed percentages and targets, which would have been essential terms of any such arrangement. Instead, he continued to try to move ASI to his preferred business model that would position him as a consultant with a stake in the company.

[90] Where, as in this case, the terms of the business relationship are manifestly essential to the formation of a binding contract, “ [i]f no agreement in respect to essential terms has been reached or the terms have not been agreed to with reasonable certainty, it can only be concluded that such terms were to be agreed upon at a later date and until that time there would be no completed agreement”: Bawitko Investments Ltd. v. Kernels Popcorn Ltd., 79 D.L.R. (4th) 97 (Ont. C.A.), at p. 105.

[91] The Court of Appeal for Ontario has considered many instances of oral contracts and the requirements for proving them. While the absence of a written agreement is not fatal, for the court to find an oral agreement, the terms of that agreement must be sufficiently clear and identifiable to establish an agreement. An agreement must be found based on manifested intentions, not subjective understandings. The uncertainty introduced by conflicting documents and emails going back and forth has been upheld by the Court of Appeal as sufficient grounds for concluding that no binding oral agreement was established, even if the parties were working on an ad hoc basis from contract to contract: see Cana International Distributing Inc. v. Standard Innovation Corporation, 2018 ONCA 145, at paras. 18-19.

[92] Having considered the testimony of the parties and the contemporaneous emails and factual matrix of events, I find that there was no meeting of the minds on the essential terms of any long-term business agreement between CIS and ASI. Neither the written communications, nor the conduct of the parties following any of the September 12, November 16, 2017 or January 10, 2018 meetings are consistent with the agreements that Mr. Baril testified to regarding equity sharing or other business terms. I have earlier found that, where their testimony conflicts, I prefer the evidence of Ms. Kelly and Dr. White over that of Mr. Baril.

[93] Mr. Baril’s February 8, 2018 attempt to document an earlier agreement is not itself evidence of the agreement having been reached when considered in light of the intervening events and communications.

[94] CIS has not met its burden of proving, on a balance of probabilities, that there was a binding agreement between CIS and ASI governing the business relationship between the parties. Therefore, CIS’s claims for breach of contract fail.

ii) Claims for Misrepresentation (issues c), d), e) and f))

[95] To make out a claim in negligent misrepresentation, CIS must establish the following five essential elements of this cause of action (see Queen v. Cognos Inc., [1993] 1 S.C.R. 87):

a. there must be a duty of care based on a "special relationship" between the representor and the representee;

b. the representation in question must be untrue, inaccurate, or misleading;

c. the representor must have acted negligently in making said misrepresentation;

d. the representee must have relied, in a reasonable manner, on said negligent misrepresentation; and

e. the reliance must have been detrimental to the representee in the sense that damages resulted.

[96] The court does not need to address each of the required elements of this cause of action, because CIS has not established the second and fifth essential elements for a claim for misrepresentation in that it has failed to establish that ASI made any untrue, inaccurate or misleading representation and has failed to establish any detrimental reliance in the sense of any resulting damages.

The Alleged Misrepresentation and Detrimental Reliance

[97] CIS claims that, commencing in November 2016 and continuing until ASI terminated the relationship in January/February 2018, ASI represented that it was willing to enter into a long-term business arrangement involving revenue sharing within the Sectors, in exchange for CIS introducing ASI to its clients and business contacts within the Sectors and actively promoting the AI Technology and generating business for ASI.

[98] Specifically, CIS claims to have introduced ASI to its clients and business contacts in the transit industry and municipal government sector among other Sectors. CIS also claims to have promoted the AI Technology as the way of the future, to replace the traditional analytics that CIS had employed successfully for many years, in order to develop business for ASI based on the promise of a long-term business association that would also benefit CIS.

[99] As further evidence of its detrimental reliance, CIS points to the fact that Mr. Baril used ASI business cards and an ASI email address in his dealings with customers, after the September 12, 2017 meeting. CIS argues that it gave up its brand and promoted ASI in reliance upon ASI’s representations of its intention to enter into a long-term business relationship (agreement) with CIS. CIS claims that, since its association with ASI ended in February of 2018, it has not been able to revert back to the business of more traditional polling and analytics that it had done for clients before its association with ASI because, during their association, clients were convinced of the benefits of the AI Technology that ASI has.

ASI Made no Misrepresentation

[100] A misrepresentation, to be actionable, must be untrue, inaccurate or misleading. CIS argues that ASI represented that it was willing to enter into a long-term business arrangement involving revenue sharing within the Sectors and that this was untrue, inaccurate or misleading.

[101] CIS points to a series of emails on June 9, 2017 in which ASI acknowledges the introductions that CIS made for ASI and holds out the prospect of a longer-term agreement (even one that might include equity sharing). In Ms. Kelly’s words, what she said was: “We like working with you. I’m sure we will come to a fair agreement.” Having a positive outlook and responding in an optimistic manner to an inquiry from someone who is looking for reassurance that they both wanted to try to work together at that time is not a misrepresentation just because they later were not able to come to terms on what they both wanted.

[102] ASI maintains that its willingness to try to reach a long-term agreement for revenue sharing (which Ms. Kelly equated with commissions) was genuine and true, and was never misrepresented to CIS. There was no commitment from ASI to a revenue sharing or even an umbrella commission agreement, but rather an indication that they were open to discussing it, which they did, over the course of a number of months between September 2017 and February 2018. That the parties were not able to reach an agreement is not a basis for finding or inferring that statements by ASI representatives in meetings and emails that they were willing to try to reach an agreement were untrue, inaccurate or misleading.

[103] The main evidence that CIS relies upon is the evidence of Mr. Mercier regarding a telephone conversation he had with Dr. White in which Mr. Mercier says Dr. White confirmed that ASI had planned to cut CIS out of their business dealings back in early November of 2017, after Mr. Baril had introduced ASI to CUTA and its members. Earlier in these reasons I have made findings about this telephone conversation and concluded that Dr. White did not say this and that Mr. Mercier misunderstood or misconstrued what he said.

[104] What Dr. White and Ms. Kelly did say in their testimony was that they were considering ending the relationship with CIS at the time of the CUTA conference, but they agreed to meet on November 16, 2017 and were prepared to try to work out a long-term business arrangement with CIS on the terms discussed at that meeting, and on the terms later discussed at their January 10, 2018 meeting, but that no agreement was reached. I accept the testimony of Dr. White and Ms. Kelly in this regard.

[105] CIS has not established, on a balance of probabilities, that ASI mispresented its intentions with respect to its willingness to try to negotiate a long-term business relationship with CIS.

No Detrimental Reliance

[106] Mr. Baril submitted in his closing argument that clients will not talk to him and he blames ASI for this. He is arguing, in essence, that the court should infer that because he promoted ASI’s AI Technology and newer methods to his clients, they are no longer willing to hire CIS to do the work that he had done previously for them using traditional methods. This inference is inconsistent with the fact that CIS received, after February 15, 2018, at least two contracts to do work using the traditional methods. Further, Mr. Mercier (who is a former client of both ASI and CIS) testified that Quebec RTC will not do business with either ASI or CIS because of the litigation and having been drawn into it. He explained that he felt compelled to participate in this proceeding, in part, because of Mr. Baril’s surreptitious recording of their conversation that became evidence in this proceeding.

[107] There is no direct evidence, nor a sufficient basis from which the court can infer, that CIS has suffered any loss of business as a result of it having promoted ASI’s AI Technology for the period during which the two companies were working together and trying to reach an agreement on a longer-term business arrangement.

[108] Furthermore, the mere fact that ASI may be doing business with two parties (Mastercard and Hill & Knowlton) who CIS also did business with in the past is not evidence of business lost by CIS. The subsequent work done by ASI for Mastercard was demonstrated to have come from another source that is unrelated to Mr. Baril and ASI has demonstrated a prior relationship with Hill & Knowlton as the source of the work that was subsequently done by it for that agency.

[109] CIS has not established, on a balance of probabilities, an evidentiary foundation for its assertion that it has suffered any loss of business or damages as a result of any reliance it placed on the prospect of a long-term business association with ASI.

iii) Claims for Breach of the Duty of Good Faith (issues g), h), and i))

[110] A significant aspect of the alleged breach of the duty of good faith overlaps with the misrepresentation claim, in that it is alleged that ASI acted in bad faith by holding out the prospect of a long-term agreement with CIS that ASI never intended to enter into.

[111] The organizing principle of good faith in dealings between contracting parties that the Supreme Court of Canada described in the case of Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494, at para. 65, has been described as a duty of honest performance, not to “lie or otherwise mislead…about matters directly linked to the performance of [a] contract” or in the exercise of a contractual right of termination: see also C.M. Callow Inc. v. Zollinger, 2020 SCC 45, at paras. 37 and 129. In the latter case, the defendant’s active deception about its intention to terminate the contract, combined with its acceptance of “freebie” work that was performed by the plaintiff with the intention or hope of a renewal or new contract, was found to constitute a breach of this duty.

[112] These cases are about the performance of obligations or the exercise of rights or discretions under a contract, and the duty of good faith in that context to have appropriate regard to the legitimate contractual interests of the other contracting partner.

[113] CIS relies on the more recent C.M. Callow decision of the Supreme Court of Canada, in which one contracting party actively misled another about their intention to renew the contract under which the parties were operating. Although CIS would like to rely on this case by analogy to ASI’s actions in allegedly having misled CIS about ASI’s intention to enter into a contract, this case is distinguishable and inapplicable for, among other reasons, because:

a. the parties were not operating under a contract in this case, as I have found that no agreement was reached aside from the ad hoc commission-fee arrangements for specific projects; thus the “organizing principle” of good faith dealings between contracting parties that the Supreme Court is dealing with in the Bhasin and C.M. Callow cases arguably does not arise at all in this case; and, even if it does,

b. it has not been established that ASI did not intend to enter into a contract or business arrangement with CIS. There is no basis for a finding that ASI actively lied or misled CIS about its intentions in this regard. Rather, it has been established that ASI and CIS tried, but were unable, to reach an agreement that was satisfactory to both sides.

Contractual Framework

[114] The parties were operating under an ad hoc Initial Agreement/commission-fee arrangement while they tried, unsuccessfully, to come to a long-term and broader scope agreement. The alleged lie or misrepresentation regarding ASI’s intention to enter into any long-term agreement is not linked to the performance of a contract or the exercise of a contractual right of termination. It is, in essence, an allegation of negotiating in bad faith. I noted in my first decision that the question of whether ASI breached its duty of good faith and honesty in contractual performance could arguably arise in the context of the lesser “agreement to enter into an agreement”. It is also possible that this duty might arise in a case such as this where the parties had an existing, albeit ad hoc, agreement and the dispute is about whether they agreed to expand or build upon it.

[115] The plaintiff was self-represented and this is a nuanced legal point that would require submissions and argument for me to rule upon it. It was not argued at trial. In the absence of fulsome submissions about whether the organizing principle of good faith could arise in this context, I am not prepared to decide this case on the basis strictly of the inapplicability of this principle. It does not make a difference to the outcome of this case because I have concluded that, on the facts, there was no breach by ASI of any duty of good faith.

No Breach of the Duty of Good Faith

[116] I have made findings earlier in these reasons about the admissions that Dr. White is said to have “let slip” to Mr. Mercier in their telephone conversation of February 18, 2018. This was a second-hand account that remains subject to Mr. Mercier’s interpretation of what was said. He was upset with ASI about the loss of his project manager and friend Dan Baril on this project. Having found that the alleged misrepresentations in this case have not been proven by the plaintiff, they cannot ground a claim that ASI actively lied to or misled CIS.

[117] CIS makes other allegations that ASI was acting in bad faith, or not acting in good faith, throughout their business dealings, such as:

a. Negotiating with a competitor, Sean Rathwell of Dillon Consulting and refusing to pay CIS until clients paid, and even after clients paid ASI;

b. Refusing to document agreement(s) in principle that were reached at meetings in September and November 2017 [this is subsumed by the breach of contract claims that I have already ruled have not been established on the record, having found that no oral agreements were reached at these meetings];

c. Rejecting CIS’s August 5, 2017 business plan and then adopting it for ASI’s benefit with TVO [this is subsumed by the unjust enrichment claim that, as discussed below, has not been established on the record];

d. The manner in which ASI announced it was terminating their relationship, by telling clients before telling CIS that it was doing so; and

e. After the business relationship ended, by making freedom of information requests alleged to have been damaging to the reputation of Mr. Baril and CIS, and communicating with Mr. Mercier’s employer.

[118] These alleged instances of “bad faith” may not fall within the organizing principle of good faith in contractual dealings, but are also not established on the record. Either way, they do not support CIS’s claims.

Dealings with a CIS Competitor

[119] CIS contends that, before terminating the business relationship between ASI and CIS, ASI began secretly working with one of CIS’s competitors, Dillon Consulting Limited, on a new business arrangement to replace CIS.

[120] ASI denies that it had entered into any business relationship with Dillon Consulting, although Ms. Kelly admits that she had coffee with the principal of that consulting firm in November of 2017. Mr. Rathwell was on the CUTA board and attended the CUTA meeting at which he met Ms. Kelly. Mr. Rathwell suggested they meet for coffee. After their initial meeting, Ms. Kelly contacted Mr. Rathwell for a referral at Halifax transit before a trip that she was taking to Halifax. She only did this after Mr. Baril was asked, and was unable, to provide her with a contact there.

[121] Mr. Mercier told Mr. Baril that he had heard from Mr. Rathwell that ASI had been talking to him starting at around the time of the CUTA conference about working with ASI in the role that CIS had been playing. This is inadmissible hearsay evidence. Mr. Rathwell was not called as a witness. Ms. Kelly testified that she had limited dealings with Mr. Rathwell after they met at the CUTA conference.

[122] It has not been established that ASI did any business with Dillon Consulting or Mr. Rathwell. In any event, ASI did not have an exclusive deal with CIS that prevented it from dealing with CIS’s competitors. Exclusivity in the transit Sector, and what CIS would be expected to do to receive that, was one of the very issues that was the subject of Ms. Kelly’s January 11, 2018 email.

[123] The plaintiff has not established any bad faith (or breach of the duty of good faith) as a result of the dealings between ASI and Mr. Rathwell or his company.

The Manner of Termination of the Relationship Between ASI and CIS

[124] CIS also complains about the manner in which the business relationship between ASI and CIS was terminated on February 14, 2018, and in particular that CIS was not told directly but rather learned of ASI’s decision from a client (Mr. Mercier, who in turn had learned from someone else on the CUTA board).

[125] The organizing principle of good faith in contractual performance extends to the exercise of a contractual right of termination but there is the threshold issue in this case of whether it would extend to the termination of negotiations towards a contractual relationship. Leaving that aside, even if clients were made aware of the end of the business relationship between ASI and CIS before there was a formal and final confirmation to CIS, telling a client before telling the contracting party of the termination of a contract, on its own, does not strike me as rising to the level of misleading or dishonest conduct that this principle is directed to, even if it is bad form. In any event, the context and sequence of events in this case make it clear that CIS had notice long before February 14, 2018 that this was coming and could not have been taken by surprise that the business association between CIS and ASI was over.

[126] There was some confusion in Mr. Mercier’s testimony about the dates of his discussions with the other CUTA board member and Mr. Baril. There was no evidence about how that other CUTA board member learned of the parting of ways between ASI and CIS, or that it came from ASI.

[127] Even if the uncertainty in the proof of the sequence of events could be overcome, the plaintiff has not established any bad faith (or breach of the duty of good faith) based on the manner in which the business relationship between ASI and CIS was terminated.

[128] The January 10, 2018 meeting is an important factor in the analysis of this issue. There is no dispute that Dr. White told Mr. Baril at the first meeting they had on that day that ASI no longer wanted to do business with CIS. That was direct and to the point. Unlike in the C.M. Callow case, Mr. Baril was not led to believe that everything was fine. The history of dealings between the parties dating back to at least November of 2017 made it clear that they were not seeing eye to eye on a number of aspects of their relationship. ASI made it clear to Mr. Baril what type of relationship they were working towards and he continually tried to move them towards a different model.

[129] Despite the blow-out at the CUTA meeting in early November 2017, ASI agreed to meet with Mr. Baril. It seemed that some progress was made at their November 16, 2017 meeting. Dr. White testified that the prospect of a business relationship between CIS and ASI had been kept alive by promises made by Mr. Baril that he did not deliver on. He would bring prospective clients and contracts to the table with grandiose projections about the amount of work they would generate, but that work did not materialize. Examples can be found in the cases of Statistics Canada and TVO, that came to a head in December of 2017 and January of 2018.

[130] After unproductive meetings in December of 2017 and concerns having been raised about the handling of the City of Ottawa project that Mr. Baril was managing, ASI had had enough and told Mr. Baril as much on January 10, 2018. ASI was up front with him about their decision to terminate the business relationship on January 10, 2018. But he convinced them to give him another chance and ASI invited Mr. Baril to provide his proposed percentages and targets.

[131] Ms. Kelly’s January 11, 2018 email clearly set out a road map of ASI’s expectations regarding the business terms that would need to be formulated into a contract for them to continue. Mr. Baril delivered a proposed “Strategic Alliance” on February 8, 2018 that patently did not meet those expectations and reverted back to a previous structure that the parties had discussed. That, combined with disappointing news from Statistics Canada, were the final straw.

[132] For reasons indicated earlier in these reasons, I accept the testimony of Ms. Kelly and Dr. White that they were genuinely still prepared to try to reach an agreement with Mr. Baril as of January 11, 2018 and that they were justified in their frustration when his February 8, 2018 draft did not accord with their expectations. Their internal agenda of putting Mr. Baril’s feet to the fire to incentivize him to focus on getting work and to show progress towards a $1 million revenue target for the first quarter, even if he was not expected to achieve it, does not amount to a lack of good faith or lead to the conclusion that they had no intention of entering into an agreement with him. It was open to Mr. Baril to negotiate the target, but not to renegotiate the entire contractual framework that Ms. Kelly had laid out in her January 11, 2018 email, which is what he tried to do.

[133] ASI had no obligation to continue to try to negotiate with Mr. Baril. ASI was entitled to put an end to the prospect of a continuing business relationship with CIS and it did so on or about February 14, 2018. Mr. Baril was on notice of this before it happened. He was anticipating that this could happen. He discussed his view of what should occur in that eventuality with Dr. White and confirmed it in an email on January 12, 2018. He later told Mr. Mercer that he had, in the meantime, copied his files from the ASI server in anticipation of them not reaching an agreement and parting ways.

[134] The end of their business relationship may have come as a surprise to outsiders and clients, such as Mr. Mercier, but it could not have been a surprise to any of the principals of ASI or CIS. How and when precisely it was communicated to clients and to Mr. Baril that ASI was no longer prepared to continue to do business with CIS, and the precise sequencing of those discussions, remains imprecise on the evidence. It is not a basis for a finding of a lack of good faith, or bad faith, on the part of ASI, when considered in the context of the history of the relationship between the parties.

Post Termination Events

[135] Post-termination events were not identified among the issues to be decided at trial in my first decision on the summary judgment motion. CIS asked that they be considered. In particular, after their business relationship ended, Mr. Baril accused the ASI representatives of embarking on a targeted campaign to try to destroy him, including by making requests for information about bribery and fraud from public officials associated with CIS clients that Mr. Baril perceived as implicating him in wrongdoing. CIS also complains about communications with public officials on the board of Mr. Mercier’s company RTC that are alleged to have been intended to intimidate or dissuade Mr. Mercier from testifying.

[136] These are not matters that I would consider to fall within the organizing principle of good faith in contractual performance. They occurred after the termination. They might, in another circumstance, give rise to an entirely different cause of action, but that was not pleaded in this case. I understand that a pleading amendment directed to this issue was sought by the plaintiff, and denied.

[137] Mr. Baril’s stated wishes in his January 12, 2018 email about how the parties would conduct themselves upon their parting of ways are just that, his wishes. In any event, there is no evidence of ASI having conducted itself in a manner contrary to what Mr. Baril indicated, only his speculation that they damaged his reputation in the eyes of his former clients.

[138] There is no evidence from any former or prospective client of CIS that the reputation of Mr. Baril or CIS has been tarnished in the eyes of any third party by anything that ASI or its representatives did after they stopped doing business with CIS. Even Mr. Mercier, whose organization Quebec RTC was one of the recipients of an information request made by ASI’s counsel in respect of its dealings with CIS, did not testify that this diminished Mr. Baril or CIS’s reputation in his eyes or the eyes of RTC.

Alleged Breaches of Fiduciary Obligations

[139] CIS made various submissions at trial, and cross-examined ASI’s representatives, about the fiduciary obligations that officers and directors owe to the companies that they represent. Although there appeared to be some suggestion that they were in a fiduciary relationship with the plaintiff, no foundation for that was ever established.

[140] Mr. Baril also complained about what he described as unethical and unprofessional acts, such as:

a. Ms. Kelly not showing up to a pre-arranged meeting and not substantiating the reason for so doing;

b. Ms. Kelly insisting on up front advances from CIS on payments from clients it was responsible for, but not paying CIS in a timely manner and disputing invoices and previous payments that CIS had provided; and

c. suggesting unrealistic revenue targets for Mr. Baril to meet in order to prove himself.

[141] Although these allegations of breaches of fiduciary duty and disparagement are raised in the context of the cause of action of a breach of the duty of good faith dealings in contractual relations, they are not legally or factually tethered to that cause of action. Nor have they been pleaded or established factually or legally as separate causes of action on the record before the court in this case.

Conclusion on Breach of the Duty of Good Faith

[142] The plaintiff has not established a breach of any duty of good faith owed by ASI to CIS. This cause of action fails.

iv) Claim for Unjust Enrichment (issue j))

[143] The Supreme Court of Canada put it succinctly in the case of Garland v. Consumers Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, at para. 30:

As a general matter, the test for unjust enrichment is well established in Canada. The cause of action has three elements: (1) an enrichment of the defendant; (2) a corresponding deprivation of the plaintiff; and (3) an absence of juristic reason for the enrichment.

[144] None of these requirements have been established by the plaintiff. Its failure to meet any one of them is fatal to this cause of action.

[145] CIS relies on Ms. Kelly’s admission during cross-examination that introductions were made and that ASI has entered into contracts with some of the Sector participants who CIS introduced it to. This is evidence of nothing more than the mutual benefits that the parties enjoyed from the projects that proceeded, and for which ASI was paid and, in turn, paid a commission to CIS. The introductions that CIS made for ASI were in furtherance of the Initial Agreement/commission-fee arrangement. Some of these introductions resulted in contracts for ASI and some did not. CIS was compensated for the ones that did. Their ad hoc Initial Agreement/commission-fee arrangement is the juristic reason for any benefit that ASI obtained from these arrangements.

[146] It was argued by the plaintiff that it is “abundantly clear” that ASI has been enriched by CIS’s actions. However, CIS has not identified any revenues, aside from those from projects that CIS was paid a commission on, that were received by ASI as a result of the work or goodwill of CIS. As indicated earlier in these reasons, the subsequent work done by ASI for Mastercard was demonstrated to have come from another source that is unrelated to Mr. Baril and ASI has demonstrated a prior relationship with Hill & Knowlton as the source of the work that was subsequently done by it for that agency. These were the only two examples given. [4] There is not a sufficient factual foundation from which to draw an inference or make a finding of enrichment of ASI on the record. Without any demonstrated benefit to ASI, there has been no deprivation to the plaintiff.

[147] The plaintiff also gave the example of a benefit obtained by ASI through having adopted Mr. Baril’s August 5, 2017 business plan to use election polling and predictions as a means of getting publicity for future business. This business plan is said to have been rejected by Ms. Kelly but then adopted by her when she appeared with Steve Paikin on TVO during the 2018 Ontario election campaign. This was not, however, shown to have led to any business for ASI, and rather cost it money.

[148] The evidence is clear from both Mr. Baril and Ms. Kelly that Ms. Kelly agreed, at Mr. Baril’s urging, to meet with Mr. Paikin and to eventually do the work on the Ontario election, under the impression that there was a budget at TVO of $75,000.00-100,000.00 to cover costs. This turned out not to be the case and the uncontradicted evidence of Ms. Kelly is that ASI spent money to do this work and there is no evidence of any business or revenues generated as a result of it. The only revenues that have been linked to any work done by ASI in relation to the Ontario election were through an independent contract that ASI obtained through Hill & Knowlton.

[149] The plaintiff has not established any unjust enrichment on the part of ASI at CIS’s expense that was without juristic reason. This cause of action fails.

v) Claim for an Accounting (issue k))

[150] CIS requests that ASI first provide an accounting of its business so that CIS can determine which of ASI’s clients Mr. Baril made introductions to, and the value of that business, which is one way in which it would be entitled to measure its damages. At this time two clients have been identified by CIS, Mastercard and Hill & Knowlton. Many names of ASI’s clients with whom it has done business since January 2017 have been withheld due to non-disclosure agreements and concerns about confidentiality, CIS says it requires a proper accounting and audit before it can determine its damages.

[151] In light of my findings on liability and that CIS has failed to meet its onus to establish liability on the part of ASI in respect of any of the causes of action alleged, there is no basis on which to order the requested accounting and this request is dismissed.

vi) The Damages Issues (issues l) and m) and the particulars of f), i) and j))

[152] As indicated earlier in these reasons, the parties agreed after I released my decision on the summary judgment motion to sever the issue of damages. This was in part because of the plaintiff’s request that, if liability was established, it would be asking for an accounting and production of supporting documents before deciding which theory of damages to pursue.

[153] In light of my findings on liability and that CIS has failed to meet its onus to establish liability on the part of ASI in respect of any of the causes of action alleged, there is no need for any accounting or for any future determination of damages to be made.

Final Disposition, Costs and Implementation of this Order

[154] For the foregoing reasons, the plaintiff’s action is dismissed, with costs. I have signed an order to this effect today. As the successful party, the defendant is entitled to some award of costs.

[155] In my decision on the summary judgment motion, having considered the submissions of the parties and the factors under Rule 57, I quantified and fixed the partial indemnity costs of that motion to be $40,000.00, inclusive of all fees, disbursements and taxes, and ordered them payable in the cause. That means that the defendant can claim those costs as the successful party in the cause, as well as any additional costs for other steps taken in the action that were not covered by its bill of costs for the summary judgment motion.

[156] It was reported to me after the conclusion of the trial that the parties have exchanged bills of costs dealing with the costs of any other steps in the action that were not part of the summary judgment motion (such as this trial), as I directed them to do. Those have not yet been provided to me. Now that the outcome of the trial is known, I encourage the parties to try to reach an agreement on the amount of costs that will be payable by the plaintiff to the defendant. If they are able to reach an agreement, they are to advise the court of such by March 19, 2021 by email to my assistant: linda.bunoza@ontario.ca

[157] If the parties are unable to reach agreement, I will allow for brief written cost submissions. The defendant’s cost submission (not to exceed 5 pages double spaced) together with the defendant’s bill of costs for the trial and the action (in respect of matters not covered by the cost submissions and award made on the summary judgment motion) and any relevant settlement offers, are to be delivered by no later than March 29, 2021. The plaintiff’s responding cost submission (not to exceed 5 pages double spaced) together with the plaintiff’s bill of costs for the trial and the action (in respect of matters not covered by the cost submissions and award made on the summary judgment motion) and any relevant settlement offers, are to be delivered by no later than April 9, 2021. I will allow for a brief written reply from the defendant not to exceed 2 pages double spaced to be delivered by no later than April 16, 2021.

[158] Notwithstanding Rule 59.05, this Judgment is effective from the date it is made and is enforceable without any need for entry and filing.

Kimmel J. Released: March 8, 2021

COURT FILE NO.: CV-18-595693 DATE: 20210308

CORE INSIGHT STRATEGIES INC. Plaintiff – and – ADVANCED SYMBOLICS (2015) INC. Defendant REASONS FOR DECISION – SUMMARY TRIAL

Released: March 8, 2021

[1] Mr. Baril is not a lawyer but undertook when leave was granted to him to do his best to represent the company’s interests because CIS could not afford a lawyer. The issues to be decided had already been identified by counsel and much of the evidence and argument already presented on the summary judgment motion. All of that formed part of the trial record and was supplemented by affidavits and oral testimony and submissions during the trial. The trial was adjourned from December 7, 2020 to January 25, 2021 to accommodate Mr. Baril and afford him additional time to prepare.

[2] The plaintiff suggests that Ms. Kelly lied about knowing Steve Paikin prior to Mr. Baril introducing them. Mr. Paikin did not testify and there is no evidence to contradict what Ms. Kelly said on this topic.

[3] Mr. Baril suggested to Ms. Kelly on cross-examination that she had another client paying for her data collection for the Ontario election under an agreement with Hill &Knowlton but Ms. Kelly did not agree that work for that client was used for the polling reported by her on TVO, or that the fees paid by that client covered ASI’s costs for the work done on the Ontario election.

[4] ASI has produced redacted contracts for many of its clients, because of non-disclosure agreements. One of the remedies that CIS sought if liability was established was a full accounting. While CIS did not have, at this stage of the proceeding, full access to ASI’s complete client list, and could not be expected to have knowledge of all clients with whom ASI did business after February 14, 2018, to establish liability, CIS still has a threshold onus to establish some benefit that ASI gained.