COURT FILE NO.: CV-17-11727-00CL
DATE: 20210414
ONTARIO
SUPERIOR COURT OF JUSTICE
(Commercial List)
BETWEEN:
SS&C TECHNOLOGIES CANADA CORP.
Applicant
– and –
THE BANK OF NEW YORK MELLON CORPORATION and CIBC MELLON GLOBAL SECURITIES SERVICES COMPANY
Respondents
Chris Paliare, Ren Bucholz, Glynnis Haw and Catherine Fan, for the Applicant
Eli Mogil and Erin Chesney for the Respondents
HEARD: November 30, December 3-4, 2020
koehnen j.
Overview
[1] The applicant claims damages of $889,752,087 arising out of the alleged breach of two Data Services Agreements pursuant to which the applicant provided the respondents with market pricing for securities of various types.
[2] The applicant submits that each agreement restricted use of the data to the entity signing the agreement but that the respondent Bank of New York Mellon Corporation (“BNY”) breached its agreement by sharing the data widely within a larger corporate group. The applicant submits that the respondent CIBC Mellon Global Securities Services Company (“CIBC Mellon”) breached its agreement by terminating the agreement and then obtaining for free from BNY, the data it formerly obtained from the applicant for a fee.
[3] The applicant calculates its damages by assuming that each of the entities with whom the respondents shared the data would have been required to enter into a separate data sharing agreement with the applicant and that the monthly fee for each of those entities would have been equal to the monthly fee that BNY paid during that particular month, assuming that the entity was in existence at the time.
[4] The total monthly fees calculated in this manner come to $150,420,564. The applicant then adds to that, a contractual rate of interest of 1.5% per month for late payments, compounded monthly, to arrive at damages of $889,752,087.
[5] In the alternative to interest of 1.5% per month, the applicant claims interest at the same rate the money would have earned had it been reinvested into the business to arrive at an alternative damages claim of $317,076,007.
[6] The respondents submit that they were entitled to share data within their corporate group because the BNY agreement was with “Mellon Trust” which was not a corporate entity but a brand name under which BNY and its predecessor operated its custodial businesses. By entering into an agreement with a brand name, the applicant intended that the data be shared by all entities that operated under the brand.
[7] I have concluded that the respondents did breach their agreements. The language of the agreements, the factual matrix and the conduct of the parties are all consistent with an understanding that the data was to be used by the entity named in the contract. In the case of “Mellon Trust”, that was Mellon Financial Corporation.
[8] I have struggled long and hard with the issue of damages and have concluded that I cannot come to a responsible conclusion on damages based on a paper record. I direct damages to the trial of an issue before me.
I. Factual Background
[9] The applicant, SS&C Technologies Canada Corp, is a financial services and technology company which, among other things, acquires data from upstream vendors and processes it into forms that asset managers and custodians can use to generate daily or monthly pricing data for their clients. SS&C makes this data available to financial institutions like the respondents through license agreements.
[10] In 1999, a predecessor to SS & C, Securities Valuation Company Inc. (“SVC”), entered into separate Data Services Agreements with “Mellon Trust” and with CIBC Mellon. In 2005 SS & C acquired SVC and thereby acquired the rights under the two Data Services Agreements. When referring to SVC in these reasons I am doing so for reasons of historical accuracy. As a practical matter, however, those references also include SS & C as its successor corporation.
[11] In 2007, Mellon Financial Corporation merged with Bank of New York to form the respondent Bank of New York Mellon Corporation (“BNY”).
[12] As noted, one of the agreements is with “Mellon Trust.” Mellon Trust is not a legal entity. This is a source of difficulty because BNY takes the position that Mellon Trust was the brand name under which Mellon Financial Corporation, and later BNY, operated its custodial business, as a result of which Mellon Financial Corporation and BNY were entitled to share the SS & C data with all of their subsidiaries and affiliates who operated a custodial business.
[13] The Respondent, CIBC Mellon is a Canadian joint venture formed in 1996 by Mellon Financial Corporation and CIBC.
[14] All parties are on the highly sophisticated end of the spectrum. All are, or are affiliates of, publicly traded companies. SS & C has over 22,000 employees worldwide. It is the world’s largest hedge fund and private equity administrator and the world’s largest mutual fund transfer agency. It has nearly US $45 trillion in managed assets. BNY is currently the world’s largest custodial bank with more than US $35 trillion under custody. In 2020 CIBC Mellon had just under $2 trillion of assets under administration.
II. Interpretation of the Contracts
[15] The respondents submit that the Mellon Trust agreement was a “line of business agreement” while the CIBC Mellon agreement was an “enterprise agreement”. According to the respondents, a line of business agreement applies to an entire line of business within a corporate family as opposed to a particular corporate entity. An enterprise agreement, on the other hand is limited to the particular corporate entity or entities referred to in the contract.
[16] SS & C’s affiant, Eric Rocks, drew a somewhat similar distinction in his affidavit of March 20, 2017 although his definitions were somewhat different. In paragraph 9 of that affidavit, he states that SS & C’s large customers “will have either multiple agreements with SS & C for each business line utilizing market data, or an enterprise agreement that explicitly defines the scope of use across multiple entities or business units.”
[17] Although BNY took the position that the Mellon Trust agreement was a line of business agreement while the CIBC Mellon agreement was an enterprise agreement, it could not point to any language in the agreements to support that distinction other than the fact that Mellon Trust was not a corporate entity as a result of which, BNY submits that its agreement must be a line of business agreement.
[18] While I accept the proposition that a vendor like SS & C might offer two or more forms of agreement to a customer, in the absence of any coherent identification of the distinguishing features between the two types of agreement, I do not find the distinction helpful in the interpretive exercise I face.
[19] BNY submits that courts should interpret agreements by looking to the words of the contract as informed by, but not overwhelmed by, the factual matrix in which the contract was made.[^1] If that analysis leads a court to believe that the contract is ambiguous, the court may look at the course of conduct of the parties for guidance. I adopt that approach below and look first to the terms of the agreement, then to the factual matrix and then to the conduct of the parties. In my view, each of those three elements demonstrates that the agreements were intended to benefit only the entity named in it and did not allow data sharing beyond the entity named in the agreement. In the case of the Mellon Trust agreement, that meant the custodial entities of Mellon Financial Corporation as they existed in 1999.
i. Language of the Agreement
[20] The face of the Mellon Trust Agreement suggests that it is intended to refer to a single legal entity.
[21] The Mellon Trust Agreement defines the parties on the first page in what would be referred to as the style of cause in a litigation document. The “style of cause” reads as follows:
BETWEEN:
MELLON TRUST
135 Santilli Highway
Everett, Mass.
USA 02149
(“Client”)
-and-
SECURITIES VALUATION COMPANY INC.
5245 Orbitor Drive
Mississauga, Ontario
L4W 4Y8
(“SVC”)
[22] Beyond referring to Mellon Trust as the “Client,” the agreement contains no further definition of who or what Mellon Trust is. The definition of Client in the Mellon Trust Agreement was never amended by the parties.
[23] Mellon Trust is identified as having a specific address. A brand cannot have an address, a legal entity can. Section 3.5 of the agreement provides for a right of termination if either party becomes insolvent. A brand cannot become insolvent, a legal entity can. Section 10.5 provides that the agreement cannot be assigned without the consent of the other party. A brand cannot assign an agreement, a legal entity can.
[24] As a starting point, given that the agreement deals with the sale of data, it is less likely that the owner of the data would allow a named purchaser to share the data with all other entities in a corporate group without some reference to that fact. The agreement contains no such reference. On the contrary, several clauses of the Mellon Trust Agreement provide that data is to be used only by the “Client” and may not be shared with anyone else. By way of example:
5.1 Client acknowledges and agrees not to furnish, or permit to be furnished, to any unauthorised person or corporation any information regarding Data, to the extent that it may reasonably be deemed that such information might compromise the rights of SVC to the confidentiality of the Data and of any programs, procedures and method of computation included in Data; Client agrees further to exercise reasonable care to ensure that such information is not disclosed to any unauthorised person or corporation.
6.1 Except as set out in Schedule A, Client acknowledges and agrees that the Data is intended exclusively for Client's own use.
6.2 Client agrees that it shall not, either during the currency of this Agreement and any renewal term thereof, or afterwards, redistribute, disclose, furnish, or resell the Data, or any part thereof, in any form, to any other person, firm or entity, except as expressly permitted by and in accordance with the terms of this Agreement […]
[25] Section 6.1 suggests that Schedule A may create an exception with respect to the limited use to which the Client can put the data. The relevant portion of Schedule A states:
- Notwithstanding section 6.1, SVC acknowledges and agrees that Client may distribute the Data by way of reports, electronically or in hard copy to its customers.
[26] These provisions make good sense given that SS & C is in the business of selling data. One of its primary objectives would be to safeguard its data and control its further distribution because any further distribution would result in the cannibalization of its business. Any sophisticated party buying data would be expected to know this or at least be alive to the issue.
[27] The only reference to permitted sharing in the Mellon Trust Agreement is found in section 6 of Schedule A which provides that “the Client may distribute the data by way of reports, electronically or in hard copy to its customers.”
[28] BNY submits that the reference to customers denotes other companies within the Mellon Trust brand. In my view, the word customer more logically refers to the arm’s length end user to whom Mellon Trust is providing the custodial services, such as a mutual fund or pension fund. It is the end user who needs to know the price of a particular security in its portfolio. That price comes from SS & C. Section 6 of Schedule A allows the price to be communicated to that end user. If the word “customer” in Schedule A were meant to refer to another legal entity within the Mellon Trust brand, then the right to transmit data would end there and the downstream Mellon entity would have no right to pass the data on to the end user.
[29] There is no evidence to suggest that the respondents ever communicated to SS & C or its predecessor that it viewed the reference to Mellon Trust as including all present and future affiliates and subsidiaries in the Mellon/BNY family until after the breaches arose.
[30] The wording of the CIBC Mellon agreement is substantially similar to that of the Mellon Trust provisions quoted above. Any differences relate more to the location of particular wording within the agreement than to substantive changes in the nature of the obligations.
ii. The Factual Matrix
[31] BNY submits that the creation and use of the Mellon Trust brand in the 1990s was well-known within the financial community.
[32] To support this submission, the respondents point to extracts from the 1993 Annual Report of Mellon Financial Corporation that described its subsidiaries as providing trust and investment management services under the umbrella name Mellon Trust. They also point to press articles from 1993 and 1994 and to analysts reports from 1999 referring to a number of entities operating under the name Mellon Trust.
[33] In addition, the respondents rely on admissions during cross-examination of the applicant’s deponent to the effect that knowledge about marketplace developments are critical for its business and that the applicant had “deep knowledge and understanding of its clients’ businesses.”
[34] Those were, however, general admissions and did not refer to the detailed corporate structure of clients. It might be asking too much of an SVC salesperson in Mississauga in 1999 to be aware of the contents of 1993 annual reports or press articles in the United States describing the corporate structure of a potential customer.
[35] In my view it would also be unfair to infer from those admissions that that SS & C or its predecessors knew that Mellon Trust was a brand because the point was never put to any of the SS & C witnesses on cross-examination.
[36] A further potential part of the factual matrix includes other forms of industry agreements. I was taken to three during oral argument.
[37] The first is between a subsidiary of SS & C, Financial Models Co. Ltd., and BNY for the latter’s SmartSource business dated December 1, 2008. Section 1.10 of that agreement provides:
Client includes its employees, directors, officers, or agents, and to the extent they are specifically identified, its affiliates and subsidiaries.[^2]
[38] A second agreement is between Schroder Investment Management North America Inc., and BNY on the one hand, and SS&C on the other, dated February 21, 2006. It defines the client as Schroder and BNY and includes in section 1.5 an identically worded provision to that found in paragraph 37 above.[^3] Exhibit A to that agreement also contains the following additional provision in section 4:
Client shall use Data in the SS&C Technologies Canada Corp. “SS&C”) suite of applications in the specified location only, and exclusively by and for itself for 1 line of business. Affiliates of Schroder Investment Management North America Inc. may store and view the Data at their primary data hub and disaster recovery facilities (currently located in the United Kingdom) solely for the purpose of providing disaster recovery services and support for the systems used to service the 1 line of business referenced above. No other use of the Data is permitted.[^4]
[39] The third agreement is an amendment to a contract between SS & C and a client whose name has been redacted dated October 31, 2011. It sets out a list of business entities that were entitled to use the data and the annual licensing fee for each.[^5]
[40] Although all these additional contracts were entered into in 2006, 2008 and 2011 and are therefore not, strictly speaking, part of the factual matrix surrounding entry into the contracts at issue, they are nevertheless potentially relevant to the factual matrix surrounding the manner in which the industry approached the issue when Mellon Financial Corporation and BNY merged in 2007 and when CIBC Mellon terminated its contract in 2011.
[41] These forms of agreement set out different ways of dealing with entities beyond those named in the contract. Each form is consistent with the starting position that the benefit of the contract goes to the named entity and no further.
iii. Conduct of the Parties
[42] The conduct of the parties is consistent with the agreements being limited to the named entities and with the proposition that additional fees were payable if the data were shared with additional entities.
[43] By way of example, on May 11, 2007, Amy Harkins, the Senior Vice President Managing Director Mellon Market Data wrote to SS & C in connection with the upcoming merger with BNY. The opening line of the letter states:
Mellon Financial Corporation and SVC entered into an agreement on September 1, 1999 (“agreement for Data Services”).
[44] It appears that she was under the impression that the agreement was with Mellon Financial Corporation, not with a brand name.
[45] Ms. Harkins appears to have continued to be under that impression even in this litigation. In paragraph 8 of an affidavit she swore on August 14, 2018 for this application she states:
Following the merger, BNY Mellon assumed all rights and responsibilities under the Agreement.
[46] While I agree that Ms. Harkins’ recollection of what the contract said does not supplant the text of the agreement, it is at least evidence of how the parties viewed the situation and conducted themselves.
[47] On March 28, 2003 CIBC Mellon entered into an amending agreement with SVC pursuant to which an affiliated entity, CIBC Mellon Trust Company, was entitled to access certain data in exchange for an additional monthly fee.
[48] Perhaps most telling is the letter Ms. Harkins wrote to SS & C on May 11, 2007 in connection with the impending merger between Mellon Financial Corporation and BNY. Ms. Harkins notes that SVC may have seen in the news that Mellon Financial Corporation and BNY have agreed to merge and that she is notifying SVC of the impending transaction. She goes on in the second paragraph to state:
At [the] present time we do not know of any expansion in the use of the data that would be needed. If it becomes apparent that the scope of data use will change we will notify you.
[49] The respondents argue that the letter meant that BNY would not be adding any more services as a result of the merger. That is not, however, what the letter says. The plain language of the letter suggests that merged entity would not be making broader use of the data after the merger than Mellon Financial Corporation did before the merger.
[50] That, however, was not the case. As a result of the merger, Mellon acquired a number of BNY custodial businesses with which it began sharing the SS & C data. On any plain meaning of the letter, that constituted an “expansion in the use of the data” or a “change in the scope of data use.”
[51] It seems implausible that BNY would tell a service provider that an impending merger would not result in the addition of any more services to their needs. The only purpose of such a communication would appear to be to pre-empt a sales call for potential new services. Moreover, if Ms. Harkins wanted to tell a service provider that her employer did not need any new services, I do not understand why she would not just say that as opposed to delivering a different message. In my view it is far more plausible that, in the context of a merger, one would tell a data provider that the merger will not lead to any expanded use of the data than one would tell them that the merger will not result in a need for additional services.
[52] In argument, the respondents tried to turn the 2007 letter into an acknowledgement by SS & C that Mellon Trust was entitled to share data within its corporate family. The respondents note that SS & C signed the letter of May 11, 2007. In paragraph 38 of their factum, the respondents submit:
Through its countersignature, SS & C acknowledged BNY Mellon as the new contract owner, but did not accept the invitation to renegotiate any aspect of the Mellon Trust Agreement.
[53] That is not a fair characterization of the letter of May 11, 2007. The letter was not an “invitation to renegotiate”. On the contrary, it was a clear indication that no renegotiation was necessary because the merger would not result in expanded use of the data.
[54] On January 26, 2011, CIBC Mellon wrote to SS & C to terminate the Data Services Agreement because it “no longer requires the services provided under the Agreement.” That was not correct. CIBC Mellon continued to require the services. Instead of paying SS & C for those services, however, CIBC Mellon simply began receiving the data for free from BNY. CIBC Mellon did not disclose that plan to SS & C.
[55] SS & C discovered that CIBC Mellon was using data under the Mellon Trust Agreement in October 2016. At that time, a glitch arose in the delivery of data from SS & C. This was frustrating for CIBC Mellon who had been using the data. They wrote to SS & C to complain. After further inquiries, SS & C discovered that CIBC Mellon had been obtaining data under the Mellon Trust Agreement. In the concluding email of the chain that led to this discovery, the person in charge of relationships with external service providers at CIBC wrote to SS & C stating:
I just realized the point of your note being that we may be receiving information that we did not pay for. Louis give me a call.
[56] Further communications ultimately led to a breakdown in the relationship between the respondents and SS & C and led to this application.
[57] Although on this application the respondents take the position that the CIBC Mellon Agreement was redundant because CIBC Mellon was already permitted to share data under the Mellon Trust Agreement, they: (i) do not explain why Mellon Trust and CIBC Mellon entered into two separate agreements to begin with; (ii) do not hey explain why CIBC Mellon had been unnecessarily paying fees under its agreement for 11 years; and (iii) have not produced any documents that shed light on how they came to understand that the CIBC Mellon Agreement was redundant and that they could share data under the Mellon Trust Agreement.
[58] In support of their argument that the Mellon Trust Agreement allowed them to share data among all Mellon custodial entities, the respondents point to a number of communications between the parties which the respondents say demonstrate that SS & C knew that CIBC Mellon was using data provided under the Mellon Trust Agreement. There are two distinguishing features to that correspondence.
[59] First, a large part of the correspondence arose while both Mellon Trust and CIBC Mellon had separate agreements with SS & C. One can see that a vendor who has separate contracts with two members of the same corporate family would either agree to a limited sharing of data between the two or not be a stickler for detail about sharing between two entities each of which was paying SS & C a fee for the data. Just because SS & C is prepared to grant an indulgence in those circumstances does not mean that it has agreed to allow the respondents to share the data with every single entity in their corporate families.
[60] Second, the correspondence that arose after 2011 was between the respondents and relatively low level sales or technical support staff at SS & C. As noted earlier, SS & C has approximately 22,000 employees. The fact that the respondents may be communicating information to technical support staff which could be read as suggesting that the respondents were sharing data with other members of the corporate group should not be interpreted as consent by SS & C to sharing the data within the entire corporate group. Technical support staff are not responsible for contractual interpretation or contractual amendments.
[61] To impute knowledge to a corporation as a whole requires that the material facts be known to a directing mind of the corporation. That lower-level customer service representatives with no responsibility for contract compliance might be aware of something, does not necessarily mean that the corporation is aware.[^6]
[62] The respondents also point to the fact that BNY had asked SS & C to send Mellon Trust invoices to CIBC Mellon for four months in 2012 while BNY updated its billing processes. Payment during those four months came directly from CIBC Mellon. The respondents submit that this confirms SS & C’s knowledge that data was being shared. That is not a fair inference. It is not unusual within a corporate group that the people responsible for paying bills are not the same people that receive the services. Moreover, this was a temporary arrangement clearly explained by the fact that BNY was updating its billing processes. The situation might have been different had the respondents explained that CIBC Mellon was paying the bills because it was also using all of the data. That, however, was not communicated.
[63] As the Supreme Court of Canada pointed out in Consolidated-Bathurst Export Ltd. v Mutual Boiler and Machinery Insurance Co:
“[A]n interpretation which defeats the intentions of the parties and their objective in entering into the commercial transaction in the first place should be discarded in favour of an interpretation of the policy which promotes a sensible commercial result.”[^7]
[64] Here, the object of the contracts was to sell data to the respondents. A contractual interpretation that allows parties to share the data broadly in the face of contractual language that restricts use of the data would defeat the objective underlying a data sale contract. The underlying concept behind the contract and its language was to make data available to the purchaser on a limited basis. The logical limitation is that it be restricted to the parties signing the contract, unless the contract provides otherwise. The language of the contract is consistent with that constraint. Interpreting the contract to limit use of the data to the contracting party promotes a sensible commercial result. Doing otherwise would have the vendor cannibalize its business by selling data to an unknown group of current and future entities. The language of the agreement, the factual matrix and the conduct parties support this view.
III. Waiver, Estoppel and Limitations
[65] In the alternative, the respondents submit that SS & C should be precluded from pursuing this application because of the principles underlying waiver, estoppel and the Limitations Act.[^8] They submit that SS & C has allowed data to be shared for 18 years and has known for 18 years that the respondents were relying on an interpretation of “Mellon Trust” that allowed data to be shared.
[66] Waiver is established where the evidence demonstrates that the waiving party had (i) a full knowledge of its rights; and (ii) an unequivocal and conscious intention to abandon them.[^9] Waiver can be inferred from a party’s post-contractual conduct.[^10]
[67] In support of its argument for waiver, the respondents rely on the communications between themselves and the applicant set out above. For the reasons set out above, I do not accept that the correspondence shows that the SS & C parties to those communications had full knowledge of SS & C’s rights or that they amounted to an unequivocal and conscious intention to abandon SS & C’s rights.
[68] In addition to the correspondence discussed earlier in these reasons, the respondents also rely on an exchange of correspondence that arose in 2009.
[69] That exchange warrants closer examination. The exchange begins with an email from CIBC Mellon to a Jeffrey Tugman, a Client Support representative at SVC, complaining that it had received an incorrect file which resulted in delays. Mr. Tugman explained the delay to his superior, Mr. Iannuzzi, noting that the delay was caused by the data source for BNY Mellon. Mr. Iannuzzi responded to Mr. Tugman saying:
Is this the same file for CIBC – I do not believe they receive this do they?
[70] Mr. Tugman responded to Mr. Iannuzzi saying:
They do not receive this information from us because CIBC only receives pricing available in the global database from us. The email BNY Mellon sent was to CIBC Mellon explaining the vendor delay. It appears that CIBC Mellon receives Scotia pricing from BNY Mellon.
[71] Mr. Iannuzzi responded by simply saying thanks.
[72] The respondents submit that Mr. Iannuzzi was a senior executive and General Manager of SS & C whose understanding should bind the corporation.
[73] The applicant has a different interpretation of these emails. It says that Mr. Iannuzzi was not a General Manager at the time of this correspondence and only assumed that position in 2011 or 2012. Further, the applicant submits that the emails do not establish that CIBC Mellon was receiving SS & C data from BNY but merely that CIBC Mellon was receiving Scotia data from an uncertain source which may appear to have been BNY Mellon. The applicant submits that the thrust of the emails was to determine whether SS & C was responsible for a delay, not to determine whether CIBC Mellon was receiving SS & C data improperly. The applicant also submits that Mr. Iannuzzi was not a sufficiently senior employee at the time to have his knowledge impressed on the corporation.
[74] I am unable to determine on the information before me whether the applicant’s interpretation is correct or not. However, even if I assume that the respondent’s interpretation is correct, the correspondence does not amount to waiver.
[75] At its highest, it shows that Mr. Iannuzzi may have been prepared to allow CIBC Mellon to have access to one portion of the data provided under the Mellon Trust Agreement. He was prepared to do that at a time when each of Mellon Trust and CIBC Mellon had separate Data Service Agreements with the applicant and were making payments under those agreements. At most this amounts to a limited indulgence with respect to a portion of the information. It does not demonstrate that Mr. Iannuzzi knew that Mellon Trust was sharing all of the data it acquired from SS & C not only with the custodial entities in the Mellon Financial family in 1999 but also with CIBC Mellon and all entities that Mellon Financial Corporation acquired after 1999. Even if I assume that Mr. Iannuzzi’s knowledge amounted to the Corporation’s knowledge, this exchange of correspondence does not demonstrate that Mr. Iannuzzi was fully aware of SS & C’s rights and does not demonstrate an unequivocal and conscious intention of SS & C to abandon the restrictions on data sharing in its agreements and permit BNY to share SS & C’s data with an undefined number of other parties.
[76] The Supreme Court of Canada established the requirements for estoppel in Ryan v. Moore[^11] as follows:
After having reviewed the jurisprudence in the United Kingdom and Canada as well as academic comments on the subject, I am of the view that the following criteria form the basis of the doctrine of estoppel by convention:
(1) The parties’ dealings must have been based on a shared assumption of fact or law: estoppel requires manifest representation by statement or conduct creating a mutual assumption. Nevertheless, estoppel can arise out of silence (impliedly).
(2) A party must have conducted itself, i.e., acted, in reliance on such shared assumption, its actions resulting in a change of its legal position.
(3) It must also be unjust or unfair to allow one of the parties to resile or depart from the common assumption. The party seeking to establish estoppel therefore has to prove that detriment will be suffered if the other party is allowed to resile from the assumption since there has been a change from the presumed position.
[77] The respondents have not met the requirements for estoppel. They have not demonstrated that there was a shared assumption of fact or law.
[78] The shared assumption of fact or law on which the respondents would have to rely to establish estoppel is that the applicant agreed with the respondents that the Mellon Trust Agreement allowed data to be shared with all Mellon entities. As set out above, the communications that the respondents rely on do not demonstrate that. Other communications from the respondents to the applicant belie the respondents’ suggestion of any shared assumption of fact or law.
[79] The letter of May 11, 2007 told the applicant that the merger would not result in expanded use of the data. That was not correct. The respondents knew that the merger resulted in expanded use of the data. The applicant did not.
[80] The letter of January 26, 2011 by which CIBC Mellon terminated its Data Services Agreement advised SS & C that CIBC Mellon no longer required the services. That too was incorrect. CIBC Mellon knew that it continued to require the services but that it would acquire those services from BNY without paying SS & C. The applicant did not know that.
[81] In those circumstances there cannot be a shared assumption of fact or law let alone a manifest representation of the applicant by statement or conduct creating such an assumption.
[82] The second element of estoppel requires reliance on the shared assumption. There can of course be no reliance on a shared assumption when the latter does not exist. At best, what the respondents relied on was a state of affairs which they brought about by communicating incorrect information to the applicant. That cannot be the basis of an estoppel.
[83] The respondents submit that the claim is time-barred because Mr. Iannuzzi learned of the sharing of data between Mellon Trust and CIBC Mellon in 2009 yet the claim was only initiated in 2017.
[84] The limitations defence fails for largely the same reasons that the waiver and estoppel defences fail. The Limitations Act requires that the applicant to have brought its claim within 2 years of the date it knew or ought to have known of the injury, act or omission giving rise to the claim.[^12] For a limitations period to begin running requires the applicant to have sufficient knowledge of facts to bring a claim. On the record before me, the applicant was not aware that parties were not paying for data they were receiving until 2016. In cases of a corporation, the material facts must be known to a directing mind of the Corporation.[^13]
II. Damages
[85] As noted, the applicant claims damages of $889 million. The respondents submit that, even if they are found to have breached their agreements, there are no damages.
[86] Each side filed experts’ reports in support of its position.
[87] In addition to the assessment of damages, the applicant submits that the respondents are liable for spoliation or that adverse inferences should be drawn against them for spoliation.
[88] The damages issue has caused me quite some difficulty. This matter proceeded as an application, not as a trial. The issues both parties raised about damages are complex, factually intense and are questions with respect to which the parties have diametrically opposed views.
[89] By way of example, the parties strongly disagree about how many of the Mellon entities had access to or actually used the SS & C data. The applicant submits that adverse inferences should be drawn against the respondents in this regard because they did not preserve documents that would have given the court insight into the use of the documents. The respondents submit that regardless of how many Mellon entities had access to the data, CIBC Mellon was the primary user and was responsible for more than 95% of the Mellon entities’ overall usage with other users making only de minimis use of the data. The respondents say they have produced more than 4.5 million lines of data usage to support this allegation.
[90] The applicant contests this and submits that whatever data BNY supplied represents approximately 25% of the overall usage by Mellon entities. In addition, there are disputes about the extent to which Mellon’s data covers all of its relevant databases or covers only one of them.
[91] I have struggled long and hard to determine whether I could come to a responsible view about damages on a paper record. I have reluctantly come to the conclusion that I cannot.
[92] The damages issue raises contradictions in the evidence that I cannot resolve on paper. The damages issues are addressed in a series of affidavits, reports, responding affidavits, responding reports, followed by reply, sur-replies and cross examinations. References to that evidence are then found in lengthy, detailed footnotes in experts’ reports. Presenting data intensive evidence in this way does not provide an adequate way in which to absorb and truly understand it.
[93] As a result, I direct the damages issue to proceed as a trial of an issue before me and ask the parties to arrange a case conference with me to discuss how damages can be adjudicated in the most efficient form. The reference to damages should proceed on the record as it currently exists unless both sides agree otherwise.
[94] The applicant’s approach to damages was to assume that each BNY entity that had access to the data should be assumed to have paid the same monthly fee that BNY paid in a given month. The applicant then added either monthly interest of 1.5%, compounder monthly, or a weighted average cost of capital, compounded quarterly, to arrive at alternative damages figures. During argument I expressed strong reservations about that approach but have not come to a final view about it.
[95] In the course of my efforts to struggle with damages, I asked myself whether calculating damages as a per centage of assets under administration or as a per centage of fees or revenues might not be appropriate. The record appears to contain the information that would allow one to make that determination. My preliminary calculations based on the information before me suggested that the fees as a per centage of assets under administration were relatively consistent until 2007 at which point they dropped markedly. The drop in fees as a per centage of assets under administration is presumably attributable to the large increase in assets under administration as a result of the 2007 merger. After this adjustment, the fees once again remained relatively stable as a per centage of assets under administration. I asked myself whether applying the pre merger per centage to post merger assets, perhaps with adjustments if appropriate, would not be the more suitable way to address damages. I would ask both sides to address this issue during the damages reference.
[96] Any appeal periods arising from these reasons will be suspended until I have released reasons on the damages reference. That will allow any appeals on liability and damages to proceed together as was originally intended by having me determine both issues on a paper record.
Koehnen J.
Released: April 14, 2021
COURT FILE NO.: CV-17-11727-00CL
DATE: 20210414
ONTARIO
SUPERIOR COURT OF JUSTICE
(Commercial List)
BETWEEN:
SS&C TECHNOLOGIES CANADA CORP.
Applicant
– and –
THE BANK OF NEW YORK MELLON CORPORATION and CIBC MELLON GLOBAL SECURITIES SERVICES COMPANY
Respondents
Released: April 14, 2021
[^1]: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 SCR 633 at paragraph 57. [^2]: Applicant's Compendium tab 40 PDF page 462. [^3]: Applicant's Argument Compendium tab 41 PDF page 496. [^4]: Applicant's Argument Compendium PDF page 501. [^5]: Application Record Volume 2, PDF p. 357. [^6]: Cataraqui Cemetery Company v. Cyr, 2017 ONSC 5819 at para 218-224; Rocco v. Northwestern National Insurance Co., 1929 CanLII 407 (ONCA). [^7]: Consolidated-Bathurst Export Ltd. v Mutual Boiler and Machinery Insurance Co, 1979 CanLII 10 (SCC) at 901; see also Guarantee Co. of North America v. Gordon Capital Corp., 1999 CanLII 664 (SCC), [1999] 3 S.C.R. 423, at para. 61. [^8]: Limitations Act, 2002, SO 2002, c 24, Sch B. [^9]: Saskatchewan River Bungalows Ltd v Maritime Life Assurance Co, 1994 CanLII 100 (SCC), [1994] 2 SCR 490 [^10]: Technicore Underground Inc v Toronto, 2012 ONCA 597 at para 63. [^11]: Ryan v. Moore, 2005 SCC 38, [2005] 2 SCR 53. [^12]: Limitations Act, s.5. [^13]: Cataraqui Cemetery Company v. Cyr, 2017 ONSC 5819, 2017 ON SC 5819 at arroz. 218, 219, 223; Rocco v. Northwestern National Insurance Co., 1929 CanLII 407 (ONCA) at p. 474.