COURT FILE NO.: CV-19-626941-CL
DATE: 20210812
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DCR Strategies Inc.
Plaintiff
– and –
Rounault “Roy” Gomez, 2420286 Ontario Inc. and xtm, iNC.
Defendants
COUNSEL:
Eli S. Lederman and Jonathan D. Langley, for the Plaintiff
Michael O’Brien and Judith Manger, for the Defendants Rounault “Roy” Gomez and 2420286 Ontario Inc. (as amicus)
David T. Woodfield and Brent J Arnold, for the Defendant XTM, Inc.
HEARD: July 26 and 27, 2021, in Toronto, by video conference
BEFORE: R. A. Lococo J.
REASONS FOR DECISION
I. Introduction
[1] Two motions were heard together in an action by the plaintiff DCR Strategies Inc. against the defendants Rounault “Roy” Gomez, 2420286 Ontario Inc. and XTM, Inc. In the action, DCR seeks damages and other relief against its former Chief Technology Officer (Mr. Gomez), his numbered company (242) and a competitor (XTM). Mr. Gomez was briefly a consultant with XTM in 2019, commencing at or around the time he left DCR.
[2] DCR seeks an interlocutory injunction against the defendants, relating to the alleged disclosure and use of DCR’s confidential information. XTM brings a cross motion for summary judgment, seeking dismissal of the action against XTM.
[3] For the reasons that follow, I am dismissing both motions.
II. Background facts
[4] DCR and XTM are competing financial technology companies. Among other things, both companies partner with financial institutions to provide prepaid credit card programs for Canadian businesses in connection with their customer loyalty programs.
[5] Commencing in or about 2012, DCR began providing services to Bell Canada relating to a prepaid credit card program. At about the same time, DCR engaged Mr. Gomez to be the person principally responsible for servicing the Bell Canada business. Mr. Gomez had been previously engaged in a similar capacity for another firm and says that he was responsible for bringing the Bell Canada business to DCR. At the time Mr. Gomez left DCR in May 2019, he held the title of Chief Technology Officer while continuing to be responsible for managing the Bell Canada account.
[6] DCR and Mr. Gomez do not agree about the nature of their relationship while Mr. Gomez was with DCR.
[7] Mr. Gomez says that he was a consultant only and, notwithstanding his title prior to leaving DCR, he was never a senior executive or employee of DCR. Mr. Gomez’s motion record includes a three-page agreement between DCR and Mr. Gomez dated April 27, 2012 entitled “Consulting Agreement”, which provides for Mr. Gomez’s retainer as an independent marketing agent. The agreement provides that Mr. Gomez was acting as an independent contractor and not an employee. The agreement also includes a four-line confidentiality clause, which prohibits the disclosure or use of DCR’s confidential information except as may be necessary or desirable to further DCR’s business interests. By offer dated June 19, 2012, DCR offered Mr. Gomez the position of Vice President of Projects and Process Delivery with DCR, which Mr. Gomez accepted. He later became DCR’s Chief Technology Officer.
[8] DCR says that Mr. Gomez was an employee and senior executive of DCR, with corresponding duties and responsibilities that evolved over his time with DCR. DCR’s motion record includes an agreement dated June 7, 2012, entitled “Competing Interests, Confidentiality, Intellectual Property and Non-Solicitation”, a title that aptly indicates the contents of that agreement (referred to in these reasons as the “Confidentiality Agreement”). DCR and its counsel refer to that agreement as Mr. Gomez’s employment agreement. Throughout the detailed provisions of the Confidentiality Agreement, Mr. Gomez is referred to by the defined term “Consultant”, but the agreement also includes a recital that the “Consultant is an employee of [DCR]”.
[9] Mr. Gomez denies signing the Confidentiality Agreement, which he says he had never seen before this litigation. He deposes that the signature that appears on the signature page over his name is a forgery, having been inserted without his knowledge or consent (which DCR denies).
[10] DCR’s supplier agreement with Bell Canada was amended by Amendment dated November 23, 2018, which included a new termination date of December 31, 2021, unless the agreement is renewed by Bell Canada or terminated in accordance with the agreement. The Amendment also included updated “Compliance Requirements” that, among other things, required DCR to promptly notify Bell Canada of any suspected or actual violation of anti-corruption legislation, including the Criminal Code, R.S.C. 1985, c. C-46.
[11] It is common ground that in or about February 2019, Mr. Gomez’s office computer crashed. An external hard drive was attached to the computer and computer files and other data were transferred to the hard drive, including Mr. Gomez’s email archive. Mr. Gomez says that the files were transferred to the hard drive in order to recover lost data, which was partially successful. DCR disputes Mr. Gomez’s evidence, alleging that Mr. Gomez illicitly came into possession of confidential and proprietary data relating to DCR.
[12] Mr. Gomez says that in April and May 2019, he received information from others at DCR (and externally) that led him to suspect that DCR was engaged in and being investigated for money laundering. Mr. Gomez says that he reported his suspicions to Bell Canada, stating his belief that he had a legal and moral obligation to do so. He also advised Bell Canada of his intention to resign from DCR.
[13] In early May 2019, Mr Gomez also met with the CEO and others at XTM, advising them of the possible availability of Bell Canada’s prepaid card business should DCR’s relationship with Bell Canada be terminated. On May 13, 2019, while still with DCR, Mr. Gomez entered into an Independent Contractor Agreement with XTM, to be effective June 1, 2019. That agreement provided that its principal objective was for Mr. Gomez to secure Bell Canada business relating to prepaid card programs within 45 days, failing which XTM could terminate the agreement without penalty.
[14] By letter dated May 28, 2019, Mr. Gomez resigned from DCR, advising that he was terminating his consulting agreement with DCR.
[15] In June 2019, Bell Canada commenced an audit of its prepaid card business with DCR. DCR says that Bell Canada subsequently advised DCR that it was satisfied that there was no wrongdoing on DCR’s part.
[16] In various letters from DCR’s counsel in June 2019, DCR demanded, among other things, that Mr. Gomez return DCR’s confidential information and other property, including cellular telephones and an external hard drive that DCR alleged contained DCR confidential information. Mr. Gomez returned two DCR cell phones but denied having the hard drive or any DCR confidential information. DCR also retained Cytelligence Inc., a digital security firm, to conduct a forensic investigation of Mr. Gomez’s DCR office computer and other devices. DCR subsequently received an investigation report dated August 12, 2019, setting out their conclusions relating to data that they found had been downloaded to an unknown external hard drive, referred to in the investigation report as the “H” drive.
[17] In or about August 2019, Bell Canada advised DCR and XTM of its intention to invite tenders for its prepaid card business through a request for proposal (RFP) process. DCR and XTM submitted separate proposals in response to the RFP.
[18] By letter dated August 21, 2019, XTM terminated its consulting agreement with Mr. Gomez.
[19] On September 6, 2019, DCR commenced an action against Mr. Gomez and XTM for damages and injunctive and declaratory relief relating to the alleged disclosure and use of DCR’s confidential information, the solicitation of DCR customers and employees, and related matters.
[20] On September 12, 2019, DCR brought the first motion currently before the court, seeking an interim, interlocutory and permanent injunction against Mr. Gomez and XTM. In the Notice of Motion, DCR sought broad relief, asking that Mr. Gomez be enjoined from directly or indirectly (i) using or disclosing DCR’s confidential information, (ii) removing or otherwise altering such information from electronic storage, (iii) soliciting any DCR customer or employee for six months, and (iv) being an employee, contractor, advisor or investor with respect to XTM or any other competitor of DCR for six months. The Notice of Motion also sought essentially the same relief against XTM together with a prohibition against XTM’s authorizing or directing Mr. Gomez to engage in such conduct.
[21] Following a case conference in October 2019, the motion was scheduled to be heard in January 2020, but Mr. Gomez was unable to retain counsel. By order of Hainey J. dated February 12, 2020, Michael O’Brien was appointed amicus for Mr. Gomez and his numbered company, 242. The hearing was rescheduled for March 22, 2020, but the COVID-19 health emergency intervened. No further steps were taken to advance the motion or the action until February 2021, except for DCR’s delivery in July 2020 of a reply affidavit for the injunction motion.
[22] In early February 2021, DCR reached out to the other parties about setting a new timetable for the injunction motion. On February 10, 2021, XTM brought a cross-motion for summary judgment, seeking dismissal of the action against XTM. As of that time, the parties had not exchanged affidavits of documents and no examinations had been scheduled or conducted.
[23] At a case conference on April 1, 2021, the hearing of both motions was scheduled for July 26 and 27, 2021. Since that time, the parties exchanged affidavits of documents and cross-examinations occurred on the affidavits in the motion materials.
[24] In late May 2021, DCR and XTM were each advised that Bell Canada would not accept their respective proposals made in response to Bell Canada’s prepaid credit card RFP. Bell awarded the business to another firm. DCR has ceased providing services to Bell Canada relating to the prepaid credit card program. DCR says that its contract with Bell Canada represented 60 percent of its business.
[25] With that background, I will now address the two motions before me, starting with the injunction motion.
III. DCR’s injunction motion
A. Parties’ positions
[26] In DCR’s September 2019 Notice of Motion, DCR sought wide-ranging injunctive relief relating to not only disclosure and use of DCR’s confidential information, but also solicitation of DCR’s customers and employees and Mr. Gomez’s future engagement with XTM. By the time of the motion hearing, with the passage of time and intervening events, DCR narrowed its requested injunctive relief, which now relates only to DCR’s confidential information. DCR now seek an interim and interlocutory injunction that would require Mr. Gomez, 242 and XTM to do the following:
a. The defendants would be required to provide XTM with a sworn statement identifying and describing any and all documents in their possession that originated from DCR, however stored, including any documents on the external hard drive described in the Cytelligence investigation report as the “H” drive or any other storage device.
b. If, after conducting a reasonable and diligent search of their records, the defendants conclude that there are no documents in their power, possession or control or that any such documents have been destroyed or deleted, they would be required to provide DCR with a sworn attestation to that fact, particularizing the items destroyed or deleted.
c. The defendants would be required to return or destroy any documents set out in paragraph (a) identified as confidential and proprietary information belonging to or originating from DCR, including but not limited to any and all records, marketing lists and data, contacts, materials, information, contracts, policies, trade secrets, electronic information and data, however stored, within their power, possession or control.
[27] DCR argues the requirements for granting an interlocutory injunction have been met in this case. In summary, DCR argues that the evidence establishes the following:
a. There is a serious issue to be tried relating to the defendants’ disclosure and use of DCR’s confidential information to DCR’s detriment.
b. If the injunction is not granted, DCR would suffer irreparable damage relating to the defendant’s illicit disclosure and use of the information such that damages would be an inadequate remedy.
c. The balance of convenience favours granting the order, weighing the prejudice that DCR would suffer if the injunction is denied against the prejudice to the defendants if the injunction is granted.
[28] With respect to the latter criterion in particular, DCR notes that each defendant (or its principal) has already provided an affidavit attesting that the defendant does not have any of DCR’s confidential information in its possession. DCR says that the requested order would provide DCR with the additional assurance it requires that any information originating from DCR that may be in the defendants’ possession or control does not constitute confidential information relating to DCR or that any such information has been either returned or destroyed.
[29] The defendants disagree. Among other things, they say that the DCR’s failure to diligently pursue injunctive relief since bringing its motion in September 2019 supports the conclusion that (i) there would be no irreparable harm to DCR if the order is not granted, and (ii) the balance of convenience does not favour granting the order. As well, given that the requested order is mandatory in nature (rather than seeking only to restrain the defendants’ conduct), the defendants say that DCR is required to establish a strong prima facie case that its action will succeed on the merits, rather than the lesser threshold of a serious issue to be tried. In the defendants’ submission, DCR has not satisfied its onus relating to the merits of the action.
B. Legal principles – interlocutory injunctions
[30] A Superior Court judge may grant an interlocutory injunction or mandatory order where it appears to the judge to be just or convenient to do so, on such terms as may be considered just: Courts of Justice Act, R.S.O 1990, c. C.43, s. 101. An interlocutory injunction may be granted if the moving party establishes the following:
a. a serious issue to be tried;
b. irreparable harm to the moving party if the injunction is not granted; and
c. the balance of convenience favours the moving party.
See RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311, at p. 334, adopting the test in American Cyanamid Co. v. Ethicon Ltd., 1975 CanLII 2598 (FC), [1975] 1 All E.R. 504 (H.L.).
[31] If the requested interlocutory injunction is mandatory in nature, the criterion for assessing the merits of the moving party’s case in the first part of the test is modified to require the moving party to show a “strong prima facie case” that it will succeed at trial, rather than a serious issue to be tried: see R. v. Canadian Broadcasting Corp., 2018 SCC 5, [2018] 1 S.C.R. 196, at para. 15. To do so, the moving party must show a “strong likelihood” that it will ultimately be successful at trial: CBC, at para. 18.
[32] The “strong prima facie case” test for assessing the merits has also been applied for interlocutory injunctions to enforce restrictive covenants in the employment context: see Researchco Limited Partnership v. Real Estate Search Corp., 2004 CanLII 35008 (Ont. S.C.); Camino Modular Systems Inc. v. Kranidis, 2019 ONSC 7437, 58 C.C.E.L. (4th) 243, at para. 15.
[33] As well, a higher threshold relating to harm assessment (the second part of the RJR-MacDonald test) has been applied for injunctions to restrain anticipated harm before it occurs, referred to as a quia timet injunction. To obtain a quia timet injunction, the moving party must demonstrate that there is a high degree of probability that the harm will in fact occur and that the harm is imminent: see Crawford Packaging Inc. v. Dorata, 2020 ONSC 3555, 66 C.C.E.L (4th) 150, at para. 31; Operation Dismantle Inc. v. Canada, 1985 CanLII 74 (SCC), [1985] 1 S.C.R. 441, at p. 458. In Boehmer Box L.P. v. Ellis Packaging Ltd., 2007 CanLII 14619 (Ont. S.C.), at para. 74., in the context of a motion for a quia timet injunction, Brown J. (as he then was) states as follows:
An injunction is an extraordinary remedy; a quia timet injunction even more extraordinary. An injunction should not be used simply to remind parties about the obligations they owe to others under the law. An injunction should issue only to restrain a breach, or a reasonably apprehended imminent breach, of legal obligations.
C. Analysis and conclusion
[34] Applying the foregoing principles, I have concluded that DCR has not satisfied its onus of establishing that the requested injunctive relief should be granted. In particular, the evidence does not establish that DCR would suffer irreparable harm if the injunction is not granted or that the balance of convenience favours granting the injunction.
[35] Significant factors that support of this conclusion include DCR’s delay in pursuing the injunction and the intervening events since the motion was brought in September 2019, some 22 months before the motion hearing. Factors beyond DCR’s control account for some of that delay, but DCR argues that more diligent steps were not taken to have the motion heard earlier given intervening events that reduced the urgency of proceeding sooner, including (i) the termination of Mr. Gomez’s consulting agreement with XTM, (ii) the favourable outcome of Bell Canada’s audit of DCR’s management of the prepaid credit card program, that cleared DCR of wrongdoing, (iii) DCR’s continued involvement with Bell Canada’s prepaid credit card for two years after Mr. Gomez’s departure from DCR until shortly before the motion hearing.
[36] While those subsequent events may provide some explanation for DCR’s delay, they also undercut DCR’s position that it would suffer irreparable harm if the injunction is not granted. DCR contends there is a causative link between Gomez’s disclosure of confidential information, the Bell Canada audit, the Bell Canada RFP, and DCR’s loss of the Bell Canada business. If that position is accepted, the resulting harm to DCR has already occurred, which may be compensable in damages or give rise to other relief. However, the evidence before court is insufficient to support the conclusion that there is ongoing harm (or other prejudice) that DCR is currently suffering or may imminently suffer if the requested relief is not granted pending the trial of the action. In these circumstances, the second part of the RJR-MacDonald test referable to irreparable harm has not been satisfied.
[37] On a similar basis, DCR has not established that the balance of convenience favours granting the injunction, which requires the weighing of prejudice to the moving party if the injunction is denied against prejudice to the respondents if the injunction is granted. DCR argues that the defendants would suffer no additional prejudice if the injunction is granted; they have already provided sworn evidence that they have no DCR confidential information, which exposes the defendants to possible future sanction should those statements be incorrect. If that position is accepted, DCR has arguably run afoul of Justice Brown’s admonition in Boehmer, at para. 74, that an “injunction should not be used simply to remind parties about the obligations they owe to others under the law.” However, the requested injunction would impose wider obligations on the defendants, imposing detailed requirements relating to the identification, return and/or destruction of information, including additional sworn attestations, potentially exposing the defendants to enforcement proceedings beyond those provided by their previous evidence. In these circumstances, given the absence of sufficient evidence of prejudice to DCR if the injunction is denied, DCR has not met its onus of establishing that the balance of convenience favours granting the injunction.
[38] Given the conclusion I have reached about the second and third elements of the RJR-MacDonald test, it is unnecessary to address in any detail whether the first element relating to the merits of the action has been satisfied. The merits are addressed in more detail below in the context of the summary judgment motion, but I offer the following additional observations.
[39] If DCR is correct that the first element of the RJR-MacDonald test requires the moving party to demonstrate a serious issue to be tried, the threshold for establishing that element of the test “is a low one”, met if the court is satisfied that “the claim is not frivolous or vexatious”: see RJR-MacDonald, at pp. 335 and 337. In my view, DCR has satisfied that onus. As set out in the next section of these reasons relating to XTM’s summary judgment motion record, I have also found that XTM has not satisfied its onus on that motion of establishing that there is no genuine issue requiring a trial.
[40] That being said, I agree with the defendants that the order that DCR seeks is mandatory in nature, imposing positive obligations on the defendants beyond merely restraining their conduct. In these circumstances, the first element of the RJR-MacDonald test is a “strong prima facie case”, requiring the moving party to show a strong likelihood that it will ultimately be successful at trial. I have reservations about whether the evidence in the motion record goes that far, but it is not necessary for me to make that determination to dispose of the motions before the court.
[41] Accordingly, DCR’s injunction motion is dismissed.
IV. XTM’s summary judgment motion
A. Parties’ positions
(i) XTM’s position
[42] XTM brings a cross motion for summary judgment under r. 20.01(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, seeking dismissal of the action against XTM on the basis that there is no genuine issue requiring a trial. In particular, XTM submits there are no triable issues relating to either (i) the alleged loss DCR suffered, or (ii) XTM’s knowing involvement in actionable conduct against DCR.
[43] With respect to loss to DCR, XTM says there is no credible evidence that DCR suffered any damages. To support that position, among other things, XTM submits the following:
a. There is no evidence that Mr. Gomez provided DCR’s confidential information to XTM, to DCR’s detriment.
b. Bell Canada business was not diverted from DCR to XTM following Mr. Gomez’s consulting engagement with XTM. The Bell Canada business remained with DCR for a further two years before they lost it in a competitive RFP process.
c. Bell Canada’s audit of DCR’s management of the prepaid credit card business resulted in Bell Canada finding no evidence of wrongdoing by DCR, leading DCR to be confident that its Bell Canada business was not in jeopardy.
d. There is no evidence that Bell Canada initiated the competitive RFP process with respect to its prepaid credit card program (a common business practice) as a result of XTM’s actions. When Bell Canada advised DCR’s president that DCR’s RFP proposal had not been accepted, she did not even ask why DCR lost the business. It was open to DCR on this motion to seek evidence from Bell Canada to address those matters. DCR did not do so.
e. There is no evidence of the extent (if any) of the financial impact on DCR of the loss of the Bell Canada business, beyond the bald statement that the Bell Canada account represented 60 percent of DCR’s business.
[44] XTM also argues that there is no evidence of its knowing involvement in actionable conduct against DCR. To support that position, among other things, XTM notes the following:
a. When Mr. Gomez approached XTM in May 2019, he advised XTM that he was a consultant with DCR, not a senior executive or employee. He represented himself as a “free agent”, with no obligations to DCR.
b. Mr. Gomez did not provide XTM with the Confidentiality Agreement with DCR setting out restrictions relating to confidentiality and non-competition.
c. XTM took reasonable steps to satisfy itself that Mr. Gomez would not be contravening any obligations to DCR in working with XTM, including consulting with its in-house compliance officer.
(ii) Gomez’s position
[45] Mr. O’Brien, as amicus for Mr. Gomez and 242 (who are not represented by counsel), advises that Mr. Gomez and 242 take no position on XTM’s summary judgment motion and are not themselves seeking summary judgment to dismiss DCR’s action against them.
(iii) DCR’s position
[46] DCR argues that XTM has failed to establish that there is no genuine issue requiring a trial with respect to XTM’s involvement in diverting a key client from DCR. DCR says that there are many material facts in dispute, involving issues of credibility and raising triable issues referred to later in these reasons.
[47] DCR also says that this is not one of those rare cases where partial summary judgment should be granted to XTM, given the risk of inconsistent findings or outcomes if the action against DCR is dismissed and the case against Mr. Gomez and 242 proceeds to trial.
B. Legal principles – summary judgment
[48] Summary judgment will be granted if the court is satisfied that there is no genuine issue requiring a trial: r. 20.04(2)(a). In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 49, the Supreme Court of Canada interpreted this provision as follows:
There will be no genuine issue requiring trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.
[49] In determining whether the test for summary judgment has been met, the motion judge has enhanced fact-finding powers that entitle the judge to weigh the evidence, evaluate credibility of a deponent and draw any reasonable inference from the evidence, unless it is in the interest of justice for such powers to be exercised only at a trial: r. 20.04(2.1). These enhanced powers are discretionary and presumptively available: Hryniak, at para. 45. Using these powers will not be against the interest of justice if using them will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole: Hryniak, at para. 66. For the purpose of exercising these enhanced powers, the motion judge is authorized to hear oral evidence, referred to as a “mini-trial”: see r. 20.04(2.2).
[50] In Hryniak, at para. 66, the court suggests a roadmap or approach to a summary judgment motion. The motion judge should first determine whether there is a genuine issue requiring a trial based only on the evidence before the court on the motion, without using the enhanced fact-finding powers. If there appears to be a genuine issue requiring a trial, the motion judge should then determine if a trial can be avoided by using those fact-finding powers. If summary judgment is refused or granted only in part, the motion judge has comprehensive trial management powers that may be used “to craft a trial procedure that will resolve the dispute in a way that is sensitive to the complexity and importance of the issue, the amount involved in the case and the effort expended on the failed motion”: see Hryniak, at para. 77, referring to r. 20.05. The court also suggests that if a summary judgment motion is dismissed, the motion judge should seize herself of the matter as the trial judge in the absence of compelling reasons to the contrary: Hryniak, at para. 78.
[51] The onus of establishing that there is no genuine issue requiring a trial is on the moving party, in this case, XTM. However, each side is required to “put its best foot forward” or “lead trumps or risk losing”: see Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200, at para. 26, aff'd 2014 ONCA 878, leave to appeal refused, [2015] S.C.C.A. No. 97; Canada (Attorney General) v. Lameman, 2008 SCC 14, [2008] 1 S.C.R 372, at para. 11. This requirement is consistent with r. 20.02(2), which requires the responding party to place before the motion judge evidence of specific facts showing that there is a genuine issue requiring a trial.
[52] The courts have also indicated that the fact that both sides to a summary judgment motion bear evidentiary burdens does not alter the moving party’s legal burden of proof. If the defendant is the moving party, it is only after it has discharged its evidentiary burden of proving there is no genuine issue requiring a trial that the burden shifts to the responding plaintiff to prove that its claim has a real chance of success: see Dia v. Calypso Theme Waterpark, 2021 ONCA 273, at paras. 25-26. Generally, the motion judge is entitled to assume that the summary judgment motion record contains all the evidence the parties would present at trial, but the motion judge is not required to make that assumption in the circumstances of a particular case if it is against the interests of justice to do so: see Dia, at para. 26; Sweda Farms (ONSC), at para. 27.
[53] In Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, at paras. 29-33, the Court of Appeal addressed the approach the motion judge should take when considering a partial summary judgment motion, which if granted would not dispose of all the issues in the action. In Butera, at paras. 29-33, the court identifies the concerns relating to partial summary judgment motions as (i) the risk of duplicative or inconsistent findings at trial, (ii) resulting delay in the resolution of the action, (iii) additional expense, (iv) appropriate utilization of scarce judicial resources, and (v) the motion record’s not being as comprehensive as the record at trial, increasing the danger of inconsistent findings.
[54] Given those concerns, the court in Butera, at para. 34, directs a cautious approach to partial summary judgment motions, as follows:
A motion for partial summary judgment should be considered to be a rare procedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost effective manner.
C. Analysis and conclusion
[55] Applying the foregoing principles, I have concluded that XTM has not satisfied its onus of establishing that there is no genuine issue requiring a trial. This is not one of those rare cases where partial summary judgment should be granted.
[56] On the evidence, there are many material facts in dispute, many of them involving issues of credibility. I agree with DCR that the evidence raises a number of triable issues, which include (i) the nature of Mr. Gomez’s relationship with DCR, including his obligations to DCR with respect to confidential information, (ii) the extent of XTM’s knowledge of Mr. Gomez’s obligations to DCR, (iii) whether Mr. Gomez was in possession of DCR’s confidential information at the time he was terminating his relationship with DCR, (iv) whether Mr. Gomez provided confidential information to XTM, and (v) whether as a result of the defendants’ actions, DCR lost Bell Canada’s business or suffered other loss.
[57] As previously noted, XTM’s submissions relating to the absence of triable issues focused on the alleged absence of evidence that DCR has suffered any loss or that XTM had any knowing involvement in actionable conduct against DCR.
[58] Most significantly, XTM says there is no credible evidence of any causative link between Gomez’s alleged disclosure of confidential information to XTM, the Bell Canada audit, the Bell Canada RFP, and DCR’s loss of the Bell Canada business. According to XTM, because of DCR’s obligation to “put its best foot forward” in response to XTM’s motion, it was incumbent on DCR to seek evidence from Bell Canada to place before the court to address the causation issue. XTM also suggests that DCR has failed to provide sufficient evidence relating to the effect on DCR of the loss of Bell Canada’s business to establish that DCR suffered any damages.
[59] I disagree.
[60] The evidence on the motion indicates that while still DCR’s Chief Technology Officer, Mr. Gomez approached XTM about the possible availability of DCR’s Bell Canada business and entered into a consulting agreement, the stated aim of which was to divert the Bell Canada business to XTM. While the effort was not successful, DCR ultimately lost the Bell Canada business. The Bell Canada account represented 60 per cent of DCR’s business, according to DCR’s president.
[61] I agree with DCR that the sequence of events and XTM’s involvement in them raises a triable issue as to whether XTM has suffered economic loss as a result of the actions of XTM, in conjunction with the actions of Mr. Gomez. XTM’s submission that DCR’s obligation to “put its best foot forward” required it to seek further evidence from Bell Canada (or provide more fulsome evidence of the extent of its loss) fails to recognize that XTM as the moving party has the legal burden (as well as the initial evidentiary burden) of establishing there is no genuine issue requiring a trial: see Dia, at paras 25-26. On the record before me, XTM has not satisfied that burden.
[62] Another factor that favours the dismissal of XTM’s summary judgment motion is the extent to which the matters to be determined involve Mr. Gomez’s actions in conjunction with those of XTM. Since Mr. Gomez is not seeking summary judgment, the extent of his liability (if any) would be determined in the normal course in the trial context, raising the real prospect of duplicative or inconsistent findings. Therefore, in all the circumstances, this is not one of the rare instances when partial summary judgment should be granted.
[63] Having determined that there are genuine issues requiring a trial on the evidence in the motion record, Hryniak, at para. 66, suggests that the motion judge consider whether a trial can be avoided by having a mini-trial or otherwise using the court’s fact-finding powers in rr. 20.04(2.1) and (2.2). It would not make sense to do so in this case, since Mr. Gomez is not seeking summary judgment. As well, I see no sufficient reason to seize myself of the trial, given among other things the current stage of the action. However, the order today provides the parties with some general trial management directions in an effort to get the action on track for trial or resolution.
V. Disposition
[64] Accordingly, an order will issue as follows:
a. DCR’s motion for injunctive relief is dismissed.
b. XTM’s motion for summary judgment is dismissed.
c. If they have not already done so, the parties shall agree to a schedule for future steps in the action (setting reasonable timelines) that shall include a deadline for setting the action down for trial. If the parties fail to agree on a schedule, any party may initiate a case conference or bring a motion for directions.
d. Unless settled between the parties, costs of the motions will be determined based on written submissions.
[65] If the parties are unable to agree on costs, each side may serve and file brief written costs submissions (not to exceed three pages) together with a costs outline within 21 days. Each side may respond by brief written submissions within a further seven days. If no submissions are received within the specified timeframe, the parties will be deemed to have settled costs.
R. A. Lococo J.
Released: August 12, 2021