Court File and Parties

COURT FILE NO.: CV-20-00648134-0000 DATE: 2021-10-29 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: SUSGLOBAL ENERGY CORP. and SUSGLOBAL ENERGY CANADA CORP. AND: GERALD HAMALIUK and LANDFILL GAS CANADA LTD.

BEFORE: VERMETTE J.

COUNSEL: Allan Rouben, for the Plaintiffs Lorne S. Silver and Joseph Hamaliuk, for the Defendants

HEARD: October 22, 2021

ENDORSEMENT

[1] The Plaintiffs bring this motion for: (a) an order restraining the Defendants from attending within 500 metres of the premises of the Plaintiffs, including the premises located on Phillipston Road in Belleville, Ontario (“Belleville Premises”), pending the disposition of the action; (b) an order restraining the Defendants from communicating directly or indirectly with staff or representatives of the Plaintiffs, other than Plaintiffs’ counsel, pending the disposition of the action; and (c) an order amending the Statement of Claim.

[2] The Defendants do not oppose the Plaintiffs’ request for leave to amend their Statement of Claim. Therefore, pursuant to Rule 26.01 of the Rules of Civil Procedure, leave to amend the Statement of Claim as set out in the Amended Statement of Claim uploaded onto CaseLines for the hearing of this motion (pp. A127-A135) is granted.

[3] The remaining relief sought by the Plaintiffs is reminiscent of a family law restraining order or a criminal peace bond. However, given that this is a civil action, the relief sought is in the nature of an interlocutory injunction, and the legal principles applicable to this type of injunction must be met.

[4] In my view, the injunctive relief sought by the Plaintiffs is not available in the circumstances of this case and based on the pleadings. Accordingly, I decline to grant the requested orders.

Factual background

[5] The Plaintiffs are in the business of renewable energy, conversion of waste to energy and regenerative products such as compost. The Defendant Gerald Hamaliuk was the Chief Executive Officer of the Plaintiff SusGlobal Energy Corp. (“SusGlobal”) from November 2014 to September 2019. Mr. Hamaliuk’s services were provided pursuant to a CEO Consulting Agreement between SusGlobal, Mr. Hamaliuk and the Defendant Landfill Gas Canada Ltd.

a. Plaintiffs’ complaints regarding Mr. Hamaliuk’s conduct following his resignation

[6] On this motion, the Plaintiffs complain about a number of incidents involving Mr. Hamaliuk since he left SusGlobal in September 2019. These incidents are summarized below.

[7] On May 20, 2020, Mr. Hamaliuk attended at the Belleville Premises without prior notice. He stopped to retrieve a box of bottles of liquid fertilizer that he had left a few weeks before for the employees to sell, if possible. One of the staff members had taken two bottles and paid Mr. Hamaliuk for the bottles before he retrieved the box and left. I note that there is a discrepancy in the evidence with respect to the exact dates of these two visits. While the Plaintiffs’ evidence as to the dates is as set out above, Mr. Hamaliuk states in his affidavit that he dropped off the box on May 20, 2020 and retrieved it in late July or early August 2020. The evidence shows, however, that both visits were without any incident.

[8] On June 26, 2020, counsel for the Plaintiffs sent a letter to Mr. Hamaliuk. The letter dealt with a number of issues, including matters covered by settlement privilege. At the end of the letter, the Plaintiffs’ counsel asked Mr. Hamaliuk to “cease and desist from any further attendances at any of the company’s premises or communicating with existing clients, without notice to or the consent of company officials at its head offices.”

[9] This action was commenced on September 23, 2020. The Statement of Claim was served on Mr. Hamaliuk the following day.

[10] On September 25, 2020, Mr. Hamaliuk called Michael Courneyea, the site manager of the Belleville Premises. According to Mr. Courneyea, Mr. Hamaliuk said that the Plaintiffs were suing him and that he was going to sue them back. Mr. Hamaliuk also said that he was going to make a complaint to the Ministry of the Environment, Conservation and Parks about “excess overs” at the Belleville Premises and that he would put the company into bankruptcy so that it would not be able to continue with the lawsuit. After Mr. Courneyea expressed concerns that this could harm the employees at the site, Mr. Hamaliuk said: “It is what it is.”

[11] Mr. Hamaliuk’s account of this conversation is different, although not dramatically so. Among other things, Mr. Hamaliuk’s evidence is that it is Mr. Courneyea, not him, who stated that a complaint to the Ministry would cause the bankruptcy of SusGlobal. Mr. Hamaliuk also denies threatening anyone’s job.

[12] On October 2, 2020, Mr. Hamaliuk sent an e-mail and a memorandum to the members of the Plaintiffs’ board of directors. In the memorandum, Mr. Hamaliuk alleged a serious breach of the Plaintiffs’ Certificate of Approval. He also expressed the view that, in light of the costs that would be necessary to incur to rectify the problem, the Plaintiffs’ profits for the previous year had been overstated by a large amount.

[13] On October 5, 2020, the Plaintiffs’ counsel wrote to the Defendants’ then counsel to complain about Mr. Hamaliuk’s actions. He requested that Mr. Hamaliuk cease and desist “from attending at any company premises, from communicating in any way or in any form with any representatives of the company or interfering with any contractual relationships of the company.”

[14] On October 7, 2020, Mr. Hamaliuk went to the auto shop located next to the Belleville Premises. According to the Plaintiffs, Mr. Hamaliuk incorrectly told the owner of the auto shop, Mr. Moore, that the Plaintiffs were not going to exercise the option to purchase an additional six acres of land and a right of way from Mr. Moore. This transaction was scheduled to close on November 1, 2020. The Plaintiffs further state that Mr. Moore advised representatives of the Plaintiffs of his conversation with Mr. Hamaliuk and he expressed concern about the closing of the transaction.

[15] Mr. Hamaliuk’s account of his conversation with Mr. Moore is slightly different. He states that he only discussed with Mr. Moore publicly available information contained in SusGlobal’s public disclosure.

[16] On May 7, 2021, Mr. Courneyea and other staff at the Belleville Premises saw Mr. Hamaliuk take pictures of the site. Mr. Hamaliuk got into his car and left before Mr. Courneyea was able to speak to him. Mr. Hamaliuk’s evidence is that he did not see anyone during this very short attendance. There is a dispute between the parties as to whether Mr. Hamaliuk was standing on the Plaintiffs’ property while taking the pictures. Mr. Hamaliuk asserts that he was standing on the road allowance, on the other side of the fence located around the Belleville Premises. While they acknowledge that Mr. Hamaliuk was outside the Belleville Premises’ gate, the Plaintiffs state that their property extends past the gate for an additional 5-12 feet off the road allowance, and that Mr. Hamaliuk was standing on the Plaintiffs’ property.

[17] The Plaintiffs allege that staff have found Mr. Hamaliuk’s conduct to be threatening, intimidating and harassing given his expressed intention to harm the company and put it into bankruptcy and the fact that this could affect their jobs and livelihoods. However, it is not alleged that there are any grounds to fear for anyone’s safety or for potential damage to property. Neither is there any evidence supporting the existence of such grounds.

[18] Based on the record before me, Mr. Hamaliuk has not contacted any employees of the Plaintiffs since his phone call to Mr. Courneyea on September 25, 2020. There is also no evidence of further contacts with the board of directors after October 2, 2020. Moreover, Mr. Hamaliuk has not attended at the Belleville Premises or at any other premises of the Plaintiffs since the May 7, 2021 incident.

b. Pleadings

[19] In the original Statement of Claim, the Plaintiffs claim the following against the Defendants:

a. damages for breach of contract, non-performance of contractual duties, breach of fiduciary duty, misrepresentation and breach of a duty of fidelity in the amount of $1,000,000.00;

b. a declaration that the Defendants are in breach of contract, in breach of their obligations to the Plaintiffs and are disentitled to any relief or monies alleged to be owing;

c. a declaration that invoices rendered by the Defendants to the Plaintiffs are statute barred by virtue of the provisions of the Limitations Act, 2002; and

d. an interim, interlocutory and permanent order directing the Defendants to surrender and deliver up shares to the Plaintiffs.

[20] The Plaintiffs allege that the Defendants failed to disclose certain information at the time the Plaintiffs retained Mr. Hamaliuk’s services to act as Chief Executive Officer and that if they had been aware of this information, they would not have entered into any agreements with Mr. Hamaliuk. The Plaintiffs also allege a number of breaches of contract and breaches of fiduciary duties on the part of the Defendants while Mr. Hamaliuk was Chief Executive Officer of the Plaintiffs, as well as poor performance issues.

[21] In their Statement of Defence and Counterclaim, the Defendants deny the Plaintiffs’ allegations and allege that Mr. Hamaliuk was constructively dismissed. The Defendants ask for damages in the amount of $514,150.00 in relation to the Plaintiffs’ failure to pay the monies owing to the Defendants for the services invoiced pursuant to the CEO Consulting Agreement. The Defendants also ask for general, punitive and exemplary damages in the amount of $500,000 in relation to the conduct of the Plaintiffs and their representatives, and some relief regarding certain shares of the Plaintiffs.

[22] The Plaintiffs’ Reply and Defence to Counterclaim includes the following paragraph:

On or about May 20, 2020, long after he had resigned, Hamaliuk attended at the Belleville site of the plaintiff without notice or authorization and improperly communicated with staff. Hamaliuk was advised to cease and desist from any further such conduct or communications with staff or existing clients. On or about September 25, 2020, after service of the statement of claim herein, Hamaliuk communicated with the Belleville site manager and threatened to put the plaintiff into bankruptcy. On or about October 2, 2020, Hamaliuk sent a memorandum to the plaintiff's Board of Directors with false and misleading information concerning the affairs of the company. The defendants were once again advised to cease and desist from such conduct. There was no response from the defendants. Instead, Hamaliuk attended in Belleville next door to the site and advised a representative of a company with whom the plaintiff was entering into an option to purchase agreement that the agreement would not be completed. The agreement was in fact completed November 10, 2020. Hamaliuk sought to interfere with the affairs and contractual relationships of the plaintiff. The conduct of Hamaliuk is malicious and high handed and disentitles the defendants to any relief to which they might otherwise be entitled.

[23] The Defendants responded to this paragraph as follows in their Reply to Defence to Counterclaim:

With respect to the statements in paragraph 14 of the Reply and Defence to Counterclaim, the Plaintiffs by Counterclaim state the following: regarding the May 20, 2020 visit, the Belleville site has public access and no permission is needed to enter. On September 25, 2020, Hamaliuk called the site manager from a remote location and advised him that he would be filing a complaint regarding the illegal storing of compost overs (a waste material) on the site. The notice to the Board of Directors was done as a condition of filing a whistleblower complaint to the SEC. Such a complaint requires that the complainant advises the local management team of the subject of the complaint, then the upper reporting string that the complainant reported to, which is the Board. SusGlobal has thus acknowledged that those conditions have been satisfied. From the Q3 SEC filing, SusGlobal has not made any provision for the costs of removing the illegally stored waste material from the site. Hamaliuk attended at the site next door to purchase winter tires, which he did. During the course of conversations, Hamaliuk mentioned that the Q2 SEC filing stated “the land option expired 6 months after May 24, 2019 and the ($80,000) option payment has been expensed”. The discussion was then about the fact that Hazout asked that the $80,000 cheque issued for the option payment not be presented for payment. The representative advised that the cheque was already post-dated, had never been presented for payment, so the option had expired in his opinion, reflecting the statement in the Q2 filing. The statement that SusGlobal was entering into an option to purchase agreement is false. The said agreement was actually entered into on May 24, 2019, as stated in the Q2 SEC filing. Therefore, Hamaliuk did not interfere with SusGlobal’s affairs or contractual relationships, as alleged.

[24] As stated above, the Plaintiffs are seeking leave to amend their Statement of Claim. Their proposed amendments include the addition of the following two subparagraphs in paragraph 1 of the Statement of Claim which outlines what the Plaintiffs claim in this action:

(d1) an interim, interlocutory and permanent order restraining the defendants from attending within 500 metres of the premises of the plaintiffs, or from communicating directly or indirectly with staff or representatives of the plaintiffs;

(d2) an interim, interlocutory and permanent order restraining the defendants from interfering with the contractual relations of the plaintiffs;

[25] The Plaintiffs also propose to add a new paragraph 17A which reads as follows:

17A. The plaintiffs state that subsequent to Hamaliuk’s resignation, and subsequent to the issuance of the claim herein, Hamaliuk has attended at the premises of the plaintiffs, has communicated with staff and the Board of Directors of the plaintiffs, has advised staff that he would put the company into bankruptcy, has disrupted the business and affairs of the plaintiffs, has interfered with the contractual relations of the plaintiffs and has acted in a high handed and malicious manner for his own benefit and to harm the interests of the plaintiffs. The plaintiffs further plead and rely on the contents of the Reply and Defence to Counterclaim herein.

Discussion

[26] The purpose of an interlocutory injunction is to preserve or maintain a situation so that the relief ultimately granted in an underlying proceeding is not rendered moot or ineffective. An injunction is not a cause of action. It is a remedy ancillary to a cause of action. It does not contain its own authorizing force. If there is no underlying cause of action, there is no legal basis to grant an interlocutory injunction. See R. v. Canadian Broadcasting Corp., 2008 SCC 5 at paras. 24-25 and Twelve Gates Capital Group v. Mizrahi Development Group, 2018 ONSC 7656 at paras. 40-42.

[27] In my view, there is no legal basis for the relief sought on this motion as it is not connected to any cause of action included in the Statement of Claim or the proposed Amended Statement of Claim. The Plaintiffs themselves concede this in their Factum:

The relief being sought on the motion, of non-attendance by the defendants within 500 metres of the plaintiff's premises and non-communication by the defendants with the plaintiff's staff or representatives, does not engage any of the underlying issues in the action, and the question of whether there is a serious issue to be tried is not relevant to the issues on the motion. Indeed, virtually all of the issues of concern arose within days or weeks after the statement of claim was served and thereafter on May 7, 2021.

[28] As stated above, the Plaintiffs request two restraining orders on this motion: (a) an order restraining the Defendants from attending within 500 metres of the premises of the Plaintiffs, including the Belleville Premises, pending the disposition of the action; and (b) an order restraining the Defendants from communicating directly or indirectly with staff or representatives of the Plaintiffs, other than Plaintiffs’ counsel, pending the disposition of the action.

[29] With respect to the first order, the cause of action of trespass is not pleaded anywhere by the Plaintiffs. Further, this order seeks more than to prevent trespass as it extends 500 metres beyond the property of the Plaintiffs.

[30] Similarly, the second order that is requested in relation to the Plaintiffs’ staff and representatives is not ancillary to any cause of action. I note that there is no actionable tort of harassment: Merrifield v. Canada (Attorney General), 2019 ONCA 205 at para. 43 and McDonald v. Belleville (City of), 2021 ONSC 1049 at para. 29. Further, reading the Amended Statement of Claim generously and liberally, neither the tort of intimidation nor its essential elements have been pleaded. The elements of this tort are: (a) the party threatened to commit an act or to use unlawful means against the interest of the threatened person, (b) the threat caused the threatened person to do or refrain from doing something he or she was entitled to do, and (c) the party making the threat intended to injure the threatened person: see McIlvenna v. The City of Greater Sudbury, 2014 ONSC 6043 at para. 19.

[31] While the proposed Amended Statement of Claim refers to the cause of action of intentional interference with contractual relations, there is no “link” in the pleading between this cause of action and the relief sought on this motion. For example, there is no allegation that the Defendants have done anything to cause any staff or representative to breach their contract with the Plaintiffs.

[32] Even if the cause of action of trespass had been pleaded, I would have declined to grant an interlocutory injunction in this case, based on the test for an interlocutory injunction set out in RJR – MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311. While the issue of whether there was trespass is in dispute, there is a serious issue to be tried. However, the Plaintiffs have not shown that they would suffer irreparable harm if the interlocutory injunction was refused pending the disposition of this action.

[33] The Plaintiffs submit that that the rules that generally apply to injunctions do not always apply in cases of trespass because of the sacrosanctity of property rights. They rely on an excerpt from R.J. Sharpe, Injunctions and Specific Performance, loose-leaf (Toronto: Thomson Reuters Canada Limited, 2019), as well as on the cases Lewvest Ltd. v. Scotia Towers Ltd., 1981 CanLII 2662 (Nfld. S.C.) (“Lewvest”) and 1465152 Ontario Limited v. Amexon Development Inc., 2015 ONCA 86 (“Amexon”).

[34] Amexon does not apply to this case as it deals with a permanent injunction, not an interlocutory one. The Lewvest case was about the boom of a sky crane swinging over the adjacent property owned by the plaintiff. The plaintiff moved for an order enjoining this practice. There was no dispute that the defendant was trespassing on the plaintiff’s land. Justice Goodridge stated, in part:

[6] Under our system of law, property rights are sacrosanct. For that reason, the rules that generally apply to injunctions do not always apply in cases such as this. The balance of convenience and other matters may have to take second place to the sacrosanctity of property rights in matters of trespass.

[7] What has happened here is that the third defendant, by trespassing on property of Lewvest Limited, can save itself, according to the evidence, close to half a million dollars. If it can save that money, so be it, but the Court is not going to give it a right to use the plaintiff's property. That is a right that it must negotiate with the plaintiff.

[9] The Court has no power to expropriate the property of one party and give it to another, either in whole or in part. If I were to deny this application for an injunction, I would in effect be doing just that — giving the third defendant a licence to use the plaintiff's property.

[11] As far as urgency is concerned, I think this relates to an apprehension of injury. Here we are discussing an on-going trespass, so the injury here of whatever dimension exists now and is a continuing one.

[12] As far as convenience is concerned, this decision undoubtedly will create tremendous inconvenience to the third defendant and very possibly to the citizens of St. John's. Little inconvenience could result to the plaintiff in refusing the injunction. Nevertheless, the plaintiff is entitled to its property rights inviolate.

[13] If a third party can gain economic advantage by using the property of another, then it must negotiate with that other to acquire user rights. The Court cannot give it to him.

[35] Lewvest is distinguishable based on its facts. In that case, the trespass was ongoing and continuous and Justice Goodridge was concerned that, without an order of the Court, the plaintiff’s property rights would be expropriated. This is not the case here. The Defendants are not seeking to use the Plaintiffs’ property for any purposes. Denying an injunction in this case would not have any expropriation-like effect. Further, there are very few alleged incidents of trespass, these incidents are of a relatively trifling nature, and the Defendants’ alleged conduct cannot be described as a continuous and ongoing trespass.

[36] I also note that R.J. Sharpe’s textbook on injunctions on which the Plaintiffs rely does not state that an injunction must be automatically granted each time that there is an allegation of trespass. In fact, it expressly points out that the present state of the law is not settled on this issue, and it discusses cases where injunctive relief was denied or suspended. I have not been referred to any cases presenting a situation similar to the present case.

[37] In light of the circumstances of this case, I see no valid reason not to apply the traditional test for an interlocutory injunction. As a result, even if the Plaintiffs had pleaded trespass, I would have declined the Plaintiffs’ request to grant an interlocutory injunction in this case as they have not met the applicable test. I point out, however, that a court may come to a different view should there be more incidents of trespass in the future.

Conclusion

[38] As set out above, I grant leave to the Plaintiffs to amend the Statement of Claim as set out in the Amended Statement of Claim uploaded onto CaseLines for the hearing of this motion. The balance of the Plaintiffs’ motion is dismissed.

[39] If costs cannot be agreed upon, the Defendants shall deliver costs submissions of not more than three pages (double-spaced), excluding the costs outline, within 10 days of the date of this endorsement. The Plaintiffs shall deliver their costs submissions (with the same page limit) within 7 days of their receipt of the Defendants’ submissions.

Vermette J.

Date: October 29, 2021