COURT FILE NO.: CV-19-00081376 DATE: May 16, 2023

SUPERIOR COURT OF JUSTICE – ONTARIO

BETWEEN: Jean Francois Lafortune v. Francois Lemay and Michael McCall and 3524574 Canada Inc. and McCall and Associates Inc.

BEFORE: Justice M. S. James

COUNSEL: Brett Hodgins and K. Scott McLean, Counsel for the Plaintiff/Responding Party Sean Taylor, Counsel for the Defendants/Moving Parties

DATE HEARD: October 21, 2022

REASONS FOR DECISION

Introduction

[1] The Defendants bring this motion for summary judgment dismissing the Plaintiff’s action. They say that the parties never agreed to a contract as alleged by the Plaintiff. Alternatively, the Plaintiff’s claim is barred by the operation of the Limitations Act, 2002.

[2] The Plaintiff says that although this motion has been brought by the Defendants, the evidence in support of the Plaintiff’s claim is conclusive and the Plaintiff is entitled to a judgment in his favour.

[3] For the reasons that follow, I have determined that the Defendants’ motion ought to be granted.

Facts

[4] The parties previously worked together in a business known as International Safety Research (“ISR”). It was initially run by the Plaintiff who was joined by the Defendant Francois Lemay (“Lemay”). The Defendant Michael McCall (McCall”) joined the firm sometime later. During the period in question, McCall was the CEO of the company.

[5] In or about 2013, the Plaintiff left ISR to take a senior position with the United National International Atomic Energy Agency (“IAEA”) in Vienna that was to last for five years.

[6] ISR was reorganized in 2015 following the Plaintiff’s departure from the company and the pending departure of another principal, Petra Keizer. Lemay and McCall intended to remain at ISR. They wanted to provide a mechanism for retaining key employees that included the issuance of new voting shares for key personnel to participate in the growth of the business and to freeze the value of the shares of the Plaintiff, who had already left the company and Keizer, who was planning to leave.

[7] The Plaintiff and Ms. Keizer owned their shares through 3524566 Canada Inc. As part of the 2015 reorganization, the existing common shareholders were issued preferred shares which represented ISR’s value at the date of the reorganization. 3524566 was one of three shareholders at that time and received preferred shares through the reorganization. The other two shareholders who received preferred shares in ISR were 3524574 Canada Inc. (which was controlled by Lemay) and M. McCall and Associates Inc (“McCall Inc.”).

[8] At the time of the reorganization, the estimated value of ISR was $2,626,000.00 and preference shares representing that amount were issued to 3524566, 3524574 and McCall Inc.

[9] New common shares were then issued to selected individuals, including Lemay and McCall. The Plaintiff negotiated for and received a 5% interest in the new shares which he held in 3524566 Canada Inc.

[10] At this time the Plaintiff had about three years left to serve on his employment contract with IAEA. In the unsigned “Record of Discussion” dated May 5, 2015 the parties alluded to the possibility of a departing shareholder returning to ISR in the future and “buying” a 25% stake in the company if that person was prepared to work full time with ISR for a “minimum period of approximately 5 years.” Although the author of the document (likely Ms. Keizer) made provision for the parties to affix their signature, McCall said that this document was not signed because there was not unanimous agreement with what was being proposed.

[11] Discussions continued after the May 5, 2015 meeting. One proposal by the Plaintiff suggested that he should receive an additional block of the new shares to hold while he worked at IAEA. He said he would give them back if he did not return to the company. I think it is fair to say that he wanted to share in the future growth of the company and to have a hook into a share of the proceeds of a potential sale.

[12] There were some obvious practical difficulties with this suggestion and in an email dated June 23rd, 2015 Lemay wrote to the Plaintiff stating in part that:

We propose instead that at any time within the next three years, if you return to an active role at ISR, doing the necessary work, we will issue you the same share as Mike and I own, and we will devise a way for you to afford them (probably a dividend that covers the taxes and the share price) if the price is greater than zero. We would really like you to come back.

[13] In the same email Lemay disclosed that the Calian Group Ltd. (“Calian”) had expressed an interest in acquiring ISR. He said, “Because this would be happening so soon after the share reorg, we would clearly need to make adjustments to split the proceed (sic) of the sale more equitably. So if within the next three months (before September 23, 2015) this became a tangible proposal that we can accept, I propose that the funds from the sale above the preferred share buyback ($2.6M) would be shared 25% each, if each person is willing to accept the conditions from Calian…We need you with us to help sell the company…We propose instead that at any time within the next three years, if you return to an active role at ISR, doing the necessary work, we will issue you the same share as Mike and I own and we will devise a way for you to afford them (probably a dividend that covers the taxes and the share price) if the price is greater than zero. We would really like you to come back.

[14] I am uncertain whether Lemay was speaking for himself only or making a proposal on behalf of all the ISR shareholders.

[15] There were two elements to Lemay’s proposal. The first was to share a portion of the Calian purchase price if “within three months this becomes a proposal that we can accept” (there is no evidence that this requirement was met). The second proposal was to return to ISR and, if certain conditions were met, the Plaintiff would acquire an equal shareholding to Lemay and McCall at a nominal price. ISR eventually made a deal with Calian, but it didn’t close until two years later.

[16] The Plaintiff responded positively and said he was willing to come back to ISR if the deal was good but the evidence does not support a conclusion that the parties had made a legally binding agreement.

[17] Following up on Lemay’s proposal, McCall wrote an email to the Plaintiff several months later on October 8, 2015 stating:

Jeff: Here is the quick pitch. Leave IAEA. Come back to ISR. Work in the Middle East (probably out of Abu Dhabi). Run all of our Middle East business. Get your shares, get paid what we get paid. I think this market is really starting to go places for us. I have contracts with GCC (three), Bahrain, Oman (two) and one I am closing in Qatar. You could probably really get it to grow. We probably won't get rich working at ISR, but maybe we can continue to grab some serious market share and someday we get a great offer for ISR we can't refuse.

[18] The Plaintiff was attracted to the possibly of returning to ISR but was non-committal. In his response he said in part, “… So we need to discuss reasonable expectations, and numbers. It is late tonight so let’s think about it and talk later.”

[19] On January 2nd, 2016, McCall wrote an email to the Plaintiff stating in part as follows:

As equal partners, you would not receive a bonus lower than Francois and I, as we have always done in the past. That was my intent when I put this in, but I can see it may not work in some instances. I cannot really write this in this agreement. This needs to be between us, as it was in the past. Shares after three months of full time employment in AD (I need some starting point), at retained earning value (which is very low right now - almost zero).

[20] The combined effect of Lemay’s comment that they would find a way to make the shares affordable if they were worth more than zero and McCall’s comment that the shares could be acquired at “retained earning value (which is very low right now – almost zero)” would certainly have led the Plaintiff to believe that he could acquire shares at a low cost.

[21] A potential sale of ISR to Calian Group was in the background to these discussions. It is not clear how much the Plaintiff knew about the negotiations as they progressed. Also not clear is when Calian actually made an offer and when the offer became a firm deal.

[22] In furtherance of the Plaintiff’s possible return to ISR, the parties began negotiating an employment agreement for the Plaintiff. Different drafts were exchanged.

[23] The Plaintiff’s affidavit at paragraphs 22 and 23 refers to a draft agreement under cover of a letter from McCall dated January 11, 2016 (Ex. F) and a subsequent draft under cover of a letter from McCall dated January 21, 2016 (Ex. G). The reference to a subsequent draft dated January 21, 2016 appears to be an error because the document contained in the Plaintiff’s affidavit at Ex. G is actually dated January 21, 2017.

[24] I find that the employment agreement that the parties agreed to is the signed version sent to the Plaintiff under cover of McCall’s letter of January 26, 2016 (Ex. B, Lemay affidavit). It appears to be identical to the version sent to the Plaintiff under cover of McCall’s letter of January 11, 2016 (referred to as Ex. F by the Plaintiff). The agreement contained the following provisions:

3. TERM AND PROBATION The employment will commence on 1 July 2016 and shall continue until the employment relationship is terminated in accordance with the provisions of this Agreement. The employment shall be on the basis of a minimum of 40 hours per week. The Employee must meet the following objectives:

1. Demonstrates outstanding leadership, loyalty, initiative and autonomy;
2. Demonstrates the ability to successfully grow the Middle East Sector to $2M in annual sales within 2 years;
3. Demonstrates the ability to successfully grow the Middle East sector to a minimum of $3M in capital sales within 4 years; and
4. Middle East Section net profit > 15%;

4. REMUNERATION, COMPENSATION AND OWNERSHIP Salary ISR agrees to pay the Employee a salary of $150,000.00 Canadian Dollars per annum payable in equal monthly installments in arrears. Any future salary increased will be consistent with all senior ISR partners. Ownership The Employee will be offered equal ownership with the existing two majority owners (Lemay and McCall) in the new shares of ISR. The shares will be offered from the shares currently owned by Lemay and McCall, in order to avoid dilution of the other existing shareholders. Shares will be available at retained earning value three months after full time employment on the ground in Abu Dhabi.

13. ENTIRE AGREEMENT This Agreement constitutes the entire agreement between the parties with respect to the employment of the Employee. The Employee agrees that there are no pre-contractual representations upon which he/she relies except as incorporated herein. The Employee specifically releases ISR from all actions, causes of actions, claims and demand in respect of any pre-contractual representation not incorporated herein, or any misrepresentations or omissions.

[25] Importantly, it will be noted that the employment agreement addressed the possibility of the Plaintiff acquiring shares in ISR “at retained earning value three months after full time employment on the ground in Abu Dhabi.” McCall’s comment in his email to the Plaintiff on January 2, 2016 that the retained earnings value was very low- “almost zero” - would have been attractive to the Plaintiff.

[26] The Plaintiff says he resigned from his position with IAEA in January, 2016 with an effective date of March 31st, 2016. I infer from this statement that the timing of his resignation coincided with finalization of his employment agreement with ISR. The Plaintiff returned to work for ISR in the summer of 2016 as the general manager of their office in Abu Dhabi, United Arab Emirates.

[27] On October 24, 2016 several months after the Plaintiff had returned to work for ISR, John Lunn, the Plaintiff’s accountant, sent an email to the Plaintiff with a copy to McCall wherein he addressed changes in the value of the shares that the Plaintiff wanted to acquire. It appears that the original idea of the Plaintiff acquiring shares based on retained earnings had become “moot” because of the increasing value of the shares. Mr. Lunn described the situation in the following terms:

From my conversation with Mike of a few minutes ago, the whole share deal appears to be moot. Assume Jeff buys some shares today, he would have to pay the ‘value’ of the shares as of today. That value should be based on what the shares are about to be sold for…..in other words, if one share is ‘valued’ today at $1,000, it will be sold in the next month or two based on a value of $1,000, so where is the gain for Jeff? The analysis would be very different if Jeff had bought in during May 2015, when the shares were valued based on a corporate value of $2.6 million. C’est la vie. Mike’s suggestion was to find another way to deal with this. Jeff, I will get further responses Tues pm about setting up of a Trust to ‘hold’ your investments. Does anyone know who is doing the books of 66 Holdco, and what is happening to the $’s that are flowing as the pref shares are being redeemed? Where is the cash? Has it been paid out in any shape or form to the shareholders? later John Lunn CPA CA Tel 613 729-8681 Fax 613-729-3168

[28] Mike McCall responded the same day with an email to the Plaintiff and Lemay:

Hi Guys; Francois, this update is mainly for you as Jeff and I have discussed a few times today. Due (mainly) to the elevated price of ISR ‘new’ shares it is untenable for Jeff to acquire these shares due to the price and the fact that it would be a very bad deal for him moving forward (buy and sell at almost the same price). We will need to structure an agreement that works for Jeff and for the deal we (will hopefully) sign the Calian. I will start a Draft, please send me your comments on structure, contents, metrics etc. We will have to look at all implications of this solution to see how it affects Mike, Francois, Jeff, ISR and Calian. Jeff is also trying to take care of the certificate of his non-residency to ensure this deal is squeaky clean from a Calian perspective (as a public company). If this does not work, Jeff will declare as a resident and take care of whatever tax issues he needs to (either of these solutions will be seen as clean by Calian I would assume). I am also looking into how the redemption debt will affect the cash paid for the new shares. More to follow, I am sure.

[29] The evidence does not clearly explain the basis and timing for the elevated price of the “new” ISR shares. Presumably the year-end financial statements for ISR would have indicated a value for retained earnings. What did the most recent financial statement disclose? Was this information provided to the Plaintiff? The Calian sale was months away from closing. What caused the value of the shares to be elevated? Did Calian’s interest in acquiring ISR increase the value of the shares or the retained earnings and if so, how? Had a new financial statement been prepared? Was ISR having an especially profitable year? What were the applicable accounting principles?

[30] Whatever the answer to these questions, it is common ground between the parties that the Plaintiff chose not to acquire any shares in accordance with provisions in the employment agreement, that is, at the retained earnings value three months after full employment. He said he did not see the benefit of buying shares then disposing of them to Calian for the same price, assuming a deal with Calian was finalized.

[31] On October 25, 2016 the Plaintiff sent an outline of an agreement to McCall and Lemay entitled “Our agreement- draft” under cover of an email that said: “Guys, I think this captures the spirit of our agreement. I don’t write in legalese, so forgive me if it is too simple. Please let me know what you think.” This proposal called for a money payment to the Plaintiff, subject to conditions, rather than the acquisition of shares. The entire proposal is reproduced below:

Whereas Lafortune, Lemay and McCall (the Parties) owned, as of December 2016, 40%, 40% and 20% preferred shares in ISR Inc. respectively through their respective holding companies, 3524566 Inc., 3524574 Canada Inc. and M. McCall and Associates Inc.; Whereas the Parties agreed in March 2015 to freeze the preferred shares in order to restructure the share ownership in ISR Inc. to reflect contribution to growth through the issuance of “growth” shares; Whereas the Parties agreed that Lafortune would receive 30% of the growth shares upon returning to full employment with ISR Inc.; Whereas the Parties agreed in January 2016 to Lafortune returning to full employment with ISR to open and become the General Manager of the UAE Branch of ISR Inc.; Whereas Lafortune signed an employment contract on 26 January 2016 with ISR Inc., which started on 9 July 2016; Whereas as in October 2016, when the growth shares were offered to Lafortune, due to an impeding (sic) purchase of ISR Inc. by a third party (the Buyer), the value of the shares had been deemed to have accrued such that the purchase of the growth shares by Lafortune would represent a cost approximately equal to the resale value, thereby presenting no financial benefit to Lafortune, and therefore being inconsistent with the original intent of the 30% growth share offering; and Whereas Lemay and McCall, upon the sale of ISR Inc. to Buyer, will each receive a payment equal to 45% of the purchase price;

The Parties hereby agree to the following:

1. At the time of the purchase of ISR Inc. by Buyer, Lafortune will be paid a fee for services and contribution to the sale equal to 30% of the purchase price minus any amount deemed required by the Buyer to be made directly or indirectly to ISR Inc., and not to the shareholders of ISR Inc., for the purpose of maintaining an acceptable balance sheet upon execution of the sale.
2. The fee shall be paid equally by 3524574 Canada Inc. and M. McCall and Associates Inc.
3. The amount paid shall reflect the payment schedule and be subject to the same performance conditions as those applied by Buyer for payment of the purchase price.
4. Any tax penalty incurred by Lemay and McCall as a result of this fee transaction, if any, compared to not paying the fee, shall be considered in the amount paid to Lafortune. This article shall apply to the initial payment and any further payment made by Buyer as part of the sale agreement of ISR Inc.
5. The fee payment shall be contingent on: a. Lafortune remaining employed by ISR Inc. and the Buyer, in whatever form deemed appropriate by Buyer, on a full time basis, for the duration stipulated by Buyer in the purchase agreement; and Lafortune working diligently, in cooperation with the other parties, to meet sales and profit targets set by Buyer as part of the purchase agreement.
6. In the event that the condition stipulated in article 5a above is not met, Lafortune shall reimburse McCall and Lemay the amount paid at the time of purchase, subject to the same conditions as those stipulated in the sale agreement for Lemay and McCall regarding their employment with ISR Inc.
7. In the event that the condition stipulated in article 5b above is not met, but article 5a is met, Lafortune shall retain the initial payment made at the execution of the sale of ISR Inc. but forfeit any further payment made by Buyer in accordance with the purchase agreement.
8. Provided that both conditions stipulated in article 5 above are met, Lafortune shall receive further fees, paid equally by 3524574 Canada Inc. and M. McCall and Associates Inc., equal to 30% of the combined amount received by 3524574 Canada Inc. and M. McCall and Associates Inc. from Buyer as part of the sale agreement of ISR Inc.

[32] There is no evidence that Lemay and McCall agreed to this proposal.

[33] In December 2016, ISR and the Plaintiff agreed to what they referred to as an updated “employment agreement.” The covering letter provided as follows:

7 December 2016 Dr. Jean Francois Lafortune Capital Plaza Tower A, Apartment 13-03 Corniche Abu Dhabi, UAE PO BOX 72240 Re: Employment Agreement Dear Jeff: International Safety Research Inc. (ISR) is pleased to offer you an updated employment agreement for the full time permanent position as the General Manager of Middle East Operations. This position includes all aspects of business development, contract coordination, project and financial management of all current and future ISR contracts in the GCC region. This offer is based on your declaration as a non-resident of Canada. The primary objective of this position and this offer is the generation, over the next two years, of recurring sales in excess of $2M/year supported by a net profit in excess of $400k in the GCC business sector. Appendix A contains an Employment Agreement. You may signal your acceptance by signing Appendix A. This offer is valid until end January 2017. All previous ISR employment agreement(s) are nullified and superseded on receipt of this agreement. Please do not hesitate to contact any points in this offer. We look forward to having you again as a full, participating leader in ISR. Sincerely, Mike McCall, M.Eng., P. Eng. CEO Attachments: Appendix A: Employment Agreement

[34] The updated employment agreement did not contain a clause similar to the “ownership” clause in the previous employment agreement and was silent on the issue of acquisition of shares in ISR by the Plaintiff.

[35] The updated contract included an “entire agreement” clause in the following terms:

This agreement constitutes the entire agreement between the parties with respect to the employment of the Employee. The Employee agrees that there are no pre-contractual representations upon which he/she relies except as incorporated herein. The Employee specifically releases ISR from all actions, causes of action, claims and demand in respect of any pre-contractual representation not incorporated herein, or any misrepresentations or omissions.

[36] On February 24th, 2017, the Plaintiff was back to the possibility of buying shares. He forwarded an email to McCall on the subject “Shares buy in”:

Mike, I need to know very quickly how much you would charge me for the shares (30% I guess) buy in. Would (sic) sort of number are you thinking about? I am working on the mechanism to get them. That should be solved fairly soon. Thanks, J

[37] McCall responded later that day as follows:

Jeff: PwC is working on numbers. Math is what ISR is worth. Say $8M, minus 2.2M for redemption debt, minus $800k for loans. So say $5M. Francois and I have 75% of main shares. 33% of that is 25%. Comes to $1.25M. He is looking at how low this can go below this. (note this is my very quick math not PwC - they have not sent their official calcs). thanks Mike

[38] On March 13th, 2017, the Plaintiff sent McCall an email question where he asked “Where does it say in the agreement we signed that we can’t see shares within two years? I can’t find it.”

[39] Later that day, McCall responded to the Plaintiff saying “JF, it doesn’t, if we sell them we lose all rights to capital gains. It is tax law. Our lawyers and accountants told us about this. Thanks, Mike.”

[40] The reason for the Plaintiff’s inquiry regarding shares is unclear as is the basis for McCall’s response.

[41] The Plaintiff says that the restriction on the sale of shares for two years “made it impossible in any event for me to obtain the shares that I had been promised.”

[42] On March 20th, 2017, McCall sent the Plaintiff an email under the subject heading “Agreement” as follows:

Hi Jeff; As discussed today, I have drafted the terms of the agreement between you and I and Francois. When we have agreed on these terms, I will write them out more formally, we will agree and I will send to the lawyer for him to complete a professional agreement.

• Jeff will be paid $471.827.02 after completion of first year of earn out;
• Jeff will be paid $512,827.02 after completion of second year of earn out;
• Jeff's target for earn out is 33% of ISR EBITDA targets;
• ISR Canada's target for EBITDA is 66% of overall EBITDA targets;
• It is understood that BLACKDOG can and will approve contracts on the basis of risks before we can sign them;
• ISR Corporate Controller calculates EBITDA for each party, and overall target is approved by BLACKDOG;
• All funds are in CAD;
• Penalties for all parties are a $4 reduction in payment value for every $1 missed on the EBITDA target;
• Payouts are only made if ISR meets overall corporate targets (or money is available for partial targets to pay deserving party(s));
• Legacy (ISR Canada) project for JF includes Qatar proposal;
• ME EBITDA targets are based on net profit for region (i.e., no corporate overhead not included in projects and marketing requirements etc);
• JL MUST be employed by ISR to receive payments;
• Payments will be post tax payments from MM and FL individually (50/50);
• FL and JF will provide equalization of MM for redemption share value at time of redemption; and
• This agreement is between JL, MM, and FL, and must be kept confidential.

Thanks, Mike Mike McCall M.Eng., P.Eng. CEO International Safety Research 613-241-4884 ext 224 (w) 613-282-4238 (cel)

[43] The Plaintiff says that in his view, McCall’s proposal was essentially an offer to “pay me the value of the growth shares I had been promised, as part of my compensation over two years.” (Lafortune affidavit, para. 32). He noted that for the first time, any prospective payment by McCall and Lemay was linked to the Plaintiff meeting certain performance targets.

[44] On April 10th, 2017, the Plaintiff sent McCall and Lemay a response in the form of a draft agreement regarding the sharing of the proceeds of the sale of ISR shares. In this proposal the Plaintiff appears to have accepted certain performance requirements as a condition to the obligation of Lemay and McCall to pay the Plaintiff. This proposal was not accepted by Lemay and McCall.

[45] In May, 2017 Calian’s purchase of ISR was completed. Payment of the full purchase price of $8,200,000 was subject to monetary performance milestones over the next two years. Ultimately the performance requirements ISR agreed to in the sale to Calian were achieved to the benefit of McCall and Lemay.

[46] The Plaintiff says it wasn’t until a meeting with Lemay and McCall in August, 2018 that he realized that they were not prepared to share any portion of the proceeds paid by Calian to acquire ISR.

Issues

[47] Can the court reach a fair and just determination on the merits of the motion for summary judgment without the necessity of a trial?

[48] Did the defendants hold shares in trust for the plaintiff following the 2015 restructuring?

[49] Did the dealings between the parties result in a contract entitling the Plaintiff to receive shares upon his return to work for ISR or a portion of the proceeds of sale of IRS shares following the sale of ISR to Calian?

[50] If a contract was made, did it become unenforceable due to the application of the Limitations Act, 2002?

Position of the Parties

i. The Moving Parties/Defendants

[51] The Defendants say that the basis of the Plaintiff’s claim is their failure to provide him with shares in ISR equal to Lemay and McCall at nominal cost. They deny this allegation but say that even if true, the running of the limitation period commenced on May 9, 2017 (the closing date of the sale to Calian), because after that date they no longer owned any shares with which to fulfil their promise. On this basis the action, having been commenced on September 12, 2019, is out of time.

[52] The Defendants also say that the parties never agreed to an arrangement whereby the Plaintiff would receive any portion of the proceeds of sale from the Calian transaction in excess of the 5% interest held by the Plaintiff following the reorganization in 2015, which arrangement, if it existed, would have the effect of extending the limitation period.

ii. The Respondent/Plaintiff

[53] The Plaintiff’s position is that there was a binding agreement made in 2015 entitling him to an equal share in the growth of the company’s value. If this entitlement could not be fulfilled by acquiring shares at a nominal value, then Lemay and McCall were obliged to share the proceeds of sale with him in some way such that he benefitted equally from the Calian transaction.

[54] At all material times the Defendants were holding the Plaintiff’s beneficial interest in ISR on his behalf during his absence, subject only to his return to ISR.

[55] It would be an error to apply the doctrine of certainty too rigidly so as to defeat the importance of giving effect to the expectations of the parties that they had entered into a valid and enforceable agreement.

[56] The sale of ISR to Calian on May 9, 2017 and the fact that the Plaintiff did not receive shares or payment on or before that date does not mean that this date represents the date of breach or discovery of a claim. The parties’ discussions in the spring of 2017 contemplated scenarios in which the Plaintiff would receive his portion of the proceeds of the sale to Calian in accordance with the earn out payments from Calian. The date of “discovery” of the claim was in August, 2018.

[57] The preponderance of evidence supports the Plaintiff’s claim and the issues ought to be resolved by a summary judgment in his favour.

Discussion and Analysis

Summary Judgment

[58] The procedure to be followed on motions for summary judgment is governed by Rule 20 of the Rules of Civil Procedure. Rule 20 was invigorated and strengthened by the decision in Hyrniak v. Maudlin, 2014 SCC 7. In Hyrniak the Supreme Court of Canada emphasized the need for a culture shift in the delivery of timely, affordable and fair access to justice in a way that reduced the emphasis on conventional trials and that promoted proportional procedures tailored to the needs of the particular case.

[59] Justice Karakatsanis, writing for a unanimous court in Hyrniak, directed that the summary judgment rules must be interpreted broadly and observed that the previous “full appreciation” of evidence requirement was too onerous and impeded access to justice. In her view, the re-vamped summary judgment procedure adopted in 2010 was an important tool in providing a cheaper and faster alternative to a full trial. She said that the traditional use of extensive pre-trial procedures and the conventional trial no longer met the needs of many modern litigants. The rule change was intended to transform summary judgment from a means to weed out unmeritorious claims to a significant alternative model of adjudication (Ibid, para. 45).

[60] The first step under Rule 20 is to determine whether there is genuine issue requiring a trial with respect to a claim or defence. There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits of a motion for summary judgment. This will be the case when the process allows the judge to find the necessary facts, allows the judge to apply the law to the facts and is a proportionate, more expeditious and less expensive means to achieve a just result (Ibid, para. 49). The proportionality principle involves considerations such as cost, efficiency, timeliness and the nature and complexity of the issues to be determined, all with a view to the just and expeditious disposition of cases on their merits. The culture shift contemplated by Justice Karakatsanis “requires judges to actively manage the legal process in line with the principle of proportionality” (Ibid, para. 32).

[61] If the motion judge determines there is a genuine issue requiring a trial, then step two involves a discretionary assessment of whether the need for a trial can be avoided by using the fact-finding powers contained in Rule 20 to weigh evidence, evaluate credibility and draw inferences from the evidence unless it is in the interest of justice for them to be exercised only at a trial (Ibid, para. 52). “Interest of justice” is not defined. It turns on a consideration of the nature of the issues, the nature and strength of the evidence and what is a proportional procedure (Ibid, para. 59).

[62] In my view, this case is well suited to resolution by summary judgment. The documentary record is thorough and reliable. The parties have been examined for discovery and the transcripts of those examinations have been filed. There are not material facts in dispute that prevent the necessary findings from being made using the summary judgment procedure, even though the parties may not agree on every point and the evidence does not provide an answer to every question. This is not a case where the court is required to make credibility assessments to resolve conflicts in crucial evidence. Both sides refer substantially to the same documents in support of their positions. The real issue is to determine the legal consequences that flow from the evidence.

The Acquisition of Shares by the Plaintiff or Payment in Lieu of Shares

[63] I find that the parties were never bound to an agreement (except for the employment agreements) that had sufficient certainty and clarity to result in legally binding rights and obligations. The objectives reflected in their early discussions regarding the Plaintiff’s acquisition of more shares in ISR were subsumed in the initial employment contract which contained a specific clause that ISR shares would be available to the Plaintiff “at the retained earning value three months after full time employment on the ground in Abu Dhabi.” This clear contractual term displaced the prior negotiations.

[64] This view is reinforced by the presence of the “entire agreement” clause which contained an acknowledgement that the Plaintiff was not relying upon any pre-contractual representations that were not included in the employment contract. The inclusion of clauses related to the possible acquisition of shares within the employment agreement means that they are captured by the entire agreement clause which applies to the whole of the document. It is not persuasive to suggest that only the clauses specifically related to employment should be caught by the entire agreement clause and that the clauses related to the acquisition of shares were not. Note as well that in the definitions section of the employment contract that the word “agreement” is defined to refer to the “entire agreement and not to any particular section or section (sic) thereof.”

[65] When the parties moved on from the notion of the Plaintiff acquiring shares for an amount derived from the retained earnings, their discussions about a new compensation mechanism did not constitute a contract. Instead, they endeavoured to make a new arrangement but never actually did. In the period of time following the Plaintiff’s decision not to acquire shares for an amount based on retained earnings, there was never a “meeting of the minds” on the precise terms upon which some amount of the Calian purchase money would be shared with the Plaintiff.

[66] For an analysis regarding when contract negotiations may result in a contract in the absence of a formal, written agreement, even where the parties anticipate that a formal agreement will be signed, see Bawitko Investments Limited v. Kernels Popcorn Limited (1991), 79 D.L.R. (4th) 97, [1991] CarswellOnt 836 (Ont. C.A.).

[67] While I accept as correct the statement of the law contained in the case of Aiello v. Bleta et al., 2022 ONSC 2798, referred to by the Plaintiff on the dangers of too rigidly applying the law of certainty of terms, each case turns on its own particular facts and no two cases are exactly alike.

[68] The Plaintiff says that he was in a difficult bargaining position vis-à-vis Lemay and McCall. He had resigned a senior post with the IAEA to take a new position in a new territory where there was no established market. He did not have the same resources available to him that were available to others in the company. International dynamics changed under the Trump presidency. It is also true that employment arrangements can involve a power imbalance in favour of the employer. For this reason the law takes a more nuanced view of the employment arrangements compared to other types of contracts, treating them as a unique subset of contract law.

[69] The Plaintiff’s comments may be true for the protracted discussions that followed the sale of ISR to Calian when the Plaintiff was trying to develop the Middle East market and the parties were exploring other options to benefit the Plaintiff, but the Plaintiff did not resign from IAEA until he was satisfied with the terms regarding his return to ISR, which was more than a year prior to the closing of the Calian transaction. The Plaintiff was a well-educated businessman who likely had experience dealing with contractual terms and negotiations from his previous position as an executive with ISR.

[70] I conclude that when the Plaintiff resigned from IAEA he was prepared to accept the contractual terms in the employment agreement under which he could acquire more shares in ISR. The changing landscape regarding the value of the retained earnings, although not well explained, turned out not to be advantageous to the Plaintiff.

[71] While it is difficult to discern from the evidence precisely why the parties were never able to agree on some arrangement to transfer shares to the Plaintiff or a monetary payment in place of shares, I note that there is no allegation in the amended statement of claim that the Defendants failed to negotiate in good faith or misled the Plaintiff by withholding important information.

[72] The evidence does not support the contention advanced in paragraph 15 of the amended statement of claim that it was a condition of the 2015 restructuring that if the Plaintiff returned to work for ISR he would automatically be entitled to a 30% interest nor do I agree that Lemay and McCall were temporarily holding the Plaintiff’s 30% interest pending his return to work at ISR as alleged in paragraph 17.

[73] I have considered whether the gaps in the evidentiary record prevent the issues from being decided summarily. My conclusion is that while there are unanswered questions, the evidence is sufficient to permit the court to make the necessary factual findings and to apply the relevant law to the material facts such that the crucial issues raised by the pleadings can be fairly adjudicated without a trial.

The Limitation Period Issue

[74] On my view of the case, this is a non-issue. The only legally enforceable provisions respecting the Plaintiff’s entitlement to acquire shares was contained in the employment agreement and the Plaintiff chose not acquire shares in the belief that he would not benefit from doing so. Using the language of the Limitations Act, 2002 there is no claim to “discover” so the timing of the commencement of proceedings is irrelevant.

Disposition

[75] The Defendants’ motion for summary judgment dismissing the Plaintiff’s claim is granted.

[76] On the issue of costs, I would request that the parties endeavour to resolve this between themselves. Failing that, the Defendants may submit a costs outline, a draft bill of costs and any offers to settle under Rule 49 within 30 days and the Plaintiff’s response, including a draft bill of the Plaintiff’s costs, is due 30 days after his receipt of the Defendants’ material.

Justice M. S. James Date released: May 16, 2023