ID Inc. v. Toronto Wholesale Produce Association, 2023 ONSC 4770

COURT FILE NO.: CV-16-00564151

DATE: 20230825

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

ID Inc.

Plaintiff

• and -

Toronto Wholesale Produce Association and StrategyCorp.

Defendants

James Zibarras and Richard MacGregor, for the Plaintiff

Timothy M. Morgan, for the

Defendant Toronto Wholesale Produce Association

Robert Bell and Emily Fan for the Defendant StrategyCorp.

HEARD: March 13 to April 4, 2023

MERRITT J.

REASONS FOR JUDGMENT

OVERVIEW

[1] This case involves a dispute concerning a billboard sign (the “Eastern Sign”) at the Ontario Food Terminal (“OFT”).

[2] The plaintiff, ID Inc. (“ID”), alleges that the defendant, Toronto Wholesale Produce Association (“TWPA”), breached their contract. The plaintiff brings this action to recover damages for lost revenue relating to the Eastern Sign and other future, potential signs. ID alleges that another defendant, StrategyCorp (“StrategyCorp”), interfered with its contractual relations with the TWPA, conspired with the TWPA, and misused its confidential information by going to one of its competitors and excluding ID.

[3] John Kenny (“Kenny”) is the principal of the plaintiff, ID. In the fall of 2011, Kenny identified an opportunity at the OFT to convert its billboard signs to digital signs.

[4] ID claims it made an oral agreement with the TWPA on January 29, 2013 (the “Alleged Oral Agreement”) to supply and install digital boards on both faces of the Eastern Sign (the “Construction”), to maintain it in exchange for monthly fee (the “Maintenance”), and to sell advertising on the sign for a 20 percent commission based on gross advertising revenue (the “Advertising Revenue”). ID says the part of the Alleged Oral Agreement dealing with Construction and Maintenance was incorporated into a written agreement (the “SMA”). ID claims that the TWPA breached both the Alleged Oral Agreement and the SMA.

[5] Kenny’s dealings with the TWPA were primarily with Bill Evans (“Evans”) and Joe DaSilva (“DaSilva”), the TWPA’s board member and secretary treasurer, and the TWPA’s board president, respectively. Evans and DaSilva both gave evidence at trial.

[6] The TWPA says there was no oral agreement, only discussions. Further, in any event, there was no agreement on material terms. The TWPA agrees it entered into the SMA; however, it says that the SMA automatically terminated when Kenny did not get a permit from the City of Toronto within 360 days of execution of the agreement, a condition under the SMA. The TWPA says that after the 360 days passed, it had no further obligations to Kenny and was free to enter an agreement with one of Kenny’s competitors.

[7] ID claims that the TWPA entered into oral agreements on other occasions. The TWPA contends that all agreements had to be in writing. Kenny also says the parties acted on the Alleged Oral Agreement, while the TWPA says it pursued the opportunity generally, but never agreed to give ID a percentage of the Advertising Revenue.

[8] During the material times, the TWPA worked with StrategyCorp, a management, consulting, and government relations firm. StrategyCorp’s primary involvement related to pursuing an alternative path for securing approval for the digital signs. Ultimately, this path did not prove viable but instead caused lengthy delay (the “Provincial Path”). Two former employees from StrategyCorp worked on securing approval for the digital sign: former partner David MacNaughton (“MacNaughton”), who left StrategyCorp in 2016 and did not testify, but whose evidence from examination for discovery was read in at trial, and former senior employee Martin Green (“Green”) who gave evidence at trial.

[9] While initially attractive, the Provincial Path was ultimately not an option. The parties obtained an erroneous legal opinion that held that, because the OFT sits on Provincial land, it is not subject to municipal by-laws and no permit to convert the sign to digital was required from the City of Toronto. StrategyCorp spent years trying to ascertain how to pursue the Provincial Path. Kenny says the SMA was on hold while the Provincial Path was pursued; therefore, time sensitive provisions in it did not lapse. Kenny says StrategyCorp pursued the Provincial Path for its own gain and to his detriment. Kenny says the TWPA forced him to enter into an agreement with StrategyCorp on December 19, 2023 and share part of his 20 percent of the advertising revenue with them (the “Consulting Agreement”).

[10] The relationship between the parties deteriorated, in part, over the long delay caused by the Provincial Path, and in part because Kenny resented StrategyCorp given their success fee was to be carved from his profit share. The Consulting Agreement made Kenny very upset. He said intemperate things to Evans and DaSilva, causing them to question both his loyalty and whether they wanted to work with him at all. To continue working with them, they required Kenny to sign a non-disclosure agreement which also prevented him from dealing directly with the OFT (the “Non Disclosure Agreement” or “NDA”).

[11] Kenny claims that StrategyCorp interfered with his contractual relations with the TWPA and conspired with the TWPA to make him pay a success fee to StrategyCorp; that StrategyCorp misused his confidential information by going to one of his competitors; and that StrategyCorp excluding him from the deal with TWPA.

[12] In 2016, the Eastern Sign was converted to a digital third-party sign. The TWPA used one of Kenny’s competitors AllVision/Digital Outdoor Network Company (“AllVision”). The sign has generated significant revenue since then.

[13] ID commenced this action against the TWPA and StrategyCorp in November 2016 alleging breach of contract and various torts.

DECISION

[14] There was no oral agreement for Construction, Maintenance or Advertising Revenue. A reasonable observer would not conclude that the parties intended to contract in view of all of the surrounding circumstances including, the parties’ words and conduct both before, during and after the January 29, 2013 meeting. The parties did enter into a written agreement (the SMA), which encompasses part of the same subject matter (Construction and Maintenance) but not the Advertising Revenue and contains an “entire agreement clause”. This creates a strong presumption against finding that a prior oral agreement also existed. Moreover, material terms in the Alleged Oral Agreement were not agreed upon.

[15] I find the TWPA breached the SMA when it contracted with AllVision to install and maintain the Eastern Sign. The TWPA waived the 360-day time requirement under the SMA. Alternatively, the TWPA is estopped from relying on the 360-day time requirement because it instructed Kenny to withdraw the application for a permit while they pursued the Provincial Path.

[16] There was no oral agreement with the TWPA for additional signs. At best, the TWPA agreed to consider using ID for additional signs. There were no negotiations, no agreed to terms, and therefore no oral agreement was made.

[17] StrategyCorp did not interfere with ID’s economic relations in regard to the withdrawal of the application for the permit. StrategyCorp did not use any unlawful means to interfere with the SMA or ID’s economic relationship with the TWPA. All parties agreed to the withdrawal of the ID’s application for a permit. The TWPA would have no cause of action against StrategyCorp for same and there can be no claimed interference with ID’s economic relations.

[18] There was no conspiracy between StrategyCorp and the TWPA to make ID responsible for StrategyCorp’s success fee. ID did not have an oral agreement and there was no unlawful conduct.

[19] The TWPA and StrategyCorp did not breach the confidentiality provisions of their respective agreements. ID did not provide confidential information: the information provided was in the public domain. Kenny did not tell anyone that information provided was confidential and there was no misuse of any information that ID provided.

[20] StrategyCorp did not breach the non-competition clause in the Consulting Agreement and the TWPA did not induce same. The Consulting Agreement never came into effect because its condition precedent was not met. In any event, StrategyCorp repudiated the Consulting Agreement and ID accepted same.

BACKGROUND FACTS

[21] I will review the basic chronology of events here for context. Further findings of fact are addressed in the Analysis below.

[22] The OFT is a food and produce hub covering approximately 40 acres. The OFT can be seen from the Gardiner Expressway in Toronto (“the Gardiner”). The Province of Ontario owns the OFT; the Ontario Food Terminal Board (“OFTB”) manages it. Wholesalers operate out of the OFT selling fruits, vegetables and flowers. The wholesalers belong to the TWPA, an Ontario corporation without share capital.

[23] The Eastern Sign was a large, double-sided, traditional or static billboard sign on the OFT property, visible from the Gardiner. The TWPA owned the Eastern Sign, leasing the small bit of land upon which the sign sits from the OFTB since 1997.

[24] Kenny thought to convert the Eastern Sign to a digital third-party sign. A third-party sign carries advertisements for companies not located on the premises. By contrast, a first-party sign advertises the business or activity carried on at the same location as the sign. Third party digital signs generate significantly more advertising revenue than traditional billboard signs because they can accommodate many advertisers with advertisements rotating every six, eight, or ten seconds. Traffic exposure is the single most important aspect of generating advertising revenue: the more people who will see the sign, the more advertisers will pay. Kenny described signs facing the Gardiner as the “holy grail” of advertising signs because the traffic counts on the Gardiner are among the highest in Canada.

[25] To identify such an opportunity, one must be in the business, understand the regulations, and understand what constitutes a successful advertising sign (i.e. sight lines, height etc.). Better sign conditions result in better revenue. At the material time, ID was a one-man operation and Kenny had been selling only first-party signs which do not generate revenue directly. Kenny had experience with third-party signs previously when he worked for one of the major players in the third-party sign industry.

The June 18 Proposal

[26] Kenny first contacted Joel Ippolito; a food wholesaler at the OFT who Kenny knew (“Ippolito”). Ippolito referred him to the Ontario Produce Marketing Association (“the OPMA”), which he understood to be responsible for the traditional static billboard signs at the OFT. As it turned out, the OPMA was managing the billboards on behalf of the TWPA who actually owned the signs, having built them in 1999. The signs were also managed by DBB Management for a time in 2002-2003. The TWPA leases the land upon which the signs sit from the OFTB. One of the terms of this lease was that the advertising on the signs would only promote the various fruits and vegetables sold at the OTF (the “Advertising Restriction”). The OPMA and the TWPA had an agreement whereby the OPMA kept 20 percent of the gross advertising revenues in exchange for managing the signs, including selling produce advertising on them. 80 percent of the advertising revenue went to the TWPA.

[27] Not knowing any of this, Kenny prepared a letter dated June 18, 2012 addressed to OPMA’s President Ian MacKenzie (“MacKenzie”) proposing three options for an upgrade of the existing Eastern Sign to a digital sign with two faces (the “June 18 Proposal”).

[28] Option A involved Kenny’s company ID supplying and installing the digital sign at a cost of $630,000 plus HST payable by the TWPA. Then, ID would charge the TWPA a maintenance fee of $6,000.00 per month for a 120-month term.

[29] Option B involved ID financing, supplying and installing the digital sign. In that case, the 120-month lease agreement would be for $14,000 per month. This was a “financing” alternative to Option A.

[30] Option C says that “ID Inc. will supply and install the boards in exchange for 70 [percent] of the advertising space on the boards, based on a 120-month term”.

[31] There are seven notes on the second page of the proposal. Note 3 provides that “Option C is contingent upon ID acceptance of advertiser restrictions”. Any restrictions on the type of advertisers could negatively impact the revenue generated.

[32] Note 4 says: “[w]ith Option C, ID is willing to sell any, or all, of the OPMA portion of the boards in the marketplace with an associated selling fee of 20 [percent] of the gross revenue”.

[33] Kenny met with MacKenzie on June 18, 2012 and provided a copy of the June 18 Proposal to him. Kenny forecasted that he could generate advertising revenue of $1,000,000 per year if the Eastern Sign was converted to a two-sided digital sign and if the Advertising Restriction was removed. Kenny says they also spoke about the need for the TWPA to get the longest lease possible (to maximize the period over which the construction cost could be amortized) and to eliminate the advertising restriction to attract wide variety of national advertisers.

[34] MacKenzie did not give evidence at trial but his discussions with the TWPA are recorded in minutes of the TWPA Board meeting of July 11, 2012.

[35] MacKenzie reviewed ID’s June 18 Proposal with the TWPA Board and advised that if the Eastern Sign could be converted to a digital sign and not limited to produce advertising it could generate income exceeding seven figures. He advised the TWPA Board that ID had presented alternatives “ranging from their partial to full ownership of the rights of the space for 10 years”. The minutes of the Board meeting confirm that MacKenzie said this.

[36] The TWPA Board favoured Option A, meaning they were leaning towards proceeding with the project and paying the full cost of converting the Eastern Sign up front with no financing. The TWPA Board directed MacKenzie and Evans to meet with ID to get a better understanding of the alternatives and to report back.

[37] After the TWPA Board meeting, the TWPA immediately took steps to pursue the opportunity. This was prior to the January 29, 2013 meeting where Kenny says the Alleged Oral Agreement was made. Therefore, these steps cannot be seen as actions taken as performance of the Alleged Oral Agreement. Rather, the steps taken are evidence that the TWPA intended to pursue the opportunity in general.

[38] In addition to meeting with Kenny in the fall of 2012, Evans and DaSilva reached out to the OFTB about digitalizing the Eastern Sign, extending the term of the lease, and getting the advertising restriction lifted. The OFTB was open to doing so in exchange for the TWPA and the OFTB sharing the advertising revenue on a 50/50 basis. The lease extension agreement was likely drafted and had been discussed with the OFTB before the January 29, 2013 meeting with Kenny. It was executed on February 1, 2013. The TWPA also reached out to StrategyCorp about retaining them regarding possible issues with the City concerning the permit for the sign conversion.

The January 29, 2013 Meeting – the Alleged Oral Agreement

[39] Kenny met with Evans and DaSilva on January 29, 2013. This is the meeting where the plaintiff says the Alleged Oral Agreement was reached.

[40] Evans’ contemporaneous notes of the meeting confirm there were discussions about digitizing the sign, but do not establish that an agreement was reached that day. The notes say Kenny told them to act quickly before one of his competitors approached Queen’s Park (meaning the landowner). Kenny’s most significant concern was the need for an agreement with the OFTB before going to the City of Toronto for a permit. Kenny told them the OFT property was grossly undervalued and could accommodate three signs on the Gardiner and a series of billboards around the perimeter. He encouraged them to get a binding agreement with the OFTB for the rights to outdoor advertising so they would have the opportunity to build more signs. The notes say “[Kenny] wants long term contracts (10 years)”. The notes indicate that the question was raised regarding whether the City of Toronto has jurisdiction over the OFT because it is on Provincial land.

[41] There are numbers and calculations in the notes. Evans was making notes as Kenny was giving them the numbers. The notes say the Eastern Sign could earn $100,000 per month, or $1.2M per year. The notes also mention a maintenance fee of $6,500 per month (this is different than the $6,000 per month maintenance fee pled and eventually incorporated into the SMA), a 20 percent selling fee, and $10,000 plus for power. There is a total of $400,000 for costs and a net of $800,000, less $350,000 depreciation, leaving $450,000. The notes also mention getting the co-operation of the OFTB to approve obtaining a permit; they say, “send owners formalized agreement and executed signed by both parties”. This is a reference to needing an agreement between the OFTB and the TWPA.

[42] There is no doubt that steps were taken to move forward with the digital sign conversion. The TWPA told the OPMA not to enter into any long term contracts for advertising on the static billboard signs because of their discussions with Kenny. Kenny began working on the permit application and gathering information needed for the application. The TWPA arranged for the OFTB to write a letter to the Sign By-Law Unit, Toronto Building Department confirming their support of the TWPA’s proposal to digitize the Eastern Sign and supporting Kenny as authorized agent of the TWPA in negotiations with the City of Toronto relating to the sign permit. Evans sent Kenny a list of contracts for advertising on the existing traditional/static sign and advised that he told MacKenzie not to enter into any more contracts without approval.

[43] Evans sent Kenny some information about the Toronto City Council voting to ask the Ontario Government to declare the OFT a provincially significant employment area. He also sent an email from StrategyCorp that mentions local ward Councillor Peter Milczyn (“Milczyn”). Kenny responded confirming that Milczyn was the councillor in Ward 5 and recommending an “under the radar” approach to the City permit application process. He suggested that Milczyn only be approached if impediments were encountered. Evans responded the same day and undertook to follow Kenny’s direction and not interfere.

[44] Kenny says that he met briefly with the city by-law staff prior to March 28, 2013.

[45] On March 28, 2013, the TWPA and the OFTB signed a document called Lease Amendment and Extension Agreement extending the lease to March 31, 2027, allowing for the conversion to digital signs, removing the Advertising Restriction, and providing for equal sharing between the TWPA and the OFTB of the net revenue from advertising. MacKenzie told them that even without the digital conversion, changing the advertising restriction on the static board would increase revenue sufficiently to justify giving the OFTB 50 percent of the revenue. This meant that the arrangement would still be economically viable even if the sign were not converted. The TWPA agreed to this before they secured the permit to convert the sign. The net revenue was defined as the gross advertising proceeds less all costs of operating the signs including commissions/fees for leasing or sale of time, maintenance, and other expenses relating to the operation of the signs.

The Sale and Maintenance Agreement (March 28, 2013)

[46] Also on March 28, 2013, ID and the TWPA signed the SMA. The SMA provides for the digitalization of the Eastern Sign with the TWPA paying ID $630,000 plus HST for same. It provides for an initial non-refundable deposit of $25,000, a deposit of $290,000 after the permit is obtained and a final payment of $396,900 ten days later. It provides that ID will make application for the permit and “any failure or inability of [ID] to obtain such permit … within three hundred and sixty (360) days of this Agreement shall result in this Agreement being terminated”.

[47] The SMA provides that the TWPA will pay ID $6,000.00 per month plus HST to maintain the Eastern Sign for 120 months with three months free maintenance and yearly Consumer Price Index increases. This is different than the $6,500 per month contained in Evans’ notes of the January 29, 2013 meeting.

[48] Clause 8 of the SMA provides:

PERMITS Notwithstanding paragraphs 3 and 5, upon the Vendor’s receipt of the initial deposit, the Vendor, on behalf of the Purchaser, shall make application to all necessary regulatory and governmental agencies for any required permit to initially install the Display and any failure or inability of the Vendor to obtain such permit for the Display within three hundred and sixty (360) days of the date of this Agreement shall result in this Agreement being terminated and the Vendor shall be entitled to retain the initial deposit in compensation for the Vendor’s bona fide efforts to obtain such permit (and in such case, the deposit shall be inclusive of HST). All permit fees required to be paid will be at the sale cost of the Purchaser. The Vendor shall promptly keep the Purchaser apprised of the status of the application for the permit.

(the “Termination Clause”)

[49] The SMA provides:

13. WAIVER No waiver by either party of any breach or failure to perform any term, covenant or condition herein contained shall constitute or be deemed a waiver of any subsequent breach or failure to perform the same or any other term, covenant or condition hereof

[50] The SMA contains an entire agreement clause as follows:

14. REPRESETNATIOINS Neither the Vendor [ID] for it’s sales representative has made any representations to the Purchaser [the TWPA] regarding the Display other than those expressed in this Agreement and the Agreement contains and expresses the whole Agreement made between the parties.

StrategyCorp

[51] StrategyCorp was involved with the TWPA before ID was introduced to the TWPA. In September 2012, StrategyCorp was working with ID to deal with issues relating to mitigation of risks that could interfere with the TWPA’s operations at the OFT, like moving its location and the membership of the OTFB.

[52] The TWPA started talking to StrategyCorp about the digital sign conversion project in the fall of 2012, prior to meeting with Kenny. On April 18, 2013, after the SMA was entered into, the TWPA made an agreement with StrategyCorp to assist ID with the sign conversion project, including making a case for why conversion is in the public interest and engaging with select municipal politicians or their staff. The agreement mentions Councillor Milczyn and a citizens’ activist group, The Toronto Public Space Initiative. Kenny says securing the permit was his responsibility and no one told him about this agreement when it was made. Kenny admits he was contacted by Green of StrategyCorp on April 25, 2013 and Green introduced himself as working with the TWPA to assist with the permit. Kenny says he was concerned about “too many cooks in the kitchen” and that StrategyCorp had no expertise in the sign business or with the Sign Variance Committee (the “Committee”), the body that grants by-law variances when they are required for a municipal permit.

[53] StrategyCorp’s involvement caused problems. Kenny told the TWPA to apply for only one sign permit because he knew one sign was more likely to be approved. This was part of his “fly under the radar” strategy to get approval for one sign initially and attempt more later. StrategyCorp’s idea, through the Provincial Path, was to explore an approval process through Provincial channels and to seek approval for five signs. The TWPA was excited about the proposition of five signs and wanted to explore the Provincial Path. That said, no one knew what the Provincial Path might be. It was later discovered that there was no Provincial Path.

The City Permit and the Provincial Path

[54] In early April 2013, Kenny met with the Sign By-Law Unit Manager Ted Van Vliet (“Van Vliet”) to alert him that an application was forthcoming. Kenny discussed whether the fact that the sign was on land owned by the Province had any impact of the permit process. Van Vliet advised him that it did not. In April 2013, Kenny advised the TWPA of several concerns regarding the permit application. They included: the fact that the City Planning and Growth Committee report, chaired by Milczyn, was doing a study on digital signs; the fact that Milczyn did not like digital signs and his influence was “key”; the fact that the by-law staff would be issuing a deferral because of the study or negative recommendation (although it was not binding on the Committee); and the fact Milczyn might be convinced to support the permit application but would want concessions including turning the Eastern Sign off at night and removing the smaller sign. Kenny said this did not bode well for the prospect of erecting subsequent digital signs at the OFT.

[55] At trial, Kenny testified that a negative staff recommendation is not necessarily a bad thing as it can be used by an applicant to revise the application and address concerns. Van Vliet confirmed this. He testified that a negative staff report can assist a permit applicant in providing further information and the Committee can approve an application despite a negative staff report. Kenny also testified that by-law staff routinely give negative recommendations. Kenny did not tell the TWPA that negative staff reports are routine and can be helpful. The TWPA had no prior experience with the Committee or the permit process and relied on Kenny in this regard. At trial, Kenny minimized the negativity of this report but Evans says Kenny did not assure him that the issues raised were “no big deal”. Evans says after receiving this information he was concerned but still hopeful.

[56] Kenny asked Evans if the manager of the OFTB could help by calling Milczyn. Evans replied that he would be speaking to StrategyCorp. Kenny then asked for a meeting before anyone else contacted the City, but did not otherwise express concern about StrategyCorp’s involvement.

[57] Evans reached out to the General Manager of the OFTB Bruce Nichols (“Nichols”). He let Nichols know that Milczyn was unsupportive and asked for his help. He also contacted StrategyCorp because of the concern about Milczyn. He hoped that StrategyCorp could work with Kenny and behind the scenes. Van Vliet testified that while lobbyists may submit a permit application, they are not allowed to approach members of the Committee. And while letters from ward councillors may be read by the Committee in the same way letters from any interested party may be read, they carry no special weight. The fact that Kenny met with Milczyn and asked for help with Milczyn from Nichols is inconsistent with ID’s position that there is no role for politics and StrategyCorp in the city permit application process.

[58] On April 15, 2013, Kenny started the application by opening a file and paying the fee. The following day, Kenny sent a letter to the Sign By-Law Unit addressing the nine criteria (“Rationale”) which the City uses to assess the application (“ID Permit Application”). These criteria are available to the public and listed on the City’s website. Kenny did not tell the TWPA that the ID Permit Application was confidential. Evans said that he did not give a copy of it to StrategyCorp. It was his belief that Kenny gave a copy of it to StrategyCorp.

[59] After the ID Permit Application was submitted, Kenny advised Evans that the by-law staff were not going to support the application. Evans testified that he was unsure about the importance of staff support. Kenny did not tell him it was not a big deal and that the permit would be approved by the Committee. Evans says was uncertain about the outcome of the ID Permit Application.

[60] Evans did not anticipate any problems with StrategyCorp and ID working together. Green admitted that they were “no experts in the sign industry or in the Committee”. Kenny testified that he was concerned because he had a deadline to produce a permit and did not consider educating StategyCorp a good use of his time. Kenny suggested a meeting as his feeling was that “too many cooks spoil the broth”. He told them the next Committee meetings were June 4 and July 9, 2013. StrategyCorp wanted to explore the Provincial Path. Kenny says he felt a duty to be a good team player and respond to StrategyCorp’s emails and provide them with information about the permit application process.

[61] On April 23, 2013, Nichols got back to Evans and provided Evans with information about a planned renovation at the OFT, that Nichols was working with the Planning and Development Committee, and that the revenue from the conversion of the Eastern Sign was needed to finance the modernization of the OFT. Nichols said there seemed to be a disconnect between the supportive members of the Planning and Development Committee and its head, Milczyn. Evans also spoke to Green about the plans to modernize the food terminal and that they should be included in the ID Permit Application. There were email communications between Kenny and Green copied to Evans around this time and Evans believed that they were working together.

[62] Kenny withdrew the ID Permit Application on May 17, 2013. Van Vliet testified that there are no restrictions on refiling permit applications. Kenny says he was disappointed about pulling the application because he had been extended courtesies by the city staff and he had no reason to think the permit would not be granted. He says he was instructed that ID was “on hold” and not to talk to the Committee or by-law staff while StrategyCorp pursued the Provincial Path. The TWPA says the SMA was not put “on hold”. Evans says he did not tell Kenny the SMA was “on hold” and that Kenny continued to work on the project and was reviewing matters for the Provincial Path. There is nothing in writing about the SMA being put “on hold”, but DaSilva said at his discovery that ID was told to wait for StrategyCorp to get provincial approval. Clearly, the TWPA did not want Kenny pursuing a city permit while they were exploring the possibility of the Provincial Path. Kenny wanted to press ahead and suggested they aim for a decision regarding the Provincial Path before the next meeting of the Committee on September 3, 2013.

[63] In May and June 2013, the parties actively pursued the Provincial Path. This included meetings to discuss strategy, retaining a lawyer to provide a legal opinion, attending various meetings, and getting the OFTB on board. Kenny, the TWPA, and StrategyCorp all actively participated in various aspects of the process. During this period, Kenny pushed to have the issue resolved in time for the September 3, 2013 meeting of the Committee.

[64] At the same time, StrategyCorp decided to pursue a success fee. They initially considered a success fee coming from ID’s share of the potential advertising revenue. They considered this to be reasonable since it was StrategyCorp, not ID, who was leading the way on the Provincial Path.

[65] StrategyCorp sought support from the TWPA for a success fee. Evans says he thought it was premature to be talking about success fees in the absence of a favourable legal opinion and in the absence of an agreement with ID regarding advertising revenue. He was concerned Kenny would be “ticked off” about the idea and wanted to wait until after the permit was obtained.

[66] On July 2, 2013, Jeff Davies of Davies Howe Partners LLP (“Davies”) provided a legal opinion to ID that because the OFTB is a Crown agency, Crown immunity applies and the OFTB is not bound by the City’s sign by-law. Despite the legal opinion, the actual path of the Provincial Path remained unclear.

[67] At the July 10, 2013 TWPA Board meeting, the legal opinion from Davies was discussed. A decision was made to wait until after the August 1, 2013 by-election to ensure that signs did not become an election issue.

[68] Kenny continued to push to have the issues resolved by early September. He sent an email to Evans concerning the proposed deadline of July 15 to make a decision in order to be ready for the September meeting of the Committee if the municipal option was the chosen path. Evans told Kenny to wait until after the election. Milczyn was running as a Member of Provincial Parliament; therefore, he could be an impediment on the Provincial Path as well.

[69] If the Provincial Path was the chosen, the OFTB as the Crown agency, would have to be on board. In September 2013, Kenny prepared a briefing document for the OFTB and the TWPA for this purpose. Kenny was not invited to the meeting with the OTFB.

[70] In September 2013, the City of Toronto staff released the report entitled Electronic and Illuminated Sign Study and Martin Rendl Associates wrote a report for the City titled Planning & Design Review of Illuminated and Electronic Signs. Green sent these to the TWPA in advance of Milczyn’s Planning and Growth Committee Report. In an email dated September 11, 2013, which was copied to Kenny, Evans says Kenny has reviewed the study and informed him that this study will become the framework for changes to the sign by law and that it will be “a lot harder” to get approval for digital signs.

[71] On September 16, 2013, Evans asked Kenny to have Davies change the legal opinion to address it to the TWPA and remove all mention of ID and the public-private partnership.

[72] In September and October, StrategyCorp and the TWPA were again discussing a success fee for StrategyCorp based on a percentage of total advertising revenue. StrategyCorp said they thought they had a verbal agreement with the TWPA for a success fee in the summer. This was based on a conversation with DaSilva. DaSilva denies telling MacNaughton that the TWPA would give StrategyCorp a success fee and said MacNaughton should know that any agreement would have to be reviewed by the lawyer and in writing. StrategyCorp understood that any agreement had to be in writing and sent a draft engagement letter. The letter expressly says that if the TWPA approved the letter, it would serve as a new agreement. This is consistent with Green’s evidence that there was no prior oral agreement regarding a success fee.

[73] The TWPA Board did not agree to giving StrategyCorp a success fee and Evans again proposed StrategyCorp get their success fee from ID’s share of the revenue. Evans says he told Green again that there was no agreement with ID on the advertising revenue. Green’s memo to himself on October 22, 2013 recording his discussion with Evans says Kenny would have received a 20 percent commission: “there is no agreement with him”.

[74] There is an email from Green to MacNaughton on October 22, 2013 relaying the conversation with Evans. Green tells MacNaughton, referring to the meeting in the summer, that Evans understands why StrategyCorp thought they had a “verbal agreement”, but that DaSilva was uncomfortable and articulated this view after receiving the draft engagement letter.

[75] Evans says there were discussions in June about a success fee, but he could not make a verbal agreement and would need board approval. Green testified that his use of the term “verbal agreement” did not mean a legally binding oral agreement. He said that since this litigation started, he has come to understand more about this sort of terminology.

[76] MacNaughton sent Green an email on October 22, 2013 saying the proposal was to take a portion of the fee that the TWPA had already agreed to pay ID. His idea was that StrategyCorp would get nothing on the first sign (i.e. the one that Kenny said he could get) and StrategyCorp would get a success fee on further signs and the succuss fee was to come out of ID’s 20 percent share. MacNaughton was angry about the idea of StrategyCorp getting further signs for them and Kenny getting rich. Green responded by saying that the TWPA has no agreement with Kenny. The TWPA discussed this proposal by StrategyCorp for a success fee at their October 23, 2013 Board meeting and the success fee coming from ID’s proposed management fee of 20 percent of gross revenue. The minutes state that there is no formal agreement with ID to manage the signs. Evans says the 20 percent figure may have come from the initial discussions with Kenny and that was also the fee being charged by the OPMA.

[77] On November 5, 2013, Evans left Kenny a voicemail saying that he was talking to Jamie Reaume of the OFTB (“Reaume”)who had spoken to several prominent people including the Premier and they were hoping for information about support from the Province by December or January but were very hopeful. Kenny felt reassured by this voicemail.

[78] On November 13, 2013, Green emailed MacNaughton saying he had received a message from Evans. Evans says he spoke to the TWPA Board members individually and then spoke to Green and told him that the TWPA Board thought it was a good idea for StrategyCorp to meet with ID to see if they could work out a deal. StrategyCorp anticipated “fireworks” from Kenny. Evans said he wanted to stay out of it and let StrategyCorp and ID come to an agreement, which he thought would be beneficial for everyone. Green said he got a message from Evans indicating that the TWPA Board thought it made sense for StrategyCorp to sit down with ID and work something out. Green testified that he understood that after StrategyCorp and ID made an agreement, the plan was for ID and the TWPA to make an agreement.

ID and StrategyCorp

[79] On November 14, 2013, an assistant with StrategyCorp contacted Kenny regarding a meeting for November 22, 2013. Kenny enquired about the agenda, including asking Evans. He says he told Evans that he had been involved in a project on federal land (at the Skydome) and if Reaume was talking to the Premier, Kenny could work with Reaume to get the deal done. Kenny says Evans yelled at him and told him to just go to the meeting. Neither Evans nor DaSilva had ever raised their voices at him. Evans agreed he was frustrated during this call and just wanted Kenny to meet with StrategyCorp to see if they could come to an arrangement.

[80] Only MacNaughton and Kenny were present at the November 22, 2013 meeting. At this time, MacNaughton believed that there was an agreement to give ID 20 percent of the advertising revenue. Kenny says MacNaughton demanded that ID give StrategyCorp a share of future gross advertising revenues from the sign. Kenny questioned him about why ID would have to give up some of its share, especially because its share was small compared to the share going to the TWPA. Further, Kenny had to work for his share, whereas the TWPA’s share was passive income. Kenny says MacNaughton told him to agree or else the TWPA would replace him and deal with someone else.

[81] Kenny says that as he left the meeting, he speculated that the reason Evans had yelled at him was that Evans knew what was coming. There is no evidence to suggest that Evans did anything other than suggest that StrategyCorp try to make an arrangement with ID.

[82] Kenny did not contact the TWPA after this first meeting with MacNaughton. In fact, he did not contact them until he met with them at their offices on December 4, 2013. The TWPA says the reason why Kenny did not contact them after this meeting was that Kenny knew he did not have any agreement to share in the advertising revenue, that he wanted to make a deal to get a share of the advertising revenue, and knew he had to work with StrategyCorp to get a deal for a share of the advertising revenue. Kenny strongly denied this. Kenny says he took the weekend to think about it and met with MacNaughton the following week. Kenny says that at that meeting, MacNaughton told him that he would not spend his considerable political capital unless there was something in it for him. Kenny was afraid that the TWPA would go elsewhere and he was trying to save his deal when he offered MacNaughton half a percent. I note this amount is so low that it may have been intended to insult or inflame MacNaughton.

[83] Emails between Green and MacNaughton discuss the meeting and how to handle the situation. The emails reference that the TWPA has been looking at alternative partners, and Kenny should be told that. They also say that Kenny has no contract beyond the first sign. They express concern that Kenny might be talking to “Counsel”, one of their competitors that Kenny had spoken to back in May 2013 when he was looking for a municipal lawyer. Green and MacNaughton were also concerned about Kenny going directly to the OFTB.

[84] On November 30, 2013, MacNaughton sent Kenny an email confirming that the Government of Ontario had not yet agreed to the proposal but that he would engage them further before Christmas. He said that StrategyCorp was not looking to share in the revenue from the first sign, which he understood was all that Kenny was “contracted for at the present moment”. He said he understood that the TWPA would contract with Kenny for any further signs if Kenny and StrategyCorp reached an agreement. Otherwise, the TWPA would pursue other options. Kenny says he heard this as both an enticement (further signs) and a threat (other options). MacNaughton forwarded this email to Evans.

[85] Kenny says he met with Evans and DaSilva on December 4, 2013 to complain about StrategyCorp. Kenny says he was trying to get answers about why StrategyCorp, who did not work for him, was looking to him for payment. He was looking for comfort from the TWPA and trying to make sense of the situation. He was disappointed about having been yelled at and he blurted out words to the effect of “[if] anyone thinks this sign is going up without my name on it, we can light it up and turn it into a bonfire.” From his perspective, he had been open, candid, and transparent. He had shared with StrategyCorp his knowledge about the sign business at the request of the TWPA. Kenny says they told him to strike a deal with StrategyCorp and that if he did, the TWPA would use ID for future signs. Kenny asked why they had not just come to him and told him they had a problem with a “greedy” lobbyist. Kenny also expressed his lack of respect for MacNaughton, saying he was an expert at compiling a wonderful list of accomplishments that amounted to nothing. Kenny says Evans abruptly left and slammed the door leaving only Kenny and DaSilva. DaSilva told him he had until Friday at 5:00 p.m. to make a deal with StrategyCorp. Accordingly, he agreed to work with StrategyCorp.

[86] Evans says that at that December 4, 2013 meeting Kenny threatened that if he did not get his way, he would lawyer up and would blow up the whole sign deal. DaSilva also testified that Kenny said this. DaSilva testified that he considered that burning the bridge and he understood Kenny to be saying that he would use his connections at the City to make sure the TWPA never got the sign. Evans denied slamming the door and said he would not upset the women sitting outside the meeting room by doing so but agreed he left abruptly. DaSilva says he told Kenny to resolve it, to work it out with StrategyCorp, and to get that result by Monday. Evans says he thought Kenny was missing the big picture, meaning the situation with the OFTB looked optimistic, they had met the then-Premier and more signs would result in more revenue for everyone. There is an email from Evans to Green on December 4, 2013 saying that Kenny threatened them and was going to lawyer up and blow up the entire deal for signs. Kenny denies saying he would blow up the deal. Although Kenny admitted to using the phrase “light it up and turn it into a bonfire”, he denied that was a threat. He characterized it as an intemperate statement caused by his distress at having been set up by the TWPA and StrategyCorp.

[87] While the parties’ evidence of the words used by Kenny at the meeting differed, based on all the evidence, including Evans’ December 4, 2013 email and the conduct of the parties before and after the meeting, it is clear the relationship between the parties was deteriorating. Kenny was angry and upset by StrategyCorp’s involvement and the success fee. On the other hand, Evans and DaSilva felt threatened by Kenny and thought his conduct at the meeting was seriously damaging to their relationship. Evans testified that after the meeting he was very disturbed at having been threatened; he did not want to work with Kenny and never wanted to see him again.

[88] Evans told MacNaughton he wanted to cut ties with Kenny but intended to speak to TWPA lawyer Irving Fox (“Fox”). When Evans spoke to Fox, the two considered how to move forward. The Provincial Path looked promising: Reaume was on side for installing signs at the OFT and StrategyCorp had taken Evans and DaSilva to meet with the then-Premier and her chief of staff. They decided that having ID and Kenny sign a confidentiality agreement would protect the TWPA from any interference by Kenny with the sign deal. Evans said he would be willing to work with Kenny if he felt that the TWPA was sufficiently protected.

[89] Kenny says he met with MacNaughton on December 5, 2013 and made a deal whereby StrategyCorp would get 2.8 percent of the gross advertising revenue. Kenny says MacNaughton agreed that StrategyCorp would not get a fee on the first sign because Kenny already had a deal with the TWPA for the first sign. Kenny testified that he agreed to give StrategyCorp a percentage on all signs for administrative convenience. He said that the Alleged Oral Agreement with the TWPA provided that ID would receive all of the advertising revenue and pay the TWPA. Now with StrategyCorp, he would have to pay both the TWPA and StrategyCorp and if StrategyCorp was only paid on subsequent signs and not the first sign, Kenny would have to keep track of the revenue for each sign separately. It would be easier to just give StrategyCorp 2.8 percent on all signs. Kenny retained a lawyer to represent him with regard to the written agreement with StrategyCorp described below. At his discovery, MacNaughton said the deal he was negotiating with ID was to apply to the revenues from the signs for the remainder of the lease that the TWPA had with the OFTB, until 2027. However, MacNaughton also said at his discovery that he had no idea what the existing contract was between ID and the TWPA and that all he understood from the TWPA was that it had a time limit and the TWPA was perfectly free to go on and deal with someone else.

[90] The Consulting Agreement was made on December 19, 2013. Kenny had an opportunity to review this agreement and was represented by counsel at the time. Evans and DaSilva were aware that StrategyCorp and ID made a deal.

The Consulting Agreement – December 19, 2013

[91] The Consulting Agreement provides that ID (referred to as the Corporation) retains StrategyCorp (referred to as the Consultant) to provide consulting services including provincial government relations and provincial regulatory approvals.

[92] The Consulting Agreement Term is defined as:

1. Term. The Corporation hereby retains the Consultant, effective as of the date first above written (the “Effective Date”) for a period ending one hundred and twenty (120) months from the first date the Displays display advertising and generate advertising revenue (the “Term”). The Consultant agrees upon the terms and conditions herein set forth to serve as a consultant and advisor to the Corporation.

[93] The Consulting Agreement was conditional on ID making an agreement with the TWPA for supply, installation and selling of advertising time. It provides:

2. Fee. Provided the Corporation enters into a written agreement with the appropriate third party regarding the supply, installation and selling of advertising time for the Displays at the Premises, and in consideration of, and as exclusive compensation for, the Consultant's services hereunder, the Corporation will pay the Consultant during the Term a fee of two and eight-tenths per cent (2.8 [percent]) of the gross amount of the advertising revenue for the Displays (the “Fee”) ….

[94] The agreement contains confidentiality clauses whereby each party agrees to keep confidential specified information about the other party:

5. Confidentiality.

5.1 The Consultant will not, at any time during the Term of this Agreement or thereafter, directly or indirectly divulge or disclose to any person, firm, association or corporation, or use for its own benefit, gain or otherwise, any information, plans, products, customer lists or any other trade secrets or confidential, technical or business materials or information of the Corporation or in the possession of the Corporation, including all information or instructions, technical or otherwise, issued or proclaimed for the sole use by the Corporation, or any confidential information that was disclosed to the Consultant or in any way acquired by the Consultant during the term of the Consultant's agreement with the Corporation.

5.2 The Corporation will not, at any time during the Term of this Agreement or thereafter, directly or indirectly divulge or disclose to any person, firm, association or corporation, or use for its own benefit, gain or otherwise, any information, plans, products, customer lists or any other trade secrets or confidential, technical or business materials or information of the Consultant or in the possession of the Consultant, including all information or instructions, technical or otherwise, issued or proclaimed for the sole use by the Consultant, or any confidential information that was disclosed to the Corporation or in any way acquired by the Corporation during the term of the Corporation’s agreement with the Consultant.

[95] ID can terminate the agreement if it no longer has the right to sell advertising:

6. Termination.

6.1 The Corporation may terminate this Agreement at any time without prior notice if, for any reason, it no longer has the right to sell the advertising for the Displays or to receive and disburse the advertising revenues for the Displays.

[96] The Consulting Agreement contains a non-competition provision which provides:

7. Non-Competition. The Consultant shall not perform government relations for or obtain regulatory approvals for any other person who arranges for the supply, installation or selling of advertising time for custom advertising displays which is visible from the Gardiner Expressway in southern Ontario during the Term of this Agreement.

ID and the TWPA Non-Disclosure Agreement – January 13, 2014

[97] Kenny says that after the Consulting Agreement was signed, the TWPA confirmed that ID would be involved in all five signs and asked ID to sign the NDA. The TWPA says that it was reluctant to work with Kenny and concerned about his December 4, 2013 threat to blow up the deal.

[98] On December 10, 2013, Fox sent Kenny a letter requesting a non-disclosure agreement. The letter says that, based on a legal opinion from Davies, the OFTB, being a Crown agency, is not bound by the Toronto Sign By-Law and can erect one or more digital signs at their discretion. The letter states that, in principle, the TWPA will approve proposed agreements between the OFTB and ID for the manufacture, installation, and maintenance of multiple signs and for the sale of advertising subject to the TWPA’s approval of the agreements. It says that the agreements would include the location and cost of installation, ID’s advertising commission, and performance targets. The letter goes on to state that if Kenny agrees in principle, the TWPA requires him to enter into a confidentiality agreement. The letter advised him to deal exclusively with Fox going forward. Kenny says this letter did not cause him any concern and the requirement that he communicate only with Fox was just for the purposes of the proposed confidentiality agreement.

[99] On January 13, 2014, the TWPA, ID, and Kenny signed the NDA. Both parties were represented by counsel at the time. The NDA says that it does not amend the SMA.

[100] The Recitals include:

D. The Parties wish to attempt to negotiate the terms of a new potential agreement (the “New Agreement”) between ID and the OFTB which would provide for ID selling, installing and maintaining up to five (5) digital signs (inclusive of the Sign) at the Terminal and selling advertising on the digital signs, upon terms acceptable to the Parties and the OFTD. TWPA is only prepared to enter into those negotiations after ID and Paul enter into this Agreement with TWPA.

[101] The NDA contains the following provisions:

1. Definitions

In this Agreement, the following terms shall have the following respective meanings:

“Confidential Information” means all information, in whatever form, furnished prior or pursuant to the [SMA], this Agreement or the New Agreement (collectively the “Agreements”) by or on behalf of the Disclosing Party to the Receiving Party, or obtained by the Receiving Party, directly or indirectly, in connection with the Receiving Party’s performance or provision of any services or products (the “Services”) in connection with any one or more of the Agreements together with analyses, drawings, or other documents or work product of any kind prepared by the Receiving Party of its Representatives (as defined below) in connection with its performance of the Services but shall not include Non-Proprietary Information (as defined below).

“Non-Proprietary Information” means information with respect to which the Receiving Party is able to establish:

(a) at the time of disclosure was or thereafter became generally available to the public, other than as a result of any act or omission by the Receiving Party or its Representatives or anyone to whom the Receiving Party or its Representatives disclosed such information,

(b) was or became lawfully known to the Receiving Party or its Representatives on a non-confidential basis and not in contravention of any applicable law from a source (other than the Disclosing Party) that is entitled to disclose the Information; or

(c) was already lawfully in the possession of the Receiving Party or its Representatives or was lawfully acquired by them, provided that such information is not subject to another confidentiality agreement or other obligation of secrecy.

2. Use and Non-disclosure

The Receiving Party:

(a) shall keep the Confidential Information in strict confidence and shall ensure that it and its Representatives shall not be used for any purpose whatsoever, directly or indirectly, other than for the purpose of carrying out its Performance;

[102] The NDA contains a provision whereby either party can request the return of all copies of its confidential information or request that it be destroyed. Kenny never made any such request.

6. Non-Interference with Business Activities

During the currency of the Sign Agreement and for a period (the “Survival Period”) of five (5) years following the expiry or termination of the Sign Agreement, neither ID nor Paul shall, for its, their or his owns purposes or benefit, directly or indirectly, or otherwise threaten or take any actions intended so, interfere with or harm the business relationship or activities of TWPA or the TWPA Members with any other Person. These restricted activities shall include, without limitation, any threatened or actual attempt to disrupt or interfere with TWPA’s relationship or dealings with the OFTB.

[103] Kenny says the TWPA wanted the NDA because they were concerned about him going directly to the OFTB. He says that under the Provincial Path, the OFTB would be more involved in the project and he had previously cautioned the TWPA about the possibility of one of his competitors approaching the OFTB directly and cutting out the TWPA. There are emails from the TWPA regarding wanting Kenny to sign the NDA to prevent him from blowing up the deal. The TWPA says it was concerned about working with Kenny because of his threats and wanted to protect itself.

[104] Evans says he did not tell Kenny that he would never be excluded from the sign opportunity or promise more signs. Evans says that the TWPA was willing to negotiate an agreement for ID to sell advertising.

[105] Evans says this negotiation never happened.

Subsequent Events

The expiry of the 360 day time limit for obtaining municipal approval

[106] On January 28, 2014, ID and the TWPA met. According to Kenny the meeting was fruitless: nothing was agreed to. The TWPA did nothing to further the negotiations with ID for more signs. Evans said it was his understanding that in January and February of 2014, StrategyCorp was working with ID and the Government of Ontario.

[107] On March 19, 2014, (3 days before the end of the 360 day time limit under the SMA) Kenny’s lawyer contacted Fox about arranging a meeting between ID and the TWPA because Kenny wanted to make a presentation regarding the digital signs and determine next steps. Fox replied on March 25, 2014 (3 days after the 360-day time limit) that it was premature to do so as the Province and the OFTB had not yet given approval to proceed with new signs.

[108] After March 2014, Kenny did not contact the TWPA by telephone or email for two years until May 2016. Nor did the TWPA receive updates from StrategyCorp concerning ID. Evans said that when it became clear that the Provincial Path was not an option in 2014, he assumed Kenny had stopped work on the project. The TWPA now says the SMA was automatically terminated on March 23, 2014 because ID failed to get the permit within 360 days of March 28, 2013. They say Kenny knew that was their position. Kenny says the SMA was on hold and there was no reason to contact the TWPA because they told Kenny it was premature for him to meet with them until StrategyCorp had finalized the Provincial Path.

[109] In 2014, Kenny followed up with StrategyCorp about the Provincial Path. There are emails between Kenny and MacNaughton between January 2014 and May 2014. Kenny says he was following up with StrategyCorp (as opposed to the TWPA) because it was StrategyCorp that was handling the Provincial Path.

[110] Eventually, sometime in 2014, it was determined that the legal opinion from Davies was wrong: the OFTB is not a Crown agency and there is no Provincial Path to avoid getting a permit from the City and a variance from the Committee. This was no fault of ID, the TWPA, or StrategyCorp. It was the government which first advised that the OFT was not a Crown agency. By April 2014, McCarthy Tétrault LLP (“McCarthys”) was retained to give a second opinion and concluded that was indeed the case. They advised that it would be time consuming and expensive to attempt to have the OFT’s status changed and only estimated a 65 percent chance of success. So, the TWPA decided to proceed with the municipal permit. Kenny was not advised.

[111] On May 14, 2014, Kenny and MacNaughton met for breakfast. That morning there was a story in the Globe and Mail about Christine Innes suing MacNaughton and Justin Trudeau. When Kenny mentioned the story to MacNaughton, MacNaughton said that he should not go home after work, drink multiple glasses of wine and send emails, as if that was the cause of the lawsuit.

[112] Kenny continued to follow up with MacNaughton between May and August 2014. In June, Kenny told MacNaughton that he had suppliers on hold for pricing (meaning the cost of installing the digital boards). On July 21, 2014, MacNaughton told Kenny that, contrary to the legal opinion, the Government of Ontario was insisting the OFT is not a Crown agency and moving ahead without City approval was dubious; however, on August 14, 2014, MacNaughton advised Kenny that he thought StrategyCorp had a “work around”, meaning the Provincial Path was still a possibility.

[113] In September 2014, Kenny and MacNaughton met with Davies. Kenny says the meeting was premised on the fact that he was the TWPA’s sign partner and Davies would be working for him. There was no suggestion that the SMA’s 360-day time limit for securing the permit had expired. He understood the municipal process was on hold and his instructions were clear that he was not to contact the City. During the meeting with Davies, MacNaughton suggested a work around which involved a single line in an omnibus bill that would provide that, for the strict purpose of digital signs, the OFT is a Crown agency. The idea was that designating the OFT as a Crown agency would allow the OFT to put up as many signs as they wanted without municipal approval.

[114] Kenny says that at this time, pursuing a municipal permit was still off the table to his knowledge. This evidence is somewhat contradicted by his October 2, 2014 email to MacNaughton about the OFT. In it, Kenny says there are a number of factors that make the municipal option a weak alternative, including that fact that the City is unlikely to approve more than two signs and will restrict motion, light output, and operating hours. He also mentioned that the City was contemplating deleting the Gardiner Gateway Special Sign District as the City already had all the digital signs they need on the Exhibition Grounds. Kenny testified that the municipal option was only weak in terms of the number of signs that could be built. He says he was suggesting that the City allows signs on their land and the province should do the same. Kenny says he was onboard for either option but that he did not know anything about the Provincial Path. Regardless, it is clear that he and StrategyCorp were discussing the municipal option at this time. I have no doubt that the Provincial Path was more attractive to all parties at the time given the potential for more signs and more revenue. To that end, there was no evidence that Kenny was advised that option was off the table.

[115] On December 12, 2014, Green sent an email to Evans advising that after extensive consideration their preference was to proceed with the municipal path while keeping the Provincial Path as a secondary option. The last sentence of this email says that Green would like to discuss the subject of the TWPA’s “potential new sign partner”, referring to Kenny’s competitor Ken Neufeld of Neufeld Sign (“Neufeld”).

[116] It was Fox, who first recommended Neufeld. The TWPA’s position was that there was no longer an agreement with ID and they were free to explore other options. Kenny was not advised of the decision to pursue the municipal option and he knew nothing about the TWPA talking to Neufeld. Evans testified that the TWPA did not send a letter to Kenny advising of their position that the SMA had automatically terminated because he assumed that Kenny would blow up again and Evans did not want to deal with him.

[117] In January 2015, StrategyCorp decided it had to address the Consulting Agreement and tell Kenny that his contract with StrategyCorp was over. Fox advised Green that the SMA automatically terminated in accordance with its terms and no termination notice was given or required. On January 20, 2015, Green and MacNaughton exchanged emails discussing notifying Kenny that his agreement with StrategyCorp was over and that the TWPA did not want to send him a letter because they were convinced Kenny would try to “sink” things as he had threatened the previous year.

[118] On January 21, 2015, MacNaughton sent a letter to ID advising that StrategyCorp considered the Consulting Agreement to have ended because the Consulting Agreement was subordinate to the SMA and the SMA had expired the previous year. The letter does not mention that the TWPA and StrategyCorp would be working with one of Kenny’s competitors and does not mention that they were no longer proceeding with the Provincial Path. Kenny did not contact the TWPA and says he did not do so because he believed that was not at liberty to do so because of the confidentiality provisions of the Consulting Agreement. This does not explain why he could not call the TWPA and inquire generally about the status of the SMA or the Alleged Oral Agreement; however, given all the events that had transpired, it is not surprising that he would be reluctant to do so until he was advised that the Provincial Path was off the table.

[119] Before receiving the January 21, 2015 letter, Kenny emailed MacNaughton on January 22, 2015 for an update. MacNaughton responded on January 23, 2015 advising that he had heard from the TWPA that Kenny’s “mandate” with the TWPA had expired. Kenny did not contact the TWPA after receiving this email. He offered various explanations for this. Kenny says he thought that MacNaughton was confused. Kenny said he was under instructions not to contact the TWPA until the Provincial Path had been determined. He thought he was being goaded into taking action and being provoked into violating agreements that required confidentiality. He also said the email was written after 5:00 p.m. and that he thought about what MacNaughton had previously said to Kenny that he had regretted sending emails after drinking too much wine. Kenny denied that the reason for not contacting the TWPA was that he knew the SMA had expired.

[120] Kenny did not contact the TWPA after receiving the January 21, 2015 letter either. Kenny says he did not know what to make of the letter. He believed that the Consulting Agreement prevented him from talking with others about his relationship with StrategyCorp. He had the NDA with the TWPA and a promise from the TWPA not to interfere with him securing the permit. He felt that clearly someone was giving StrategyCorp inaccurate information, and he was at a loss as to how to respond. Kenny says no one from the TWPA, StrategyCorp, or Fox had ever told him the 360 day time limit was expiring.

[121] Green testified that after sending the January 21, 2015 letter saying StrategyCorp considered its agreement with ID to be over, Green did not hear from Kenny and understood the relationship to have ended. He and MacNaughton were concerned that Kenny might attempt to sabotage the sign conversion initiative.

[122] TWPA Board minutes of February 15, 2015 show that the TWPA instructed StrategyCorp to pursue the municipal path. Green told the TWPA Board that StrategyCorp had confirmed that a digital sign generates approximately $1M per side or face and the OFT property has room for five signs. Green said StrategyCorp’s recommendation would be to apply for three signs or six faces, which should generate $4.5M per year.

The TWPA talks to ID’s competitors

[123] By May 2015, the TWPA and StrategyCorp began communication with ID’s competitor Neufeld. In September 2015, StrategyCorp and Neufeld presented to the TWPA.

[124] Kenny says when he ran into MacNaughton on September 20, 2015 he had no reason to think StrategyCorp was working with his competitors.

[125] The TWPA met with two of ID’s competitors in the fall of 2015. AllVision/DONC (Digital Outdoor Network Company) (“AllVision”) presented to the TWPA Board on October 6, 2015 and Neufeld and StrategyCorp presented on October 7, 2015. The TWPA Board chose to proceed with AllVision. AllVision advised that the correct procedure for sign approval was through a City permit and application to the Committee for one sign. The AllVision proposal involved the TWPA paying the costs of the sign conversion. The TWPA asked AllVision to work with StrategyCorp.

[126] On May 16 or 17, 2016, AllVision and the TWPA signed an agreement for the installation, maintenance, and advertising of two digital signs at the OFT. Under the AllVision Agreement, there are audit rights, minimum fees payable to the TWPA, a termination provision, and an assignment clause. The terms of the agreement were negotiated, Fox was involved, and the agreement was discussed with and reviewed by the TWPA Board.

[127] In May 2016, the week before a new permit application was submitted, Kenny contacted DaSilva to suggest they abandon the Provincial Path. DaSilva did not tell him that the TWPA had signed an agreement with AllVision or that the SMA had automatically terminated. Quite the opposite, DaSilva told him they were going to let StrategyCorp play it out. DaSilva says he was surprised when Kenny called “out of the blue” after having threatened them and because the 360-day time limit had expired. Evans also said he was shocked when Kenny called. Evans assumed that Kenny had moved on when the Provincial Path did not work out. At that point they had not heard from him in two years. According to Kenny, he understood the Provincial Path was still being explored and was following up with StrategyCorp.

[128] StrategyCorp and the TWPA discussed messages to give to Kenny, including that the SMA expired some time ago, that Kenny remains under an NDA, and that the TWPA was not interested in a new contract with him. No such messages were delivered to Kenny.

[129] The TWPA asked the OFTB to further extend their lease agreement and make the other smaller sign at the OFT digital as well. The OFTB declined both requests. On June 1, 2016, the TWPA submitted an application with respect to the Eastern Sign to the Committee. Kenny says much of the information in the June 2016 Application was the same type of information as was contained in the ID Permit Application. An initial negative staff report was received. StrategyCorp told the TWPA that the negative staff report was expected but they were hopeful that Committee would overrule it.

[130] On July 5, 2016, the Committee granted the six requested variances thereby paving the way for the digital sign conversion. Once the permit was granted, Kenny emailed DaSilva who was going through an extremely difficult time. Kenny said he was ready to discuss implementation. DaSilva told Evans he would ignore Kenny’s email.

[131] In September 2016, the digital conversion was done using Media Resources Inc. (“MRI”), one of three suppliers capable of providing the high-quality digital board required for outdoor advertising. MRI was the company Kenny planned to use. The Eastern Sign started generating advertising revenues consistent with Kenny’s initial projections.

[132] ID says a typical “exit strategy” is to convert a sign, get it up and running, and sell it. In this case, in June 2017, AllVision’s 43.5 percent interest in the advertising revenue of the Eastern Sign was sold to Outfront Media Inc. (“Outfront”) as part of share transaction involving a large portfolio of digital signs (including 6-8 signs in Toronto) for $94.4M. Although Michelle Erskine from Outfront (“Erskine”) initially forecasted about $800,000 in gross annual advertising revenue from the sign, it has in fact averaged closer to $1,000,000 per year. Outfront is still doing business with the TWPA and is not aware of any reason why they would not continue doing so after 2027. Outfront and the TWPA have had preliminary discussions about more signs at the OFT.

[133] On December 4, 2017 StrategyCorp wrote to AllVision advising that their fee under the May 19, 2016 agreement could be contrary to Toronto’s Lobbying By-law and they asked that the clause requiring payment of a fee be deleted. As a result, there was no payment to StrategyCorp.

POSITIONS OF THE PARTIES

[134] The plaintiff claims that the plan for ID to earn a commission for selling advertising on the Eastern Sign was part of the June 18 Proposal from the outset and discussed before the Alleged Oral Agreement was made. The TWPA disputes this fact.

[135] According to Kenny, under Options A or B of the June 18 Proposal, ID gets 20 percent of the gross advertising revenue. Under Option C, ID gets 70 percent of the advertising revenue.

[136] Kenny says there is a typographical error in note 4 which he noticed after this litigation was commenced. According to him, the advertising revenue is already included in Option C and note 4 should read: “[w]ith Options A or B, ID is willing to sell any, or all, of the OPMA portion of the boards in the marketplace with an associated selling fee of 20 [percent] of the gross revenue.”

[137] TWPA’s interpretation of the June 18 Proposal is that under options A and B, the TWPA gets all the advertising revenue.

[138] The plaintiff claims the Alleged Oral Agreement was made at the meeting between Kenny, Evans and DaSilva on January 29, 2013. The plaintiff has advanced slightly different versions of the Alleged Oral Agreement.

[139] Amended Statement of Claim pleads that:

8. By on or about February, ID Inc. and the TWPA had discussed and agreed that ID Inc. would:

(a) help the TWPA erect more than one, and up to five signs, at the OFT, and sell advertising on the signs;

(b) use its best efforts to initially secure a Municipal Permit from the City of Toronto for one two-sided sign;

(c) supply and install the new digital two-sided sign at the OFT for a total purchase price of $711,900.00;

(d) maintain the digital signs on a going forward basis after that for $6,000 per month; and

(e) replace the OPMA in selling advertising on the new digital signs, and any other additional signs, which advertising would be expanded to include products besides fruits and vegetables, and for which ID Inc. would receive a fee fer a similar to the fee that the OPMA had been receiving, equal to 20 [percent] of the annual gross advertising revenues from all signs erected, regardless of the number of signs.

[140] At trial, Kenny testified in his evidence in chief that he had a “crystal clear” memory of the January 29, 2013 meeting. Kenny says he told them that, if the TWPA paid the capital cost, they would get 80 percent of the gross advertising revenue and ID would get 20 percent. He said that the TWPA agreed to proceed with the conversion of the Eastern Sign and was anxious to do so with a view to maximizing profit for the TWPA. He says that Evans immediately understood the opportunity, advised him that the TWPA had “millions in the bank” and wanted to invest in the project to get the largest possible percentage of the advertising revenue. At trial, Kenny confirmed that the terms of the Alleged Oral Agreement were as set out in the claim. In the plaintiff’s closing submissions, Kenny’s evidence at trial was summarized as being that the Alleged Oral Agreement contained the following material terms:

TWPA pays ID the $630,000 plus HST for the sign conversion to digital,

TWPA pays ID the $6,000 monthly maintenance fee for 120 months,

The gross advertising revenue is shared: 80 percent to TWPA and 20 percent to ID for the same term as the lease with the OFTB and

ID would obtain the permit and after that was done, they would apply to convert the second sign.

[141] This characterization is not entirely accurate. At trial Kenny said he told the TWPA that the second sign was not viable because it was too small. Instead, he said, they should do one sign and “preserve the opportunity for further signs”.

[142] Kenny says that most of the conversation revolved around next steps, including lifting the Advertising Restriction, negotiating the longest possible lease with the landlord (for amortization of the construction costs and to maximize revenue from advertising), and authorizing Kenny to act as agent of the OFTB as landlord to apply for the sign permit. I note that the TWPA was already in discussions with the OFTB about the lease extension agreement at this time. Kenny says the TWPA briefly questioned whether the fact that they were on Provincial land had any bearing on the permit. He told them his understanding was that municipal approval was required. Kenny says after this meeting there were no further negotiations about the material terms of the Alleged Oral Agreement and the parties proceeded to act on it. Kenny says they did not turn to the June 18 Proposal during the meeting. Kenny says Evans and DaSilva were excited about the idea of paying for the construction and getting 80 percent of the revenue. He says that an agreement was reached and they shook hands on it. He says that he was not told that additional approval was required, that they needed more information, or that they wanted to meet with other companies.

[143] The TWPA says there was no oral agreement reached at this meeting, only discussions. Evans testified that the TWPA never makes oral agreements, and all agreements must be approved by the Board, reviewed by their lawyer, and be in writing. Evans said the exception might be if he agreed to give a small sum of money to a charity, but for larger payments made over time, a written contract would be required. Evans said if the TWPA made an agreement to share in the advertising revenue, it would be negotiated, in writing, and approved by the TWPA Board and their lawyer. Evans was the person responsible for dealing with the TWPA lawyer on written contracts and he would provide them to DaSilva. DaSilva said that to be approved, a contract would have to be presented to the Board, go to the lawyer for review, and then back to the Board for a vote. Both Evans and DaSilva said there was no agreement reached and there were only discussions at the January 29, 2013 meeting, which consisted mostly of Kenny talking and Evans taking notes.

[144] The parties had different versions of the events leading up to withdrawing the ID Permit Application.

[145] The TWPA says StrategyCorp and ID both recommended withdrawing the ID Permit Application because of the issue with Milczyn. The TWPA followed the advice to withdraw it. Kenny says it was not his idea or advice to withdraw the permit; he was instructed to do so. It was also not his idea to do three to five signs. Kenny says that StrategyCorp was worried about what impact a negative staff report might have on a Provincial Path and it was their idea to pull the permit.

[146] On May 16, 2013, Green sent an email to Evans, DaSilva, Kenny and others advising that he had spoken to Kenny and discussed the issue internally at StrategyCorp. Green said, “we believe that a negative staff report would not be helpful to our case, especially if we have legal justification to move forward with a provincial process”. He went on to suggest they consider pulling the ID Permit Application. There was a conference call on May 17, 2013 with Green, Evans, Fox, Kenny, and DaSilva. Kenny says he had no opinion on whether to pull the ID Permit Application but was simply telling them that if they intended to so, now was the correct time to do so. Evans says he understood that both StrategyCorp and Kenny were recommending the ID Permit Application be pulled.

[147] Evans says he had no opinion on whether the Provincial Path or the municipal process was the better choice. He says he relied on StrategyCorp and ID and understood they were working together. Evans agreed it was ultimately the TWPA’s decision to withdraw the ID Permit Application.

[148] Kenny said that the concern relating to the negative staff report related only to the Provincial Path and he was otherwise unconcerned about it. As mentioned above, his emails to the TWPA do not reflect this.

CREDIBILITY AND RELIABILTIY

[149] In assessing credibility and reliability, courts have looked at several factors. A helpful list is contained in Caroti v. Vuletic, 2022 ONSC 4695, at para. 436 (citations edited):

a. Whether the witness’ evidence makes sense by being internally consistent, logical or plausible: Borrelli v. Chan, 2018 ONSC 1429, 58 C.B.R. (6th) 1, at para. 187, affirmed 2019 ONCA 525, 147 O.R. (3d) 145, leave to appeal denied, [2019] S.C.C.A. No. 314; Faryna v. Chorny, [1951] 2 D.L.R. 354 (B.C.C.A.), at 357;

b. Whether there are inconsistencies or weaknesses in a witness’ evidence such as internal inconsistencies, prior inconsistent statements, or inconsistencies with the evidence of other witnesses: R. v. Williams, 2018 ONCA 138, at para. 33;

c. Whether there is independent evidence to confirm or contradict the witness’ evidence, or whether there is a lack of any such evidence: Christakos v. De Caires, 2016 ONSC 702, at para. 10;

d. A witness’ demeanour, including their sincerity and use of language, although this must be done with caution: R. v. Mah, 2002 NSCA 99, 207 N.S.R. (2d) 262, at paras. 70-75; and

e. Whether a witness, particularly a party to a case, may have a motive to fabricate evidence: R. v. J.H. (2005), 2005 CanLII 253 (ON CA), 192 C.C.C. (3d) 480 (Ont. C.A.), at paras. 51-56.

[150] Additional factors to consider include:

a. Whether a witness demonstrated untruthfulness during testimony.

b. Whether a witness demonstrated evasiveness, or reluctance to answer questions.

c. Whether a witness volunteered information not sought.

d. Whether a witness demonstrated favouritism or bias.

e. Whether a witness had reconstructed memory.

Libfeld v. Libfeld, 2021 ONSC 4670 at paras. 38-40, rev’d in part on other grounds, 2023 ONCA 128, leave to appeal requested, [2023] S.C.C.A. No. 162, citing Fitzpatrick v. Orwin, 2012 ONSC 3492.

[151] The following are my general observations on the credibility and reliability of the main witnesses. I note that the events in issue took place a decade before the trial and, while Evans and Green were most forthcoming about the impact of the passage of time on their memories, it is unreasonable to conclude that any of the witnesses’ memories are perfectly intact.

Kenny

[152] Kenny has an interest in the outcome of this case. There were times when his evidence was inconsistent with other evidence given by him, inconsistent with the documents, contrary to common sense, or illogical. There were also problems with the manner in which he testified.

[153] There were times when emails Kenny wrote contradicted his evidence. For example, in his evidence in chief, Kenny maintained that he was never supportive of pursuing the Provincial Path. He described it as fantasy. This is directly contrary to emails he wrote at the time saying pursuing a municipal permit was the weaker option. It is also contrary to the common-sense conclusion that the TWPA, StrategyCorp, and ID all wanted to pursue the Provincial Path because it was a potential path to more signs and more revenue for all. In fact, in support of the Provincial Path, Kenny found and retained a lawyer and even had a meeting with another public relations firm, Counsel Public Affairs, concerning it. His statement that he was not in favour of the Provincial Path was also contrary to his other evidence, where he said that he was on board for either the municipal option or the Provincial Path. Kenny’s evidence that he never supported the Provincial Path is not credible.

[154] When cross examined on a letter from Fox dated December, 10, 2013, Kenny’s evidence was directly contrary to a plain reading of the document. The first paragraph of the letter defines the SMA as “the ID Agreement”. The second page states that nothing in the letter will alter the terms of the ID Agreement. In cross-examination, Kenny denied that the reference to the ID Agreement on page 2 was a reference to the SMA, even though it was defined as such on page one. His position makes no sense.

[155] There were times when Kenny’s evidence seemed illogical, such as when he denied understanding that the “work around involving a line in an omnibus bill” meant passing legislation.

[156] There were also times where Kenny’s evidence was directly contrary to evidence he gave at his examination for discovery. For example, at trial he testified to remembering offering half a percent of his share of the advertising revenue to MacNaughton at their November 27 meeting. At discovery, he testified that he did not remember this, and it was MacNaughton’s recollection that this happened, not his.

[157] At other times, Kenny was less than forthcoming. For example, at trial he said that he remembered seeing MacNaughton at the Toronto International Film Festival. In discovery, he denied this and suggested that MacNaughton’s email claiming this was wrong. When the discovery transcript was put to him at trial, he denied that at discovery he was saying that MacNaughton was likely drinking when he wrote the email. A plain reading of the discovery transcript suggests otherwise. Similarly, at trial Kenny denied telling the TWPA that MacNaughton was slimy or dirty but, on the other hand, he agreed that he felt that one would require a shower after having been in a room with MacNaughton.

[158] Often during cross examination, Kenny appeared to be trying to determine where questions were leading and, rather than answering them directly, he tried to advocate his position in the litigation.

[159] Kenny testified that he had a “crystal clear” memory of the January 29, 2013 meeting. There is evidence which casts doubt on this claim, and even whether Kenny’s memory of this meeting is at all reliable. At trial, Kenny agreed that the oral agreement was as alleged in the Statement of Claim. Before it was amended, paragraph 8 of the Statement of Claim pled that the Alleged Oral Agreement had been made by March 2012. The Amended Statement of Claim says it was made by February 2012. Paragraph 4 of the plaintiff’s Reply to the TWPA’s Statement of Defence claims that the Alleged Oral Agreement was entered into by the fall of 2012.

[160] The plaintiff’s evidence from his examination for discovery in August 2017 was put to him in cross-examination. At discovery, he testified that the Alleged Oral Agreement was entered into sometime prior to the extension of the lease, but he did not remember exactly when. At his discovery, Kenny said the Alleged Oral Agreement was reached over many meetings, conversations, and emails; he could not recall the meeting with Evans and DaSilva in early 2013. He specifically said at discovery that “you don’t arrive at an agreement in a single meeting”. He tried to explain this obvious inconsistency by saying there were many meetings and other discussions not involving him before the January 29, 2013 meeting. His explanation was not logical. At the discovery he was specifically being asked about the meeting at which the Alleged Oral Agreement was made and he said he did not recall it (let alone have a crystal clear memory of it). He also said the Alleged Oral Agreement was reached over many meetings.

[161] Given the inconsistencies above regarding the date upon which the plaintiff says the Alleged Oral Agreement was made, and his evidence at trial and the discovery evidence with which he was impeached, I find that the plaintiff likely reconstructed his memory after having seen Evans’ notes of the January 29, 2013 meeting.

[162] While I do not find that Kenny was intentionally misleading the court on the main issues, I conclude that, on many points, his evidence was unreliable. To an extent, he has reconstructed his memory based on his review of the documents.

Evans and DaSilva

[163] Evans and DaSilva were the main witnesses for the TWPA. They have an interest in the outcome of the litigation. At times, Evans and DaSilva made sweeping statements that seemed to bolster the TWPA’s case. For example, Evans said that every agreement made was in writing, reviewed by the Board’s counsel, and approved by the TWPA Board. DaSilva went further and said that to be approved, a contract would have to be presented to the TWPA Board, go to the lawyer, and then back to the Board to vote. This is contrary to other evidence. The December 12, 2012 engagement with StrategyCorp did not go to the Board for approval and was not reviewed by Fox. Evans said this was because it was just additional services. I also note that StrategyCorp completed a significant amount of work on the billboard before the engagement letter was signed on April 25, 2013. The SMA did not go to the Board, the Board was simply told that Kenny would be engaged to secure the permit. It is worth noting, however, that the initial proposal with the cost of the Construction and Maintenance fee had been reviewed by the TWPA Board and they had determined that they wanted to pay for the Construction themselves. The NDA did not go to the Board for approval. Nor did the SMA go to the Board for a vote. When confronted with these examples, DaSilva agreed that his statement that, to be approved, a contract would have to be presented to the Board, go to the lawyer, and then back to the Board for a vote, was an overstatement.

[164] Evans gave the impression that he involved the TWPA Board in all important decisions, yet there are examples which clearly contradict this position. For example, he did not report to the Board that the opinion from Davies, who was hired to give a legal opinion on whether the OFT being on Provincial land was subject to municipal by-laws, was wrong until February 25, 2015. Yet Evans clearly knew almost a year prior to that as he was retaining McCarthys in April 2014.

[165] At times, Evans refused to concede points that were unfavourable to the TWPA’s case, even though documentary evidence contradicted Evans’ testimony. For example, on June 13, 2013, Green emailed MacNaughton after receiving a call from Evans about StrategyCorp receiving a success fee. Green tells MacNaughton: “Bill Evans just called me. All good news, but he’d like us to hold off on talking to [Kenny].” The email goes on to explain the rationale for holding off on talking to Kenny. At trial, Evans denied any suggestion that he agreed in principle with a success fee going to StrategyCorp from ID’s share of advertising revenue and said that he told Green not to do it. It does not make sense that Green would mislead MacNaughton about the TWPA’s position on the success fee.

[166] Given the problems with the evidence of Kenny, DaSilva, and Evans, I rely primarily on the contemporaneous documents where they differ from the testimony at trial, although I give greater weight to the evidence of DaSilva and Evans.

Green

[167] David MacNaughton left StrategyCorp in 2016 and did not testify. The TWPA called Green as a witness. Green no longer works for StrategyCorp; he left on bad terms and has little interest in the outcome of the litigation. The TWPA and StrategyCorp stopped working together in 2017. Green gave his evidence in a straightforward and forthright manner. However, like Evans and DaSilva, Green’s memory of the events of a decade ago was naturally somewhat faded. He was more forthcoming about the fact that he relied mostly on the documents to refresh his recollection.

ISSUES

[168] There are nine issues to be determined as follows:

1. Was there an oral agreement between ID and the TWPA for Construction, Maintenance and Advertising Revenue on the Eastern Sign? If so, was it breached?

2. Did the SMA automatically terminate in March 2014 or did the TWPA breach it?

3. Was there an oral agreement with the TWPA for additional signs, if so, was it breached?

4. Did StrategyCorp interfere with ID’s economic relations in regard to the withdrawal of the ID permit?

5. Was there a conspiracy between StrategyCorp and the TWPA to make ID responsible for StrategyCorp’s success fee?

6. Did the TWPA and StrategyCorp breach the confidentiality provisions of their respective agreements?

7. Did StrategyCorp breach the non-competition clause in the Consulting Agreement?

8. Did the defendant breach their obligations of good faith and fair dealing in the performance of their contracts?

9. What are the plaintiff’s damages, if any?

ANALYSIS

Issue 1: Alleged Oral Agreement

[169] Was there a binding contract reached between ID and the TWPA on January 29, 2013? For reasons set out below I find there was no binding oral contract made.

[170] Whether a contract is formed is an objective determination: see Smith v. Hughes (1871), L.R. 6 Q.B. 597, at p. 607, cited in Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp., 2020 SCC 29, 41 B.C.L.R. (6th) 1, at para. 29, 33. For a contract to exist, the parties must be ad idem. The test of whether the parties are ad idem is also objective: “would an objective, reasonable bystander conclude that, in all the circumstances, the parties intended to contract?”: UBS Securities Canada, Inc. v. Sands Brothers Canada Ltd., 2009 ONCA 328, 95 O.R. (3d) 93, at para. 47.

[171] A contract is only created where the parties “have formed a mutual intention to enter into a bargain with each other and further, are in agreement as to the terms of that bargain”: Xynos v. Xynos, 2023 ONSC 830, at para. 92, citing John McCamus, The Law of Contracts (3d ed., 2020), p. 31. The terms of the bargain are essential to creating an enforceable agreement. As the Court of Appeal for Ontario noted in UBS (ONCA), at para. 47, “[a]n intention alone is insufficient to create an enforceable agreement, it is necessary that the essential terms of the agreement are also sufficiently certain.” The Court of Appeal affirmed the trial judge’s decision that similarly held that essential terms must be sufficiently clear to suggest that the parties came to an agreement: see UBS (ONSC), at para. 42. The trial judge cited the following passage from Canada Square Corp. et al. v. VS Services Ltd. et al. (1982), 1981 CanLII 1893 (ON CA), 34 O.R. (2d) 250 (C.A.), at p.24:

I am satisfied … that the parties intended to make a contract. However, this does not end the matter. Notwithstanding that the parties may have thought they were bound, if the essential terms of the alleged contract lack certainty, either because they are vague or because they are obviously incomplete, the result will not be a binding contract: 9 Hals., 4th ed. Para. 262; Treitel, The Law of Contract, 5th ed. (1979), at p. 40; Corbin on Contracts at p. 394.

Oral Agreements

[172] When courts are faced with oral contracts, they must look “not only at the words used, but also at whether the parties’ conduct is consistent with the oral agreement”: Voitchovsky v. Gibson, 2022 BCCA 428, at para. 32 (emphasis in original). The test here is the same as for written agreements, as outlined in Ethiopian Orthodox Tewahedo Church of Canada St. Mary Cathedral v. Aga, 2021 SCC 22, 163 O.R. (3d) 719. In Voitchovsky, at para. 35, the court stated the test as: “whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract.”: at para. 32. The Court of Appeal for British Columbia in Voitchovsky went on to hold that when assessing an oral contract:

The determination of the outward manifestation of the parties’ intentions is contextual and takes into account the parties’ communications as well as their conduct before and after the agreement is made (Oswald v. Start Up SRL, 2021 BCCA 352, at para. 34). The parties must have reached consensus on the essential terms of their agreement and failure to reach this “meeting of the minds” means the agreement will fail for lack of certainty (Rudyak v. Bekturova, 2018 BCCA 414, 20 B.C.L.R. (6th) 65, at para. 24). This inquiry is an objective one, such that the actual state of mind and personal knowledge of the parties is not relevant (Hammerton v. MGM Ford-Lincoln Sales Ltd., 2007 BCCA 188, 66 B.C.L.R. (4th) 183, at para. 23, citing S.M. Waddams, The Law of Contracts, 5th ed. (Toronto: Canada Law Book Inc. 2005), at 103).

[Citations edited.]

[173] As is the case with written contracts, parties to an oral contract must also agree on the essential terms of the agreement. Put differently, the court cannot make a contract for parties if they have not agreed upon its material terms: see Kelly v. Watson (1921), 61 S.C.R. 428; Picavet v. Clute, 2012 ONSC 2221, 22 R.P.R. (5th) 72, at para. 13; Hornstein v. Kats et. al., 2020 ONSC 870, 24 R.P.R. (6th) 107, at para. 200; Xiang v. Atlas Healthcare (Brampton) Ltd., 2021 ONSC 1225, at para. 48; Rosseel v. Molson, 2020 ONSC 2100, 37 R.F.L. (8th) 332, at para. 7; Maghakian v. Takaoka, 2022 ONSC 2004, at para. 88.

[174] Where essential provisions are missing, “the general tenor of the decisions is against any possibility of completing the parties’ work for them and creating a valid contract out of vague contractual intent that may be evidenced by their language or conduct”: G.H.L. Fridman, The Law of Contract in Canada (6th ed., 2011) at pp. 21-22.

[175] The test for determining whether the missing terms are essential is whether they are so important that they warrant a conclusion that there is no agreement: see Brownlee v. Kashin, 2015 ONSC 1035, 52 R.P.R. (5th) 319, at para. 49, citing John McCamus, The Law of Contract (2nd ed., 2012), p. 94 and see Apotex v. Allergan, Inc., 2016 FCA 155, 483 N.R. 131, at paras. 31-33.

[176] Where essential terms are not agreed and the parties are merely agreeing to enter into a contract, courts will generally not enforce such agreements because they are “too uncertain as to be able to quantify the damages that would flow from their breach; after all, the negotiations could go anywhere and nowhere:” Angela Swan, Jakub Adamski, Agreements to agree: Halsbury’s Laws of Canada – Contracts (2021 Reissue), citing Courtney & Fairbairn Ltd. v. Tolaini Brothers (Hotels) Ltd., [1975] 1 W.L.R. 297 at 301, [1975] 1 All E.R. 716, at 720 (C.A.).

[177] In this case, the parties disagree on whether there was an oral agreement. Kenny testified at trial that on January 29, 2013, ID and the TWPA entered into an oral agreement. Evans and DaSilva testified that there was no oral agreement, only discussions on January 29, 2013. To determine whether an oral agreement was reached, I must consider whether an objective, reasonable bystander would conclude that, in all the circumstances, the parties intended to contract. This requires an examination of the parties’ words and conduct before, on, and after January 29, 2013. In conducting the analysis, I am attempting to ascertain the reasonable intentions of the parties.

[178] The entire agreement clause in the SMA creates a strong presumption that their reasonable intention was to set out the entire contract in that document: see Corey Developments Inc. v. Eastbridge Developments (Waterloo) Ltd. (1997), 1997 CanLII 12254 (ON SC), 34 O.R. (3d) 73. In Corey, the court considered the enforceability of an alleged collateral oral agreement in the face of a formal agreement which contained an entire agreement clause. The court in Corey held that:

The Supreme Court of Canada has established a very rigid rule which precludes the consideration of collateral contracts and/or extrinsic evidence if inconsistent with the written contract in question. In this case, the existence of a personal guarantee is inconsistent with para. 7.1 of the agreement which is an “entire agreement clause” and which provides that there is no representation or agreement outside the written agreement related to the contract.

However, the legal analysis cannot end there. There are exceptional circumstances in which extrinsic evidence can be adduced and considered. It must be recalled that the purpose of the parol evidence rule is to ensure that the expectations of the contracting parties are upheld. It is apparent from the evidence, and the court’s perception or the oral testimony, that the parties’ reasonable expectations went beyond the four corners of the written agreement.

For the reasons I have set out in Parts V and VI, I think that it is a considerable oversimplification of the law to say that an exclusionary clause will not avail he defendant if a collateral warranty is made out on the evidence. Sometimes it will, sometimes it would not; the court must strive to reach the true contractual intention of the parties, guided, in the case of contradiction, by the strong presumption in favour of the document.

[179] If there was an oral agreement that included advertising revenue, why was it not included in the SMA? Kenny testified that there was no particular reason for same, just that he used an old template for preparing the SMA. That being said, this may be an exceptional case where the parties’ reasonable expectations went beyond the four corners of the agreement. This is a question to be decided in view of all the evidence, including the parties’ words and conduct both before and after the SMA was signed. I must also consider whether the essential terms were sufficiently clear.

TWPA Practices Regarding Agreements

[180] I do not accept that there was a hard and fast rule that every agreement entered into by the TWPA was in writing, approved by the lawyer, reviewed by the Board, and put to a vote. On the other hand, the TWPA did reduce its agreements to writing, the lawyer was usually involved, and the Board was advised of and approved agreements in principle before they were made. I am not suggesting that this procedure is required to form a binding contract; rather, I am considering evidence of the TWPA’s usual practices as objective evidence of their intention in this case.

Agreements with OPMA

[181] The prior agreements with the OPMA and DBB Management (who sold advertising for the TWPA in 2002-2003) concerning payment of advertising revenues with respect to the traditional billboard signs were in writing. The plaintiff points to the fact that they were two page agreements and did not contain many of the terms that were involved in the agreement ultimately reached with AllVision to convert the Eastern Sign. While this is true, I note, however, that the agreements with OPMA and DBB to sell advertising on the static signs did not involve investment by the TWPA of over $700,000 or a commitment to pay $72,000 per year in maintenance fees. The contracts for advertising on the static signs involved advertising revenue of approximately 1/10 of the $1M per year projected for the digital sign and most of the revenue from the signs managed by the OPMA was offset by the expense of maintaining the static signs. With a contract of this value, it seems obvious that the TWPA would be more concerned about terms such as Advertising Revenue targets, accounting of profits, assignability, and the like. A two page agreement may have been appropriate for these smaller simpler contracts in 2002 and 2003.

Lease with the OFTB

[182] The lease between the TWPA and the OFTB dated February 22, 2013 and the amended lease dated March 28, 2013 are, not surprisingly, both in writing.

[183] On November 28, 2012, Green sent an email to MacNaughton relaying his conversation with Evans. He says Evans told him they had recently struck an agreement with the OFTB to share the billboard revenue 50/50, whereas the written agreement was not actually executed. The plaintiff suggests this is evidence that the TWPA acted on oral agreements. When confronted with this document in cross examination, Evans said he did not tell Green the TWPA had a deal with the OFTB. He said that he would have to go to the TWPA Board and put it in writing in order to have an agreement. Evans did go to the TWPA Board. There was a discussion at the December 5, 2012 TWPA Board meeting about the content of the Advertising Restriction and that the OFTB Chair Nichols was open to changing it in exchange for a 50/50 split in the Advertising Revenue. At the January 16, 2013 TWPA Board meeting, the Board was asked to, and did, approve the TWPA entering into negotiations with the OFTB to drop the Advertising Restriction in return for a 50/50 split of the net revenues.

[184] Also, Evans sent Kenny a copy of the OFTB lease agreement on February 6, before it was signed and referred to it as a binding agreement. When cross examined on this point, he said he only used the phrase “binding agreement” because Kenny had used that wording when describing what the TWPA needed to get from the OFTB and that there was no agreement because he still had to go to the TWPA Board. I do not find that by using this phrase Evans was opining on the legal enforceability of the lease.

StrategyCorp Agreements with the TWPA

[185] The engagement agreements between StrategyCorp and the TWPA were in writing. Both the original agreement with StrategyCorp in July 2012 and the April 25, 2013 agreement with StrategyCorp were in writing.

[186] The December 12, 2012 engagement letter with StrategyCorp did not go to the Board for approval and was not reviewed by Fox. Evans said this was because it was just an agreement for additional services. At the TWPA Board meeting on December 5, 2012, the Board was advised the StrategyCorp was working on the billboards. I also note that StrategyCorp completed a significant amount of work on the billboard before the engagement letter was signed on April 25, 2013; however, there was an ongoing relationship between the two so it makes sense that StrategyCorp would not be concerned about getting paid and that the written agreement would follow.

[187] MacNaughton and Green discussed in emails that the TWPA had “agreed” to give StrategyCorp a success fee. Evans knew that StrategyCorp wanted a success fee but denied that the TWPA had ever agreed to pay it. It is clear from emails that MacNaughton thought the TWPA had agreed. Eventually, when the idea was put to the TWPA Board, they rejected it and told StrategyCorp to speak to ID about ID paying a success fee to StrategyCorp. This evidence supports the proposition that TWPA Board approval was required for contracts.

The SMA

[188] The SMA was in writing and was the subject of negotiations on many terms over approximately two months with blacklined versions going back and forth. The TWPA’s lawyer Fox was directly involved in same. When negotiating terms of the SMA, Fox specifically told Kenny there was no agreement until it was approved by his client and signed. A lawyer’s explicit reservation of the client’s authority to decide whether an offer is accepted means that there can be no agreement until the client is heard from: see Apotex, at para. 43.

[189] The TWPA Board was also involved. The June 18 Proposal, which contained the cost of the Construction and Maintenance fees, was reviewed by the TWPA Board at the July 11, 2013 TWPA Board meeting. They determined that they wanted to proceed with the project and pay for the conversion of the sign themselves. At the Board meeting on March 29, 2013, the Board was advised that Evans and DaSilva had met with Kenny a number of times to discuss the terms of his involvement and that Kenny would be engaged.

The NDA

[190] The NDA did not go to the Board for approval. It was drafted by the TWPA’s lawyer and was not a new undertaking in the sense that it did not commit the TWPA to spend any money. It simply laid the groundwork for future negotiations with Kenny.

The Agreement with AllVision

[191] The TWPA eventually contracted with AllVision to digitize the Eastern Sign. This agreement, dated May 16 or 17, 2016, is in writing. AllVision was chosen through a competitive process where presentations were made to the TWPA by it and a competitor. The terms of the agreement were negotiated, Fox was involved, and the agreement was discussed with and reviewed by the TWPA Board. A draft of the AllVision Agreement was reviewed by the TWPA Board at it’s Board Meeting on January 20, 2016. Specific terms of the agreement were discussed at the TWPA Board meeting on April 20, 2016. Overall strategy with respect to the project was discussed at the TWPA Board Meeting on April 6, 2016.

[192] I find that, in light of the way other agreements were made, it is highly unlikely that Evans and DaSilva would enter into a binding agreement of this magnitude without seeking Board approval and without involving their lawyer in drafting a written agreement.

[193] ID also relies on the removal of a term from the OFTB lease as evidence in support of the Alleged Oral Agreement. The unsigned copy of the OFTB lease, which was dated February 1, 2013 and provided to Kenny on February 6, 2013 (but likely drafted before the January 29, 2013), had a clause that provided that a committee of members from the OFTB and the TWPA would select someone to deal with day-to-day matters involving the operation of the sign. This clause was removed, and Kenny says this is evidence of the Alleged Oral Agreement because the TWPA had agreed that ID would sell the advertising space and they did not need a committee. There was no direct evidence on the reason for the change from a committee and there could be other possible explanations why the change was made. I do not infer the change was because there was an agreement with Kenny to sell advertising.

[194] The plaintiff says the TWPA had a practice of considering oral agreements binding before they were reduced to writing and cites the OFTB lease and the agreements between the TWPA and StrategyCorp for this proposition. ID says that Evans entered into a verbal agreement with StrategyCorp for a success fee. Green testified that it was his belief, in the summer of 2013, that the TWPA and StrategyCorp had no agreement for a success fee. He said that his use of the phrase “verbally agreed to a perpetual success fee...” in an email on June 27, 2013 did not mean a binding agreement. He says he meant there were discussions and that StrategyCorp was optimistic that the discussions would lead to an actual written agreement. This evidence is consistent with the fact that, later, on October 8, 2013, StrategyCorp sent the TWPA a draft engagement letter containing a success fee.

[195] Green, in an email to MacNaughton on November 28, 2012, says that that Evans told him they had recently struck an agreement with the OFTB to share the billboard revenue 50/50, whereas the written agreement was not actually executed at that time. When confronted with this document in cross examination, Evans said he did not tell Green that the TWPA had a deal with the OFTB, and that he would have to go to the TWPA Board and put it in writing in order to have an agreement.

[196] I find that at the material times, the language and words used by the parties were not precise. For example, Evans used the phrase “binding agreement” referring to the OFTB lease before it was signed. Green testified that he did not appreciate the distinctions between an oral agreement, a binding agreement, and other agreements, until this litigation. While the TWPA’s practices with respect to entering into contracts were not reduced to writing or formalized, in general, the TWPA’s practice was to involve the Board before contracts were made, reduce contracts to writing, and have their lawyer involved in drafting contracts. If these things did not happen there was no binding agreement. For example, although Evans and StrategyCorp discussed a success fee, ultimately it was rejected by the TWPA Board at the October 23, 2013 TWPA Board meeting and no agreement was made. The Alleged Oral Agreement and specifically ID’s entitlement to a share of the Advertising Revenue was never taken to or approved by the Board, never reduced to writing and Fox’s input was not sought. An objective observer would expect these steps to have been taken if an agreement was made.

Conduct Before January 29, 2013

[197] I find that the idea that ID would receive a share of the advertising revenue was not part of the plan from the outset. The June 18 Proposal contains options whereby ID does not sell the advertising on the signs or share in the advertising revenue.

[198] Kenny testified that the plan was always for ID to get a share of the advertising revenue and under the June 18 Proposal there is no option where either party receives 100 percent of the Advertising Revenue. Yet Kenny testified that he told MacKenzie the options were “full or partial” ownership of the rights. The way Kenny now describes the options, none of them involve full ownership of the rights. Kenny’s statement to McKenzie is consistent with the plain reading of the document that under Option A or B, no advertising revenue goes to ID.

[199] MacKenzie’s advice to the Borad that ID had presented alternatives “ranging from their partial to full ownership of the rights of the space for 10 years” is consistent with the TWPA’s interpretation that under options A and B, the TWPA gets all the advertising revenue. Under the plaintiff’s interpretation of the proposal, there is no option whereby either party gets 100 percent of the advertising revenue; this is inconsistent with the Board Minutes as well as Kenny’s admission that he said that to MacKenzie.

[200] It is also consistent with the fact that under note 3 of the June 18 Proposal, the provision regarding removing the Advertising Restriction only applied to Option C, which appears to be the only option under which ID gets advertising revenue. If Kenny is correct and under Options A or B ID gets 20 percent of the gross advertising revenue, it does not make sense that note 3 provides that only Option C is contingent upon ID’s acceptance of Advertiser Restrictions. One would think that Kenny would want to eliminate the restriction limiting advertising to produce even if ID were only getting 20 percent of the gross advertising revenue so as to be able to attract a variety of large national advertisers and generate more revenue. As between the Construction, the Maintenance, and the Advertising Revenue, the Advertising Revenue is by far the most lucrative aspect of the sign. Even 20 percent of the gross Advertising Revenue is worth more than double the profit of the Construction and Maintenance combined.

[201] I do not accept Kenny’s evidence that there was a typographical error and I reject his suggestion that from the outset that plan included ID receiving a share of the advertising revenue.

[202] I find that, while it might have been Kenny’s intention to pursue a share of the advertising revenue under all the options, Options A and B of the June 18 Proposal, as drafted and shown to the TWPA Board, did not include a share of the advertising revenue going to ID.

Conduct on January 29, 2013

[203] Evans testified that there was no agreement to pay Kenny an advertising fee at this meeting, although they knew he would be hoping to get one. Evans said that any agreement would have to be reduced to writing and go to the Board, and that he wanted to discuss more specifics. Evans said they likely shook hands at the end of the meeting as a formality, but no deal was reached. Kenny did not tell him, and he did not understand, that any information given to him was confidential. Evans’ report to the TWPA Board is consistent with his evidence that no agreement was reached. Evans’ handwritten notes of the January 31, 2013 TWPA Board meeting indicate there was a discussion about the signs and the TWPA and the OFTB working together to find an “acceptable operator” to run the signs. ID was not discussed, and Evan testified that no decision had been made as to who was going to do the advertising. He says they were going to make that decision after the permit was obtained.

[204] DaSilva’s evidence was largely consistent with Evan’s evidence, but he did say they planned to do an agreement with ID regarding advertising after the permit was obtained.

[205] With respect to what transpired at the January 29, 2013 meeting, the documents support the TWPA’s position that no agreement was reached. Evans’ notes reference a 20 percent selling fee but do not say it was to go to ID. Evans’ notes of the January 31, 2013 TWPA Board meeting also refer to finding an acceptable operator for the digital sign and do not reference ID.

Conduct after January 29, 2013

[206] The parties’ conduct after January 29, 2013 establishes that the TWPA intended to purse the opportunity of converting the Eastern Sign to digital, but does not establish that they had entered into a binding oral contract with ID so do so.

[207] ID claims it was entitled to a share in the advertising revenue as per the terms of the Alleged Oral Agreement. There are certainly documents supporting the idea of ID receiving a fee of 20 percent of the advertising revenue. The parties were contemplating ID selling advertising space and there is evidence supporting this proposition. Evans’ notes from the January 29, 2013 meeting contain a reference to 20 percent selling fee but do not say it was to go to ID. Evans said the agreement regarding selling advertising would come after the permit was obtained and the sign converted.

[208] There is no doubt that by this point, and likely before, the TWPA had decided to pursue the sign conversion project generally. The TWPA says it was a one-step-at-a-time approach (or an agreement to agree), while ID says the Alleged Oral Agreement encompassed all aspects of the conversion project including advertising revenue. Therefore, I must examine the parties’ words and conduct to see if a reasonable and objective observer would think there was an agreement for conversion of the sign, maintenance and advertising to be done by ID. Or, whether there was simply an intention to proceed with the project in general without any commitment to use ID for the advertising.

[209] There is also no doubt that steps were taken to move forward with the digital sign conversion. Evans sent Kenny a list of existing advertisers and told the OPMA not to enter into any long term contracts for advertising. Kenny began working on the permit application and met briefly with city by-law staff, the TWPA negotiated a lease extension with the OFTB and arranged for the OFTB to write the letter authorizing Kenny as their agent, and the TWPA spoke to StrategyCorp about the project. Kenny sent the TWPA a list of target advertisers and says he would not have done so if he did not understand he had an agreement to do the advertising. This list was sent to the TWPA in the context of their negotiations with the OFTB on the removal of the Advertising Restriction from the lease and was needed for that purpose. There was no reason for Kenny to be sending that list at that time for any other purpose.

[210] All these steps do not point specifically to the existence of the Alleged Oral Agreement. The are equally consistent with a decision to pursue the sign conversion project generally.

[211] DaSilva was asked in cross examination if the TWPA had an agreement with ID for the construction of the sign when they went to the OFTB about the use clause and getting Kenny approved to apply for the permit. He said yes. ID says this is evidence of the Alleged Oral Agreement because it was before the SMA was signed. I disagree. The TWPA had discussions with the OFTB regarding the advertising restriction over an extended period of time (from before December 12, 2012 until it was signed March 28, 2013). The discussions about getting Kenny approved to apply for the permit went from before February 14, 2013 to February 25, 2013. Drafts of the SMA were being circulated on February 25, 2013 and the SMA was executed on March 28, 2013. None of these dates were put to DaSilva when he was asked that question and given how close in time these events occurred, and his admitted difficulties remembering the events in issue, I put little weight on this answer.

[212] The Lease Amendment and Extension Agreement refers to a deduction for commissions/fees for leasing or sale of time. Kenny says this means the advertising revenue split was therefore 20 percent to ID, 40 percent to the TWPA, and 40 percent to the OFTB. I do not agree. It simply means that ID and the TWPA would split the net revenue after commissions in whatever amount were paid to whomever did the selling of advertising. I find that there was certainly an intention to convert the sign to digital and an understanding that a commission would be paid to the seller of the advertising.

[213] On April 1, 2013, Kenny sent an email to Ippolito advising that he got the “go ahead” from the TWPA on March 28, 2013 to retrofit the existing billboard to digital. This is not consistent with there being an oral agreement made January 29, 2013. The TWPA points to activity concerning getting the permit in early April to support their position that the SMA was the first binding agreement with ID and that there was no prior oral agreement. For example, Kenny told Evans on April 1, 2013 that he went to city hall to start the dialogue with the city and Kenny started arranging meetings with Van Vliet at that time.

[214] Kenny says his reference to a “public-private partnership” with ID, the TWPA, and the OFTB in his June 10, 2013 email to Davies is a direct reference to the agreement to share advertising revenue 20/40/40. Kenny says “[m]y company ID Inc. has entered into a public-private partnership with the Toronto Wholesale Produce Association and the Ontario Food Terminal Board to erect digital advertising signs on the Food Terminal property at 165 The Queensway in Toronto” (emphasis added). It says nothing about selling advertising and revenue sharing.

[215] An email from Kenny to Evans on September 30, 2013 regarding information for presentation to the Province of Ontario noted that they would be employing services of Ontario based companies to build signs and “[a]ll advertising sales will be provided by ID Inc. – a Toronto-based company.” However, the email also says, “concrete from TO”, “[s]teel from Brampton” and “[d]igital board from Oakville”; however, contracts had not yet been entered into regarding any of these matters. At best these were ideas. Evans testified that no decisions had been made on these issues and there was no evidence that any of these items had been pursued at all.

[216] The Minutes of the Annual General Meeting of the TWPA on June 25, 2013 contain a report on the digital billboards. Reported are the lease amendment agreement, the increased revenue by eliminating the use clause, and sharing revenue with the OFTB. It was also reported that Kenny had been engaged to get the permit to convert to a digital sign. There is no mention here of any agreement with ID concerning advertising revenue.

[217] ID also points to many references in the documents about StrategyCorp’s success fee coming out of ID’s share of the advertising revenue. For example, Evans sent an email to TWPA Board member John Courtman on October 17, 2013 talking about the proposed StrategyCorp success fee. “They are proposing that these fees be deducted from I.D. Inc commission (20 [percent])…” he says, which is what StrategyCorp was proposing.

[218] Emails and documents suggest StrategyCorp believed that ID had an agreement for a share of the advertising revenue, which Evans saw and did not correct. For example, the revenue projections contained in the May 27, 2013 PowerPoint prepared by StrategyCorp are $800,000 per sign, which Kenny says is the TWPA’s 80 percent of his projected $1M. On June 6, 2013, Green and MacNaughton were discussing their plan to talk to the TWPA about a success fee. They intended to seek the fee from Kenny’s share of the advertising revenue and take nothing from the revenue generated by the first sign. Green testified that when they were talking about a success fee for StrategyCorp, he wrongly thought that ID had an agreement with the TWPA regarding 20 percent of the advertising revenue. He said he did not know who told him that but assumes it was Kenny, Evans, or MacNaughton. There is also StrategyCorp’s email of June 27, 2013 referring to a meeting with the TWPA, ID, Fox, Green, and Davies; which says, “preserving the desired revenue stream for each of the partners”. StrategyCorp’s proposed success fee was to come out of ID’s 20 percent share of the revenue.

[219] There is a memo dated July 8, 2013 memo from StrategyCorp to TWPA which refers to an agreement to pay Kenny 20 percent of the advertising revenue. Kenny says this is evidence of the Alleged Oral Agreement. StrategyCorp says this comment was an aside and the purpose of the memo had nothing to do with ID. The TWPA says this particular bullet is wrong, and Green was specifically corrected on this point. Green was discussing terms of the SMA which he had not seen and wrongly assumed the SMA contained an agreement to give ID a share of the Advertising Revenue. TWPA told Green in June 2013 there was no agreement with Kenny at the provincial level. It seems that in spite of this, Green continued to believe that there was some sort of agreement to give ID a share of the Advertising Revenue. By October 2013, Green understood that there was no agreement between the TWPA and ID regarding Advertising Revenue. Evans says he did not notice the incorrect statement in the memo and there are other obvious errors that he overlooked. For example, it incorrectly says that the cost to erect each sign is around $1M and it states that the TWPA and the OFTB had an agreement to split revenue on two signs, whereas the agreement with the OFTB was only for one.

[220] ID submits that MacNaughton’s admissions at discovery (which were read in as part of the plaintiff’s case at trial) that he understood that ID had a deal with the TWPA for 20 percent of the advertising revenue support the existence of the Alleged Oral Agreement. Evans testified that he did not give StrategyCorp a copy of the SMA and that he did not tell StrategyCorp that the TWPA had agreed to give Kenny 20 percent of the advertising revenue. At his discovery, MacNaughton also said he did not know the terms of the contract between ID and the TWPA. Neither MacNaughton nor Green ever saw the SMA. The plaintiff read in MacNaughton’s discovery evidence where he said that by July 8, 2013 he understood that ID had an agreement for 20 percent of the advertising revenue and since he had not yet met Kenny, the information must have come from the TWPA. Kenny testified that only he, Evans, and DaSilva were at the January 29, 2013 meeting where he says the Alleged Oral Agreement was reached and he did not tell MacNaughton about the 20 percent. For that reason, it must have come from Evans or DaSilva.

[221] MacNaughton did not give evidence at trial. From the passages of his examination for discovery transcript, I cannot see if it was put to him that he could have obtained the information from Green. There are emails between Green and Kenny which show that they had spoken to each other since at least mid-April 2013 or before. It is possible that Kenny told Green he was going to sell advertising for 20 percent of the revenue and Green told this to MacNaughton. I cannot conclude that it was the TWPA that told MacNaughton that there was an agreement with ID for 20 percent of the advertising revenue.

[222] StrategyCorp’s misunderstanding that the SMA contained a provision regarding ID receiving 20 percent of the advertising revenue was eventually cleared up. Green’s email of June 13, 2013 says that Evans told him the TWPA has no agreement with Kenny going forward at the provincial level. Evans says he told Green that there was no agreement with ID for a share of the Advertising Revenue. Green made notes of his call with Evans on October 22, 2013 where Evans told him that there was no agreement with ID for a 20 percent commission. When MacNaughton emailed Green that same day and suggested that the TWPA was already committed to pay Kenny, Green responded by advising them that the TWPA had no agreement with Kenny.

[223] In September 2013, Kenny sent an email to the TWPA where he refers to fulfilling ID’s contract with the TWPA by getting the signs installed. This is clearly a reference to the SMA, and Kenny concedes this fact. This suggests that the only agreement with ID was the SMA.

[224] The October 23, 2013 TWPA Board Minutes state that there is no formal agreement with ID to manage the signs.

[225] Also, the Consulting Agreement dated December 19, 2013 does not say that ID already had an agreement with the TWPA regarding advertising revenue and on its face seems to suggest that it did not. The StrategyCorp fees payable under the Consulting Agreement are conditional on ID entering into an agreement for advertising revenue. The Consulting Agreement provides that payment to StrategyCorp is conditional on ID having a written agreement to sell advertising.

[226] The fact that the Consulting Agreement refers to a potential future written agreement between ID and a third-party regarding the supply, installation and selling of advertising time implies there was no such agreement at the time. The letter from Fox to Kenny dated December 10, 2013 where the TWPA requires ID to enter into the NDA specifically references the SMA. It does not mention the Alleged Oral Agreement. It goes on to say that,

in principle, the TWPA is prepared to approve proposed agreements between you and the OFTB for the manufacture, installation and maintenance of multiple signs and the sale of advertising on same, subject to the TWPA approving the terms of these agreements and specifically the advertising commission and performance targets regarding same.

[227] The NDA is also evidence that there was no Alleged Oral Agreement. The NDA contemplates ID selling, installing, and maintaining up to five digital signs at the OFT and selling advertising on the digital signs on terms acceptable to the parties and the OFTB. It says that the TWPA is only prepared to enter into those negotiations after ID and Kenny enter into the NDA. The NDA recitals do not mention any prior oral agreement to sell advertising. The NDA refers to the SMA only.

The SMA (March 28, 2013) – Changing or Missing Terms

[228] The SMA creates several problems for the plaintiff with respect to the existence of the Alleged Oral Agreement. The SMA incorporates some but not all of the terms of the Alleged Oral Agreement. It also contains an entire agreement clause. It changes some of the terms of the Alleged Oral Agreement; and the negotiations that preceded its signature demonstrate that there were material terms concerning the construction and maintenance upon which the parties had not agreed. Aside from the SMA, there is also other evidence that shows there were material terms relating to the advertising revenue component of the Alleged Oral Agreement that had not been agreed or were unclear.

[229] The SMA encompasses three of the Alleged Oral Agreement’s four components.

[230] The SMA provides (1) for the conversion of the Eastern Sign to digital with the TWPA paying ID $630,000 plus HST for same, (2) that ID will make an application for the necessary permit, and (3) that the TWPA will pay ID $6,000.00 per month plus HST to maintain the Eastern Sign for 120 months (i.e. conversion, maintenance fees, and permit).

[231] The Alleged Oral Agreement terms that relate to the same matters as are contained in the SMA are:

a. The TWPA would pay ID $630,000 plus HST for the conversion of the Eastern Sign (the “Conversion Cost”);

b. The TWPA would pay ID $6,000 plus HST per month for 120 months for the maintenance of the Eastern Sign (the “Maintenance Cost”); and

c. ID would secure the necessary approval and permit for the conversion of the Eastern Sign only. Once that was approved, ID would apply for the second sign conversion.

[232] There are significant differences between the Alleged Oral Agreement and the SMA. The SMA says nothing about sharing Advertising Revenue. In fact, the SMA makes no reference to advertising at all. The monthly maintenance fee is different (i.e., $6,500 under the Alleged Oral Agreement and $6,000 per month with Consumer Price Index increases under the SMA). The SMA makes no reference to a second sign.

[233] The TWPA also relies on the “entire agreement” clause. ID says this is the entire agreement regarding only the construction and maintenance of the sign. ID’s position is that the SMA formalized parts of the Alleged Oral Agreement relating to Construction, Maintenance and the ID Permit Application and this is the entire agreement regarding those items only. Kenny says this was the first phase of the project and the agreement regarding sharing of advertising revenue that was part of the Alleged Oral Agreement was not mentioned because advertising does not start until after the digital sign is built. He says the material terms were agreed on January 29, 2013 and there were no further negotiations on those material terms after that time.

[234] Kenny prepared the first draft of the SMA. Fox reviewed the SMA, and there were several drafts exchanged with some of the terms being negotiated and changed. Significantly, at one point during the negotiations, Fox expressly told Kenny in writing that there was no agreement until the SMA was signed. This evidence is inconsistent with there being a prior Alleged Oral Agreement relating to the same matters.

[235] Evans testified that he and Fox reviewed and discussed all the changes. There were many specifically negotiated additional terms in the SMA many of which were not part of the Alleged Oral Agreement. The drafts exchanged show that changes were made to the first draft including the size of the deposit, whether the deposit was refundable, the timeline for obtaining the permit, the warranty terms, the term regarding soil conditions, the time for the TWPA to object in the event of deficiencies in the installation of the digital boards, the interest rate for unpaid amounts owing, and whether the maintenance part of the contract could be cancelled on notice. Some terms were removed entirely. The TWPA also negotiated three months of free maintenance and the maintenance fee of $6,000 per month increases with the cost of living during the 120-month term. The clause providing for automatic termination if ID did not obtain the permit within 360 days of the SMA was the subject of specific negotiations between the parties. The SMA also provides that neither party can assign the agreement, nor any part thereof, without the prior written consent of the other party.

[236] None of these terms were part of the Alleged Oral Agreement. Kenny admitted that all these items were not discussed at the time the Alleged Oral Agreement was made. He characterized them as “details”. The TWPA says these were important terms and they would not have entered into the contract without them. Kenny does not dispute that he had the opportunity to read the changes to the agreement and an opportunity to negotiate the terms of the agreement. Kenny agrees he wanted the written agreement in place before he started spending money on the sign.

[237] There were many important items not addressed at all by the Alleged Oral Agreement, including timing of payment of the purchase price and deposit, termination rights, what would constitute an acceptable level of advertising (100 percent full or something less), what would happen if ID could not sell an acceptable level of advertising (e.g. a minimum guarantee for the TWPA), what would happen in the event of the bankruptcy of one of the parties, whether the agreement could be assigned in whole or part (i.e. maintenance of the sign or the right to sell advertising), a schedule for payments of its share of the advertising revenue to the TWPA, a right to audit ID’s financial records, increasing maintenance fees for inflation, warranties, how long the TWPA have to object to installation of sign, what would happen if visibility of the sign from the Gardner changes, what would happen if the sign was damaged, and an insurance provision, for example. All these terms were contained in the SMA and/or the agreement ultimately signed with AllVision.

[238] The term of the Alleged Oral Agreement was not clear. The June 18 Proposal specified a 120-month term. Kenny said he explained the importance of having the longest term possible in the lease to Evans and DaSilva at the January 29, 2013 meeting where the Alleged Oral Agreement was purportedly reached. Evans’ notes refer to a 10-year term. Kenny says the 10-year term was a “placeholder” pending the negotiations between the TWPA and the OFTB regarding extending the lease. The Alleged Oral Agreement pled in the Statement of Claim has no term.

[239] Kenny also said the term of the Alleged Oral Agreement with respect to the advertising revenue was to be for as long as the lease with the OFTB. The plaintiff’s written submissions after trial also say the term of the Alleged Oral Agreement was for as long as the lease. The OFTB lease was extended until March 31, 2027. The term of the SMA was 120 months from when the sign was installed which was expected to be in 2013. Therefore, the end of the term of the SMA would be in 2023. Kenny referred to the 120-month term as a placeholder. It may well have been a placeholder when he prepared the June 18 Proposal not knowing the term of the lease, but by the time the SMA was entered, the term of the OFTB lease was established and known to Kenny. Kenny did not explain the reason for the two different terms.

[240] At his discovery, MacNaughton gave evidence that was read in at trial. He said the deal he was negotiating with ID for a success fee was to apply to the revenues from the signs for the remainder of the lease that the TWPA had with the OFTB, which was up to 2027. However, MacNaughton also said at his discovery that he had no idea what the existing contract was between ID and the TWPA. The Consulting Agreement whereby ID retained StrategyCorp to provide consulting services in exchange for a percentage of the advertising revenue has a term that is for 120 months from the date the first sign generates revenue. This term matches the term of the SMA and not the term of the OTFB lease. This is inconsistent with the existence of the Alleged Oral Agreement. If there were an oral agreement with a term that matched the OFTB lease term, Kenny would have tied the Consulting Agreement term to the Alleged Oral Agreement and the OFTB lease.

Conclusion on Oral Agreement

[241] There is no doubt that the TWPA wanted to pursue the project from the outset and was leaning toward paying for the sign themselves. They took active steps to pursue the project such as engaging StrategyCorp and working with the OFTB on the lease extension and changing the Advertising Restriction. They also authorized Kenny to be their representative to get the permit. All these things were done before the SMA was executed. Also, I find they had an intention to eventually enter into an agreement with Kenny. They intended to enter into an agreement with ID for the advertising and for any subsequent signs and likely would have done so were it not for the meeting where he threatened them. I also find that StrategyCorp believed that ID had an agreement with the TWPA that included a 20 percent share of the advertising revenue.

[242] The parties’ evidence on whether the Oral Agreement was made at the January 29, 2013 meeting was diametrically opposed. Kenny says his memory of the meeting is crystal clear and an agreement was reached that day. Evans and DaSilva say they did not and would not enter into this agreement without TWPA Board approval. This not a case where I can simply accept the evidence of one party and reject the evidence of the other. Kenny’s evidence was not reliable for the reasons set out above. I also have concerns about the reliability of the evidence of Evans and DaSilva.

[243] Turning then, to the parties’ words and conduct which was either undisputed or based on contemporaneous documents, I find that a reasonable person looking at their words and conduct would not conclude an agreement was reached. There is a difference between the TWPA deciding to pursue the project of digitizing the Eastern Sign and the TWPA entering into an oral agreement with the plaintiff. Much of conduct of the parties after January 29, 2013 is consistent with either conclusion. However, the weight of the evidence establishes on a balance of probabilities that an oral agreement was not reached. The Alleged Oral Agreement was not approved by the TWPA Board. The evidence establishes that the Board was involved in approving, at least in principal, contracts entered into by the TWPA. While the TWPA Board did not necessarily review each the written contract, it was standard practice to have their lawyer do so. I find that it is unlikely that Evans and DaSilva would enter into an agreement of this magnitude without Board approval. Option A of the June 18 Proposal that was reviewed by the Board did not contain a provision for ID to sell advertising on the Eastern Sign. While Kenny says this was a “typo”, he did not raise it until trial. The Alleged Oral Agreement was not reviewed by the TWPA lawyer which was the usual practice. The portion of the Alleged Oral Agreement relating to advertising revenue was not reduced to writing. At trial, there was no evidence the TWPA entered into any other oral agreements; to the contrary, all other agreements were in writing. The SMA was reduced to writing and contains an “entire agreement” clause. In the face of an Alleged Oral agreement and a subsequent written agreement containing an entire agreement clause, the court must strive to reach the true contractual intention of the parties, guided by the strong presumption in favour of the document.

[244] Finally, there were essential terms that were not part of the Alleged Oral Agreement such as the term, the amount of the maintenance fee (it changed from $6,500 to $6,000), and minimum levels of advertising or performance targets that had to be reached.

[245] After weighing and assessing all of the evidence, I find that there was no oral agreement on any of the Construction of the sign, the Maintenance of the sign, or the Advertising Revenue because of the lack of agreement on essential terms (missing material terms, changing terms, and unclear terms), coupled with my concerns about Kenny’s inconsistent statements on when and how the oral agreement was reached, and the fact that all the other agreements between them were reduced to writing, approved by the Board, and reviewed by the lawyer. In this case, the evidence does not establish that the parties entered into a binding agreement; specifically, the Alleged Oral Agreement.

Issue 2: Expiry of the SMA

[246] Did the SMA automatically terminate in March 2014 or did the TWPA breach it?

[247] The SMA did not automatically terminate because ID did not fail to get a permit and was not unable to do so. Rather the TWPA waived compliance with this provision of the SMA or, alternatively is estopped from relying on it.

[248] The SMA provides that it automatically terminates if ID fails or is unable to obtain the necessary permit for the sign conversion within 360 days. The issue is whether the SMA automatically terminated and alternatively, whether the TWPA waived the provision or is estopped from relying on it. Kenny says it was not his failure or inability that caused him not to get the permit and therefore the automatic termination provision should not apply. He says ID was on hold and waiver or estoppel applies to prevent the TWPA from relying on the strict terms of the contract. Evans testified repeatedly that ID was not “on hold” after the permit was pulled and the TWPA takes the position that the SMA automatically expired.

[249] There is no dispute that ID did not obtain the permit within 360 days of the date of the SMA. ID initially made application for a permit on April 16, 2013 but the TWPA told Kenny to withdraw the permit because the parties were pursuing the Provincial Path. There was a concern that a negative staff report might prejudice the pursuit of the Provincial Path. Evans’ notes in the Board meeting minutes dated May 15, 2013 reflect that both StrategyCorp and ID were recommending pulling the application and Evans and DaSilva agreed. Regardless of whether Kenny was supporting the pulling of the ID Permit Application or just the timing of same, there is no evidence that Kenny told the TWPA that he was concerned about StrategyCorp’s approach and the Provincial Path.

[250] Kenny withdrew the ID Permit Application on May 17, 2013. The TWPA told him not to contact the City while the parties pursued the Provincial Path and to work with StrategyCorp. The pursuit of the Provincial Path took a long time and the 360-day time limit passed and ID did not re-submit the permit. ID was not completely on hold after the permit was pulled: Kenny continued to work on the sign conversion project. For example, on June 20, 2013, Kenny reported to the TWPA, Fox, and Green that he had attended the Planning and Growth Management Committee meeting and reported on same. In September 2013, Kenny prepared a Briefing Document for the OFTB and the TWPA for this purpose of getting the OFTB on board with the Provincial Path. Kenny followed up with the TWPA on July 15, 2013 suggesting that if the ID Permit Application was refiled then they could be at the September 3, 2013 meeting of the Committee. The TWPA told Kenny that they were on hold pending the August 1, 2013 by-election since they did not want the sign to become an election issue. Kenny continued to follow up with StrategyCorp frequently in the fall of 2013 and regularly until July 2014 and again in the fall of 2014.

[251] The plaintiff argues ID did not “fail” to obtain a permit, nor were they unable to do so. ID says it never had the opportunity to fail because it was instructed to withdraw the permit; Kenny was, at all times, willing and able to apply for a permit. The TWPA says the only reasonable interpretation of the provision is that if, for any reason, ID did not get a permit, then the SMA terminates.

[252] In US Steel Canada Inc. et al. v. The United Steel Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union et al., 2022 ONSC 6993 at para. 99, leave to appeal ref’d, 2023 ONCA 277 the court considered the Oxford English Dictionary which defines “fail” in part, as “[n]ot to render the due or expected service or aid”, and “[t]o leave undone, omit, to perform, miss”: Oxford English Dictionary Online. Oxford University Press, September 2022. The court held that a party cannot fail at something they were not asked to do. The court relied on Southcott Estates Inc. v. Toronto Catholic District School Board, 2010 ONCA 310, 104 O.R. (3d) 784, aff’d 2012 SCC 51, [2012] 2 S.C.R. 675 where the Court of Appeal for Ontario noted at para. 13 that it is a principle of law that no one in such a case can take advantage of the existence of a state of things which they produced.

[253] The TWPA directed ID to withdraw the ID Permit Application and then told ID not to contact the City. This was a state of affairs that they created and upon which the TWPA cannot now rely to terminate the contract. ID cannot fail or be unable to do something they were told not to do. Nor can the TWPA tell ID to withdraw the ID Permit Application then turn around and claim the contract expired because ID followed their instructions.

[254] This conclusion is reinforced when the words of the provision are given their ordinary and grammatical meaning: see Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at para. 47. The parties agreed that this provision would capture any failure or inability on the part of ID to secure the permit. Read ordinarily, and in line with the cases cited above, ID did neither of these things. ID neither failed nor was unable to secure the permits; the TWPA told them not to. Failure and inability in this sense refer to actions taken by ID to no avail. The words cannot, as the TWPA suggests, be taken to extended to capture a scenario where a permit was not secured for any reason. Simply put, if that was the TWPA’s intention, they should have written the contract that way.

[255] I find that ID was directed to withdraw the permit and so never “failed” or was “unable” to obtain the permit and did not breach the 360-day time limit in the SMA.

Waiver

[256] The Supreme Court of Canada described waiver as occurring where one party to a contract or to proceedings takes steps which amount to foregoing reliance on some known right or defect in the performance of the other party: see Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 CanLII 100 (SCC), [1994] 2 S.C.R. 490, at para. 19, citing Mitchell & Jewell Ltd. v. Canadian Pacific Express Co., 1974 ALTASCAD 18, [1974] 3 W.W.R. 259 (Alta. C.A.); Marchischuk v. Dominion Industrial Supplies, 1991 CanLII 59 (SCC), [1991] 2 S.C.R. 61, [1991] 4 W.W.R. 673 (dealing with waiver of a limitation period).

[257] The doctrine of waiver was explained by Major J. at pp. 499-500:

Waiver occurs where one party to a contract or to proceedings takes steps which amount to foregoing reliance on some known right or defect in the performance of the other party [citations omitted]. The elements of waiver were described in Federal Business Development Bank v. Steinbock Development Corp. (1983), 42 A.R. 231 (C.A.), cited by both parties to the present appeal (Laycraft J.A. for the court, at p. 236):

The essentials of waiver are thus full knowledge of the deficiency which might be relied upon and the unequivocal intention to relinquish the right to rely on it. That intention may be expressed in a formal legal document, it may be expressed in some informal fashion or it may be inferred from conduct. In whatever fashion the intention to relinquish the right is communicated, however, the conscious intention to do so is what must be ascertained.

[258] Waiver will be found where the evidence demonstrates that the party waiving had (1) a full knowledge of rights; and (2) an unequivocal and conscious intention to abandon them: see Saskatchewan River, at para. 20.

[259] Waiver may be communicated expressly or inferred from a course of conduct: see Owen Sound Public Library Board v. Mial Developments Ltd. et al. (1979), 1979 CanLII 1624 (ON CA), 26 O.R. (2d) 459 (C.A.); Suzuki v. Polygon Pacific Homes Ltd., 2013 BCSC 1709, at para 19.

[260] In Potter Realty v. Builders Contract Management Ltd. (1983), 50 A.R. 323 (Q.B.), at paras. 49 the court held:

Whether it is a matter of waiver, variation of a contract or the exercising of a right to treat the contract as still subsisting, the equitable principle as stated by Lord Cairns in Hughes v. Metropolitan Railway Company [1877] 2 A.C. 439 at 448, is the dominant principle to be applied. The ratio decidendi of Lord Cairns in that case is:

It is the first principle upon which all Courts of Equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results – certain penalties or legal forfeiture – afterwards by their own act or with their own consent enter upon a course of negotiations which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced or will be kept in suspense or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would have been inequitable, having regard to the dealings which have thus taken place between the parties.

[261] It is unclear whether Kenny agreed with StrategyCorp that the negative staff report regarding the ID Permit Application would be harmful if they pursued the Provincial Path, as seems to be the case on a plain reading of the emails at the time, or if he was just going along with that suggestion made by StrategyCorp because he knew nothing about the Provincial Path. I find that regardless of whose idea it was initially, and regardless of the level of enthusiasm for the idea, the TWPA, StrategyCorp, and ID all agreed to pull the ID Permit Application.

[262] In this case, the TWPA certainly had full knowledge of the 360 day time limit in the SMA. The TWPA unequivocally and consciously waived reliance on the 360 day time limit for submitting the permit when it agreed that the permit should be pulled, instructed ID to withdraw the permit, and put the re-submission of the permit on hold pending the pursuit of the Provincial Path. Here it would be inequitable to allow the TWPA to enforce the 360 day time limit having regard to the fact that it led ID to believe that the permit should not be re-submitted pending the pursuit of the Provincial Path. At no time did the TWPA ever tell Kenny that the Provincial Path had been abandoned and they wanted to go back to pursing a municipal permit. The TWPA told Kenny to work with StrategyCorp and the Consulting Agreement provided that StrategyCorp would pursue the required approvals on ID’s behalf. Fox expressly told Kenny’s lawyer on March 28, 2014 that meeting was premature until StrategyCorp got the green light from the Province. The TWPA and StrategyCorp specifically withheld from Kenny their intention to go back to pursing a municipal permit because they were concerned he would cause trouble. Kenny found MacNaughton’s letter of January 21, 2015 terminating the Consulting Agreement between ID and StrategyCorp confusing. It did not constitute an instruction to Kenny to re-submit the permit and it did not come from the TWPA. At no time after instructing Kenny to pull the permit did the TWPA tell him to resubmit it. On May 19, 2016, when Kenny called DaSilva to purse the matter, he was given the same message again when DaSilva told him to wait for StrategyCorp to continue to play it out. For those reasons, I find that TWPA waived the requirement for ID to submit the permit within 360 days of the date of the SMA and therefore the TWPA breached the SMA when it used one of ID’s competitors for the Construction and Maintenance of the Eastern Sign.

Estoppel

[263] Estoppel is closely related to waiver. It is an equitable doctrine that prevents a party from relying on a contract where it did not intend to rely on the strict terms and led the other party to believe that it would not rely on the contractual provision. In Grasshopper Solar Corporation v. Independent Electricity System Operator, 2020 ONCA 499, 8 B.L.R. (6th) 169, at para. 55, the court set out the test for estoppel by convention:

Estoppel by convention is a relatively rare form of estoppel that may arise when both parties to a contract act based on a shared assumption concerning circumstances relevant to their contract. If it would be unfair to allow a party to resile from the assumption, the doctrine operates to provide a remedy for detrimental reliance on the assumption by the other party.

[264] The shared assumption may arise from conduct or silence but must be clear and shared. The doctrine exists to protect reasonable reliance: see Grasshopper at para. 56.

[265] In this case, ID and the TWPA were acting on the shared assumption that the Provincial Path was available based on the legal opinion. The TWPA says this was not Kenny’s assumption because at trial he referred to the Provincial Path as a “fantasy”. While that may be how he feels about it now, that was not his view at the time. He expressly touted the advantages of the Provincial Path in his email of October 2, 2014. The assumption was clear: the parties agreed to withdraw the ID Permit Application pending the pursuit of the Provincial Path so that a negative staff report would not create an obstacle on the Provincial Path. ID relied on this assumption in withdrawing the ID Permit Application.

[266] It was it reasonable for Kenny to rely on this assumption. He tried to follow up with the TWPA but they told him it was premature until StrategyCorp figured out the Provincial Path. At first, he followed up with StrategyCorp regularly. It is understandable why Kenny tread carefully. After his upset with the TWPA and StrategyCorp regarding the success fee in late 2013, he was required to sign the NDA. As time went on, he was not included in some key events. Kenny continued to be in contact with StrategyCorp who never told him the Provincial Path was off the table. He was not told the legal opinion was wrong for several months in 2014. Then, after meeting with the lawyers again in September 2014, he understood they were considering a work around. He was told to wait until after the fall 2014 election was over. He continued to follow-up with StrategyCorp about the Provincial Path versus the municipal option. In February 2015, when the TWPA decided to abandon the Provincial Path and pursue the municipal path, they should have called Kenny and told him to resubmit the ID Permit Application. They did nothing until he called them on May 19, 2016. Then, DaSilva told him the TWPA were going to let StrategyCorp deal with it. The TWPA never told him the time was expiring or that they intended to submit a permit application.

[267] ID also argues promissory estoppel applies. Promissory estoppel applies when one party makes a promise by words or conduct which is intended to affect the legal relationship and be acted on or relied on by the other party: see Trial Lawyers Association of British Columbia v. Royal & Sun Alliance Insurance Company of Canada, 2021 SCC 47, 163 O.R. (3d) 398, at para. 15 quoting Sopinka J. in Maracle v. Travellers Indemnity Co. of Canada, 1991 CanLII 58 (SCC), [1991] 2 S.C.R. 50, at p. 57. The TWPA told Kenny to pull the ID Permit Application and not to contact the City while the Provincial Path was pursued. The TWPA, by words and conduct, told ID it would not rely on the 360-day time limit.

[268] Estoppel is an equitable remedy. With respect to the 360-day time limit, the equities favour ID. Kenny applied for the permit promptly; he withdrew it because StrategyCorp suggested an alternative and possibly better approach, and the TWPA instructed him to do so. He tried to follow up but was dissuaded. The TWPA never told Kenny when they decided to pursue the municipal route and never advised Kenny he could, or even should, re-submit the ID Permit Application. The TWPA let the 360 days expire, said nothing, and then went with his competitor. Even when Kenny called the TWPA to follow up in May 2016, DaSilva said they were letting StrategyCorp deal with it.

[269] I find that the TWPA breached the SMA when it failed to advise Kenny to resubmit the ID Permit Application and hired AllVision to do so.

Issue 3: Additional Signs

[270] Was there an Oral agreement with the TWPA for additional signs, and if so, was it breached?

[271] ID submits that, but for the TWPA’s breach of the Alleged Oral Agreement and the SMA, ID would have been involved in any discussions about additional signs and introduced to the OFTB for the purposes of installing and advertising on any such signs. The Statement of Claim pleads that the Alleged Oral Agreement included up to five signs. As set out above, the plaintiff failed to prove the Alleged Oral Agreement. The discussions in January 2013 clearly focused on one sign, and the letter from Fox on December 10, 2013 said the TWPA would consider using ID for future signs but no agreement was made. I find that there was no Alleged Oral Agreement, and therefore no agreement for more signs.

Issue 4: Interference with Economic Relations

[272] Did StrategyCorp interfere with ID’s economic relations with the TWPA with regard to the withdrawal of the ID Permit Application?

[273] There was no unlawful conduct to support a finding of interference with economic relations or unlawful means conspiracy and therefore both these claims must fail.

[274] In A.I. Enterprises Ltd. v. Bram Enterprises Ltd., 2014 SCC 12, [2014] 1 S.C.R. 177, at para. 76, the Supreme Court of Canada clarified that to constitute unlawful means, “the conduct must give rise to a civil cause of action by the third party or would do so if the third party had suffered loss as a result of that conduct”. In Grand Financial Management Inc. v. Solemio Transportation Inc., 2016 ONCA 175, 395 D.L.R. (4th) 529, at para. 62, the court made it clear that the defendant must have intended to injure the plaintiff’s economic interests. The court set out the test as follows: first, the defendant must have intended to injure the plaintiff’s economic interests; secondly, the interference must have been by illegal or unlawful means; and thirdly, the plaintiff must have suffered economic harm or loss as a result: see Alleslev-Krofchak v. Valcom Ltd., 2010 ONCA 557, 322 D.L.R. (4th) 193, and cases cited therein, leave to appeal refused, [2010] S.C.C.A. No. 403; Pro-Sys Consultants Ltd. v. Microsoft Corp., 2013 SCC 57, [2013] 3 S.C.R. 477, at para. 81.

[275] StrategyCorp was generally aware that there was a contract between ID and the TWPA. The pursuit of the Provincial Path hindered the performance of the SMA in that it resulted in the ID Permit Application being pulled. The issue is whether StrategyCorp intended to inure ID and acted by unlawful means.

[276] Kenny has suggested that StrategyCorp steered the TWPA towards the Provincial Path because they had a financial interest in the Provincial Path since success fees for lobbying at the provincial level are allowed, whereas they are not allowed at the municipal level. Kenny suggests this was a plan by StrategyCorp and the TWPA went along with the end result, being to exclude ID from the project.

[277] Green testified that in his time at StrategyCorp the duty was always to the client and financial incentives did not skew the duty to the client. He said that, in this case, StrategyCorp looked at the options that were best for the client.

[278] I find that StrategyCorp did not intend to injure ID or act by unlawful means when it pursued the Provincial Path as opposed to the municipal path. All parties were in favour of pursing the Provincial Path. It offered the possibility of more signs and greater revenue. It also may have avoided the issues with Milczyn, the negative staff report, and the study. Kenny was an active participant. They all agreed to withdraw the ID Permit Application as part of this pursuit. The TWPA would not have a cause of action against StrategyCorp because it agreed to withdraw the ID Permit Application to pursue the Provincial Path. The delay in determining that the Provincial Path was not viable was not the fault of StrategyCorp, the TWPA, or ID. They all relied on an erroneous legal opinion.

[279] StrategyCorp did not interfere with ID’s economic relations with the TWPA in regard to the withdrawal of the ID Permit Application.

Issue 5: Conspiracy

[280] Did StrategyCorp and the TWPA conspire to breach ID’s oral agreement for 20 percent of the advertising revenue and force ID to pay a success fee to StrategyCorp?

[281] ID alleges that StrategyCorp and the TWPA engaged in a conspiracy to breach the Alleged Oral Agreement and make ID responsible for StrategyCorp’s success fee. I have already found there was no Alleged Oral Agreement, but even if there were, there was no conspiracy to breach it by making ID responsible for StrategyCorp’s success fee.

[282] ID does not allege it was a lawful means conspiracy and that the predominant purpose was to cause injury to ID. Rather, ID alleges it was an unlawful means conspiracy. The test is:

a. Two or more people acted in concert, by agreement, or with a common design;

b. The conduct that was “unlawful”;

c. The conduct was directed towards the plaintiff;

d. The defendants should have known that injury was likely to result; and

e. Injury or harm did result.

Agribrands Purina Canada Inc v. Kasamekas, 2011 ONCA 460, 106 O.R. (3d) 427, at para. 26.

[283] There was no unlawful conduct with regard to the success fee. The TWPA wanted to get the sign deal done and wanted ID and StrategyCorp to work together to achieve this objective. StrategyCorp had a significant role to play in getting the sign built, particularly on the Provincial Path. Kenny admitted he knew nothing about the Provincial Path. It was not unlawful for StrategyCorp to pursue a success fee from ID since it was ID’s responsibility to get permission to build the sign and they were assisting with that objective.

[284] The TWPA did not make an oral agreement with StrategyCorp for a success fee and did not conspire with StrategyCorp to force ID to pay it. The TWPA knew StrategyCorp wanted a success fee and the TWPA could not pay it because the OFTB was unable to agree to such fees. ID had no expertise on the Provincial Path. The TWPA wanted StrategyCorp and ID to work together on Provincial Path towards the joint goal of maximizing revenue for all parties. The TWPA did not act unlawfully.

[285] ID did not have an agreement to share in the advertising revenue, and therefore StrategyCorp and the TWPA’s conduct did not amount to inducing breach of contract or interference with economic relations and was not otherwise unlawful.

[286] ID also alleges that the unlawful conduct was StrategyCorp’s misrepresentation. ID says StrategyCorp’s threat that the TWPA could go elsewhere was false, and could amount to misrepresentation or fraud, but also admits that it was likely true. The evidence does not establish that the TWPA told MacNaughton to tell Kenny it could go elsewhere. At the time MacNaughton and Kenny were negotiating the Consulting Agreement, Evans was hoping they would all work together to achieve the best outcome for all.

[287] There was no conspiracy by StrategyCorp and the TWPA.

Issue 6: Breach of Confidentiality

[288] Did the TWPA and StrategyCorp breach the confidentiality provisions of their respective agreements?

[289] The TWPA and StrategyCorp did not breach the confidentiality provisions of their respective agreements and did not misuse ID’s confidential information.

[290] ID alleges both StrategyCorp and the TWPA breached the confidentiality provisions of their respective agreements (i.e. the Consulting Agreement and the NDA). Kenny says the opportunity to convert the signs to digital was confidential because he identified the opportunity based on his understanding of the advertising business, digital signs, and the regulatory regime. Kenny told the TWPA at the meeting on January 29, 2013 that his competitors were like sharks and might see the opportunity and go to the OFT. Kenny alleges that the TWPA and StrategyCorp breached their confidentiality agreements by going to Kenny’s competitors, Neufeld and AllVision. I find there were no such breaches because ID never provided confidential information to StrategyCorp or the TWPA, Kenny never told them any information provided was confidential, and no information provided by ID was misused.

[291] Both the Consulting Agreement and the NDA contain confidentiality provisions as set out above. The NDA defines confidential information broadly but excludes non-proprietary information and non-confidential information. The Consulting Agreement prohibits disclosure of confidential information but does not define it. I find that StrategyCorp and the TWPA did not breach the confidentiality provisions of their respective agreements.

[292] A breach of confidence requires:

a. That the information conveyed was confidential;

b. That it was communicated in confidence; and

c. That it was misused by the party to whom it was communicated to the detriment of the party who conveyed it.

Lac Minerals Ltd. v. International Corona Resources Ltd., 1989 CanLII 34 (SCC), [1989] 2 S.C.R. 574, at p. 635-636; Intellibox Concept Inc. v. Intermec Technologies Canada Ltd., 2011 ONSC 4264, 95 B.L.R. (4th) 124, at para. 60.

[293] While it is possible to have a confidential document based on materials or components which are publicly available, information which is in the public domain and that is public knowledge is not confidential: see Lac Minerals, at para. 58, citing Saltman Engineering Co. v. Campbell Engineering Co. (1948), 65 R.P.C. 203 (C.A.) (leave to appeal to House of Lords refused), at 215. Information that is widely known throughout the industry or known to competitors is not confidential: see Intellibox, at para. 63; The TDL Group Corp. v. DXStorm.com Inc., 2013 ONSC 5718, 29 B.L.R. (5th) 177, at para. 258.

[294] Many people, including Kenny’s competitors, upgrade signs to digital. The opportunity was there to be seen. The opportunity to upgrade static billboard signs to digital and the process for doing so were widely known through the outdoor advertising industry and not confidential. The large companies have teams of people searching for such opportunities and are able to identify them. Kenny did not have a patent. Kenny did not have any inside information in this regard. Kenny said as much in his first email when he enquired about the opportunity. He said, “if I can see the opportunity for the digital signs, others might be able to see it as well”. Kenny agreed that outdoor advertising companies have staff devoted to gaining new locations for their billboards and that his competitors know how to get city permits, know how to convert static billboards to digital, know how to do revenue projections, understand traffic flow, and so on.

[295] The information contained in the ID Permit Application was not confidential; it contained a recitation of facts concerning the OFT and the location of the Eastern Sign. Kenny initially claimed that everything in the ID Permit Application was confidential; however, on cross examination he conceded that much of the material was not confidential such as material that is publicly available (e.g., Wikipedia page, flow chart from City website, bounds of the property). Some of the material Kenny claims is confidential in the ID Permit Application came from the TWPA.

[296] Van Vliet testified, and the Municipal Code provides, that the purpose of the Sign Variance Committee application process is to maintain a public record. Once the Notice of Hearing was published on April 30, 2013, the ID Permit Application was publicly available. Erskin from Outfront (one of ID’s competitors) testified that they routinely obtain permit applications from the City to see what competitors are doing. The NDA expressly excludes information which is publicly available.

[297] ID never told StrategyCorp or the TWPA that the opportunity was confidential. There is no evidence that Kenny told anyone at the TWPA or StrategyCorp that the information in his initial proposal or the information in the ID Permit Application was confidential. When Kenny first contacted Ippolito about the digital sign conversion idea, he did not say it was confidential. Nor did he tell MacKenzie it was confidential. The proposal he gave to OPMA was not labeled confidential. Evans testified that MacKenzie never told him the information in ID’s proposal was confidential. Evans and Green testified that Kenny never told them the information in the ID Permit Application was confidential. Kenny sent Green a copy of the ID Permit Application which clearly identifies the opportunity and never said it was confidential.

[298] The information concerning the opportunity was not misused. Although Green testified that he gave the ID Permit Application to AllVision, as a matter of course, so that AllVision would be aware of the history and context of the initial application, there was no evidence that AllVision used the ID Permit Application. The two applications are not the same; they use different wording and contain different materials. Although there is similarity, that is because such applications are required to address the nine criteria or Rationale prescribed by the regulation. Kenny concedes that the first four pages of the AllVision application were not taken from the ID Permit Application. ID did not include a letter from DaSilva or letters from charities in its application, whereas AllVision did so. ID admits that the Rationale section of the AllVision application does not use the same words and the AllVision application does not use the same photographs. The ID Application has no overhead map whereas the AllVision application does. The AllVision application is more specific in describing the intended use of the advertising revenue generated. The AllVision application also speaks to increased tax for the City and contains submissions addressing concerns about the increase in light levels caused by the sign as well as use of the sign for Amber Alerts and emergency messaging.

[299] AllVision is an experienced sign company and there is no evidence they needed or used the ID Permit Application. ID’s competitors are well equipped to prepare permit applications.

[300] There is also evidence that ID shared information about the opportunity with others. On June 4, 2013, Kenny met with Caroline Pinto of Counsel about them submitting a proposal to ID to support the TWPA in investigating and determining whether the City has jurisdiction to approve digital signs on land owned by the Province, including securing a legal opinion and engaging both the Province and the City. Counsel is in the same business as StrategyCorp. Kenny told her that the TWPA was working with StrategyCorp. Counsel told Kenny that the city permit process is onerous and political, and they mentioned that Milczyn was unsupportive. It appears from the email sent from Pinto to Kenny that Kenny told her about the Provincial Path, which was StrategyCorp’s idea. It would be unusual for Kenny to consider the ID Permit Application confidential but not the Provincial Path.

[301] I find that the TWPA and StrategyCorp did not breach the confidentiality provisions of their respective agreements.

Issue 7: The Consulting Agreement – Non-Competition

[302] Did StrategyCorp breach the non-competition clause in the Consulting Agreement?

[303] The Non-Competition clause in the Consulting Agreement never came into effect because the condition precedent to the Consulting Agreement was not met. In any event, StrategyCorp repudiated the Agreement when MacNaughton sent the January 21, 2015 letter and ID accepted the repudiation by doing nothing in the face of it.

[304] ID submits that StrategyCorp breached the non-competition clause in the Consulting Agreement and ID induced such breach. ID says that StrategyCorp was soliciting work from Neufeld in December 2014 in breach of the non-competition provision of the Consulting Agreement. There are internal StrategyCorp emails from December 2014 talking about meeting with the TWPA’s potential new sign partner, Neufeld. ID claims StrategyCorp breached the non-competition clause in October 2015 when it submitted a proposal with Neufeld to the TWPA concerning the conversion of the Eastern Sign to a digital sign. ID claims StrategyCorp breached the non-competition clause again and the TWPA induced such breach when the TWPA decided to move forward with AllVision and arranged for StrategyCorp to work with AllVision. In March, StrategyCorp and AllVision submitted a proposal to the TWPA for the sign conversion.

[305] As set out above, the Consulting Agreement prohibits StrategyCorp from competing during the term of the agreement which is defined as being effective on the date of the Consulting Agreement and ending 120 months from the first date the signs display advertising and generate advertising revenue. The Consulting Agreement fee was conditional on ID making an agreement with the TWPA (or another party) for supply, installation, and selling of advertising time. It provided for termination without prior notice if, for any reason, ID did not have the right to sell advertising.

[306] The Consulting Agreement contained a condition precedent: it was conditional on ID having an agreement to sell advertising. ID submits that only the fee was conditional on the condition precedent. I disagree. The termination provision and the term were also dependant on ID selling advertising. Reading the contract as a whole, the parties’ intent is that an agreement between ID and the TWPA for selling advertising is a condition precedent to the Consulting Agreement with StrategyCorp.

[307] A condition precedent exists where a contract depends on a future uncertain event which is dependent on the will of a third party. If the parties intend that the obligations of the contract are contingent on the external event then, until the event occurs, there is no right to performance of the contract by either party: see THMR Development Inc. v. 1440254 Ontario Ltd., 2018 ONCA 954, 85 B.L.R. (5th) 175, at para. 15; U.S. Steel Canada Inc., at para. 169; Horn Ventures International Inc. v. Xylem Canada LP, 2022 ONSC 4158, at paras. 76-77.

[308] Here, there was no right to performance because there was a condition precedent; StrategyCorp and ID intended the Consulting Agreement to be dependant on a written agreement between ID and the TWPA with respect to advertising revenue. Kenny agreed that the TWPA was the “third party” referred to in clause 3. The TWPA and ID never entered into a written agreement for selling advertising time. The Consulting Agreement provided for payment to StrategyCorp of a success fee of 2.8 percent in exchange for providing services in connection with “provincial government relations” and “provincial regulatory approvals”. Kenny agreed, in cross examination, that StrategyCorp’s fee applied only if the Provincial Path was successful. Ultimately the Provincial Path was not viable, and abandoned. Therefore, the TWPA never entered into a written agreement with ID for selling advertising revenue.

Also, the term was indefinite. It was to end 120 months from the first date the signs display advertising and generate advertising revenue, which never happened.

[309] It is settled law that rules applicable to restrictive covenants differ depending on whether the covenants are linked to a contract for the sale of a business or a contract of employment: One Insurance Group Ltd. v. Roy et al., 2018 MBQB 190 relying on J.G. Collings Insurance Agencies Ltd. v. Elsley, 1978 CanLII 7 (SCC), [1978] 2 S.C.R. 916; Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6, [2009] 1 S.C.R. 157; and Payette v. Guay Inc., 2013 SCC 45, [2013] 3 S.C.R. 95.

[310] In this case the restrictive covenants were not made in either context but were agreed to in a commercial context whether there was no presumed imbalance of power as there is in an employment context. The rules should not be applied with the same rigour.

[311] The court must assess the reasonableness of the restrictive covenants with reference to the interests of the parties and must ask the following questions:

a) Does the plaintiff have a proprietary interest entitled to protection?

b) Are the temporal or spatial features of the clause too broad?

c) Is the covenant unenforceable as being against competition generally, and not limited to proscribing solicitation of clients of the former employer? (J.G. Collins, at para. 19).

[312] In this case ID Inc. had a proprietary interest in the SMA to protect. It may have been reasonable for the restrictive covenant to continue for the same term as the SMA; however, given that ID never had an oral agreement to sell advertising on the signs and never did so, the term of the Consulting Agreement was of indefinite in duration and unreasonable in the circumstances.

[313] Also, StrategyCorp repudiated the Consulting Agreement and ID accepted same. In January 2015, StrategyCorp repudiated the Consulting Agreement when MacNaughton sent the email of January 23, 2015 and the letter of January 21, 2015 saying that StrategyCorp considered the Consulting Agreement to have ended because the Consulting Agreement was subordinate to the SMA and the SMA had expired the previous year. He said, “[i]n light of that, we regret that we have no choice but to consider the agreement between our firms to have ended as well”. ID argues that the Consulting Agreement was not dependant on the SMA. MacNaughton had not seen the SMA. StrategyCorp had asked the TWPA about their relationship with ID and been told that the agreement with ID had been terminated and that the TWPA did not have an agreement with ID. Regardless of whether MacNaughton’s letter and email were correct, a reasonable person reading his correspondence would conclude that StrategyCorp no longer intended to be bound by the Consulting Agreement: see Remedy Drug Store Co. Inc. v. Farnham, 2015 ONCA 576, 389 D.L.R. (4th) 671, at paras. 45-46. Kenny’s failure to act in the face of this letter constitutes ID’s acceptance of StrategyCorp’s repudiation of the Consulting Agreement.

[314] In the face of the repudiation, ID was put to an election: to accept or reject the repudiation within a reasonable time: see Place Concorde East Limited Partnership v. Shelter Corporation of Canada (2006), 2006 CanLII 16346 (ON CA), 270 D.L.R. (4th) 181 (C.A.), at paras. 49-50.

[315] Kenny accepted the repudiation and did not communicate with StrategyCorp after the repudiation. While silence may not always be a repudiation, in this case, where there was regular communication before the repudiation and none after, and in view of Kenny’s distain for StrategyCorp and resentment at having to work with them, silence on ID’s part was an acceptance of the repudiation: see Brown v. Belleville (City), 2013 ONCA 148, 114 O.R. (3d) 561, at para. 48, citing White v. E.B.F. Manufacturing Ltd., 2005 NSCA 167, 239 N.S.R. (2d) 270, at para. 91, repudiation, citing Chitty on Contracts, 28th ed., Vol. 1 (London: Sweet & Maxwell, 1999), at p. 25-012).

[316] ID says the TWPA induced StrategyCorp to breach the non-competition clause. I have decided that StrategyCorp did not breach the non-competition clause. In any event, even if I am wrong, the TWPA did not induce any breach.

[317] The elements of the tort of inducing breach of contract are as follows:

a. A contract existed;

b. The defendant was aware of the contract;

c. The defendant caused the inducement or wrongful interference; and

d. The plaintiff suffered as a result.

Correia v. Canac Kitchens, 2008 ONCA 506 at para. 93, cited in Greta Energy Inc v. Pembine Pipeline Corporation 2022 ONCA 783 at para. 27.

[318] Although the defendant is not required to know the precise terms of the contract, the defendant must be generally aware of the nature of the contract. In this case, the TWPA only knew that StrategyCorp and ID had entered into an agreement whereby ID was to pay a success fee to StrategyCorp. The TWPA did not see a copy of the Consulting Agreement. There is no evidence that the TWPA was aware that the agreement contained a non-competition clause. If the TWPA did not know of the existence of the non-competition clause, there was no actionable wrong committed by it: see Posluns v. Toronto Stock Exchange and Gardiner, 1964 CanLII 199 (ON SC), [1964] 2 O.R. 547 (Ont. H.C.), at para. 169, aff’d 1965 CanLII 32 (ON CA), [1966] 1 O.R. 285 (C.A.), aff’d [1968] 1 S.C.R. 330.

[319] Also, it was the TWPA that sought out the opportunity with Neufeld. There was no evidence that StrategyCorp’s involvement caused the TWPA to pursue this opportunity. The TWPA ultimately chose to work with AllVision. Therefore, the plaintiff cannot establish that it suffered any damages even if StrategyCorp breached the non-competition clause. Alternatively, there are no damages beyond the damages for breach of the SMA which I am awarding.

Issue 8: Duty of Good Faith

[320] Did the Defendants breach their obligations of good faith and fair dealing in the performance of their contracts?

[321] StrategyCorp did not breach their obligations of good faith and fair dealing. The TWPA did breach its obligations of good faith and fair dealing in the performance of the SMA by lying and knowingly misleading ID.

[322] The duty of good faith and honest performance of contracts requires a party not seek to undermine the opposing party’s interests in bad faith. The party must not lie or otherwise knowingly mislead the other party about matters directly linked to the performance of the contract. The principal cannot be applied in a manner that is inconsistent with the fundamental commitments of contract law where the parties are free to pursue self interest: see Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494, at paras. 63, 65, 73.

[323] Kenny alleges that the TWPA breached its duty of good faith and honest performance by:

a. Contracting with StrategyCorp to assist with the sign conversion project without consulting with ID.

b. Negotiating with StrategyCorp to give them a success fee without telling ID.

c. Telling Kenny to meet with StrategyCorp on November 22, 2013 and withholding the purpose of the meeting.

d. Representing to Kenny through MacNaughton that if ID did a deal with StrategyCorp the TWPA would contract with ID for all future signs.

e. Misleading ID through Fox to sign the mutual NDA when the true purpose was the non-interference clause.

f. Misleading ID that the 360-day termination clause in the SMA would not apply.

g. Misleading ID on May 18, 2016 when DaSilva told Kenny that StrategyCorp was still handling the permit application after AllVision was already involved.

h. Failing to tell ID that it directed StrategyCorp to contact Neufeld about the sign conversion project.

[324] Most of these claims are without foundation for the following reasons:

a. The TWPA made an agreement with StrategyCorp in April 2013 to assist with the sign conversion project and told ID that StrategyCorp was involved in April 2013 and StrategyCorp regularly communicated with ID thereafter.

b. The TWPA did not make an agreement with StrategyCorp for a success fee.

c. Evans did not act in bad faith in not telling Kenny what the meeting was about. He told Kenny to meet with MacNaughton because he wanted ID and StrategyCorp to work together and make an arrangement with each other and for the TWPA to stay out of it.

d. The TWPA did not represent that it would enter into a contract with ID if ID did a deal with StrategyCorp.

e. The TWPA was reluctant to work with ID after Kenny’s threats on December 4, 2014. The TWPA proposed the NDA to protect itself from the threatened conduct going forward.

f. Although the TWPA did not act in bad faith with regard to the 360-day termination provision, ID did not breach it, the TWPA waived it and is estopped from relying on it as set out above.

[325] The TWPA waived the 360-day termination provision and then knowingly lied to and misled Kenny. The TWPA intentionally avoided telling Kenny that they considered the contract with ID to have terminated. The TWPA misled ID when DaSilva put off Kenny in May 2016 by telling him that StrategyCorp was still dealing with the matter while working with Neufeld and AllVision. This was dishonesty in the performance of the SMA and a breach of its duty of good faith.

[326] Kenny alleges that StrategyCorp breached its duty of good faith and honest performance by:

a. Sidelining or excluding ID by not telling Kenny when they first knew the legal opinion was wrong in March 2014 for the purpose ensuring he would not jeopardize the Provincial Path, until they could find another company who was more amenable to their wishes.

b. Ignoring Kenny from October 2014 to January 2015 while in discussions about working with a new sign partner and considering a new sign partner from November 2013 onward (there is only one line in an email from Green to MacNaughton that the TWPA was looking at an alternative and he should know that doesn’t make sense because it is before the threats on December 4 and before that the TWPA wanted StrategyCorp and ID to work together).

c. Not telling ID that StrategyCorp and the TWPA decided to return to the municipal process in the summer of 2014.

d. Discussing how to tell Kenny the Consulting Agreement was over and making jokes about who to blame.

[327] These claims are without foundation for the following reasons:

a. StrategyCorp told Kenny about the problem with the legal opinion. The preliminary steps to arrange a meeting for a second opinion were discussed between Green and Evans on April 29, 2014 and Kenny was aware of the problem by May 14, 2014.

b. StrategyCorp told Kenny that the Provincial Path was in trouble on July 31, 2014.

c. StrategyCorp was clear and prompt when it told Kenny the StrategyCorp agreement was terminated on January 21, 2015.

[328] ID has alleged that MacNaughton was slow to respond to his correspondence. A review of the emails shows that MacNaughton usually responded within a day or two and often on the same day. This was not a breach of the duty of good faith.

[329] ID has alleged that StrategyCorp and the TWPA sidelined him. As an example, he cites the fact that he was excluded from the meeting with the OFTB. Also, Paola Guarmieri of the TWPA sent an email to Evans saying that Kenny wanting to talk to Reaume was their worst fear. Evans explained that this was not about trying to exclude Kenny but rather trying to prevent a conflict between them about placement of the signs. This was not a breach of the duty of good faith.

[330] Kenny suspected that the TWPA was concerned about him doing a deal with the OFTB directly and excluding them. Evans and Green testified that Kenny was not invited to the meeting because of a concern about how Kenny would interact with Reaume. They said that Kenny had a big personality, liked to take control of a situation, and could be difficult if anyone disagreed with him; whereas Reaume was not a good listener and could also be difficult. The TWPA wanted to proceed carefully and the meeting with the OFTB was to be a low-key introduction to the idea of them partnering on the Provincial Path. I accept their evidence in this regard. It is consistent with their correspondence discussing the need to be careful with Reaume, and it is consistent with emails from StrategyCorp saying that Kenny’s involvement was important.

[331] Kenny testified that asking him to obtain a second copy of the legal opinion which deleted the reference to ID is evidence of the plan between the TWPA and StrategyCorp to cut him out of the deal. At the time, Kenny expressed concern to the TWPA that StrategyCorp and the province might consider ID expendable. The TWPA says they simply wanted a shorter opinion focusing on the jurisdiction issue in order to explain the situation to the OFTB and structure a partnership with them. The TWPA says a partnership between it and the OFTB was necessary to pursue the Provincial Path. I accept the evidence of Evans: it is consistent with the fact that they included Kenny in the discussion and forwarded to him the email between them and StrategyCorp. This conduct is inconsistent with a plan to exclude him.

[332] I do not find that the TWPA acted in bad faith with regard to the legal opinion or Reaume. I do find that the TWPA breached its duty of good faith in the performance of SMA when it did not tell Kenny it was pursuing the municipal permit again, it began discussions with ID’s competitors and put Kenny off by telling him that StrategyCorp was still handling the matter.

DAMAGES

[333] ID claims damages for lost profit on the construction of the digital sign, the monthly maintenance fees, and the lost advertising revenue. The plaintiff’s expert James Johnson (“Johnson”) provided an expert opinion on all of these damages. Johnson is the principal of Johnson Fretty, an American investment bank which focuses on the outdoor advertising industry. His work includes assisting clients who buy, sell, and finance billboards; he also does appraisals. He has been in this business since 1991. There are only three or four other such firms, all in the United States. Johnson has worked on approximately 500 sign deals including roughly 50 in Canada. He says there is little difference in the U.S. and Canadian markets other than the cost of capital. In most of the transactions he does, a strategic buyer, i.e. another billboard company, is the purchaser. Johnson used both the discounted cash flow and multiple approach. The discounted cash flow takes into account that a dollar in the future is worth less than a dollar today. The discount rate takes into consideration the cost of capital. Johnson says Kenny’s cost of capital is irrelevant; rather, it is the perspective of the buyer that is important. Johnson used one of the large sign company Lamar’s weighted average cost of capital and a discount rate of 9.5 percent. In valuing a sign, he looks at (1) the net billboard cash flow which is based on historical or projected revenues and the cost of running the billboard and (2) comparable transactions and specifically the sale price as a multiple of gross profit. He then applies the multiple to the net billboard cash flow. He has kept a confidential data base for decades of transactions in which his firm has been involved as well as publicly available information and information he obtains by other means.

[334] Timothy Zimmerman from RSM (“Zimmerman”) gave expert evidence on behalf of the TWPA. Zimmerman is a highly qualified business valuator with experience reviewing financial data in all sorts of industries; however, he has no significant expertise in the digital sign industry aside from a few transactions. Zimmerman used Kenny’s historical financial statements to determine his profit margin. ID’s financial statements show an average profit margin of 36 percent. The problem is that these statements do not relate to any income or expenses from third-party digital signs and are therefore largely irrelevant. Zimmerman used different discount rates depending on the underlying risk to ID in the different categories of damages. In other words, they used a discount rate of 5 percent for the sign construction and maintenance services, and 25 percent for the advertising revenue discount rate percent.

Damages for Lost Profits on the Advertising Revenue

[335] In light of my finding that there was no oral agreement, there are no damages for lost advertising revenue. The plaintiff is entitled to damages for the breach of the SMA, i.e. only the Construction and Maintenance. There was no evidence that there would be a market to purchase an agreement for only the maintenance fees and no advertising revenue. Damages must be assessed based on the lost profits for the SMA.

Damages for Lost Profits on the Construction Component

[336] Kenny says if the Sign Variance Committee proceeded on June 4, 2013 and was unsuccessful, concerns could be addressed, and they could reapply on July 9, 2013, September 13, 2013 or a subsequent meeting since meetings were scheduled every two months. He says there would have been 5 potential hearing dates before the 360-day time limit in the SMA expired. Kenny pulled information from the City of Toronto website that indicates that permits for other third-party signs were granted around this time.

[337] The parties did not submit the municipal permit in 2013. They pursued the Provincial Path into 2015. After the Provincial path was abandoned, a municipal permit was ultimately issued in July 2016 and the sign converted in September 2016. I find that, had ID submitted its application in 2016, more likely than not, it would have been approved by the Committee.

[338] The profit on the construction as per the quote from Kenny’s supplier MRI is calculated as follows. The SMA price for construction was $630,000 plus HST. ID’s cost was $362,200 ($175,000 x 2 faces, plus shipping and instillation of $12,200). The profit is therefore $267,800 plus HST of $34,814 less the $25,000 deposit Kenny received = $277,614 profit. Kenny testified that this cost was in Canadian dollars. He said that even though the quote says the pricing was valid for 30 days (from May 2, 2012) he had verbal assurance from MRI that they would honour the agreement and it appears that they did, at least until June 2014. Given that the money for construction would have been paid almost immediately after the permit was obtained, I have applied no discount rate.

Damages for lost profit for the maintenance component.

[339] The profit on the maintenance fee was $6,000 per month (adjusted annually for CPI increases as per the SMA) less expenses for 10 years. Kenny says that digital signs require an average of 4 service calls per year and each service call is approximately $1,000 (i.e., $500 for parts and $500 for labour). Kenny had a one-year parts and labour warranty and another 4-year parts warranty with his supplier. Therefore, he would have no expenses in the first year; costs of $500 x 4 calls = $2,000 per year for 4 years for a sub total of $8,000 for years 2-5 inclusive; and costs of $1,000 x 4 = $4,000 per year for 5 years sub total of $20,000 for years 6 to 10. The total expenses are $28,000. Kenny says he would have no other expenses for maintaining the sign. Erskine from Outfront testified in this case. Outfront is one of the three major players in the outdoor advertising industry. Outfront bought the sign from AllVision and have spent approximately $4,000 to $6,000 per year maintaining the sign. Outfront also has inhouse technical people who try to resolve issues with digital signs before using MRI. Johnson agreed that $4,000 to $6,000 was in the ballpark of costs but he was more conservative in his estimate and assumed expenses of about triple that range. Johnson’s estimate included costs such as communication devices and costs, municipal taxes, grass, or tree branch cutting. Having regard to Kenny’s evidence, and the evidence from Erskin and Johnson, I find that $6,000 is an appropriate figure for ID’s annual cost of maintaining the sign.

[340] I award damages for loss of the maintenance portion of the SMA for ten years based on costs of an average of $6,000 per year using the discount rate of 5 percent suggested by the TWPA’s expert. The 5 percent discount rate is appropriate given that the risk of ID not achieving the estimated cash flow was low. If the parties cannot agree on the quantum of these damages, they may make further submissions in writing, including further calculations from the experts on the quantum of my award, on or before September 29, 2023.

[341] The damages that flow from TWPA’s breach of duty of good faith are the damages that would put ID back in the position it would have been in had the contract been performed and are the same as the damages for lost profits on the Construction Component and the Maintenance Component as set out above.

[342] Punitive damages are not appropriate. It is rare for punitive damages to be awarded for a breach of contract: see Vorvis v. Insurance Corp. Of British Columbia, 1989 CanLII 93 (SCC), [1989] 1 S.C.R. 1085. The TWPA did not act intentionally to harm Kenny and ID. Its conduct was not harsh, vindictive, reprehensible or malicious and is not deserving of condemnation or punishment.

COSTS

[343] I encourage the parties to resolve the issue of costs. If they are unable to do so, the plaintiff may send written submissions (not longer than five pages in addition to a costs outline or bill of costs) on or before 30 days from the date the damages are finalized by way of a consent order or further decision by me. The defendants may submit responding submissions within 10 days thereafter (also not longer than five pages plus a costs outline or bill of costs). If so advised, the plaintiff may send reply submissions (two pages) within 5 days thereafter.

Merritt J.

Date: August 25, 2023

COURT FILE NO.: CV-16-00564151

DATE: 20230825

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

ID Inc.

Plaintiff

• and -

Toronto Wholesale Produce Association and StrategyCorp.

Defendants

REASONS FOR JUDGMENT

Merritt J.

Released: August 25, 2023