COURT FILE NO.: CV-14-511332

DATE: 20231204

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

JAMES BAY RESOURCES LIMITED

Plaintiff

– and –

MAK MERA NIGERIA LIMITED, a.k.a. MAK MERA LIMITED and WALE OLORUNSOLA a.k.a. WALE SOLA

Defendants

Hilary Book and William McLennan, for the Plaintiff

Erin Chesney and David Hakim, for the Defendants

HEARD: April 3, 4, 5, 6, 7, 10, 11, 12, 13, 14, and 17, 2023; May 8 and 9, 2023

papageorgiou j.

Overview

[1] This dispute occurs within the wider context of Nigerian law, which requires non-Nigerian entities that seek to profit from the extraction of oil in Nigeria to partner with at least one Indigenous Nigerian business. This is commonly referred to as the “Local Content” requirement.

[2] James Bay Resources Limited (“James Bay”) is incorporated pursuant to the laws of Ontario and was listed on the TSX Venture Exchange (“TSXV”) at all material times.[^1] Its original business involved looking for precious metals.

[3] Mak Mera Limited (“Mak Mera”) is a company incorporated pursuant to the laws of Nigeria in 1996. Mak Mera carries on business as a consultant and service provider in the oil and gas sector in Nigeria.

[4] Wale Sola is the President and Business Development Manager of Mak Mera. His role involves interfacing with foreign companies seeking to do business in Nigeria’s oil and gas industry.

[5] James Bay entered into two agreements with Mak Mera in respect of its intended oil exploration in Nigeria (the “Agreements”).

[6] James Bay paid moneys to Mak Mera in the amount of $405,000 during the performance of these Agreements.

[7] Ultimately, James Bay was unable to acquire any oil and gas assets and the relationship between James Bay and Mak Mera deteriorated.

[8] On July 2, 2014, Mak Mera wrote a letter of complaint to the Nigerian Department of Petroleum Resources (the “DPR”), Shell Corporation (“Shell”) and other individual representatives of Shell which made a variety of allegations against James Bay (the “July 2014 Letter”).

[9] James Bay says that this July 2014 Letter was defamatory.

[10] James Bay also claims repayment of the $405,000 paid to Mak Mera, alleging that they were contingent on James Bay successfully acquiring an oil and gas asset. (James Bay also paid Mak Mera’s expenses on an ongoing basis and does not seek repayment of these).

[11] The Defendants deny these claims.

Decision

[12] For the reasons that follow, I am allowing James Bay’s claim to repayment of $405,000 as against Mak Mera alone and awarding $200,000 in respect of James Bay’s defamation claim as against the Defendants on a joint and several basis.

Issues

[13] In arriving at my decision, I have considered the following issues:

• Issue 1: Did the Agreements contain express or implied terms that payments required by these Agreements were contingent on success?

• Issue 2: Should a term be implied that any moneys paid by James Bay pursuant to the Agreements would have to be returned if James Bay did not successfully acquire an oil and gas asset?

• Issue 3: Has Mak Mera been unjustly enriched?

• Issue 4: Is Mr. Sola personally liable for the repayment?

• Issue 5: Was the July 2014 Letter defamatory?

• Issue 6: Are the contents of the July 2014 Letter substantially true?

• Issue 7: Was the July 2014 Letter fair comment?

• Issue 8: Was the July 2014 Letter written on an occasion of qualified privilege?

• Issue 9: Does the existence of malice defeat the defences of fair comment and qualified privilege?

• Issue 10: What are the damages required to vindicate James Bay’s reputation?

• Issue 11: Is Mr. Sola personally liable for the damages in respect of the July 2014 Letter?

Analysis

[14] Before turning to the issues, I will address credibility.

[15] In Faryna v. Chorny, 1951 CanLII 252 (BC CA), [1952] 2 D.L.R. 354 (B.C.C.A.), at p. 357, the B.C. Court of Appeal provided the following guidance on evaluating credibility:

The credibility of interested witnesses, particularly in cases of conflict of evidence, cannot be gauged solely by the test of whether the personal demeanour of the particular witness carried conviction of the truth. The test must reasonably subject his story to an examination of its consistency with the probabilities that surround the currently existing conditions. In short, the real test of the truth of the story of a witness in such a case must be its harmony with the preponderance of the probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions. [Emphasis added.]

See also: R. v. Kiss, 2018 ONCA 184, at para. 30.

[16] There were only three witnesses who testified: Mr. Stephen Shefsky and Mr. Adeniyi Olaniyan on behalf of James Bay, and Mr. Sola on behalf of Mak Mera.

[17] Mr. Shefsky is a lawyer. He was at all material times the President, CEO and a director of James Bay. He has an impressive CV and has been involved with many companies that have successfully developed mining interests over the last thirty years. Mr. Shefsky was the most credible and reliable witness; his evidence was the most consistent with contemporaneous documents. He answered questions directly, was not argumentative, and readily admitted things that were not necessarily advantageous to James Bay’s case. For example, he admitted that Mak Mera provided valuable services. These included: provision of safety and security services; introduction to parties such as D & H Solutions, and Adeniyi Olaniyan who became James’ Bay’s country manager; obtaining visas; arranging flights, transportation and accommodation; and finding office space.

[18] Like Mr. Shefsky, Mr. Sola has an impressive CV. He has a computer software engineering degree as well as a master’s degree in software engineering. He has worked for Microsoft in New York as well as merchant banks including Merrill Lynch and Barclays. He owns retail stores in Toronto and became President of Mak Mera in 2007. He is also the President and CEO of a merchant bank, REIN Capital. Its website says it has raised $160 billion in the last decade.

[19] I found Mr. Sola the least credible or reliable. He gave testimony on many facts that were contradicted by his discovery or other evidence. For example:

• At his discovery he said that he worked full-time for Mak Mera from 2007 to 2008 but denied this at trial.

• At his discovery he said that Mak Mera was not an exploration and production company, but at trial insisted it was.

• At his discovery he said that Mak Mera did not have any connection with the chiefs or politicians involved in an oil mining lease known as Oil Mining Lease 11 (“OML-11”), and that those connections belonged to D&H Solutions (“D&H"), a corporation working in Nigeria’s oil and gas sector. At trial he said it was Mak Mera, not D&H, with the connections.

• At trial, he said he knew all of the department heads of the DPR, but in an email in September 2012, he said, “I don’t know these guys, but they all love the chief.”

[20] There are other examples I will outline throughout these reasons.

[21] When confronted with inconsistencies, he often said he simply disagreed or that more context was required, but he was not re-examined on any of this contradictory evidence.

[22] Chief Olorunfemi, who is the Chairman of Mak Mera, did not testify at trial, but his discovery evidence was read in. James Bay gave notice of its intention to call him as a witness under r. 57.07 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, but he failed to attend. The Defendants did not provide any admissible evidence as to why that was. Notably, at the pre-trial in January 2023, Mak Mera said Chief Olorunfemi would be testifying via Zoom.

[23] The fact that the Defendants failed to call Chief Olorunfemi as their witness when he was a key player, without proper medical support in respect of his alleged inability to testify, reflects on the overall credibility of the Defendants’ case.

[24] Mr. Olaniyan was the country manager for James Bay. The Defendants raised an issue as to Mr. Olaniyan’s credibility based upon a photocopy of a letter that Mr. Olaniyan had purportedly written appointing Chief Olorunfemi as a Director of one of the companies at issue. This was the subject of a voir dire. Having heard all the evidence, I am not satisfied that James Bay has proven that Mr. Olaniyan wrote this letter for reasons I will discuss below. They also argued that Mr. Olaniyan’s testimony was inconsistent with Mr. Shefsky’s because he denied that the Defendants had provided benefit to James Bay. However, Mr. Olaniyan became involved much after Mak Mera had done most of its work; from his perspective it may well have appeared that way. I found Mr. Olaniyan’s testimony to be clear, consistent and believable. Thus, I do not have concerns about Mr. Olaniyan’s credibility or reliability.

[25] The Defendants argued that I should draw an adverse inference from the fact that James Bay did not call Mr. Wayne Egan as a witness. Mr. Egan was James Bay’s external corporate counsel and Chairman of James Bay’s Board of Directors. He had been examined for discovery at the Defendants’ request. Although he did not testify, it is not clear how his evidence would have been of assistance. He was not involved in the day-to-day dealings between James Bay and Mak Mera; his main involvement related to advice he gave in respect of the agreements at issue. His advice or approval of these agreements is not relevant to their interpretation.

[26] If the Defendants thought his evidence was relevant, they could have subpoenaed him. Thus, I draw no adverse inference from James Bay’s failure to call him as a witness.

[27] Finally, I note that credibility was not particularly relevant to the contractual issues because the parties had reduced their agreements to writing. It was relevant, however, to issues related to the alleged defamatory letter and the defences raised.

Issue 1: Did the Agreements contain express or implied terms that payments required by these Agreements was contingent on success?

a) Background facts

[28] In 2011, Jay Freeman, an investment broker, introduced Mr. Shefsky and James Bay to Mak Mera and Mr. Sola. One particular opportunity that Mak Mera could assist James Bay with was OML-11.

[29] OML-11 had significant proven and probable oil reserves but had been out of production for political reasons.

[30] It is in a geographic area in Nigeria where the Ogoni People live. Many years ago, the government of Nigeria hung nine members of the Ogoni People. The Ogoni People blamed the drilling activities at OML-11 for these deaths and took measures to ensure that no oil could be produced any longer from that well. It had been producing up to 100,000 barrels per day when it was shut down.

[31] The parties discussed aspects of the proposed venture at a meeting in Kitchener on March 6, 2011. Mak Mera said it had a relationship with D&H, who had been given certain rights to operate in that area by the Ogoni People. Mr. Sola gave Mr. Shefsky Chief Olorunfemi’s biography as well as promotional material about Mak Mera and Nigeria.

b) The March 9, 2011 Memorandum of Understanding between James Bay and Mak Mera[^2]

[32] On March 9, 2011, James Bay and Mak Mera entered into a Memorandum of Understanding (the “MOU”), which provided as follows:

JAMES BAY RESOURCES MEMORANDUM

SUBJECT: ACQUISITION OF NIGERIAN OIL & GAS ASSETS

DATE: 09/03/2011

1. James Bay to issue 12 million shares representing 30% of the issued and outstanding shares of James Bay

2. James Bay will fund initial $2 million of risk capital to acquire oil & gas assets in Nigeria

3. James Bay to raise an additional $25 million in order to fund development of assets acquired in Nigeria

4. James Bay will pay Wale Sola 12 million shares of JBR and $300,000

a) 3 million shares to be issue [sic] upon successful completion of due diligence and acquisition of oil & gas assets in Nigeria

b) 3 million shares to be issue [sic] upon the company reaching 1,500 boe per day

c) 3 million shares to be issue [sic] upon the company reaching 4,000 boe per day

d) 3 million shares to be issued upon the company reaching 5,500 boe per day

5. James Bay will offer Wale Sola a senior management position and a board seat with appropriate salary and stock option plan

6. Terms subject to board approval by James Bay Resources

[33] The MOU was drafted by Mr. Shefsky, reviewed by Mr. Egan and approved by James Bay’s Board of Directors.

[34] After the MOU was signed, James Bay worked with Mak Mera towards an interest in OML-11.

[35] Sometime in August 2011, Mr. Shefsky realized that acquiring OML-11 was proving to be difficult.

[36] Given that James Bay had spent hundreds of thousands of dollars in due diligence and had become comfortable in Nigeria, James Bay determined that it would look at other opportunities in Nigeria. Accordingly, less and less importance was placed on OML-11 and more and more was placed on other projects.

[37] One opportunity was Oil Mining Lease 90 (“OML-90”). An Indigenous company, Bicta Energy & Management Systems Limited (“Bicta”), had acquired OML-90, and was seeking financing. Mr. Sola introduced James Bay to Bicta.

c) The February 1, 2012 Letter Agreement

[38] On February 1, 2012, James Bay and Mak Mera entered into a letter agreement (the “Letter Agreement”).

[39] Both parties retained sophisticated counsel to represent them in the negotiations.

[40] The recitals outlined the fact that James Bay and Mak Mera had entered into the MOU and stated that “[t]he parties propose to accordingly replace the [MOU]” and that they had “agreed to the terms as provided for in this letter agreement” (emphasis added).

[41] Paragraph 1 stated that if an interest in OML-11 had been acquired (of at least 15 percent), then the terms of the MOU would apply with respect to that transaction and Mak Mera would receive 6 million shares in James Bay, in addition to any share entitlements pursuant to paragraph 2.

[42] Paragraph 2 stated that:

2. For Projects other than those in paragraph 1 above, the Corporation shall issue to the Service Provider an aggregate of up to 6.5 million (6,500,000) shares. In such a case James Bay agrees that it will issue 3.5 million (3,500,000) common shares in the capital of James Bay (the "Common Shares") to the Service Provider, as soon as practicably possible upon a definitive agreement being entered into with regard to acquisition of an interest in an oil and gas project in Nigeria, and a further 3 million (3,000,000) Common Shares to the Service Provider, as soon as practicably possible if such project(s): (i) achieve average production of at least 1,500 BOE/D over a period of 60 days or (ii) a minimum of P50 recoverable estimate of 50 million BOE (defined by an independent third party report).

[43] Paragraph 3 stated that “[t]he conditions to the issuance of the 6.5 million Common Shares contained in items (i) and (ii) of paragraph 2 must be met on or prior to December 31, 2013, otherwise any obligations of the Corporation pursuant to paragraph 2 of this Agreement shall cease to exist.”

[44] With respect to compensation, paragraphs 4 and 5 stated that:

4. The Corporation agrees that it will pay to the Service Provider the amount of US$165,000, as compensation for the services rendered. The parties acknowledge that the US$165,000 is to be paid at the same time the initial 3.5 million Common Shares are issued to the Service Provider under this Agreement.

5. The Service Provider agrees that the compensation set out above in this Agreement is the entire compensation payable, and covenants and represents that no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement, based upon any arrangement made by or on behalf of the Corporation, which would make the Corporation liable for any such fees or commissions.

[45] Paragraph 8 set out the fact that the issuance of shares pursuant to paragraphs 1 or 2 of the Letter Agreement could be contingent on TSXV approval:

8. Regulatory and Shareholder Approval

The Service Provider acknowledges and agrees that the issuance of the Common Shares in paragraphs 1 or 2 hereof may be contingent upon and subject to receipt by the Corporation of approval of the TSXV and the approval of the shareholders of the Corporation, which is also subject to the requirements of paragraph 3 hereof, and the required undertakings. The Service Provider hereby acknowledges that such approvals may never be received and that the Corporation cannot control or guarantee the receipt of such approvals. The Corporation agrees to use its reasonable commercial best efforts to secure the approval required to issue the Common Shares, including compliance with its obligations in paragraph 3.

[46] Paragraph 13 provided that “[n]o amendment, modification or rescission of this Agreement shall be effective unless set forth in writing.”

[47] There was also a Support Agreement between Mak Mera and James Bay as to how Mr. Shefsky would vote as a shareholder, attached as Schedule “A” to the Letter Agreement. Importantly, the Support Agreement noted that the transactions set out in the Letter Agreement would constitute a Change of Business (“COB”) that would require the approval of the TSXV.

d) The parties’ position with respect to the payments

[48] James Bay alleges that any payments required by the MOU and the Letter Agreement were contingent on success. Mak Mera argues that they were not.

e) Principles of contractual interpretation

[49] The main principles of contractual interpretation are as follows:

• A court must give effect to the parties’ objective intentions at the time of contract formation.

• A court cannot take into account evidence of the parties’ subjective intentions.

• With respect to written contracts, a court presumes that the parties have intended what they said.

• A court should interpret commercial agreements in accordance with good business sense, and avoid commercial absurdity.

• Where there is an ambiguity, the court may resort to extrinsic evidence to clear up the ambiguity.

• The words of a contract must be given their ordinary and grammatical meaning.

[50] In Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, the Supreme Court indicated that simply reading and interpreting the literal words of a contract alone might not actually establish the objective intention of the parties. This is because there is always a “setting” in which the words are used. Further, words do not have “an immutable or absolute meaning”: at para. 47. The Supreme Court also stated, at para. 48, that “[t]he meaning of words is often derived from a number of contextual factors, including the purpose of the agreement and the nature of the relationship created by the agreement”.

[51] Accordingly, when interpreting contracts courts must take into account the surrounding circumstances which are known to the parties or which reasonably ought to have been known at or before the time of contract formation: Sattva, at para. 58. This includes “absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable [person]”: Sattva, at para. 58.

[52] However, the surrounding circumstances cannot be used “to deviate from the text such that the court creates a new agreement”: at para. 57.

[53] Nor can the surrounding circumstances be used to “overwhelm the words” used. Rather, this evidence is supposed to “deepen a decision-maker’s understanding of the mutual and objective intentions of the parties as expressed in the words of the contract”: at para. 57.

[54] The Supreme Court also referenced the parol evidence rule which “precludes admission of evidence outside the words of the written contract that would add to, subtract from, vary or contradict a contract that has been wholly reduced to writing”: at para. 59. The parol evidence rule prevents parties from admitting the subjective intention of the parties, supports the goal of finality, and hampers a party’s ability to use fabricated evidence to interpret a contract: at para. 59.

f) Evidence of negotiations as part of the surrounding circumstances

[55] James Bay wishes to use evidence of the following pre-contractual negotiations/communications as part of the factual matrix, arguing that Sattva should permit this.

[56] I disagree that this evidence is admissible pursuant to Sattva.

[57] First, James Bay seeks to admit Mr. Shefsky’s evidence that before the MOU was drafted and signed, Mr. Shefsky and Mr. Sola specifically discussed the fact that the cash payment referenced in the MOU was a “success fee” which was contingent on the successful acquisition of an interest in OML-11. Mr. Sola denies these conversations.

[58] Second, James Bay also references the following emails exchanged prior to execution of the MOU.

[59] On March 9, 2011, at 8:57 a.m., Mr. Shefsky sent Mr. Sola an email which referred to an “amended” copy of the MOU which he drafted (I note that there was no evidence as to what the unamended MOU stated). The email stated:

Hi Wale,

Enclosed, please find the amended copy of the James Bay Memorandum. I realized after I made the changes to yesterday’s Memo that I did not address your request for a fee to be paid to you in as an advance against the $300,000.

I have not had an opportunity to discuss with Mark, and will call you later with our thoughts.

[60] At 9:17 a.m. that same day, Mr. Sola responded as follows:

Thanks for fast turnaround.

Jay will discuss the advance. He knows the story. I have emailed him. It is important that I have $250k upfront so I can devote my full attention to the project. I will have to be spending weeks (maybe 3 months in a row) in Nigeria away from my family and retail business in Toronto. I have to organize all that- hire 2 new managers to run my retail business and ensure there is sufficient cash to run things in my absence so I can focus!

I will not have my wife's support otherwise. I've been down this path before where I run around doing things and neglect my family and business and then have huge bills when I get back.

You’re getting into a $1bn deal here. This is my lifetime aspiration, to build a $1bn business. You’re teaming up with Nigeria’s best. I’m young (38) and energetic. I can move mountains. You can sleep well at night knowing Wale is in charge.

Please split the two agreements (scan separately) so I can forward to Hemla for feedback. I hope we can conclude over the next 2 hours before I fly. Hemla guys are standing by.

[61] Then, at 1:50 p.m., Mr. Sola sent Mr. Shefsky a signed copy of the MOU which had been sent to him and which is referenced above.

[62] The evidence James Bay seeks to introduce does not set out objective facts which the parties knew or of which they ought to have been aware. Instead, this evidence sets out the parties’ subjective intentions with respect to the treatment of the $300,000 before they signed the MOU.

[63] Traditionally, evidence of negotiations has not been taken into account by courts as part of the interpretive exercise, but in recent years there are some cases which have taken some parts of negotiations into account as part of the surrounding circumstances.

[64] The academics cited[^3] by James Bay do not go so far as to suggest that evidence of negotiations which set out the parties’ subjective intentions should be used as part of the interpretive exercise.

[65] Neither do the cases cited by James Bay. At most, courts in these cases have admitted some limited evidence of negotiation where it set out objective facts of which the parties were aware, or where it demonstrated the objective purpose of the agreement: see Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7; Resolute FP Canada Inc. v. Ontario (Attorney General), 2019 SCC 60, [2019] 4 S.C.R. 394; Corner Brook (City) v. Bailey, 2021 SCC 29, at para. 56; and Canada (Attorney General) v. Fontaine, 2017 SCC 47, [2017] 2 S.C.R. 205.

[66] Recently, in Goodlife Fitness Centres Inc. v. Rock Developments Inc., 2019 ONCA 58, at para. 15, the Court of Appeal observed that it has “repeatedly cautioned against looking to negotiations to interpret a contract.” Quoting its decision in Primo Poloniato Grandchildren's Trust (Trustee of) v. Browne, 2012 ONCA 862, 115 O.R. (3d) 287, it affirmed that “[w]hile the scope of the factual matrix is broad, it excludes evidence of negotiations, except perhaps in the most general terms”. In that case, it determined that the application judge’s reference to email exchanges during negotiations to make findings of fact about the meaning of a commercial contract was an error. This is the most direct and applicable authority to the issues before me.

[67] Finally, introduction of the kind of pre-contractual negotiations that James Bay seeks to admit would be inconsistent with the Supreme Court’s express direction in Sattva, at para. 55, that the goal of contractual interpretation is “to ascertain the objective intentions of the parties”.

g) The surrounding circumstances

[68] The relevant and objective surrounding circumstances in this case that the parties knew or ought reasonably to have known at the time of the MOU and the Letter Agreement are as follows:

• The exploration for oil is risky, especially in Nigeria, because of required government approval and technical issues. Large amounts of capital are required with no guaranteed return.

• The purpose of both Agreements was to facilitate James Bay’s acquisition of an interest in oil and gas.

• Prior to the MOU, James Bay had no presence in Nigeria.

• James Bay needed to partner with a Nigerian company to meet the Local Content requirement.

• Mak Mera had the ability to assist James Bay in fulfilling the Local Content requirement.

• Mak Mera was also able to assist James Bay by providing valuable contacts in the Nigerian oil and gas industry as well as other services.

• Additionally, by the time of the Letter Agreement the parties were aware that James Bay would likely require TSXV approval for a COB.

h) Interpretation taking into account surrounding circumstances

[69] The Letter Agreement specifically stated that it replaced the MOU and that the terms of the MOU would only apply if James Bay acquired at least a 15-percent interest in OML-11. Thus, all aspects of the MOU were contingent on James Bay acquiring this interest in OML-11. James Bay never acquired any interest in OML-11. Thus, the $300,000 payment referenced in the MOU was never due.

[70] The only remaining financial remuneration to which Mak Mera could have been entitled under the Letter Agreement was the $165,000 with respect to oil interests other than OML-11.

[71] On May 29, 2012, James Bay entered into a Joint Operating Agreement with Bicta to acquire a 47-percent interest in OML-90. The Joint Operating Agreement would be subject to approval from the Government of Nigeria as well as regulatory and other approvals.

[72] In or around May 2013, the DPR approved the assignment of a 47-percent participating interest in OML-90 to James Bay.

[73] Then, James Bay passed a shareholders resolution for the issuance of shares to Mak Mera in respect of OML-90. However, these shares were never issued because of issues related to TSXV approval.

[74] Although the TSXV had given its conditional approval to the COB, a condition of completing the COB was proof that James Bay had raised a certain amount of funding.

[75] As will be discussed below in greater detail, James Bay took reasonable steps to obtain the required funding but could not. Ultimately, James Bay did not obtain TSXV approval by December 31, 2013, and no shares were issued to Mak Mera.

[76] James Bay’s position is that because TSXV approval had not been obtained by December 31, 2013, and the milestones in paragraph 2 of the Letter Agreement had not been reached, there was no obligation on James Bay to pay $165,000 to Mak Mera.

[77] The Letter Agreement is poorly written on this issue. Even if it could be argued that the Letter Agreement contained an ambiguity with respect to this issue, neither party argued ambiguity. Further, in 2021, James Bay’s former counsel made an agreement with the Defendants that subsequent conduct could not be admissible to resolve any ambiguity.

[78] The parties’ agreement on this issue is no less an agreement than the MOU and the Letter Agreement. The parties prepared for and conducted the trial taking into account this agreement, and I am respecting it.

[79] On the one hand, the payment of the $165,000 was set out in paragraph 4 of the Letter Agreement and there is no specific language that makes it contingent on anything. Paragraph 8 of the Letter Agreement specifically uses the word “contingent” with respect to the issuance of shares which “may be contingent upon” TSXV approval. Further, paragraph 3 expressly states that if the conditions set out in paragraph 2(i) and (ii) of the Letter Agreement with respect to production volumes were not fulfilled by December 31, 2013, then James Bay’s obligations to issue shares pursuant to paragraph 2 ceased to exist. There is no similar wording bringing the obligation to pay the $165,000 set out in paragraph 4 to an end.

[80] On the other hand, and reading the Letter Agreement as a whole, paragraph 4 states that the $165,000 “is to be paid at the same time the initial 3.5 million Common Shares are issued to the Service Provider under this Agreement.” Therefore, even though the word “contingent” is not used with respect to the requirement to pay $165,000, the legal obligation to pay the $165,000 was tied to the obligation to issue the first tranche of shares, which was contingent on TSXV approval for the COB, which was then tied to the TSXV’s funding requirements.

[81] I disagree with the Defendants’ argument that paragraph 4 is only a timing provision representing the outer limit of when the $165,000 had to be paid.[^4] If this was the case, the parties would have used clear language, such as wording that the $165,000 “is to be paid by” the time the initial 3.5 million shares are issued. The plain and ordinary meaning of the words that the $165,000 was to be paid “at the same time” as the initial tranche of shares means just that. Therefore, if the shares were not due, neither was the $165,000.

[82] I also reject the argument that this interpretation is commercially unreasonable because it would mean that Mak Mera received no remuneration for its services. There are many commercial arrangements where businesses provide services and are not ultimately remunerated unless a final arrangement is reached. The clearest example is real estate transactions where real estate agents are often, if not usually, only remunerated when a deal closes, even if they have provided valuable services.

[83] One could argue that payment that is not contingent on success makes less commercial sense because Mak Mera would receive 30 % of James Bay’s shares upon a successful acquisition. If it was remunerated for its services all along, why would it receive 30 % in James Bay’s shares as well?

[84] There was no evidence presented on any industry standards either way.

[85] Both parties were in the same boat; they were sophisticated and represented by sophisticated counsel. If James Bay did not ultimately obtain an interest which it could actually complete, it would have also expended time, money and energy for nothing.

i) Did James Bay fail to use reasonable efforts to obtain TSXV approval?

[86] Mak Mera argues that even if the payment of the $165,000 was tied to the issuance of shares pursuant to the Letter Agreement, then James Bay failed to comply with its contractual obligation to use “reasonable commercial best efforts to secure” TSXV approval as set out in paragraph 8 of the Letter Agreement. Mak Mera argues that James Bay cannot rely on its own breach to nullify the obligation to pay the $165,000 set out in the Letter Agreement: Marleau v. Savage (1998), 22 R.P.R. (3d) 70 (Ont. Gen. Div.).

[87] I find that James Bay did not breach its contractual obligation in this regard.

[88] James Bay obtained conditional approval from the TSXV for its COB on January 11, 2013, and various extensions to August 21, 2013. As part of this, James Bay submitted the Letter Agreement to the TSXV. In its communications with the TSXV, James Bay referenced the share issuance to Mak Mera if the COB was approved and they successfully acquired OML-90.

[89] The TSXV advised that final approval would be conditional on James Bay obtaining a private placement of $13.5 million in funding. This was the amount of money required to re-enter the well and drill test it.

[90] James Bay made extensive efforts to obtain this financing which fulfilled its obligation to use “reasonable commercial best efforts”.

[91] Beginning in 2012, James Bay began seeking commitments to raise the required equity and debt. It communicated with banks and potential investors.

[92] It obtained non-binding expressions of interest from many banks, but these were not finalized.

[93] At the beginning of 2013, James Bay retained Dundee Securities Europe LLP to assist it.

[94] It met with 20 banks and private equity groups in the U.K. and Nigeria to try and secure financing for the project, including Afreximbank, United Bank, Standard Charter Bank, TD Bank, RBC, Glencore and Zenith Bank, and the United Bank of Africa.

[95] It met with and sent detailed presentation materials to at least 14 potential investors, individuals, or organizations.

[96] It had discussions with British Petroleum (“BP”) whereby it proposed that BP would provide $10 million in funding in exchange for a right of first refusal. The deal was not completed because the well had not been drill tested and BP wanted to see the test results before it invested.

[97] James Bay also sought to negotiate a different arrangement with owners of two other marginal oil fields whereby they would operate all the oil fields from the same facility to save cost. Nothing materialized.

[98] In the end, it could not obtain funding because all the investors wanted proof that there were proven reserves.

[99] It is noteworthy that Mr. Sola created REIN Capital around the time James Bay was seeking financing and as set out above, Mr. Sola is its President and CEO. REIN Capital is a fully integrated merchant bank focusing on financing and investment services to African economies in the oil and gas field. As set out above, its website says it has raised $160 billion in the last decade.

[100] REIN Capital never assisted James Bay in obtaining financing. I agree with James Bay that “the logical inference from Mr. Sola’s failure to provide even an introduction is that he did not believe that [OML-90] was financeable.”

[101] There is no persuasive evidence that James Bay could have obtained the funding required for TSXV approval by the end of December 31, 2013, when the Letter Agreement came to an end with respect to oil fields other than OML-11.

[102] The fact that James Bay never sought a further extension from the TSXV after August 21, 2013 is irrelevant because it could not have met the TSXV’s condition, even if it obtained the extension.

j) Did the Letter Agreement require James Bay to issue shares to Mak Mera even if it was unable to obtain TSXV approval?

[103] Mak Mera argues that even if the payment of the $165,000 was tied to share issuance, James Bay was still required to issue shares upon entering into the agreement with Bicta, even if it was unable to obtain approval for its COB.

[104] I disagree with this interpretation.

[105] As set out above, pursuant to paragraph 2 of the Letter Agreement James Bay agreed to issue shares to Mak Mera “as soon as practicably possible upon a definitive agreement being entered into with regard to acquisition of an interest in an oil and gas asset project in Nigeria”.

[106] James Bay entered into a definitive agreement with Bicta on May 29, 2012.

[107] It is true that James Bay could have sought the TSXV approval to issue shares to Mak Mera at that time even if it never obtained TSXV approval for the COB, although there is no evidence the TSXV would have approved this.

[108] However, the whole purpose of the Letter Agreement was for James Bay to acquire an oil and gas asset and then operate that business in Nigeria. Paragraph 8 said that Mak Mera acknowledged that TSXV approval might be required for the issuance of shares. And, as set out above, the Support Agreement attached as Schedule “A” made specific reference to the COB.

[109] Furthermore, paragraph 3 of the Letter Agreement specifically stated that if the production values set out in paragraphs 2(i) and (ii) were not met by December 31, 2013, all of James Bay’s obligations came to an end.

[110] The interpretation advanced by Mak Mera is not supported by the words of the Letter Agreement, nor is it commercially reasonable. It would mean that James Bay would have to give up 30 percent of its shareholdings even if it was never actually able to complete an agreement and able to operate in the oil and gas field because it did not obtain TSXV approval for the COB.

[111] It is unclear what the purpose of paragraph 8 is if Mak Mera’s interpretation is correct. I add that the words “as soon as practicably possible” must mean something. In my view, these words referenced matters including the need for TSXV approval referenced in the Letter Agreement. It was not practicably possible to issues shares even though a definitive agreement had been entered into with Bicta, without this approval.

k) Subsequent Conduct

[112] I add here that if I am wrong in respecting the parties’ agreement on subsequent conduct and the Letter Agreement had been found to contain an ambiguity, the subsequent conduct, on balance, supports James Bay.

[113] On the Defendants’ side, there is evidence that Mak Mera sent five invoices referencing consulting services. These invoices do not provide any details as to work done and billed for. In most instances, James Bay simply made a payment without an invoice. As well, there were 17 payments made so for the majority, there was no invoice.

[114] Mr. Shefsky indicated that each time a payment was made, it was because Mr. Sola telephoned him and requested an advance against the success fee because of Mr. Sola’s financial need. In addition to my believing Mr. Shefsky because of his overall credibility, the payment dates are irregular. If these were regular block monthly payments for consulting services, they would have occurred on or about the same date of each month but they do not. If were payments for Mak Mera’s time or specific services as at the date of payment, the existing five invoices would have itemized what those services were, but the invoices do not. And there are no regular written communications about these payments, with the exception of communications I set out below in the section on unjust enrichment. This supports Mr. Shefsky’s evidence that the payments were in response to a telephone call from Mr. Sola. These communications pursuant to which the payments were made and the conduct around these payments constitute subsequent conduct.

[115] Although James Bay’s accounting system reflected these payments as consulting payments, Mr. Shefsky explained and I accept that this was because their accounting system did not have the ability to record advances.

[116] As well, the total remuneration pursuant to the Agreements was $465,000 and James Bay only paid $405,000. The Defendants did not reference any demands for payment of the balance, nor did they advance any counterclaim seeking payment of any balance which would be owed if the payments pursuant to the Agreements were not contingent.

Issue 2: Should a term be implied that any moneys paid by James Bay pursuant to the Agreements would have to be returned if it did not successfully acquire an oil and gas asset?

[117] Terms can be implied based upon “business efficacy”: M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., 1999 CanLII 677 (SCC), [1999] 1 S.C.R. 619, at para. 29.

[118] A relatively high degree of obviousness is needed before a term will be applied: M.J.B., at para. 29. Further, “if there is any evidence against the proposed term, it cannot be implied”: Rankin Construction Inc. v. Ontario, 2014 ONCA 636, 376 D.L.R. (4th) 697, at para. 29.

[119] It is uncontested that James Bay paid Mak Mera a total of $405,000 over time. James Bay says that these were advances against amounts that would have been due pursuant to the Agreements if James Bay had successfully acquired an oil and gas interest in accordance with the MOU and the Letter Agreement. I have not used this evidence for the purpose of interpreting the Agreements but to explain why James Bay made these payments, after having already found that the monetary payments set out in the MOU and the Letter Agreement would not be due absent success.

[120] It is highly obvious that if moneys were paid in advance but the ultimate oil and gas assets were not acquired, any such moneys would have to be repaid and that a term should be applied for commercial efficacy.

[121] This was a high-stakes venture that these parties engaged in together. James Bay provided the risk capital as well as sweat equity. Mak Mera provided the Local Content requirement and its own sweat equity. Pursuant to their Agreements, they would succeed or fail together. In the meantime, James Bay made payments to Mak Mera because of Mr. Sola’s personal need.

[122] The “entire agreement” clause in Schedule “A” of the Letter Agreement does not assist Mak Mera. Schedule “A” contains the Support Agreement between Mak Mera and Mr. Shefsky that states Mr. Shefsky must vote his shares in respect of the COB. Since the parties chose to include an “entire agreement” clause in this other agreement attached as a schedule, the failure to do so in the Letter Agreement itself should be interpreted to mean that there may be implied terms. In any event, the presence of an “entire agreement” clause is only one factor to be taken into account in determining whether a term should be implied: Jeff Day Hospitality Inc. v. Heritage Conservation Holdings, Canada, Inc., 2022 ONCA 201, at para. 21.

[123] Thus, I am ordering that $405,000 paid to Mak Mera be repaid to James Bay pursuant to an implied term in these Agreements. In that regard, if there is such an implied term and Mak Mera failed to repay the money, it breached the contract by failing to do so.

Issue 3: Has Mak Mera been unjustly enriched?

[124] James Bay’s unjust enrichment argument was an alternate argument to its contractual claim.

[125] If I am wrong about my interpretation of the MOU and the Letter Agreement such that Mak Mera has a legal entitlement to these payments or that a term should not be implied that these amounts be repaid, then I would reject James Bay’s unjust enrichment argument.

[126] As set out in Atlantic Lottery Corp Inc. v. Babstock, 2020 SCC 19, [2020] 2 S.C.R. 420, at para. 71, “A defendant that acquires a benefit pursuant to a valid contract is justified in retaining that benefit”.

[127] In the context of its unjust enrichment claim, James Bay argued that Mak Mera should be estopped from relying on the Agreements as a juristic reason for the payments, relying upon Ryan v. Moore, 2005 SCC 38, [2005] 2 S.C.R. 53, which set out the legal basis for estoppel by convention and estoppel by representation.

[128] James Bay argued that at the material times, the parties treated the payments as advances against cash payments that were legally contingent on success, or at the very least, the Defendants made representations to James Bay that they considered the payments to be only advances against a success fee to induce the payments. James Bay says it made the payments based on the shared understanding and representations and as such, Mak Mera cannot rely on the Agreements.

[129] In support of this shared understanding or representation, James Bay relies upon Mr. Shefsky’s evidence that James Bay made payments to Mak Mera in response to Mr. Sola’s requests for advances against the success fee because he was having financial difficulties. As I said, I found Mr. Shefsky credible and believe him that these conversations occurred.

[130] There are also written communications which support this, including:

• A June 23, 2011 email where Mr. Sola emailed Mr. Shefsky asking for a further advance and said, “[W]e will reconcile when you’re ready to pay me the big money”;

• An October 4, 2011 email from Mr. Sola where he suggested that $10,000 per month be deducted from the $300,000 success fee; and

• A September 21, 2012 email where Mr. Sola referred to the agreement and that “the $165k would be paid at closing. But I insisted on continuing to draw down the $165k and we will reconcile when we close.”

[131] Nevertheless, this estoppel argument must fail because for an estoppel to apply, a party must have changed its course of conduct by acting or abstaining from acting in reliance upon the assumption or representation, thereby altering their legal position: Moore, at paras. 59, 69 and 73. If the MOU and the Letter Agreement required payment of these funds unconditionally, then even if James Bay paid these amounts because of representations or some understanding that the Agreements meant something else, it did not change its legal position which was prescribed by the Agreements.

[132] As set out in Grasshopper Solar Corporation v. Independent Electricity System Operator, 2020 ONCA 499, 8 B.L.R. (6th) 169, estoppel by convention cannot change the terms of a contract. Rather, it prevents a party from relying on the contract “to protect the reasonable reliance of the other party.” Because it “has the potential to undermine certainty of contract”, this doctrine “must be applied with care, especially in the context of commercial relationships between sophisticated parties represented by counsel”: at para. 54. See also Moore, at para. 50. In my view, this principle is equally applicable to estoppel by representation.

Issue 4: Is Mr. Sola personally liable for the repayment of money?

[133] I find that Mr. Sola is not personally liable for the repayment of the $405,000.

[134] Both the MOU and the Letter Agreement were contracts entered into by Mak Mera, not by Mr. Sola in his personal capacity. James Bay agreed that even though the body of the MOU referenced payments to Mr. Sola, it meant Mak Mera.

[135] James Bay offers very little basis for piercing the corporate veil. First, it says that it was taken by surprise by this argument. However, the argument was James Bay’s to make and prove with evidence because it is the plaintiff with the burden of showing why Mr. Sola is liable for the breach of contract claim. It was aware at all times that Mr. Sola had not signed these Agreements in his personal capacity and as such, it would have to lead evidence to show why he should be personally liable. It did not.

[136] James Bay then made vague allegations that the lines between Mr. Sola and Mak Mera are blurred with respect to who received the funds. However, their own chart shows that most of these funds (with the exception of $40,000) were wired directly to Mak Mera UK at Mak Mera’s direction.

[137] This is not sufficient evidence to pierce the corporate veil.

[138] James Bay has failed to prove with evidence that either Mak Mera was completely dominated and controlled by Mr. Sola, that it was used as a shield for fraudulent or improper purposes, or that Mak Mera acted as Mr. Sola’s agent: FNF Enterprises Inc. v. Wag and Train Inc., 2023 ONCA 92, 165 O.R. (3d) 401, at para. 18.

[139] Therefore, Mr. Sola is not personally liable.

Issue 5: Was the July 2014 Letter written by Mak Mera defamatory?

[140] I conclude that the July 2014 Letter written by Mak Mera was defamatory for the following reasons.

[141] Apart from the work James Bay was doing to try to finalize its agreement with Bicta with respect to OML-90, James Bay ultimately sought to acquire an interest in exploring Oil Mining Lease 25 (“OML-25”).

[142] Mr. Olaniyan initially brought this opportunity to James Bay, but James Bay’s Board did not wish to pursue it, so for a time, Mr. Olaniyan did so on his own through a company he incorporated, Crestar Integrated Natural Resources (“Crestar”). Although Crestar had been incorporated by Mr. Olaniyan, James Bay ultimately acquired an interest in Crestar.

[143] As of December 31, 2013, when the Letter Agreement terminated, James Bay had not acquired any interest in OML-25 through Crestar.

[144] However, in May 2014, Crestar successfully entered into an agreement with Shell in respect of OML-25.

[145] On July 2, 2014, Mr. Sola, on behalf of Mak Mera, wrote a letter to representatives of Shell and the director of the DPR.

[146] The portions of the July 2014 Letter set out in the Statement of Claim claimed to be defamatory are as follows:

[A public filing by James Bay] unequivocally states that JAMES BAY has no obligations to MM under the Agreement. Essentially this public filing means that MM, an indigenous Nigerian company who brought JAMES BAY to do business in Nigeria is NOT ENTITLED TO ANYTHING resulting from JAMES BAY’s business in Nigeria. This unilateral decision by James Bay has completely eliminated our participation in the OML-25 acquisition and dashed our aspiration to become an E&P company. This resolution by JAMES BAY goes against the good faith, letter and spirit of our Agreement. JAMES BAY has acted in a way that has completely breached the intention of the Agreement and we at MM feel violated. We have been unfairly dealt with in our own country by a foreign corporation. This IS NOT THE WAY IT IS SUPPOSED TO BE IN THE YEAR 2014 WHEN BOTH THE ROYAL DUTCH SHELL GROUP AND THE NIGERIAN GOVERNMENT ARE PROMOTING LOCAL CONTENT, AND WE ARE FURIOUS!

JAMES BAY owns 45% equity interest in CRESTAR according to JAMES BAY’s public filing. This fact is not reflected in the Corporate Affairs Commission, the Nigerian companies’ public registry. The result of the above finding is that we know very little about the real beneficial ownership of Crestar.

[W]e conclude that CRESTAR and the OML-25 bid and all of JAMES BAY’s business in Nigeria are predicated on the goodwill and good faith of the Agreements signed by JAMES BAY with MM and DHS.

It is clear that JAMES BAY has taken away the equity that rightfully belongs to MM.

If we are to get NO BENEFIT from the OML-25 acquisition by JAMES BAY GROUP by virtue of the opaque relationship between CRESTAR and JAMES BAY, we do consider that MM would have been defrauded by misrepresentations and deceptive conduct.

We seek your indulgence to please suspend the award of OML-25 to JAMES BAY/CRESTAR to give us the required time to resolve the matters raised with JAMES BAY. The two parties, MM and DHS want answers to the nagging questions. [Underlining and all caps in original; bolding added.]

[147] In order to establish that statements are defamatory, a plaintiff must prove: i) that the words referred to the plaintiff; ii) that the words published were communicated to at least one person other than the plaintiff; and iii) that the impugned words were defamatory, in the sense that they would tend to lower a plaintiff’s reputation in the eyes of a reasonable person with ordinary intelligence: Grant v. Torstar Corp., 2009 SCC 61, [2009] 3 S.C.R. 640, at para. 28; Warman v. Grosvenor (2008), 2008 CanLII 57728 (ON SC), 92 O.R. (3d) 663 (S.C.), at paras. 52-57; Mantini v. Smith Lyons LLP (No. 2) (2003), 2003 CanLII 22736 (ON CA), 64 O.R. (3d) 516 (C.A.), leave to appeal refused, [2003] S.C.C.A. No. 344; Hill v. Church of Scientology of Toronto, 1995 CanLII 59 (SCC), [1995] 2 S.C.R. 1130; and Botiuk v. Toronto Free Press Publications Ltd., 1995 CanLII 60 (SCC), [1995] 3 S.C.R. 3.

[148] In considering whether the letter is defamatory, all of the circumstances of the case may be considered, including: (a) the natural and ordinary meaning of the words; (b) any reasonable implications the words may bear; (c) the context in which the words were used; (d) the audience to whom the words were published; and (e) the manner in which the words were presented: Skafco Ltd. v. Abdalla, 2020 ONSC 136, 62 C.C.L.T. (4th) 14, at para. 29; Walsh Energy Inc. v. Better Business Bureau of Ottawa-Hull Inc., 2018 ONCA 383, 424 D.L.R. (4th) 514, at para. 19; and Botiuk, at para. 62.

[149] James Bay pleads that the impugned words, in their natural and ordinary meaning are prima facie defamatory. It also pleads the following innuendo: a) James Bay made false or misleading public filings; b) James Bay breached its contract with Mak Mera; c) James Bay acted in bad faith and unfairly in dealing with Mak Mera; d) James Bay, a foreign corporation in Nigeria, violated Mak Mera, a local corporation; e) James Bay wrongfully took or misappropriated Mak Mera’s property; f) James Bay defrauded and deceived Mak Mera; and g) James Bay’s conduct is such that the Nigerian government should not approve James Bay’s acquisition of an oil and gas asset.

[150] I agree that the words used would be taken by a reasonable person to have the extended meanings pleaded by James Bay.

[151] The first two criteria for establishing defamation are satisfied, as the July 2014 Letter clearly refers to James Bay and was published to more than one person.

[152] I also agree that the July 2014 Letter could and would tend to lower James Bay’s reputation in the mind of a reasonable person, taking into account the natural and ordinary meaning of the words and the extended meanings. Allegations of fraud, misrepresentation, deceptive conduct, taking away equity that belonged to Mak Mera, unfair treatment and a lack of good faith are serious allegations. The overall tenor of the impugned statements is that James Bay violated an Indigenous Nigerian company by using its assistance and then cutting them out unilaterally after reaping benefits from Mak Mera’s work. It is particularly important that the main audience for the July 2014 Letter is the DPR who has the responsibility for oversight over oil and gas exploration, as well as representatives of Shell with whom Crestar had entered into an agreement in respect of OML-25. The form of the July 2014 Letter is important as it presents as a credible letter from a known service provider and as such would be taken seriously. Finally, some of the particularly damaging words are in all caps and/or underlined to draw attention to them.

[153] It would be hard to imagine a more damaging set of statements about a foreign company seeking to establish an oil and gas business in Nigeria being made to the DPR and Shell.

Issue 6: Are the contents of the July 2014 Letter substantially true?

[154] Once words are found to be prima facie defamatory, they are presumed to be false. To succeed in a defence of justification, a defendant must prove the substantial truth of the “sting”, or the main thrust, of the defamation; Bent v. Platnick, 2020 SCC 23, [2020] 2 S.C.R. 645, at para. 107.

[155] I agree with James Bay that the defamatory sting is as follows:

• James Bay made up false or misleading public filings.

• James Bay misled, defrauded and deceived Mak Mera.

• James Bay breached its contract with Mak Mera.

[156] I also agree that the Defendants did not prove the substantial truth of the sting or main thrust of the defamation.

a) Alleged false and misleading public filings.

[157] The July 2014 Letter alleges that James Bay concealed the details of its ownership interest in Crestar. But there was no evidence of this. The date stamp on the document Mr. Sola obtained which he says shows Mr. Olaniyan owned all but one share on July 2, 2014, is in fact the date stamp when the document was copied and provided to Mr. Sola. The document shows it was filed on August 20, 2013. After that date, the share ownership was changed so that by November 1, 2013, James Bay owned 45 percent and Crestar owned 55 percent, consistent with James Bay’s corporate filings. Mak Mera has simply misread the documents and also failed to do a complete search to obtain the Nigerian corporate filings that showed the November 1, 2013 share structure.

[158] Mak Mera also claimed that although Crestar was held out as providing Local Content, it was in fact a subsidiary of James Bay with James Bay exercising control over it.

[159] James Bay’s financial statements listed Crestar as a subsidiary over which it had control even though it only owned 45 percent of the shares. Mr. Shefsky explained that this was an auditing issue which required this presentation on the financial statements because James Bay had entered into a Financial and Technical Service Agreement which required it to fund Crestar, and provide other assistance. James Bay was thus responsible for several millions of dollars in funding and payment of all of the outstanding expenses.

[160] The Defendants provided no evidence regarding this issue other than James Bay’s publicly filed financial statements which fully disclosed the Financial and Technical Services Agreement.

[161] While there were insinuations that there was something nefarious about this arrangement, there is no evidence before me as to whether or not this arrangement, which was fully disclosed in James Bay’s financial statements, would run afoul of the Local Content requirement. Mr. Shefsky testified that this arrangement was similar to the arrangement James Bay had with Bicta regarding OML-90. Recall the OML-90 transaction was approved by the DPR.

[162] Further, while there was general evidence about Mak Mera assisting James Bay in fulfilling the Local Content requirement, there was no evidence explaining what the Local Content requirement was, what would satisfy it, what would run afoul of it, any legislation or policy guidelines that might exist, or what information foreign companies would have to provide to the Nigerian government or the DPR in respect of Local Content.

[163] Mak Mera had strong relationships with those at the DPR. I infer that if there was any evidence that anything about the Financial and Technical Service Agreement would have violated the Local Content laws, there would have been specific evidence about this and some explanation as to why that was, instead of bald insinuations.

[164] As the burden of establishing substantial truth is on the Defendants, merely showing me information in the financial statements is insufficient to establish that this arrangement violated Local Content laws and that James Bay acted in a false and misleading manner with respect to its interest in Crestar.

b) Alleged misleading, defrauding and deception of Mak Mera

Chief Olorunfemi’s possible role in Crestar

[165] There were some documents that supported Mr. Sola’s evidence that there was some expectation in 2013 that Chief Olorunfemi would be on Crestar’s Board of Directors. I will explain this, but even if there was, it cannot change the fact that the Letter Agreement terminated on December 31, 2013 with respect to any oil and gas interests other than OML-11. That would include OML-25 regardless of whether or not Chief Olorunfemi sat on Crestar’s Board.

[166] First, there was a draft expression of interest sent to Mr. Sola on August 23, 2013 by Mr. Shefsky which showed Chief Olorunfemi as Chairman of Crestar’s Board of Directors (the “Draft Expression of Interest”). Mr. Shefsky said that he saw what was in the Draft Expression of Interest and did not ask for it to be changed because Chief Olorunfemi was an honorary Chairman of James Bay, and he did not catch the mischaracterization of this statement. Mr. Olaniyan also said it was a mistake. I found both of them credible and believable and I accept their evidence that this was a mistake.

[167] There was also a letter from Kenda Capital to Shell dated August 30, 2013, enclosing the expression of interest with respect to OML-25 and which still showed that Chief Olorunfemi as the Chairman of Crestar (the “Final Expression of Interest”). Notably, this is almost the exact same document as the Draft Expression of Interest so it appears that the mistake was simply repeated in the final document.

[168] Finally, as set out in the introduction, there was a photocopy of a letter dated September 20, 2013 purportedly written by Mr. Olaniyan appointing Chief Olorunfemi as a Director of Crestar (the “Appointment Letter”). Mr. Sola testified that Chief Olorunfemi gave him the Appointment Letter and this was the subject matter of a voir dire.

[169] Mr. Olaniyan looked genuinely shocked when he saw the Appointment Letter. He said that although it looked like his signature, he had never seen this document before. He further gave reasons why this Appointment Letter could not have been written by him, set out in reasons on the voir dire. At the time of the voir dire, the Appointment Letter was admitted as a document Chief Olorunfemi gave Mr. Sola without determining whether Mr. Olaniyan had written and signed it. I indicated that I would determine the issue of whether Mr. Olaniyan signed the letter in the final reasons, taking into account all the evidence before me. Having considered the preponderance of probabilities, I conclude that the Defendants have failed to prove that Mr. Olaniyan wrote and signed this letter.

[170] First, I accept Mr. Olaniyan’s explanations as to why it makes no sense for him to have written this alleged Appointment Letter:

i) As at the end of September, there was no activity in Crestar because the Final Expression of Interest had just been submitted and was speculative. Things began gathering momentum when Shell made the divestiture announcement the first week of October 2013. At that time, they began seriously considering who would be on the Board.

ii) The Appointment Letter submitted by Mr. Sola did not have Crestar’s symbol or the letterhead that it used. I note here that the bid made by Crestar to Shell in 2014 was made by way of letter and did have a specific Crestar symbol that the alleged Appointment Letter did not. It also did not have the header that the alleged Appointment Letter had. I note here as well that the purported Appointment Letter did, however, have the header that Crestar’s corporate filings had in the Nigerian Corporate Registry which Mr. Sola had obtained when he had these corporate filings photocopied on July 2, 2014.

iii) No Directors of Crestar were written any letters when they were appointed.

iv) The first time Crestar sent its approved list of Directors to the Corporate Affairs Commission was on November 18, 2013.

[171] Second, throughout the proceedings the Defendants only produced a photocopy of the Appointment Letter. They did not include it in the documents set out in the Joint Book of Documents or make a specific request for its authenticity in its Request to Admit. When Mr. Shefsky was cross examined, he was not asked about the Appointment Letter either. It appears that the Defendants’ strategy was to take Mr. Olaniyan by surprise. But this ultimately backfired.

[172] Third, Mr. Olaniyan testified on April 6, 2023. Then, on April 17, 2023, the last day of trial, Mr. Sola produced the original after James Bay had closed its case. There is no satisfactory explanation as to why the original was not produced sooner. I am skeptical about Mr. Sola’s explanation as to how he obtained the alleged original. He said he asked for someone in Nigeria to look for it and needed to find someone travelling to Canada to bring it to him. The Defendants provided no evidence of any plane tickets regarding this travel from Nigeria to Canada bringing the original. The Defendants could have but did not call the witness who they said travelled to Canada with the original.

[173] There is no good explanation as to why they would have given no notice that the original was on the way during the trial so any issue could be resolved prior to the conclusion of the trial. As well, there is no good explanation as to why the original was not simply couriered so that it would have been available for Mr. Olaniyan’s cross-examination or the voir dire, and so that James Bay could have done some independent analysis of the original signature before the trial was over. Mr. Olaniyan never had an opportunity to review the original.

[174] Fourth, Chief Olorunfemi, who could have testified that he received the Appointment Letter, did not testify.

[175] Fifth, there is no mention of the Appointment Letter, which purportedly appoints Chief Olorunfemi as a Director, in the July 2014 Letter, even though the July 2014 Letter does specifically reference the contents of the Draft Expression of Interest which mistakenly showed Chief Olorunfemi on Crestar’s Board. What the July 2014 Letter specifically says is that Chief Olorunfemi “is cited as the Chairman and a Director of CRESTAR” in the “bid document in our hands.” I will point out here that Mak Mera admitted at trial it never had the bid documents even though it said it did in the July Letter. It appears this statement in the July 2014 Letter was with reference to the Draft Expression of Interest.

[176] Receiving a letter allegedly appointing Chief Olorunfemi to the Board in September 2013 would be much more than merely “citing” this in the Draft Expression of Interest in August 2013. If Chief Olorunfemi had received such a letter, it would have been referenced in the July 2014 Letter given the wide scope and length of the July 2014 Letter.

[177] Indeed, the July 2014 Letter undermines the argument that Mak Mera or Chief Olorunfemi had any expectations related to being involved with Crestar. The July 2014 Letter states: “It has come to our attention that the preferred bidder for OML-25 is Crestar…. we know very little about the real beneficial ownership of CRESTAR. Who are they? Who is Crestar?” It does not say anything to the effect that Chief Olorunfemi was led to believe that he would sit on Crestar’s Board or that Mak Mera would have any interest in Crestar. It must also be kept in mind here that the Defendants had the Draft Expression of Interest and it did not reference Mak Mera obtaining any interest in OML-25.

[178] Sixth, there has been no analysis of Mr. Olaniyan’s signature which the Defendants could have done to prove that he signed the alleged Appointment Letter.

[179] Seventh, the Appointment Letter says that at a meeting of the Board of Directors of Crestar a resolution was passed appointing Chief Olorunfemi. No such resolution has been produced or was ever requested as far as I am aware. The information in the documents filed with the Nigerian Corporate Affairs shows that prior to November 18, 2013, the two Directors were Mr. Olaniyan and Mr. Adetutu Sanusi, and that on November 18, 2013, Mr. Sanusi resigned and others were appointed.

[180] In any event, all of this is irrelevant to the justification defence.

[181] The Final Expression of Interest was James Bay’s attempt to buy an interest in OML-25 privately. As noted above, Shell ultimately determined that it did not want to sell OML-25 privately, but that it would sell by way of bid which was open to the oil and gas community in Nigeria.

[182] The bid process for OML-25 began in October 2013 and was not concluded until April 2014, and Chief Olorunfemi had no involvement in that bid. None of the Defendants or Chief Olorunfemi are noted in the bid made to Shell.

[183] Chief Olorunfemi must have known he was not on Crestar’s Board because he attended no meetings, and yet there is no evidence of any communications from him or anyone else at Mak Mera making any inquiries about the matter.

[184] Furthermore, even if Chief Olorunfemi had sat on Crestar’s Board, he was not Mak Mera; his sitting on Crestar’s Board would not change the fact that any entitlement that Mak Mera had with respect to projects other than OML-11 terminated pursuant to the Letter Agreement on December 31, 2013.

[185] Thus, the allegation that the Defendants were deceived in any material way with respect to Chief Olorunfemi’s or Mak Mera’s potential role in Crestar is not substantially true.

Mak Mera’s role in OML-25

[186] The July 2014 Letter suggests that James Bay misled them about Mak Mera’s role in the OML-25 bid.

[187] I find that it did not.

[188] Mr. Sola gave evidence that he had been led to believe that Mak Mera would be the Local Content provider for the OML-25 bid, and that James Bay had used Mak Mera’s profile to obtain the bid. He also said that Mak Mera “did everything.”

[189] While there were some sparse and limited communications about OML-25 between Mr. Shefsky and Mr. Sola, Mak Mera did not have any involvement in this opportunity, of which James Bay learned from Mr. Olaniyan.

[190] When cross-examined, Mr. Sola admitted that although he received the unsigned Draft Expression of Interest dated August 23, 2013, “he didn’t have any further information.” This contradicts his initial evidence that Mak Mera “did everything.” He also admitted he knew that interested parties had to submit bids. Mak Mera could not have been a key player in the circumstances, even based on Mr. Sola’s own evidence. Indeed, if he was basing his expectation on the Draft Expression of Interest, it did not provide for Mak Mera to have any involvement or provide the Local Content. Neither the Draft Expression of Interest or the Final Expression of Interest made any mention of Mak Mera whatsoever with respect to OML-25, even though they referenced many other companies.

[191] I add that Mr. Sola made significant reference to emails and other documents with respect to the work he did on OML-11 and OML-90 and yet there was nothing remotely similar with respect to OML-25.

[192] The very limited communications Mr. Sola and Mr. Shefsky had about OML-25 do not assist the Defendants. Mr. Shefsky explained that they thought that if their bid for OML-25 was successful, then that would help James Bay obtain the financing required for the COB so that James Bay could complete the deal with Bicta in respect of OML-90. Thus, it was possible that OML-25 would ultimately result in share issuance to Mak Mera pursuant to the Letter Agreement with respect to OML-90.

[193] Mr. Shefsky said as much in an email dated October 4, 2013, where they discussed OML-25 and Mr. Shefsky said, “I will get James Bay financed now.” While the Defendants make much of this communication by suggesting that it was some kind of promise that Mak Mera would be involved in OML-25, on its face it could only be a reference to potentially getting the financing to complete the COB required for the OML-90 deal, since Mr. Shefsky was talking about financing for James Bay, not Crestar. This email also shows that James Bay was acting in good faith. As late as October 2013, James Bay was still hoping to be able to complete the COB so it could issue shares to Mak Mera as a result of the Bicta deal. And it hoped to leverage OML-25 to obtain funding required for the COB.

[194] After Shell announced a bidding process for the divestment in October 2013, members of Crestar met with Shell to make a presentation. Mak Mera did not attend. In November, Shell asked Crestar to confirm its interest in OML-25. In December 2013, Crestar did so and met with Shell again in London and the Netherlands. Mak Mera did not attend. Nor are there any emails where anyone from Mak Mera is following up and questioning why they are not involved.

[195] Mr. Sola admitted that the Defendants did not attend any meetings with Shell and were not asked to comment on any of the materials. This also contradicts his initial evidence that Mak Mera “did everything.”

[196] As noted above, the bid was not even made until February 25, 2014, when the Letter Agreement had already come to an end. There was nothing wrong with James Bay pursuing this opportunity without Mak Mera’s involvement. There was also nothing unfair or deceptive about James Bay referencing the OML-90 deal with Bicta in the materials used to pursue OML-25.

[197] Again, Mak Mera was a sophisticated party who negotiated the Letter Agreement with the benefit of sophisticated counsel. It cannot complain that it negotiated an agreement that terminated pursuant to its terms on December 31, 2013.

With respect to the Letter Agreement not coming to an end on December 31, 2013

[198] Mr. Sola’s claims that he was led to believe that the Letter Agreement did not terminate according to its terms is also unpersuasive.

[199] There is no support for this apart from his testimony, which I did not find credible. Furthermore, the Letter Agreement specifically states that any amendments must be in writing. There were no written communications of any sort regarding this let alone a written amendment.

c) Alleged breach of contract

[200] For all the reasons set out above with respect to James Bay’s interest in OML-25 being acquired after the Letter Agreement’s express termination date of December 31, 2013, I conclude that James Bay did not breach the Letter Agreement with respect to any conduct related to OML-25. As well, I have found that James Bay did not breach the MOU or the Letter Agreement with respect to the issuance of shares because of the OML-90 deal.

[201] Thus, I find that the defence of justification is not made out.

Issue 7: Was the July 2014 Letter fair comment?

[202] The defence of fair comment is broad in scope and does not create a high threshold. It applies only to comment and not assertions of fact: Senft v. Vigneua, 2020 YKCA 8, at para. 81.

[203] There is a five-part test as set out in WIC Radio Ltd. v. Simpson, 2008 SCC 40, [2008] 2 S.C.R. 420, at para. 28, which I will evaluate below.

[204] I have found that the July 2014 Letter does not meet this test.

a) Was the comment on a matter of public interest?

[205] Public interest is not simply anything that interests the public. There is no single test or list of things that qualify: Torstar, at paras. 102-103.

[206] To qualify as being in the public interest, it must be “shown to be one inviting public attention, or about which the public has some substantial concern because it affects the welfare of citizens, or one to which considerable public notoriety or controversy has attached”: Torstar, at para. 105. The expression is a matter of public interest so long as “some segment of the community would have a genuine interest in receiving information on the subject”: Sokoloff v. Tru-Path Occupational Therapy Services Ltd., 2020 ONCA 730, 153 O.R. (3d) 20, at para. 17, citing 1704604 Ontario Ltd. v. Pointes Protection Association, 2020 SCC 22, [2020] 2 S.C.R. 587, at para. 102.

[207] I agree that the July 2014 Letter referenced matters of public interest because they related to a corporation’s alleged conduct towards an Indigenous business partner in the context of the Local Content requirement. As well, courts have held that business conduct has a public dimension that at least some members of the public will have an interest in knowing about because they deal with such businesses: Bradford Travel and Cruises Ltd. v. Viveiros, 2019 ONSC 4587, at para. 31; Crawford Design Inc., et al v. Mullowney et al., 2021 ONSC 7849, at paras. 26-29.

b) Were the comments recognizable as comment?

[208] In WIC Radio, the Supreme Court held that fair comment may include statements that appear to be statements of fact but which are in reality “deduction, inference, conclusion, criticism, judgment, remark or observation which is generally incapable of proof”: at paras. 26-28. Further, fair comment is “generously interpreted”: at para. 30.

[209] The Supreme Court also explained that the determination of what is fact or comment “must be determined from the perspective of a ‘reasonable viewer or reader’”: at para. 27.

[210] In determining whether a statement is comment, the court must examine the totality of the circumstances in which the remark was made, including the language, the medium, any cautionary terms and the audience. Presentation of the statement is critical: even words that appear as statements of fact may in pith and substance be comment,: Raymond E. Brown, Brown on Defamation (Canada, United Kingdom, Australia, New Zealand, United States), 2nd ed. (October 2023), at § 15:5, online: (Proview) Thomson Reuters Canada.

[211] Interpreting the July 2014 Letter generously, I agree that many of its impugned statements are recognizable as comment. It provides the following language:

i. That James Bay has gone against the good faith, letter and spirit of the Agreements.

ii. That James Bay’s unilateral decision eliminated Mak Mera’s participation in the OML-25 acquisition and dashed Mak Mera’s aspiration to become an E&P company.

iii. That James Bay has acted in a way that breached the intention of Agreements and Mak Mera feels violated.

iv. This is not the way it is supposed to be in the year 2014 when both the Royal Dutch Shell Group and the Nigerian Government are promoting local content.

v. We are furious.

vi. If Mak Mera does not benefit from the acquisition of OML-25, Mak Mera considers that it would have been defrauded by misrepresentations and deceptive conduct.

vii. We conclude that Crestar and the OML-25 and all of James Bay’s business are predicated on good will and good faith of Agreements signed by James Bay with Mak Mera and DHS.

viii. Mak Mera seeks an indulgence to suspend the award of OML-25 to James Bay and Crestar to give us the required time to resolve the matters with James Bay. Mak Mera wants answers to its nagging questions.

[212] These are judgments, inferences, conclusions, criticisms, and questions.

[213] In Paderewski v. Skorski, 2017 ONSC 6594, aff’d 2022 ONSC 1550 (Div. Ct.), the defendants published an article that included statements alleging misappropriation and fraud against the plaintiff’s Board of Directors. The court held that “the fact that actual fraud was not proved does not preclude the expression of an opinion about fraud, provided it is based on facts and meets the other criteria for a fair comment defence”: at para. 121.

[214] In Foulidis v. Baker, 2012 ONSC 7295, at para. 31 (“Foulidis (S.C.)”), aff’d 2014 ONCA 529, 323 O.A.C. 258 (“Foulidis (ONCA)”), the court found that a statement that “a police investigation is merited” constituted opinion or comment, based on assertions of fact that preceded it.

[215] Overall, the impugned portions of the July 2014 Letter, read as whole, would be recognizable to the reasonable reader as comment.

c) Were the comments based on fact?

[216] In evaluating the factual basis for the comments, the entire July 2014 Letter is relevant and not merely the impugned statements.

[217] In WIC Radio, the Supreme Court of Canada specified that “[t]he comment must explicitly or implicitly indicate, at least in general terms, what are the facts on which the comment is being made”: at para. 31.

[218] A reader should be able to recognize the facts so that they can then “make up their own minds” about the comment being made: WIC Radio, at para. 31. Further, the foundation for underlying facts must actually be true; if they are not, then the defence fails: at para. 31.

[219] As noted in WIC Radio, at para. 39, although the comment must have a “basis” in the facts, there is no requirement that the comment be “supported by the facts”.

[220] In this case, there are true facts set out in the July 2014 Letter as follows: i) Mak Mera is an Indigenous company; ii) Mak Mera and James Bay entered into agreements with James Bay; iii) James Bay’s role was to provide capital while Mak Mera provided Local Content; iv) Mak Mera introduced James Bay to OML-90; v) James Bay successfully “farmed into this field” which means it entered into an agreement with Bicta and obtained the DPR approval; vi) Mak Mera made introductions to James Bay in Nigeria; vii) James Bay did state unequivocally that it has no obligations to Mak Mera under the Agreements in its public filings; viii) Crestar was the preferred bidder for OML-25; ix) OML-90 was a credential for Crestar’s operational experience as it is referred to in the bid.

[221] As I will discuss in the section on malice, there are multiple significant misstatements of fact in the July 2014 Letter. However, the fact of such misstatements does not at this stage defeat the fair comment defence because of s. 23 of the Libel and Slander Act, R.S.O. 1990, c. L. 12, which provides as follows:

Fair comment

23 In an action for libel or slander for words consisting partly of allegations of fact and partly of expression of opinion, a defence of fair comment shall not fail by reason only that the truth of every allegation of fact is not proved if the expression of opinion is fair comment having regard to such of the facts alleged or referred to in the words complained of as are proved. R.S.O. 1990, c. L.12, s. 23.

[222] However, these misstatements are relevant to malice which defeats fair comment, which I will discuss in a separate section.

d) Does the comment satisfy the objective test that any person could honestly express that opinion based on the proved facts?

[223] As set out in WIC Radio, at para. 49, citing with approval the Australian High Court in Channel Seven Adelaide Pty. Ltd. v. Manock (2007), 241 A.L.R. 468, [2007] HCA 60, at para. 3:

The protection from actionability which the common law gives to fair and honest comment on matters of public interest is an important aspect of freedom of speech. In this context, “fair” does not mean objectively reasonable. The defence protects obstinate, or foolish, or offensive statements of opinion, or inferences, or judgment, provided certain conditions are satisfied. The word “fair” refers to the limits to what any honest person, however opinionated or prejudiced, would express upon the basis of the relevant facts. [Emphasis added.]

[224] I agree that any person could honestly express the comments in the July 2014 Letter based upon the underlying facts which have been proved to be true and which are set out in the July 2014 Letter.

e) Were the Defendants subjectively actuated by express malice?

[225] As I will discuss in the section below on malice, I have concluded that the Defendants were actuated by express malice, thus defeating the defence of fair comment.

Issue 8: Was the July 2014 Letter written on an occasion of qualified privilege?

[226] A defamatory statement is protected by qualified privilege where there is a special relationship between the publisher and the recipients of the communication such that the defendant had an interest or duty (legal, social, moral or personal) to publish the information to the person to whom it was published, and the recipient had a corresponding interest or duty to receive it: Bent, at para. 121; Torstar, at para. 34.

[227] The privilege attaches to the occasion upon which the communication is made, not to the communication. The privilege is based upon social utility in protecting particular communications from civil liability: Bent, at paras. 121, 124. As noted by the Supreme Court in Torstar, at para. 30, qualified privilege reflects “the fact that ‘common convenience and welfare of society’ sometimes requires untrammeled communications. The law acknowledges through recognition of privileged occasions that false and defamatory expression may sometimes contribute to desirable social ends” (citations omitted).

[228] The categories of duties and reciprocal interests that give rise to qualified privilege are not to be construed narrowly. They may be personal, social, business, financial or legal in nature and have included things like employment references and complaints to police, regulatory bodies or public authorities: Brissette v. Cactus Club Cabaret Ltd., 2016 BCSC 459, at para. 120, aff’d 2017 BCCA 200, 413 D.L.R. (4th) 317; Cusson v. Quan, 2007 ONCA 771, 87 O.R. (3d) 241, at para. 39, rev’d on other grounds, 2009 SCC 62, [2009] 3 S.C.R. 712.

[229] It has been recognized that occasions of qualified privilege include statements made on a subject in which both the defendant and the person to whom the statements are made have a legitimate common interest: Crandall v. Atlantic School of Theology (1993), 1993 CanLII 4685 (NS SC), 120 N.S.R. (2d) 219 (S.C.), at para. 28.

[230] For example, in Woods v. Plewes, 2014 BCSC 318, at para. 54, the court noted that “[e]mployees and employers alike have an interest and duty in exchanging information that touches on the proper functioning of the business, including relations between employees.” In Zerbin v. Vrbanek, 2020 ABQB 797, 13 B.L.R. (6th) 50, at para. 195, aff’d 2021 ABCA 317, 31 C.L.R. (5th) 76, the court found the requisite mutuality of interests to support qualified privilege in communications by a supplier of products for a construction project to the person undertaking that project.

[231] As well, it can include statements made by a defendant to obtain redress for a grievance: Canuck Security Services Ltd. v. Gill, 2013 BCSC 893. In Canuk, a former employee of a security company sent a letter to four of the company’s customers and to ministries of the provincial government, impugning the company’s business practices in deliberately or carelessly failing to pay wages and failing to meet its business obligations to the Canada Revenue Agency. The court found that the recipients had a reciprocal interest in receiving the letter. The customer recipients, and all construction companies, would have an interest in knowing workers on their sites were unpaid, and the government ministry recipients would have an interest as the matters dealt with in the letter fell within their mandate: at paras. 175-178.

[232] Although there was not a great deal of evidence regarding the DPR’s mandate and what it does, it is clear that it has responsibilities related to oil exploration in Nigeria. I infer that as such, it considers the Local Content requirement. If there are concerns that companies have not complied with Local Content requirements, or that Indigenous companies are being taken unfair advantage of, there is social utility in protecting that communication. There is arguably a duty to communicate that information to the DPR as well as an interest in the DPR receiving it.

[233] Representatives from Shell were sent the July 2014 Letter. Shell is a major player in the oil and gas field in Nigeria, and had entered into a significant agreement with Crestar related to OML-25. I agree that Shell and Mak Mera had a common interest related to whether James Bay had complied with Local Content laws related to Crestar.

[234] Thus, the occasion that gives rise to the defence of qualified privilege is the need for the DPR and Shell to have information relevant to James Bay’s and Crestar’s conduct with respect to the Local Content requirement and its conduct with an Indigenous partner.

[235] As set out in Foulidis (ONCA), at para. 41, on an occasion of privilege, one person may defame another and “[t]he law presumes that the defamatory statement was made honestly and in good faith.” In other words, “the legal effect of the defence of qualified privilege is to rebut the inference, one that naturally emerges from the publication of defamatory words, that they were spoken with malice.” See also Botiuk, at para. 79.

[236] However, qualified privilege may be defeated in two ways. First, it can be defeated where the limits of the duty or interest have been exceeded: Botiuk, at para. 80. This can occur where the information communicated was not legitimately appropriate to the purposes of the occasion: Botiuk, at para. 80. Here, the language used by Mak Mera was neither reasonably necessary nor appropriate in all the circumstances: Bent, at para. 129; Hill, at para. 156.

[237] The July 2014 Letter referenced James Bay going against the good faith, letter and spirit of the Agreements, and that Mak Mera considered itself defrauded by misrepresentations and deceptive conduct. None of these statements had to be in the July 2014 Letter if the concern was to alert the DPR and Shell to the possible violation of Local Content laws or even to alert them as to Mak Mera’s claim to a participating interest in OML-25. Given that James Bay had just been awarded this contract and was seeking DPR approval which could be jeopardized, the occasion called for restraint in the communication of the information related to the concerns expressed. The July 2014 Letter is written in a manner that portrays James Bay in the worst possible light. This was not necessary or appropriate at this stage since Mak Mera did not have all the facts and it knew this, as I will further set out in the section on malice.

[238] I add that the July 2014 Letter did not ask the DPR to conduct any analysis of the contractual issues between James Bay and Mak Mera. It asked for a suspension so that the parties could work this out. This was not a pleading at the outset of a case or a complaint to a governmental body where Mak Mera hoped to obtain a decision.

[239] In the circumstances, the Defendants should have waited until conducting further investigations before using such extreme language impugning James Bay’s integrity, or they should have written a letter without the inflammatory language used: Hill, at para. 155.

[240] In the event I am wrong that the contents of the July 2014 Letter exceeded the limits of the duty or interest, I discuss below my conclusion that the defence of qualified privilege is still defeated by malice.

Issue 9: Was the July 2014 Letter written with malice?

[241] Both defences of fair comment and qualified privilege are defeated where the plaintiff can show the dominant subjective motive of the communication is actual or express malice: Foulidis (ONCA), at paras. 54-55.

[242] Malice is generally considered to mean ill will or spite: WIC Radio, at para. 28.

[243] Malice can also be established when a defendant spoke dishonestly when making the statement or where the defendant spoke with reckless disregard for the truth: Bent, at para. 136; Hill, at para. 145; and Botiuk, at para. 34. The plaintiff must prove that the defendant “knew he was not telling the truth or that he was at least reckless about the truth”: Foulidis (ONCA), at para. 52. The more serious an allegation, the more weight the court will give to evidence of the defendant’s failure to verify it before publication: Bent, at para. 136.

[244] In the context of the fair comment defence, it can also be established where the statements were made with the dominant subjective motive that is “not connected with the purpose for which the defence exists”: WIC Radio, at para. 1. The purpose of this defence is to ensure robust and open debate about matters of public interest: WIC Radio, at para 1.

[245] In the context of the defence of qualified privilege, it can also mean that the statements were made with a dominant subjective motive that conflicts with the sense of duty or the mutual interest that the occasion giving rise to qualified privilege created: Hill, at para. 145; Sun Life Assurance Co. of Canada et al. v. Dalrymple, 1965 CanLII 9 (SCC), [1965] S.C.R. 302, at p. 310; Cherneskey v. Armadale, 1978 CanLII 20 (SCC), [1979] 1 S.C.R. 1067, at p. 1099; and Foulidis (ONCA), at para. 51.

[246] Malice can be established through inference from the language of the impugned statement or with extrinsic evidence: Foulidis (ONCA), at paras. 49, 58.

[247] Care must be had and the burden of proving malice is not easy: Cusson at para. 136; Cimolai v. Hall, 2007 BCCA 225, 240 B.C.A.C. 53. In Creative Salmon Co. v. Staniford, 2009 BCCA 61, 307 D.L.R. (4th) 518, at para. 34, the BC Court of Appeal cautioned that “there may be circumstances where malice is not the dominant motive of the defendant.”

[248] I conclude that the Defendants were not acting honestly because of significant misstatements of fact in the July 2014 Letter:

a) that James Bay made a unilateral decision that Mak Mera was not entitled to anything resulting from its business in Nigeria and that this “completely eliminated [Mak Mera’s] participation in OML-25”. In fact, this was not a unilateral decision. The parties, with the help of sophisticated counsel, negotiated the Letter Agreement which replaced the MOU. Mak Mera’s entitlements pursuant to the Letter Agreement, by its negotiated terms, terminated on December 31, 2013 with respect to any projects other than OML-11. Thus, there was no unilateral decision. Furthermore, Mak Mera had had no involvement in OML-25; to state that something James Bay did eliminated Mak Mera’s participation is factually incorrect. Mak Mera had never participated and there had been no agreement that it would;

b) that James Bay’s ownership interest in Crestar was not reflected in the Corporate Affairs registry in Nigeria, when in fact it was. See discussion above;

c) that Mr. Olaniyan, a full-time employee of James Bay, owned all the shares of Crestar;

d) that “according to the bid document in [Mak Mera’s] hands”, James Bay used Mak Mera as the Indigenous service provider with Chief Olorunfemi as the Chairman and Director of Crestar and that the other directors in the document were there because of respect for Chief Olorunfemi. Mak Mera never had the bid document, only the Draft Expression of Interest which did not even mention Mak Mera, let alone suggest that it was to participate in any way. Nor did Mak Mera show that the other Directors were part of Crestar because of respect for Chief Olorunfemi; and

f) that Mak Mera was “an Indigenous Nigerian company whose goodwill generated the opportunity.” Mak Mera did not bring OML-25 to James Bay, did not assist with it and there was no evidence that Mak Mera’s goodwill had anything to do with the generation of this opportunity. [Emphasis added]

[249] The July 2014 Letter is extremely misleading and Mr. Sola knew many of the damaging facts set out in the July Letter were not true.

[250] Mr. Sola admitted that he knew there was a bid document and he had not seen it. He knew the Draft Expression of Interest dated August 23, 2013 that he saw was not the bid and was not accepted by Shell.

[251] Furthermore, even the Draft Expression of Interest that he saw did not say that James Bay intended to use Mak Mera as the Indigenous service provider, which is what the July 2014 Letter alleged. The Draft Expression of Interest he saw expressly stated that Crestar would be the Indigenous partner. He would have been able to see this. The Final Expression of Interest was essentially the same as the Draft Expression of Interest. There were no documents at trial that showed that James Bay intended to use Mak Mera as the Indigenous service provider with respect to OML-25.

[252] He must have also known that Mak Mera did not have any legitimate expectation to participate in OML-25, because Mak Mera did not bring this opportunity to James Bay and never did any work related to OML-25.

[253] He also must have known that the Letter Agreement terminated as of December 31, 2013 because it very clearly states this. Therefore, he must have known that James Bay did not make any unilateral decision as alleged to cut Mak Mera’s participation out of anything.

[254] The July 2014 Letter is written in a manner that creates the unfair impression of a vulnerable Indigenous company that was unfairly treated, as opposed to a sophisticated party that did not get an interest in OML-25 because of contractual provisions that it negotiated with the benefit of sophisticated legal advice, because it did not introduce James Bay to this opportunity, and because it had no involvement in OML-25 at all. The misstated facts are significant in supporting this narrative and it is difficult to believe that the only misstated facts are the ones that would not be of assistance to the Defendants if they had been set out accurately.

[255] If the Defendants did not know these facts they displayed extreme recklessness by: a) not verifying these asserted facts by obtaining a copy of the actual bid that went to Shell; b) not talking to their sophisticated counsel about the relevance of the termination date in the Letter Agreement; c) failing to verify the information as to Crestar’s ownership; d) reading the information they did have in a rushed manner and incorrectly; and e) failing to speak to James Bay to hear its side and to investigate whether the other directors of Crestar were a part of Crestar because of their respect for Chief Olorunfemi.

[256] James Bay had acted in good faith with Mak Mera, including seeking immediate approval for the share issuance after the Bicta deal in 2012 even when it did not have TSXV approval, by making advance payments, and by continuing to try to get the funding for the COB which it thought it could obtain by leveraging its interest in OML-25. James Bay had even spent $150,000 in due diligence on a project on Dawes Island and permitted Mak Mera to pursue it instead. This oil well became a producing asset and Mak Mera obtained the whole benefit from it. It is curious that Mr. Sola would not have at least had a conversation with Mr. Shefsky before sending the July 2014 Letter.

[257] The kind of allegations the Defendants made, which suggested that James Bay had used Mak Mera’s services and then taken OML-25 which the July 2014 Letter says belonged to Mak Mera, was one of the most serious allegations they could have made to the recipients. This required the Defendants to make at least some effort at verification.

[258] The Defendants conduct was more than careless. Their conduct in writing the July 2014 Letter without investigating the correctness of important facts therein was at a minimum reckless. The legal consequence of their recklessness is that their conduct must be found to be malicious: Botiuk, at para. 103.

[259] I also conclude that the Defendants’ dominant motive was not to protect the integrity of the oil and gas business in Nigeria with respect to Local Content laws or for assistance with a mediated result as Mr. Sola alleged. Rather, I infer from all the facts before me that the express and dominant motive was to make enough significant and damaging allegations against James Bay so that the Defendants could extract pecuniary benefits that they knew they were not entitled to pursuant to the Letter Agreement. In the context of a letter as detailed and lengthy as the July 2014 Letter, the misstatement of the main facts that would have undermined their allegation that they had been defrauded or treated unfairly, is significant and deliberate.

[260] This motive was an ulterior motive that conflicted with the sense of duty or the mutual interest that the occasion giving rise to qualified privilege created.

[261] This motive was also unconnected to the purpose for which the fair comment defence exists, which is to ensure robust and open commentary on matters of public interest.

[262] The timing of the July 2014 Letter is important here, too. It was immediately after James Bay had won the bid and began working on necessary approvals including from the DPR. There was nothing urgent about sending it right then, but doing so would put significant pressure on James Bay.

[263] Despite Mr. Sola’s testimony, the July 2014 Letter does not say anything about the DPR mediating any dispute. It requested a suspension of the award of OML-25 to James Bay/Crestar altogether “to give us the required time to resolve matters raised with James Bay.” Mak Mera could have had discussions with James Bay without writing to the DPR and Shell. However, a suspension, if granted prior to those discussions, would give Mak Mera significant leverage over James Bay in any such discussions.

[264] The July 2014 Letter also made an appeal directly to James Bay’s partner, Shell, within the body: “As longstanding trusted corporate citizens we would be shocked if this outcome were allowed by Royal Dutch Shell to stand in Nigeria.” Here, the Defendants were applying direct pressure on Shell, which they must have known would be problematic for James Bay, all the while misstating important facts and making it look like it had been cheated out of its participation in OML-25.

[265] It would have been obvious to the Defendants that this type of letter could jeopardize these approvals and James Bay’s relationship with Shell. When testifying about the value of Mak Mera’s contributions to James Bay, Mr. Sola gave extensive evidence about Mak Mera’s strong relationship with the DPR. He said that they were like a family because of Mak Mera’s prominence. He even used his influence to expedite matters for James Bay. But then when he was asked about this influence in the context of the July 2014 Letter, he denied it. I find this disingenuous.

[266] Mak Mera had also written to the DPR once before and extracted an immediate compromise from James Bay. In March 2013, Mr. Sola had written to the DPR when the parties had a disagreement as to whether James Bay’s and D&H’s shares would also be held in escrow after it acquired an interest in OML-90, if the COB had been approved. Even though James Bay did not agree with what was in the March 2013 letter to the DPR, it agreed to a longer escrow period because it needed the DPR’s support and this letter could have stood in the way. Once the Defendants obtained what they wanted, they withdrew the letter to the DPR.

[267] The Defendants’ conduct after sending the July 2014 Letter also shows they were primarily actuated by their own pecuniary interest as opposed to concerns about the integrity of the oil and gas business in Nigeria or to ensure robust debate about matters of public interest. Two weeks after the July 2014 Letter was sent, Mr. Shefsky met with Chief Olorunfemi who said he would “pull” the letter if James Bay paid $10 million.

[268] Mr. Shefsky was not cross-examined on this and the Defendants called no evidence to dispute it. If Mak Mera’s main purpose in writing the July 2014 Letter had been concerns about the integrity of the oil and gas industry in Nigeria because of James Bay’s alleged opaque relationship with Crestar or concerns that Crestar did not actually fulfill the Local Content requirement, it would not have made this demand; payment to Mak Mera of any amount would not have addressed these concerns.

[269] After James Bay sent a cease and desist letter on July 15, 2014 through its counsel, the Defendants’ counsel replied on August 9, 2014, stating that if James Bay did not comply with their demands, Mak Mera would “commence a number of blistering legal proceedings that will cause untold hardship and damage to your Clients’ activities and reputation, not only in Nigeria, but worldwide.”

[270] If they could not extract a compromise from James Bay, then what they wanted was for James Bay to lose the bid altogether so that they could pursue it for themselves. And that is what ultimately happened.

[271] Mak Mera wrote a further letter to the DPR again to petition against Crestar and James Bay having any interest in OML-25. In that letter they republished further accusations, attaching parts of the March 2013 letter to the DPR and the July 2014 Letter.

[272] In or around the fall of 2014, the DPR decided to pre-empt the company with whom Shell could choose to partner. One of those potential companies listed by the Nigerian government was Mak Mera. Crestar and others never obtained any interest.

[273] Thus, I am satisfied that the Defendants acted with malice in the sense of knowing dishonesty, recklessness and with a dominant express subjective purpose of extracting a financial compromise it knew or should have known it was not entitled to. This is sufficient to defeat the defences of qualified privilege and fair comment.

Issue 10: What damages are required to vindicate James Bay’s reputation?

[274] James Bay requests damages in the amount of $500,000. The Defendants argue that a nominal award is appropriate.

[275] A company whose business character or reputation is injuriously affected by a defamatory publication is entitled, without proof of damage, to a compensatory award representing the sum necessary to publicly vindicate the company’s business reputation: Walker v. CFTO Ltd. (1987), 1987 CanLII 126 (ON CA), 59 O.R. (2d) 104 (C.A.), at p. 113.

[276] Courts have recognized that injury which is done to reputation is difficult to repair: Botiuk, at para. 92.

[277] The standard factors to consider in determining the quantum of damages for defamation include the plaintiff’s position and standing, the nature and seriousness of the defamatory statements, the mode and extent of publication, the absence or refusal of any retraction or apology, the whole conduct and motive of the defendant from publication through judgment including trial, and any evidence of aggravating or mitigating circumstances: 122164 Canada Ltd. v. C.M. Takacs Holdings Corp., 2012 ONSC 6338, at para. 20, citing Barrick Gold Corporation v. Lopehandia (2004), 2004 CanLII 12938 (ON CA), 71 O.R. (3d) 416 (C.A.), at para. 29; Skafco, at paras. 29-30; and Hill, at para. 183.

[278] Where the plaintiff requests substantial general damages, the context, the audience and the impact of the defamatory messages must be calculated to arrive at a just result: Skafco, at para. 20.

[279] The assessment of damages is different than it is with respect to an individual because corporations cannot have hurt feelings: Skafco, at para. 20; Walker, at p. 113.

[280] James Bay relies upon the following cases.

[281] In Second Cup Ltd. v. Eftoda (2006), 41 C.C.L.T. (3d) 111 (Ont. S.C.), the court awarded general damages of $425,000. The defendant company and its owner published several defamatory statements about the plaintiff franchisor to its franchisees. They stated, among other things, that the plaintiff’s attitude was “harsh, oppressive, unfair, unjust and bullying” and that it was “[o]ne of the most unprincipled franchisors operating in Canada today”. They also suggested the plaintiff had engaged in “misrepresentation, lack of support, exploitation, harassment, deception, and fraud”. The court stated that a nominal award would not “clearly demonstrate to the community the vindication of the plaintiff’s reputation.” It emphasized that “most notable” in the case was the failure to offer any apology or retraction, even despite a cease-and-desist letter from the plaintiff’s counsel years before.

[282] Further, in Takacs Holdings, a franchisor sued former franchisees for defamatory statements. The court awarded default judgment and general damages of $425,000. The defendants had engaged in a “persistent and extensive campaign” to damage the plaintiff’s reputation. Aggravating factors included sending one letter to the Canadian Franchise Association alleging the plaintiff failed to comply with laws, which was copied to others in the industry. The audience was selected to inflict maximum harm. The defendants refused to retract the letter or apologize and threatened to heighten their campaign.

[283] I agree with the Defendants that these cases involved franchisor-franchisee relationships which are unique in awarding significant damages.

[284] Further, each of these cases involved media coverage: Second Cup, at para. 41; Takacs Holdings, at para. 23. In Takacs Holdings, the defamed party had to invest considerable time “writing correction letters to newspapers and its franchisees and hiring a public relations firm”: at para. 23.

[285] Here, there is no evidence of any media publications of the July 2014 Letter.

[286] In any event, the Supreme Court of Canada has observed that detailed comparisons of cases in defamation cases is not overly helpful because each case is different: Hill, at para. 187.

[287] I find that the following factors justify a significant damage award, but not as significant a damage award as in the above cases.

[288] The allegations, although largely stated as opinions, were serious. They suggested that James Bay had violated an Indigenous Nigerian company. The July 2014 Letter used words like “unfair”, “defrauded”, “misrepresentation”, and “deceptive conduct”. These allegations were made to the DPR, who held James Bay’s fate in its hands, as well as its partner in a venture, Shell.

[289] The oil and gas industry in Nigeria is small and competitive and James Bay was a relatively new player. Allegations of this sort would likely have a significant impact on it. I agree that the nature of these allegations would have a lasting impact on the people who saw it.

[290] The DPR pre-empted the bid for OML-25 after the July 2014 Letter. Shortly before the DPR did pre-empt the bid, Mr. Shefsky met with the Minister at the DPR and he asked about the July 2014 Letter.

[291] James Bay had been taken seriously in the oil and gas industry in Nigeria up until the July 2014 Letter. It had negotiated an agreement with Bicta regarding OML-90 and obtained DPR approval. There is no other explanation for the DPR’s decision to pre-empt the bid. Thus, I conclude that the July Letter did have a significant enough impact on James Bay’s reputation, that it affected the OML-25 bid even though there is no request for special damages with respect to it.

[292] James Bay’s relationship with Shell fell apart too, although there was very little evidence as to why. There was some evidence about an international arbitration between Shell and James Bay which James Bay lost. It is unclear on the record what that related to and so it is difficult to make any findings about this.

[293] James Bay and its related companies ultimately left Nigeria and did not successfully obtain any other interests. Although Mr. Olaniyan did not provide any particulars on any conversations, he said that after the July 2014 Letter, when he tried to do business in Nigeria he was repeatedly confronted with James Bay’s “credibility issue” and eventually had to call it quits. James Bay’s subsidiary, JBENL, is being wound up. James Bay expended more than $1.3 million in Nigeria. The fact that it would walk away from this investment supports the inference that it had to because its reputation was so significantly undermined in the eyes of the DPR and others in the oil and gas field as a result of the July 2014 Letter.

[294] There are no mitigating circumstances but there are aggravating circumstances. The Defendants have refused to apologize or retract the July 2014 Letter and advanced a defence of justification which is essentially a republication of the defamatory statements right up until trial: Hill, at para. 185.

[295] In Second Cup, at para. 40, the court concluded that without an apology, the only vindication in the eyes of the world is a substantial award of damages.

[296] In the end I award damages in the amount of $200,000 as the amount required to vindicate James Bay’s reputation.

Issue 11: Is Mr. Sola personally liable for the damages in respect of the July 2014 Letter?

[297] Mr. Sola wrote and signed the July 2014 Letter. Mr. Sola, as an officer of Mak Mera, is independently liable for his own tortious conduct.

[298] In the following cases officers or directors have been found jointly and severally liable in respect of letters written by them, and even in circumstances where they only provided information for a defamatory publication knowing and intending that it would be published: Paderewski, at para. 138; United Ventures Fitness v. Twist, 2019 ONSC 3613, at paras. 39-40; and Skafco, at para. 48.

[299] As set out in Hill, at para. 176, it is well established that “all persons who are involved in the commission of a joint tort are jointly and severally liable for damages…. If one person writes a libel, another repeats it, and a third approves what is written, they all have made the defamatory libel. Both the person who originally utters the defamatory statement, and the individual who expresses agreement with it, are liable for the injury.”

[300] Thus, Mr. Sola and Mak Mera are jointly and severally liable for the defamation.

[301] If the parties cannot agree on costs they may make submissions no longer than ten pages as follows: a) James Bay by December 15, 2023, and b) Mak Mera by January 7, 2024.

Papageorgiou J.

Released: December 4, 2023

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

JAMES BAY RESOURCES LIMITED

Plaintiff

– and –

MAK MERA NIGERIA LIMITED a.k.a. MAK MERA LIMITED and ADEWALE OLORUNSOLA a.k.a. WALE SOLA

Defendants

REASONS FOR JUDGMENT

Papageorgiou J.

Released: December 4, 2023

[^1]: It was delisted on October 14, 2014, and subsequently listed on the Canadian Securities Exchange.

[^2]: Note that although this document was called a Memorandum of Understanding, in a subsequent agreement which will be referenced, the parties defined the Memorandum of Understanding as a “Services Agreement” because James Bay also entered into a Memorandum of Understanding with D&H which is also referenced in the subsequent agreement. Therefore, there had to be two different names for these memorandums of understanding to avoid confusion in the subsequent agreement.

[^3]: See Geoff R. Hall, Canadian Contractual Interpretation Law, 4th ed. (Toronto, ON: LexisNexis Canada, 2020) at 2.3.4; A. Swan, J. Adamski and A.Y. Na., Canadian Contract Law, 4th ed. (Toronto, ON: LexisNexis Canada, 2018) at 8.151.

[^4]: The Defendants cited Advantage Tool & Machine Ltd. v. Cross Industries Ltd., 2023 BCSC 104, 88 C.C.E.L. (4th) 1 for the proposition that a clause providing for payments, which would start when certain specified events were completed, did not amount to a conditional obligation. This case does not stand for that broad proposition. As in all cases, the court interpreted the contract before it. In Advantage, the defendant had made an offer to purchase the plaintiff’s business which the plaintiff accepted. The purchase price was $450,000 to be paid in instalments. The defendant took possession and made four payments when the relationship unraveled. The plaintiff sued for breach of contract and the defendant argued that the parties had only agreed to agree. The court found that the parties had indeed entered into a binding contract. In that context, the court stated that the obligation to make instalment payments spoke to the timing of obligations and not the obligation in the first place, which was clear as there was a binding contract. This case does not assist the Defendants here.