Court File and Parties

COURT FILE NO.: CV-21-00657638-0000 DATE: 20240116 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: DENIS ELLIOTT Plaintiff AND: MMC MARKETING & PROMOTION INC. Defendant

BEFORE: Justice Chalmers

COUNSEL: D. Camenzuli and J. Cecchetto, for the Plaintiff J. Bartlett and S. Pulver, for the Defendant

HEARD: Videoconference on Nov. 2, 2023

ENDORSEMENT

OVERVIEW

[1] The Plaintiff, Denis Elliott (Denis) brings this motion for summary judgment.

[2] In February 2018, the Defendant, MMC Marketing and Promotion Inc. (MMC) entered in an Exclusive Sales Representation Agreement (the ESRA) with Wayfinder Vacation Services Inc. (Wayfinder) and Checkpoint Travel Co-Operative Inc. (Checkpoint). Under the terms of the ESRA, MMC was required to assist in the design and set up of a sales centre for the sale of the memberships offered by Waypoint Vacation Co-Operative Ltd. (Waypoint). Pursuant to the ESRA, Checkpoint would pay MMC a commission percentage of the net sales of Waypoint memberships.

[3] In March 2018, MMC engaged the services of Denis to set up a sales office located at 4195 Dundas Street West (the Dundas Office). The parties entered into an oral agreement (the Dundas Agreement). The parties agree there was an oral agreement but do not agree on the terms. According to Denis, MMC agreed to pay $200 for each client he located and sent to a presentation at the Dundas Office. MMC states that the Dundas Agreement was a profit-sharing agreement whereby each of MMC and Denis would share the profits generated by the Dundas Office on a 50-50 basis.

[4] Denis states that he began providing his services to MMC in March 2018. He kept track of the clients located and secured by him. By March 2019, he estimated that he had secured approximately 600 clients to attend presentations at the Dundas Office. He claims that MMC owes him approximately $120,000. MMC states that Checkpoint failed to make the payments required under the ESRA. As a result, there was little, or no profit earned from the Dundas Office. In February and March 2019, MMC paid $9,568.55 in profit sharing to Denis.

[5] Denis brings this action against MMC under the Simplified Procedure. MMC argues that this matter is not appropriate for summary judgment because of the disputed facts and issues of credibility. The simplified procedure rules prohibit cross-examinations on affidavits and examinations of witnesses on a pending motion and therefore the issues of credibility cannot be resolved on a summary judgment motion.

[6] For the reasons set out below, I find that Denis is not entitled to the relief sought. On the evidentiary record before me, I am of the view that the summary judgment procedure will not lead to “a fair process and just adjudication”. I dismiss the motion for summary judgment.

FACTUAL BACKGROUND

The Agreements

The ESRA

[7] In August 2017, the corporations controlled and operated by the Denis’ parents, Steven and Barbara Elliott, Wayfinder and Checkpoint engaged MMC to help sell its Waypoint vacation packages in Canada. This was a trial run. No documents were executed at this time. The trial run was successful. In February 2018, MMC entered into the ESRA with Wayfinder and Checkpoint. The ESRA was signed on February 17, 2018. Stephen Elliott (Stephen) signed on behalf of Wayfinder and Checkpoint. Cecil Hendrix signed the ESRA on behalf of MMC. MMC states that Denis is not a party to the ESRA, however he participated in the negotiation of the agreement.

[8] Pursuant to the ESRA, MMC was retained to act as the exclusive director of sales of the Waypoint vacation program. MMC was required to provide certain sales and marketing services, which included recruiting, hiring, and training of all sales staff, and assisting in the design and set up of a sales centre in Mississauga (the Mississauga Office).

[9] Section 5 of the ESRA provides that Checkpoint would compensate MMC with a commission percentage of the net sales of the Waypoint memberships. The commission was calculated based on weekly net sales and was payable on a weekly basis. Denis was the director of Checkpoint. He received all invoices and signed off on all cheques paid by Checkpoint to MMC.

The Mississauga Profit Sharing Agreement

[10] After the ESRA was executed, Waypoint opened a sales office located on Satellite Drive, Mississauga (the Mississauga Office). MMC alleges that in February 2018, there was an oral agreement between MMC, Denis and Stephen with respect to the profits generated at the Mississauga Office (the Mississauga Profit Sharing Agreement). According to MMC, the agreement provided that on annual profits of less than $1,000,000, MMC would receive 20% of the profits and Denis and Stephen would each receive 40% of the profits. Denis denies the existence of the Mississauga Profit Sharing Agreement.

The Marketing Agreement

[11] MMC alleges that in October 2018, MMC entered into a further oral agreement with Waypoint, Wayfinder, and Checkpoint (the Marketing Agreement). MMC states that pursuant to the terms of the Marketing Agreement, MMC would receive $450 for each qualified client who attended the sales presentation at the Mississauga Office. MMC was to issue invoices on a weekly basis, which it did between November 2018 and March 2019.

Dundas Agreement

[12] MMC leased and opened the Dundas Office. MMC engaged the services of Denis to set up and run the Dundas Office. Denis was required to provide and train staff and operate the telemarketing business out of that location. The parties agree that the arrangement was governed by an oral agreement (the Dundas Agreement). However, the parties do not agree on the terms of oral agreement.

[13] Denis states that the parties entered into the Dundas Agreement in March 2018. MMC states that the agreement was entered into on November 1, 2018. Denis states that as compensation for his services, MMC agreed to pay him $200 for each client it located and sent to a presentation at the Dundas Office. MMC states that the Dundas Agreement provides that the profit from the Dundas Office would be shared 50-50 as between Denis and MMC. Both parties agree that Denis was to be reimbursed for his reasonable expenses incurred in relation to the Dundas Office.

[14] MMC states that although the Mississauga Profit Sharing Agreement was separate from the Dundas Agreement, both agreements were predicated on the payment of marketing fees to MMC, by Waypoint and Checkpoint pursuant to the overarching Marketing Agreement. Denis states that there was no Marketing Agreement and, in any event, his arrangement with MMC was subject only to the Dundas Agreement. He further states that a failure by Checkpoint to pay MMC under the ESRA did not allow MMC to refuse to make the payments to which he was entitled under the Dundas Agreement.

Presentations at the Dundas Office

[15] According to Denis, he started providing services pursuant to the Dundas Agreement in March 2018. He set up the Dundas Office. He hired and trained telemarketers and supervised their work. He purchased equipment and supplies. Denis states that new clients began attending the presentations in October 2018. Denis would take down the information from each client who attended a presentation. He would enter the information in a computer program which would convey the information to MMC and schedule the client’s attendance at the presentations. Denis states that he no longer has access to the information entered into the computer program and that this information is in the possession of MMC. Denis states that he kept a “rudimentary record” of the number of presentation attendees at the Dundas Office. Denis estimates that approximately 600 people attended the presentations at the Dundas Office between March 2018 and March 2019. Denis has not produced any invoices rendered to MMC.

[16] According to Denis, the Dundas Agreement provides that he was to be compensated at the end of each quarter. Due to the limited amount of presentation attendees between March 2018 and October 2018, Denis did not insist on payment at the conclusion of each quarter in 2018. In January 2019, Denis approached MMC about being paid for his services. He was told to be patient. No payments were made, and Denis again approached MMC for payment. According to Denis, he was told that there would be no further payments. In March 2019, Denis stopped providing services to MMC.

[17] According to MMC, it made payments to Denis in 2019, for expenses and profit-sharing. Two payments for expenses were made on January 25, 2019, in the amounts of $3,411.23 and $1,052.58. An additional payment for reimbursement of expenses was made on March 8, 2019, in the amount of $374.18. MMC made a profit-sharing payment to Denis on February 5, 2019, in the amount of $4,986.42. A second profit sharing payment was made on March 8, 2019, in the amount of $4,582.13. The total amount of profit-sharing payments was $9,568.55. On the face of the cheques dated February 5 and March 8, 2019, it is noted that the payment was for a share of the profits. According to MMC, the profit-sharing payment was based on 50% of the profits earned at the Dundas Office.

Issuance of the T4A

[18] In March 2020, MMC’s accountant prepared and issued a T4A slip to Denis for the 2019 fiscal year. The T4A provided that his “self-employed commissions” from MMC totaled $109,568.65. This was based on the agreement of 50/50 profit sharing between MMC and Denis. The full amount set out in the T4A was not paid to Denis. According to MMC, the T4A sets out the amount that Denis would have earned up to March 2019, if the MMC invoices had been paid by Wayfinder and/or Checkpoint. MMC advised Denis that once the amounts owing to MMC are paid, Denis will receive his share of the profits. The payments were not received from Waypoint and Checkpoint, and no additional payments were made to Denis.

[19] After receiving the T4A, Denis advised the Canada Revenue Agency (CRA) that he did not receive the amount set out in the T4A. CRA disallowed MMC’s expenses of $100,000 on the basis that Denis was not paid. The CRA removed the T4A from its records and as a result Denis was not required to pay tax on this amount.

The Alleged Breach of the ESRA

[20] MMC takes the position that Wayfinder and Checkpoint breached the ESRA and Marketing Agreement. On March 18, 2019, MMC rendered an invoice for services rendered for tours booked between March 4-11, 2019. The invoice was sent directly to Denis’ e-mail address. The invoice was in the amount of $5,593.50. Checkpoint did not pay the commission fee. MMC also states that Checkpoint refused to reimburse MMC for expenses. Denis and Stephen did not respond to MMC’s requests for payments. Invoices dated March 20 and March 27, 2019, were also not paid.

[21] MMC states that as a result of the breach of the agreements, MMC was neither able nor required to pay Denis pursuant to the Dundas Agreement. Denis argues that the agreements are separate and there was no agreement that if MMC was not paid by Wayfinder, and/or Checkpoint, it could withhold payments owing to him.

The Related Litigation

[22] On April 9, 2019, Wayfinder, Checkpoint and Waypoint brought an action against Cecil Hendrix (Hendrix), carrying on business as MMC Marketing, Agata Lyczek (Lyczek), Michael Krause and Taxwatch Inc. Denis is not a Plaintiff in that action. It is alleged that MMC misappropriated funds and diverted money to Hendrix’s personal account. The Plaintiffs claim damages of over $400,000 from MMC and the other Defendants.

[23] The MMC Defendants denied the allegations and brought a counterclaim. 1961975 Ontario Inc, Stephen and Denis were added as Defendants by counterclaim. In the counterclaim, it is alleged that Wayfinder and Checkpoint breached the terms of the ESRA. The counterclaim was for approximately $500,000 in damages.

[24] The Elliot Plaintiffs brought a motion for interlocutory injunctive relief. The motion was returnable September 25, 2019. MMC was concerned about the moving parties’ ability to pay a cost award and brought a motion for security for costs which was returnable on August 20, 2019. Shortly after the security for costs motion was served, the injunction motion was dropped.

Ministry of Labour Investigation

[25] In June 2020, Denis filed a claim with the Ontario Ministry of Labour. He claimed that he was an employee of MMC and was owed unpaid wages in the amount of $109.568.65 plus vacation and termination pay. This is the same amount that is being claimed in this action.

[26] In October 2020, following its investigation, the Employment Standards Officer concluded that Denis was not an employee. She stated as follows:

I find the best available evidence is the copy of the cheque that shows the claimant was paid profits.

It is undisputed that the claimant is a director for WayPoint and that WayPoint retained the services of the company - MMC to promote its business.

I find that the claimant’s compensation is directly related to the profit generated from events. The more the number or attendees, the greater is the compensation. The copy of the cheque issued on February 05, 2019 shows the claimant was paid profits. The executive sales rep agreement states that nothing in the agreement shall constitute or be construed to create a partnership, joint venture or employment relationship between the parties. Based on the evidence submitted, I find the company statement credible and that the claimant was paid profits by the company and therefore he was issued T4A. I find that the claimant was able to realize profits by having more people attend the WayPoint presentation. This shows he had significant chance to realize profits. Therefore, this element suggests the claimant was an employee.

The Statement of Claim

[27] Denis commenced this claim after he received the Employment Standards Officer’s decision denying his claim for unpaid wages. The Claim was issued on February 24, 2021. The action is brought under Simplified Procedure provided in Rule 76. Neither party brought a motion to consolidate this action with the action brought by Waypoint, Wayfinder, and Checkpoint.

[28] The Plaintiff brought this motion on April 5, 2022. The matter was spoken to at CPC on April 12, 2022. The Defendants argued that this is not an appropriate case for a summary judgment motion. Justice Vermette convened a case conference. The case conference took place before Justice Sugunasiri on November 18, 2022. Once again, the Defendants argued that summary judgment was not appropriate. In her endorsement, Justice Sugunasiri noted that it is “possible” that a motions judge may be inclined to consider this issue as sufficiently distinct to consider granting judgment in the face of the related action. She scheduled the motion for November 2, 2023.

THE ISSUES

[29] The following issues will be addressed:

Issue # 1 – What is the test for summary judgment? Issue # 2 – Should summary judgment be granted in favour of Denis? and Issue # 3 – The Dismissal of the Counterclaim brought by MMC.

ANALYSIS

Issue #1 – What is the test for summary judgment?

[30] The Plaintiff brings this motion for summary judgment. Summary judgment will be granted if there is no genuine issue requiring a trial. There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process:

a. allows the judge to make the necessary findings of fact;

b. allows the judge to apply the law to the facts; and

c. is a proportionate, more expeditious and less expensive means to achieve a just result: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 SCR 87, at paras. 48 and 49.

[31] The Supreme Court in Hryniak recognized that some cases will require a trial to allow for a just and fair determination of the issue in dispute. The Supreme Court stated as follows:

These principles are interconnected and all speak to whether summary judgment will provide a fair and just adjudication. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute: at para. 50.

[32] The Court of Appeal has since provided further direction with respect to the use of the summary judgment procedure in Mason v. Perras Mongenais, 2018 ONCA 978:

With respect, the cultural shift referenced in Hryniak is not as dramatic or as radical as the motion judge would have it. The shift recommended by Hryniak was away from the very restrictive use of summary judgment, that had developed, to a more expansive application of the summary judgment procedure. However, nothing in Hryniak detracts from the overriding principle that summary judgment is only appropriate where it leads to “a fair process and just adjudication”: Hryniak at para. 33. Certainly there is nothing in Hryniak that suggests that trials are now to be viewed as the resolution option of last resort. Put simply, summary judgment remains the exception, not the rule: at para. 44.

[33] There are other factors at play for a motion for summary judgment in a simplified procedure action. The simplified procedure allows for a summary trial and therefore the summary judgment motion may not be the more cost-effective means of resolving the action. As noted by in Li v. Michaud, 2021 ONSC 1896:

[….] excepting clear cases, it is difficult to see when a motion for summary judgment would be a more proportionate, timely, and cost-effective means of resolving a simplified procedure action than would be proceeding by summary trial: at para. 20.

[34] There are also concerns with the appropriateness of a summary judgment motion in an action subject to simplified procedure because there is no opportunity to conduct cross-examinations on affidavits or to conduct an examination of a witness on a pending motion. As noted in Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764, 108 O.R. (3d) 1:

[….] summary judgment motions in simplified procedure actions should be discouraged where there is competing evidence from multiple witnesses, the evaluation of which would benefit from cross-examination, or where oral evidence is clearly needed to decide certain issues. Given that Rule 76 limits discoveries and prohibits cross-examination on affidavits and examinations of witnesses on motions, the test for granting summary judgment will generally not be met where there is significant conflicting evidence on issues confronting the motion judge. While the motion judge could order the hearing of limited oral evidence on the summary judgment motion under rule 20.04(2.2), in most cases where oral evidence is needed, the efficiency rationale reflected in the rule will indicate that the better course is to simply proceed to a speedy trial, whether an ordinary trial or a summary one: [….]. at para. 256.

[35] MMC also argues that the within action is related to the action commenced by the Elliot Corporations in April 2019. MMC states that summary judgment would result in partial summary judgment and run the risk of inconsistent findings by multiple judges. The Supreme Court in Hryniak observed that it may not be in the interests of justice to use the fact-finding powers against a single defendant if the claims against other parties will proceed to trial in any event: Butera v. Chown, Cairns LLP, 2017 ONCA 783, at para. 25 (see also Malik v. Attia, 2020 ONCA 787, at para. 62.)

Issue # 2 – Should summary judgment be granted in favour of Denis?

[36] Both parties agree that MMC and Denis entered into the oral Dundas Agreement. However, the parties do not agree on the basic terms of the agreement. Denis argues that pursuant to the Dundas Agreement he was an employee and was entitled to a payment of $200 for each person who attended a presentation. MMC takes a very different position. MMC states that Denis was not an employee, but instead was to share in the profits generated by the Dundas Office. MMC also states that pursuant to the oral Marketing Agreement, it was the understanding of the parties that no payments would be made to Denis if MMC was not paid what was owing under the ESRA and Mississauga Profit-Sharing Agreement.

[37] There is conflicting evidence between the parties with respect to the oral agreements that may have been entered into, and the terms of those agreements. In Verbeek v. Kooner, 2021 ONSC 7863, this court set out the principles to be applied where a case is based solely, or principally on the oral evidence of the parties:

a. the standard of proof applicable to competing versions of an event is whether it is “more likely than not” that the alleged event occurred as proffered by the plaintiff;

b. the trial judge must scrutinize the evidence with care. There is no differing level of scrutiny or care that applies depending on the seriousness of the case;

c. a witness’s statement should be scrutinized in light of, and in conjunction with, all of the other evidence; and

d. Evidence must be sufficiently clear, convincing, and cogent to satisfy the balance of probabilities test. There is no objective standard to measure sufficiency. The judge is faced often with evidence of events that are alleged to have occurred many years before, where there is little other evidence than that of the plaintiff and the defendant. […]: at para. 87.

[38] In Rosehaven Homes Limited v. Egudkina, 2023 ONSC 4464, the court noted that where there are conflicting explanations which cannot be tested through cross-examination, the case may not be appropriate for summary judgment:

[….] Pursuant to r. 76.04(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, cross-examinations are not permitted in an action brought under the simplified procedure. This is a hard and fast rule, with judges afforded no discretion to order cross-examinations.

The failure to close the transaction goes to the heart of the Plaintiffs’ case. There are conflicting explanations as to why the contract was breached. Despite the able submissions of Plaintiffs’ counsel, with the evidence in support of each party’s position remaining untested by cross-examination, I find this is not an appropriate case in which summary judgment should be granted. There are genuine issues requiring a trial: at paras. 18, 20.

[39] In my view, the evidence with respect to the terms of the Dundas Agreement is not “sufficiently clear, convincing and cogent” to satisfy the balance of probabilities test. The parties do not agree on the basic terms of the agreement. Denis argues that he was to receive $200 per client, and MMC argues that the profit from the Dundas Office was to be shared on a 50-50 basis. The determination of the issue will come down to the credibility of the parties. The evidence of the parties could not be tested on cross-examination.

[40] Denis argues that conflicting evidence of the parties is with respect to non-material issues. He states that the summary judgment motion can be decided on the basis that MMC issued a T4A in the amount of $109,568.65 of which $100,000 was not paid to him. He states that this is clear documentary evidence that he earned the amount of $109,568.65 through his work for MMC at the Dundas Office.

[41] I am not satisfied that the T4A issued by MMC proves Denis was an employee or is entitled to this amount. As noted by the Employment Standards Officer, a T4A is consistent with a profit-sharing arrangement and not employment. The cheques from MMC dated February 5, 2019, and March 8, 2019, totaling $9,568.55, state on their face that the payment was for a share of the profits.

[42] MMC argues that the T4A sets out the amount Denis would receive if all MMC invoices were paid pursuant to the ESRA and the Marketing Agreement. MMC further argues that as a result of the non-payment of the invoices, there was no profit to distribute. It is the position of MMC that once it is paid the amounts owing, Denis will receive his share of the profits.

[43] I also note that Denis did not submit any invoices to MMC for the work he states he did pursuant to the Dundas Agreement. In my view, lack of invoices supports MMC’s position that the arrangement between the parties was not to reimburse Denis for the work he did, but instead to distribute the profits generated by the sales office on a 50-50 basis.

[44] I am of the view that there are too many outstanding issues between the parties to have confidence in deciding the matter on a summary judgment motion. There is very little documentary evidence with respect to the terms of the agreement. The terms of the oral Dundas Agreement will turn on the credibility of the affiants. There are no cross-examinations on affidavits to assist in determining the credibility of the parties.

Conclusion

[45] I conclude that there are genuine issues that require a trial. There are disputed facts and issues of credibility. The evidence of the parties could not be tested through cross-examination. As a result, I am unable to make the “necessary findings of fact or apply the legal principles to reach a just and fair determination”: Hryniak, at para. 51. Given the disputed facts and credibility issues involved in this case, I find that the use of the fact-finding powers set out in R. 20.04 (2.1) and (2.2) of the Rules of Civil Procedure will not lead to a fair and just result.

[46] I find that the summary judgment procedure is not the “more proportionate, expeditious or less expensive means to achieve a just result”, and that the interests of justice are better served by having the matter proceed to trial in the normal course: Hryniak, at para. 64.

Issue # 3 – The Dismissal of the Counterclaim brought by MMC.

[47] The parties consent to an order dismissing the counterclaim brought by MMC against Denis, Stephen, Barbara Elliot and Checkpoint. The Defendants by counterclaim are seeking their costs of defending the counterclaim.

[48] The Statement of Defence and Counterclaim is dated May 10, 2019. The counterclaim consists of 19 paragraphs. The Defendants by counterclaim delivered a Reply and Defence to Counterclaim dated June 8, 2021. The Defence to Counterclaim consists of 26 paragraphs. MMC provided a notice of its intention to abandon its Counterclaim on May 9, 2023. The Defendants by counterclaim argue that it had expended significant costs before being advised that MMC was abandoning the counterclaim. MMC notes that it provided notice that the Counterclaim was abandoned before the Defendants to counterclaim prepared a factum.

[49] I am satisfied that the Defendants by counterclaim are entitled to their costs of defending the counterclaim up to the date they received notice from MMC that the counterclaim was abandoned. The issue with respect to the amount of costs shall be determined in writing.

DISPOSITION

[50] The Plaintiff’s summary judgment motion is dismissed.

[51] The Supreme Court in Hryniak, at para. 78, directs that in dismissing a summary judgment motion, I must consider whether there are any compelling reasons that I should not remain seized of the matter. As a result of hearing the motion and writing this endorsement, I am familiar with the factual and legal issues in the case. I am of the view that the time to get a new judge up to speed is not justified given the amounts in issue. There are no compelling reasons for me not to remain seized and preside over the trial.

[52] This action is subject to the simplified procedure. R. 76.12 provides that a simplified procedure matter may proceed by way of a summary trial. Under r. 76.10(6), if the parties do not agree to proceed to a summary trial, the pre-trial conference judge may determine the mode of trial that is appropriate in the circumstances.

[53] The parties are directed to contact the trial office to arrange a case conference before me to address the issues of mode of trial, and trial scheduling.

[54] The Defendant is successful on the summary judgment motion and is presumptively entitled to its costs. If the parties are unable to agree on costs, the issue will be determined in writing. The Defendant may deliver its written costs submissions with 15 days of the date of this endorsement. The written submissions shall not exceed 5 pages, excluding offers to settle and caselaw. The Plaintiff may deliver his written cost submissions, on the same basis, within 15 days of receiving the Defendants’ cost submissions. The written cost submissions will be with respect to both the costs of the summary judgment motion, and the costs with respect to abandoning the Counterclaim.

Chalmers J. Date: January 16, 2024