



COURT OF APPEAL
    FOR ONTARIO

CITATION:
Precious
    Metal Capital Corp. v. Smith, 2012 ONCA 298

DATE: 20120508

DOCKET: C54301

Rosenberg, Juriansz
    and Rouleau JJ.A.

BETWEEN

Precious Metal Capital Corp.

Plaintiff
    (Appellant)

and

Gregory Charles Smith, Taghmen Ventures Limited,
    NHG Capital Limited, Gregory Jack Peebles, Haviland Management Inc., Haviland
    International Resources Inc. Limited aka Haviland International Resources
    Limited, Euro Americas Securities Limited, International Consolidated Minerals
    Limited, and Platinum Diversified Mining Inc.,
Platinum
    Partners Value Arbitrage Fund, L.P., Mark Nordlicht and Ancash Mining Ltd.

Defendants (
Respondents
)

AND BETWEEN

Gregory Charles Smith, Taghmen Ventures Limited,
    NHG Capital Limited, International Consolidated Minerals Limited, International
    Consolidated Minerals Inc. (formerly Platinum Diversified Mining Inc.,) and
    Euro Americas Securities Limited

Plaintiffs by Counterclaim (Respondents)

and

Precious Metal Capital
    Corp., Steven Babcock, Gary Sugar, George H. Babcock, Babcock Consulting
    Limited and Plataperu Resources Inc.

Defendants to the Counterclaim (Appellants)

Morris Manning, Q.C. and David Roebuck, for the
    appellants

Matthew Milne-Smith, for respondents
Platinum Partners Value
    Arbitrage Fund, L.P., Mark Nordlicht and Ancash Mining Ltd.

Heard: January 30, 2012

On appeal from the judgment of Justice Peter A. Cumming
    of the Superior Court of Justice dated September 2, 2011, with reasons reported
    at 2011 ONSC 2962, 72 E.T.R. (3d) 69.

Juriansz
    J.A.:

[1]

This is an appeal from the order of Cumming J. dated September 2, 2011, granting
    summary judgment to the moving parties, Platinum Partners Value Arbitration
    Fund L.P., Mark Nordlicht and Ancash Mining Ltd. (known collectively as the Ancash
    defendants). The Ancash defendants were three of 12 defendants in the initial action.

[2]

The appellant, Precious Metal Capital Corp. (PMCC), is an Ontario
    company with the object of locating, acquiring and developing precious metal
    mining opportunities in South America. The success of its action against the
    Ancash defendants depends on it establishing that the defendant Gregory Jack
    Peebles breached his fiduciary duty to PMCC and committed a breach of
    confidence. PMCC claims relief against the Ancash defendants on the basis of
    their knowing assistance in Peebles breach of trust, and for conspiracy and
    unjust enrichment. Likewise, the success of the Ancash defendants summary
    judgment motion depends on them establishing that there is no liability on the
    part of Peebles.

[3]

PMCC claims that it retained Peebles, first verbally in early January
    2005 and subsequently by written agency agreement dated May 20, 2005, to raise
    financing for three mining properties: San Luis, Millotingo and Pachapaqui. It
    claims it shared confidential information about Pachapaqui in the course of
    retaining him. PMCC asserts that Peebles retainer as agent and the confidential
    information he received created a fiduciary relationship that he breached by
    acquiring Pachapaqui for himself.

[4]

It is common ground that PMCC engaged Peebles in regard to San Luis and
    Millotingo. The heart of the dispute is whether he was also engaged in regard
    Pachapaqui.

[5]

Peebles and his partner and companies, the defendants Gregory Smith,
    Haviland Management Inc. and Haviland International Resources Inc., bought
    Pachapaqui from its owner Plata-Peru, and sold it to the Ancash defendants.
    Peebles assembled a deal in which International Consolidated Minerals Limited
    (ICM) would acquire all three properties (Pachapaqui from the Ancash defendants
    and San Luis and Millotingo from PMCC) in exchange for shares. ICM did not
    close the deal when it learned that PMCC did not own San Luis and Millotingo.
    PMCC then commenced this action.

(1)

Decision of the motion judge

[6]

The motion judge began his analysis by observing that PMCC's claim
    against the Ancash defendants was derivative of its claim against the
    defendants Peebles, Smith, Haviland Management Inc. and Haviland International
    Resources Inc. He asked: [i]s there a genuine issue requiring a trial with
    respect to whether PMCC retained Haviland [Management Inc.] (
i.e.
Mr.
    Peebles) to help PMCC purchase Pachapaqui and did Mr. Peebles owe and breach a
    duty of confidence to PMCC in that regard? He found that a trial was not
    required to decide the question and awarded summary judgment to the
    respondents.

[7]

The record before the motion judge included the direct evidence of two
    witnesses, Gary Sugar and Stephen Babcock, that there was an agency
    relationship between PMCC and Peebles which obligated Peebles to help PMCC
    acquire Pachapaqui. However, the motion judge found that the agency
    relationship the two witnesses claimed existed cannot exist in law on the
    facts before me, given the strength of the documentary evidence, together with
    the evidentiary record as a whole, in contradicting Messrs. Sugar and Stephen
    Babcock.

(2)

Test for summary judgment

[8]

The summary judgment motion below was decided before this courts
    decision in
Combined Air Mechanical Services v. Flesch
, 2011 ONCA 764, 108 O.R. (3d) 1
. In
Combined
    Air
,
this court
    articulated the test to be applied on a summary judgment motion under the
    amended Rule 20. The question whether there is a genuine issue requiring a
    trial must be answered in light of whether a full trial is required for the
    judge to get a full appreciation of the evidence and issues required to make dispositive
    positive findings. The ultimate question is whether a trial is required in the interest
    of justice.

[9]

The court indicated that the full appreciation test would likely be
    met in cases that are largely driven by documents, in which testimonial
    evidence and contentious factual issues are limited:
Combined Air
, at
    para. 52. The test is unlikely to be met in cases in which there are multiple
    factual issues involving conflicting evidence from a number of witnesses and a
    voluminous evidentiary record (para. 51).

(3)

Discussion

[10]

This
    is a case in which there is a voluminous evidentiary record and conflicting
    evidence from a number of witnesses. Nevertheless, the
Combined Air
formulation of the summary judgment test is met in this case. The record
    enabled the application judge to have a full appreciation of the evidence and
    issues required to make the findings he did.

[11]

The
    voluminous evidentiary record in this case is due to the complexity of the transactions
    and the relationships among the parties. However, relatively few documents bear
    on the one issue on which the case turns: whether Peebles was retained by PMCC
    as its agent to purchase, or finance the purchase of, Pachapaqui on its behalf.

[12]

In
    this case there is conflicting evidence from a number of witnesses. However,
    most of the points of disagreement among the witnesses are minor or are about
    issues that are not material. The only material conflict relates to the one
    issue stated above. Gary Sugar and Steven Babcock assert that PMCC retained
    Peebles as an agent and provided him with confidential information to acquire
    Pachapaqui on its behalf, while Peebles denies that.

[13]

The
    motion judge was well aware that credibility findings should not be made on a
    summary judgment motion and he studiously avoided doing so. Despite the
    conflicting affidavit evidence, he was still able decide that a trial was not
    required to determine whether Peebles was an agent for PMCC in acquiring
    Pachapaqui, without making findings about the credibility of the witnesses. He
    did so by concluding that the testimony of Gary Sugar and Steven Babcock would
    be insufficient in law to establish the plaintiffs claim given the strength
    of the documentary evidence, together with the evidentiary record as a whole,
    in contradicting [them] in their assertion.

[14]

This
    was a determination he was entitled to make. If the action had proceeded to
    trial, PMCC would have borne the burden of proving it retained Peebles as agent
    to acquire an interest in Pachapaqui and that it provided him with confidential
    information. The assertions of Gary Sugar and Steven Babcock were the only
    evidence offered to support these claims. As the motion judge demonstrated in
    his careful analysis, all of the documentary and other evidence pointed in the
    opposite direction. In the face of the facts established by the documentary and
    other evidence, including the evidence of the actions and communications of Gary
    Sugar and Steven Babcock themselves, it was open to the motion judge to
    conclude that the plaintiff could not obtain judgment in its favour at trial.
    On all the evidence in the record, PMCC simply could not fulfill its burden of
    proving that it retained Peebles as agent and provided him with confidential
    information to acquire Pachapaqui on its behalf.

[15]

I
    need not repeat the motion judges careful analysis of the evidence in the
    record. I would merely highlight a few facts.

[16]

One,
    Peebles acquired no confidential information about Pachapaqui from PMCC.
    Plata-Peru, the former owner of Pachapaqui, disseminated information about the
    mine to potential investors and buyers. Any information about Pachapaqui that
    Peebles learned from Steven Babcock or Gary Sugar was not confidential
    information that belonged to PMCC but information Plata-Peru had disseminated
    throughout the mining community.

[17]

Two,
    as the motion judge said, any aspiration on the part of PMCC to acquire
    Pachapaqui was wishful fantasy. PMCC's only assets were in relation to San
    Luis and Millotingo. As the motion judge found, PMCC misrepresented both to the
    Peebles group and to ICM, the ultimate purchaser of Pachapaqui, that it owned
    the San Luis and Millotingo properties. In fact, it held options that had gone
    into default. PMCC was in no position to acquire Pachapaqui.

[18]

Three,
    the agency agreement, which contained an entire agreement clause, did not
    mention Pachapaqui. The evidentiary record enabled the motion judge to find, as
    he did, that the amount of financing contemplated by the agreement realistically
    relates to development of the San Luis and Millotingo properties, that
    Peebles entitlement to remuneration was not tied to Pachapaqui, and that the amount
    of remuneration the agreement provided was inconsistent with the addition of
    Pachapaqui to the venture.

[19]

Four,
    as the motion judges review of the evidence shows, PMCC was well aware that
    Peebles was acquiring Pachapaqui on his own account. Steven Babcock was an
    officer and director of Plata-Peru and was fully apprised of the Peebles
    groups initiative to purchase Pachapaqui. His actions and communications are
    not consistent with PMCC being an undisclosed principal behind Peebles
    proposal. In fact, had PMCC been an undisclosed principal, Steven Babcock would
    have been in a conflict of interest.

[20]

For
    these reasons, I would conclude that the record enabled the application judge
    to have a full appreciation of the evidence and issues, and that there is no
    basis for interfering with his decision that a trial is not necessary to
    conclude that PMCC cannot establish its claim that Peebles was its agent in
    acquiring Pachapaqui. Without establishing that claim, PMCCs action against
    the respondents cannot succeed.

(4)

Conclusion

[21]

I
    would dismiss the appeal and fix the respondents costs in the amount of
    $15,000.00 including disbursements and applicable taxes.

R.G. Juriansz J.A.

I agree M. Rosenberg
    J.A.

I agree Paul Rouleau
    J.A.

Released:
May 8, 2012


