



COURT OF APPEAL FOR ONTARIO

CITATION: Cosolo v. Geo. A. Kelson Company Limited, 2018 ONCA
    318

DATE: 20180328

DOCKET: C64150

Feldman, Pardu and Benotto JJ.A.

BETWEEN

Louie Cosolo

Plaintiff

(Respondent)

and

Geo. A. Kelson Company Limited

Defendant

(Appellant)

Geoff Hall and Patrick Pengelly, for the appellant

Patrick Monaghan and Michelle Fan, for the respondent

Heard: March 1, 2018

On appeal from the order of Justice Paul Perell of the Superior
    Court of Justice, dated July 5, 2017, with reasons reported at 2017 ONSC 4150.

REASONS FOR DECISION

[1]

Cosolo is an engineer who was employed by the appellant
    engineering firm
between 2005
    and October 30, 2015,
becoming a vice-president in
    July, 2011. During his employment, Cosolo acquired 43,000 Class E common shares
    of Kelson, which he sold to the company in August 2015 for $891,820. This
    amount was to be paid in ten installment payments of $89,182 each plus interest
    on the outstanding balance.

[2]

He received the first
    installment before resigning in October 2015, but in 2016, after he had become
    the CEO of a rival engineering firm, Kelson refused to make further payments.
    It alleged that Cosolo had breached his fiduciary duties by soliciting Kelson
    employees to join him at the rival engineering firm and by using Kelsons
    confidential information to compete against Kelson.

[3]

Cosolo sued Kelson for
    $802,638 plus interest for breach of contract. Kelson defended and asserted a right
    of setoff for damages for breach of fiduciary duty. When Cosolo moved for
    summary judgment, Kelson resisted, submitting that there were genuine issues
    for trial and that a proper adjudication of the case would require full
    discovery and a full trial. Although Kelson cross-examined on the affidavits
    filed in support of the summary judgment motion, it did not pursue additional documentary
    discovery before the summary judgment motion was heard.

[4]

The motion judge granted
    summary judgment to Cosolo for $750,000, after applying a discount rate of 7%
    to the outstanding debt. Both sides presented expert evidence on the discount
    rate, but neither was given the financial information that was requested from
    Kelson that would affect the rate.

[5]

The motion judge found that as
    vice-president of Kelson, Cosolo had access to sensitive, confidential and
    proprietary information about Kelson, and that Cosolo had a fiduciary
    relationship with Kelson. However, the motion judge found that Cosolo did not
    cause any harm to Kelson by any breach of fiduciary duty. He found that Cosolo
    did not use any confidential or proprietary information from Kelson, that the
    employees who left Kelson to work with Cosolos new employer did so on their
    own initiative, and that the two employees approached by Cosolo did not leave
    Kelson.

[6]

The appellant argues that the
    motion judge made palpable and overriding errors in finding that: (i) Cosolo
    did not breach his fiduciary duty by communicating with two current Kelson
    employees and that even if he did, the communications were meaningless
    breaches; (ii) Cosolo did not use any confidential or proprietary information
    from Kelson; and (iii) a discount rate between 6% and 8% was the best estimate
    of the present value of Cosolos claim.

[7]

The appellant claims that
    given the conflicting evidence on these points, these findings were not
    available on the summary judgment motion and can only be properl
y determined at a trial.
His
    position on the appeal is that the motion judge erred by granting summary
    judgment on the record before him, and not ordering a trial of the issues of
    breach of fiduciary duty by the respondent and the proper discount rate to be
    applied to the respondents claim.

[8]

The appellant submits, in effect, that a breach of fiduciary duty case
    such as this is in a special category that is not suitable for summary
    judgment, and therefore the motion judge should have declined to act on the
    evidence put before the court on the summary judgment motion. Instead he should
    have ordered a trial (or possibly one or more mini-trials) with full
    documentary discovery.

[9]

We do not agree with this submission. The motion judges conclusion that
    the respondent breached no fiduciary duty owed to his employer causing damage
    was amply supported by the evidence. There was nothing raised in the
    cross-examinations on the affidavits to suggest the need for any further
    exploration of either documentary or testimonial evidence to resolve any of the
    issues that the motion judge was asked to decide.

[10]

In other words, there was no genuine issue for trial raised on the
    record. Nor is breach of fiduciary duty a special category that is not amenable
    to summary judgment where no genuine issue for trial is raised.

[11]

Further, there is therefore nothing in this record to suggest that there
    may be other relevant evidence that would have affected either the decision of
    the motion judge whether to grant summary judgment, or his decision on the
    merits. In any event, there was nothing that prevented the appellant from
    seeking further documentary production for the purpose of the motion.

[12]

The appeal is therefore dismissed, with costs in the agreed amount of
    $25,000, inclusive of disbursements and HST.

K. Feldman J.A.

G. Pardu J.A.

M.L. Benotto J.A.


