





CITATION:
NewPoint Capital
          Partners Inc. v. Diena, 2011 ONCA 394





DATE:
          20110519



DOCKET: C53110



COURT OF APPEAL FOR ONTARIO



MacPherson, Armstrong and Karakatsanis JJ.A.



BETWEEN



NewPoint Capital Partners Inc.



Plaintiff (Respondent)



and



Daniel Diena, Emmanuel Diena
, Parkway Pharmacy
          Inc., Methadrug Clinic Limited, Union Medical Pharmacy Inc., and 68235
          Ontario Limited



Defendant (
Appellants
)



Jane Sirdevan, for the appellants



Peter W.G. Carey and Meagan J. Swan, for the respondent



Heard
: May 18, 2011



On appeal from the judgment of Justice P. Theodore Matlow of
          the Superior Court of Justice, dated December 6, 2010.



ENDORSEMENT



[1]

In a judgment dated December 6, 2010, Matlow J. granted
    partial summary judgment to the plaintiff NewPoint Capital Partners Inc. (NewPoint)
    against the personal defendants Daniel Diena and Emmanuel Diena. The judgment
    was for $249,547.49 relating to a financing fee provided for in a contract
    between the parties. The motion judge also held that the balance of the plaintiffs
    claim relating to a so-called work fee needed to proceed to trial. The
    appellants appeal from the partial summary judgment component of the decision.

[2]

The Diena brothers retained NewPoint to assist them in
    securing financing for the acquisition of pharmacy businesses. Article 4.1 of
    the contract provided for NewPoint to receive fees for its services:

4.1 Fees

During the period we [NewPoint] are retained by the
    Purchaser [the appellants], or within six months thereafter, or longer by
    reason of continuing bona fide negotiations subsequent to the six month period,
    NewPoint will be paid the following:


Immediately
    upon the closing of each Acquisition
the Purchaser agrees to pay NewPoint a
    success fee (Success Fee) equal to 1% of the aggregate purchase price of the
    acquired entity; plus


Immediately upon raising capital
    to fund ongoing acquisitions
, NewPoint will be paid a fee equal to 1%
    of  senior debt committed, 2% of
    subordinated debt committed, and 3% of equity committed. Additionally, NewPoint
    will be issued equity warrants of the Purchaser equal to 5% of the fully
    diluted equity of the Target, at an exercise price per share equal to the per
    share value implied by the equity raise. In the event that there is no equity
    raise at the time of raising the initial capital, the parties to this agreement
    will determine an equity value in good faith. The warrant will be subject to
    standard terms and conditions and will have a term of three years.

[Emphasis
    added.]

[3]

On two occasions after the contract was executed,
    NewPoint secured substantial financing for the Dienas. On both occasions, the
    transactions did not close for reasons connected to the Dienas, not the
    prospective sellers. On the second occasion, NewPoint sought payment of a fee
    pursuant to Article 4.1 of the contract. The motion judge granted summary
    judgment for $249,547.49.

[4]

The Diena brothers essential submission is that
    Article 4.1 is ambiguous. It is unclear whether a fee is to be paid once
    NewPoint secured financing from a third party for the Dienas or, alternatively,
    whether the fee was to be paid only if the acquisition of a pharmacy business
    by the Dienas actually closed. In light of this ambiguity, a trial, including
    evidence about the parties intentions and communications, was necessary.

[5]

We disagree. Although the motion judges reasons are
    inadequate and do not meet the
Sheppard
standard, in our view the language of Article 4.1 is clear. Article 4.1, read
    as a whole, and in the context of the entire agreement, contemplates that
    payment of fees to NewPoint would occur at two different points in time. The
    first paragraph of Article 4.1 begins with the words immediately upon the
    closing of each Acquisition. The second paragraph of the article commences
    with immediately upon raising capital to fund ongoing acquisitions. Both
    paragraphs then provide for fees calculated in different ways. NewPoints bill
    for a fee after the second failed transaction fits four-square into the second
    paragraph of the article; it was a fee sought after NewPoint had raised $23.5
    million financing for the Dienas and the fee was calculated in accordance with
    the formula in the second paragraph.

[6]

In short, the contractual wording is clear and supports
    the motion judges decision granting partial summary judgment.

[7]

The appeal is dismissed. NewPoint is entitled to its
    costs of the appeal fixed at $5,000, inclusive of disbursements and HST.

J. C. MacPherson J.A.

Rob P. Armstrong J.A.

Karakatsanis J.A.


