



COURT OF APPEAL FOR ONTARIO

CITATION: Norton McMullen Consulting Inc. v. Boreham, 2016
ONCA 778

DATE: 20161024

DOCKET: C61089

Hoy A.C.J.O., Benotto and Huscroft JJ.A.

BETWEEN

Norton McMullen Consulting
Inc.,
and
Paul Simpson

Plaintiffs (Respondents)

and

Paul Boreham
,
401 Energy Ltd.,

MFOP Wind Power
Ltd.
and
Last Chance Wind Power Corp.

Defendants (Appellants)



and

Attorney General of
Ontario

Intervener

AND BETWEEN

Paul Boreham, 401 Energy
Ltd., MFOP Wind Power Ltd. and Gateway Wind Farms Development Inc.

Plaintiffs (Appellants)

and

Norton McMullen & Co. LLP, Paul Simpson
and Rob Gilroy

Defendants (Respondents)



H. Scott Fairley and N. Joan Kasozi, for the appellants,
Paul Boreham, 401 Energy Ltd., MFOP Wind Power Ltd.

Lisa C. Munro, for the respondents, Norton McMuller
Consulting Inc., Paul Simpson and Rob Gilroy

Karen Phung and Michael Shell for the respondents, Norton
McMuller Consulting Inc. and Paul Simpson

Heard: October 7, 2016

On appeal from the judgment of Justice Edward M. Morgan
of the Superior Court of Justice, dated October 16, 2015.

ENDORSEMENT



[1]

This appeal was dismissed, with reasons to follow. These are those
reasons.

[2]

The appellants were involved in two separate actions. They were
plaintiffs in one and defendants in the other. They sought to consolidate the
two actions.  However, the respondents successfully moved for summary judgment
against the appellants in the action they were defending. The motions judge
then declined to consolidate the actions since there was only one action left.
The appellants seek to have the two actions remitted to trial and consolidated.

[3]

The respondent Norton McCullen Consulting Inc (NMC) sued the appellant
Paul Boreham and his associated companies (collectively, Boreham) for amounts
owing under two agreements between the parties: a Consulting Agreement and a
Letter of Credit Agreement. In a separate action, Boreham sued Norton McMullen
& Co. LLP (NMA), an accounting firm of which NMC is an offshoot, for
negligence and breach of fiduciary duty.

[4]

The events that gave rise to these actions concerned a business venture
(the Project) in which Boreham sought to exploit the Ontario provincial
governments Feed-in Tariff (FIT) program for wind power, more specifically a
bonus component of the FIT program called the Community Price Adder. The
Project involved several companies, the corporate and shareholding structures
of which he designed to comply with what he believed to be the requirements for
access to the Community Price Adder. At the time of his corporate planning,
Boreham believed that the only requirement was to have majority shareholding by
local investors. Therefore, he incorporated ten project companies, selling
51% of the shares of each to local investors and  retaining the remaining 49%
of the shares, as well as the revenue from the share sales, in his controlled
holding company, 401 Energy Ltd. (401). However, he later learned that the
Community Price Adder required not only that the local investors own the
majority of the shares, but also that they have 50% of the real economic
interest.  The Project did not qualify because the local investors real
economic interest was limited to the aggregate of $4.3 million they paid for
their shares and the total development cost for the Project was $200-250
million.

[5]

In 2009, while still operating under a mistaken understanding of the
Projects regulatory architecture, Boreham retained Paul Simpson, a partner at
NMA, with a mandate to obtain investors for the Project. Boreham had previously
retained NMA for tax accounting services. In March 2010 the Consulting
Agreement in issue was signed. It provided that Simpson, through NMC would seek
to find potential investors. A scale of fees was included that depended upon
the selling price secured.

[6]

Boreham then required $500,000 to post as performance security for his
FIT contract with the provincial government. Simpson agreed to post a letter of
credit personally and the Letter of Credit Agreement at issue was signed.

[7]

Boreham received legal advice with respect to both the Consulting
Agreement and the Letter of Credit Agreement.

[8]

Eventually, with Borehams involvement, Simpson and Borehams lawyer negotiated
a sale of the equity in the  Project.

[9]

NMC and Simpson sued Boreham for amounts owing on the Letter of Credit
and the Consulting Agreement and moved for summary judgment. Boreham argued
that the agreements were unenforceable. The motion judge disagreed, granted summary
judgment and dismissed the motion to consolidate. Borehams action against MN
and Simpson remains outstanding.

[10]

The appellants submit that the motion judge erred in granting summary
judgment because:

(1)

This was not an appropriate case
for summary judgment;

(2)

The Consulting Agreement and the
Letter of Credit Agreement are unenforceable because they are in substance loan
agreements and impose interest contrary to s. 347 of the
Criminal Code
and were procured in violation of the fiduciary duty that Simpson owed to
Boreham and other equitable principles;; and

(3)

Boreham was not personally
liable to NMC.

[11]

We do not accept these submissions.

[12]

We agree with the motions judge when he described the action as a
document-driven case. The parties communicated with each other by email; they
documented all of their agreements through lawyers; and there were no real credibility
issues. The transactions between the parties involved the enforcement of
carefully negotiated, thoroughly lawyered, and unambiguously drafted contracts
(Reasons, at para. 77). This was precisely the type of case that should be
determined by way of summary judgment.

[13]

The motions judge found that the Letter of Credit Agreement was an
investment agreement and not a loan agreement and that no circumstances giving
rise to a fiduciary duty existed. He also found that Boreham was a party to
both agreements in a personal capacity. There is no basis to interfere with
these findings.

[14]

The appellants did not plead or argue below that the Consulting
Agreement was in substance a loan agreement and that the effect of the success
fee that it provided for was to impose interest contrary to s. 347 of the
Criminal
Code.
This is a sufficient basis to reject this argument on appeal. In any
event, the Consulting Agreement is, as it is entitled, an agreement for the
provision of services and is not, in substance, a loan agreement. The fact
that, in face of Borehams cash-flow problems, Simpson agreed to defer hourly
fees and accept a success fee did not convert the Consulting Agreement into a
loan agreement.

[15]

The appellants also argue that: through the arrangement created by the
Consulting Agreement, Simpson became Borehams agent; as a result, Simpson owed
Boreham a fiduciary duty or other equitable principles were triggered; and Simpson
breached that duty or those equitable principles when he negotiated the Letter
of Credit Agreement, which, Boreham argues, is overly favourable to Simpson. The
appellants did not plead that Simpson acted as Borehams agent, and it is not
clear that this was argued below. But the argument in any event fails in face
of the motion judges finding as to the nature of Simpson and Borehams working
relationship. He wrote, at para. 38, that  the documentation shows Boreham to
have been involved in instructing Simpson and approving or rejecting various
proposals at every step. As the motion judge concluded, there was no basis to
impose a fiduciary duty on Simpson.

[16]

The appeal is dismissed with costs payable to NMC and Simpson fixed at
$25,000; and to NMA with costs fixed at $8,000. All costs are inclusive of
disbursements and HST.



Alexandra
Hoy A.C.J.O

M.L. Benotto
J.A.

Grant Huscroft
J.A.


