



COURT OF APPEAL FOR ONTARIO

CITATION: Northern Industrial Services Group Inc. v. Duguay,
    2016 ONCA 539

DATE: 20160707

DOCKET: C61019

MacPherson, Cronk and Benotto JJ.A.

BETWEEN

Northern Industrial
    Services Group Inc.

Plaintiff/Defendant by
    Counterclaim/

(Appellant)

and

Maurice Duguay Sr.
, Maurice Duguay Jr., Docithee Rondeau

and
    2362969 Ontario Inc. c.o.b. as DSI Services

Defendants (Respondent)

Bob Yu, for the appellant

Sylvano A. Carlesso, for the respondent

Heard: July 5, 2016

On appeal from the judgment of Justice Robin Y. Tremblay of
    the Superior Court of Justice, dated July 29, 2015.

By the Court:

[1]

The appellant, Northern Industrial Services Group Inc. (NISG), appeals
    from the summary judgment granted by the motion judge in favour of the
    respondent, Maurice Duguay Sr. (Duguay Sr.), whereby the motion judge: i)
    dismissed NISGs action as against Duguay Sr. for damages for breach of
    contract and fiduciary duty; and ii) granted Duguay Sr.s counterclaim for
    $274,900, plus interest, for monies owed to him by NISG under a share purchase
    agreement, and costs.

[2]

For the reasons that follow, we conclude that the appeal must be
    dismissed.

I.        Background in Brief

[3]

For many years, Duguay Sr. owned and operated a company in Timmins that
    engaged in commercial and industrial high pressure washing, vacuuming and
    associated services.  He employed his son, Maurice Duguay Jr. (Duguay Jr.),
    in the business for about 11 years.

[4]

On September 28, 2011, as he was approaching retirement, Duguay Sr.
    entered into a written share purchase agreement (the Share Purchase
    Agreement) with a predecessor company to NISG whereby he sold all his shares
    in his company for the aggregate amount of $550,000.  The purchase price was
    payable in three instalments over two years: i) $100 on closing; ii) $274,950
    on September 28, 2012; and iii) the remaining sum of $274,950 on September 28, 2013.

[5]

The Schedules to the Share Purchase Agreement included a non-competition
    agreement, signed by Duguay Sr. in favour of NISG.  As relevant to this appeal,
    it provided that, for a period of four years, Duguay Sr. could not, directly or
    indirectly, engage in or aid, assist or abet others in engaging in any
    business, conduct or activity in competition with [NISG].  Neither Duguay Jr. nor
    DSI were parties to the non-competition agreement.

[6]

After the closing of the share purchase transaction, Duguay Jr. remained
    in  NISGs employ for approximately 18 or 19 months.  In the spring of 2013, he
    quit his job with NISG and, together with a partner, incorporated the defendant
    2362969 Ontario Inc. to carry on a rival commercial and industrial washing
    enterprise under the name DSI Services (DSI).

[7]

NISG paid the first two instalment payments to Duguay Sr. due under the
    Share Purchase Agreement.  However, it failed to make the third and final
    payment of $274,950 due on September 28, 2013.  Instead, on the same day, it commenced
    proceedings against Duguay Sr., Duguay Jr., DSI and others, claiming, as
    against Duguay Sr., that he had breached the terms of the non-competition
    agreement by funding Duguay Jr. and DSI, and by providing real and personal
    property to Duguay Jr. and DSI for use in DSIs competing business.  It also
    sought damages for breach of fiduciary duty, although this claim, as pleaded,
    appears to have been in the alternative.

[8]

Duguay Sr. denied these allegations.  When the dispute could not be
    resolved, Duguay Sr. defended the action and, in turn, counterclaimed against
    NISG for the outstanding payment owed to him under the Share Purchase Agreement
    for the purchase of his shares.  In late February 2014, he moved in the
    Superior Court of Justice for summary judgment dismissing the main action as
    against him and granting judgment in his favour on the counterclaim.  His
    co-defendants did not join in the motion.

II.       Issues

[9]

NISG attacks the motion judges decision on multiple grounds.  In
    essence, it argues that the motion judge misapprehended the governing test for
    summary judgment, made factual findings that are either unsupported by or
    inconsistent with the evidentiary record, failed to resolve ambiguities that he
    held existed in certain of the evidence relied on by NISG and further failed to
    properly assess the evidence relating to NISGs claimed damages.  Its arguments
    on appeal are confined to its breach of contract claim against Duguay Sr.

[10]

We reject these arguments for the following reasons.

III.       Discussion

(1)

Liability

[11]

We see no basis on which to fault the motion judges approach to or
    application of the test for summary judgment.

[12]

After setting out the undisputed background facts and the parties
    positions on the motion, the motion judge turned directly to the principles
    governing motions for summary judgment.  He referenced
Hryniak v. Mauldin
,
    [2014] 1 S.C.R. 87, [2014] S.C.J. No. 7, and set out in some detail, at paras.
    14-18 of his reasons, the roadmap to a motion for summary judgment outlined
    in
Hryniak
by the Supreme Court.  He then noted, correctly, at para.
    19:

The moving party must lead evidence that there is no genuine
    issue requiring a trial, demonstrating that a trial is unnecessary to truly,
    fairly and justly resolve the issues.  It is only after the moving party has
    met its onus that the burden shifts to the responding party to show that there
    is a genuine issue requiring a trial.  [Citations omitted.]

[13]

The motion judge did not err in his description of the principles
    applicable to the determination whether to grant summary judgment.  His reasons
    confirm that he understood the legal test for summary judgment and applied it
    to the facts as he found them.

[14]

And it is in the latter regard that NISGs challenge to the motion
    judges decision founders.  Contrary to NISGs submission, the motion judges
    critical factual findings were amply supported by the evidentiary record.  They
    included the following:

(1)

The
    funds alleged by NISG to have been provided by Duguay Sr. to his son to fund
    DSI (a total of $40,000 advanced by Duguay Sr. between April 21, 2013 and June
    4, 2013), formed part of monies paid by Duguay Sr. to Duguay Jr. in recognition
    of the latters many years of service with his fathers company;

(2)

Duguay
    Sr. promised to pay these, and other funds, to his son prior to the creation of
    DSI, at a time when Duguay Jr. was still working for NISG;

(3)

As
    admitted by Alan Perello, the principal of NISG, on his cross-examination,
    NISGs claim that the payments in issue were intended by Duguay Sr. to fund DSI
    was based on rumours.  NISG had no hard facts to support the claim;

(4)

Although
    NISG maintained that Duguay Sr. and Duguay Jr. admitted in a recorded
    conversation on September 30, 2013 that Duguay Sr. provided funding to DSI, the
    alleged admissions were not clearly made.  To the contrary, the statements in
    question were far from clear and subject to interpretation;

(5)

Duguay
    Sr. provided a detailed breakdown of how his son expended the monies given to
    him by his father, establishing that they were used to pay for his sons
    personal expenses, including the expenses of his matrimonial separation;

(6)

In
    particular, there was no evidence proffered by NISG demonstrating that Duguay
    Sr. provided money to his son for the specific purpose of funding DSI or with
    the knowledge that the money furnished by him would be used to fund DSI; and

(7)

Similarly,
    no breach of the non-competition agreement by the provision of property or
    assistance to DSI by Duguay Sr. was established on the whole of the evidence. 
    The only relevant evidence in this regard reflected normal assistance, of a
    limited and transitory nature, that might be expected between a father and son,
    rather than a larger pattern of continuing provision of property or other assistance
    to DSI.

[15]

As we have said, these key findings were firmly anchored in the
    evidentiary record.  They are dispositive of the issue whether Duguay Sr.
    breached the terms of the non-competition agreement.

[16]

Having found that certain of the evidence relied on by NISG to prove its
    breach of contract claim was ambiguous or inconclusive, the motion judge was
    not obliged to undertake detailed credibility assessments or to resolve the
    ambiguities in question.  It was sufficient to establish Duguay Sr.s
    entitlement to summary judgment to find, as the motion judge did, that NISG
    owed the debt in question under the Share Purchase Agreement and that NISG had
    failed to put its best foot forward on the motion by adducing clear and
    reliable evidence of Duguay Sr.s breach of the non-competition agreement.

[17]

Perhaps most telling, in this regard, was Mr. Perellos own admission,
    binding on NISG, that he had no firm facts but, rather, only rumours to support
    NISGs breach claim.  Suspicions alone cannot establish breach of contract.

(2)

Damages

[18]

As we see no basis for appellate interference with the motion judges
    holding that Duguay Sr. did not breach the non-competition agreement, no issue
    of set-off of NISGs alleged damages arises.  For the same reason, it is
    unnecessary to address NISGs argument that the motion judge erred in his
    assessment of the evidence regarding NISGs damages claim.  Similarly, as the
    appeal must be dismissed, we do not reach NISGs request for a stay of the
    judgment granted on Duguay Sr.s counterclaim.

[19]

We note that the summary judgment granted by the motion judge pertains
    only to Duguay Sr. NISGs action against the other defendants has not been
    dismissed.  Should that action proceed, it will be open to NISG to advance
    those arguments that it regards as appropriate, in the normal course.

IV.      Disposition

[20]

The appeal, therefore, is dismissed.  Duguay Sr. is entitled to his
    costs of the appeal, fixed in the amount of $16,950, inclusive of disbursements
    and H.S.T.

Released:

JCM                                                            J.C.
    MacPherson J.A.

JUL 7 2016                                       E.A.
    Cronk J.A.

M.L.
    Benotto J.A.


