



COURT OF APPEAL FOR ONTARIO

CITATION: Jack Ganz Consulting Ltd. v.
    Recipe Unlimited Corporation, 2021 ONCA 907

DATE: 20211220

DOCKET: C68546

Feldman, Harvison Young and
    Thorburn JJ.A.

BETWEEN

Jack Ganz Consulting Ltd.

Plaintiff (Appellant)

and

Recipe Unlimited Corporation

Defendant (Respondent)

Patricia Virc and M. Michael Title, for
    the appellant

Ken Prehogan and Max Skrow, for the
    respondent

Heard: April 12, 2021, by video conference

On appeal from the judgment of Justice Sandra
    Nishikawa of the Superior Court of Justice, dated May 28, 2020, with reasons at
    2020 ONSC 3319.

By the
    Court:

A.

OVERVIEW

[1]

Jack Ganz Consulting Ltd. (JGC) brought a claim for breach of contract
    against Recipe Unlimited Corporation, formerly known as Cara Operations Limited
    (Cara). JGC claimed that the respondent, Cara breached its signed and
    executed consulting agreement of March 10, 2006 (the Agreement). JGC claimed damages,
    including damages for lost stock options, and common law reasonable notice on
    the basis that JGC was a dependent contractor.

[2]

Cara brought a motion for summary judgment. The motion judge granted the
    motion for summary judgment, dismissing JGCs action for breach of contract and
    failure to provide common law reasonable notice and other ancillary relief. We
    do not agree with the conclusion that there is no genuine issue requiring a
    trial.

[3]

While it is clear that until October 31, 2014 there
    was a contractual arrangement in effect between the parties to engage the
    services of JGC, it is not clear whether and to what extent the terms in the March
    10, 2006 Agreement were still in effect, save for the fact that JGC would
    continue to bill for its services on the terms set out in the Agreement.

[4]

We find there is a genuine issue for trial as to the terms of the contractual
    arrangement between the parties at the time JGCs services were terminated by
    Cara and the rights and obligations flowing therefrom.

[5]

Therefore, for reasons that follow, we would allow the appeal, set aside
    the summary judgment and remit the matter for trial.

B.

THE EVIDENCE

[6]

Jack Ganz was the principal of JGC which offered information technology (IT)
    services.

[7]

In March 2006, his firm was retained to assist Cara with IT
    infrastructure in accordance with the terms of a written consulting Agreement
    dated March 10, 2006.

The Relevant Terms of the
    2006 Agreement

[8]

The Agreement stipulated that JGC was an independent
    contractor who
would be paid an annual consulting fee of $420,000 to
    provide IT consulting services and an additional $250 per hour for each
    additional hour that services were required in excess of 180 hours.

[9]

The Agreement also provided that if Cara became a public corporation
    with shares listed on a public stock exchange and offered an employee equity
    incentive plan, JGC would have the opportunity to participate in the plan on
    the same terms and conditions offered to its other senior management level
    employees.

[10]

The
    Agreement contained an automatic renewal of the three-year term 
unless terminated prior to the expiration date in accordance with
    this Agreement
:

2.01
Term
. The term of this Consulting Agreement shall commence on the date hereof
    and shall continue for a period of three consecutive (3) years thereafter. This
    Agreement shall automatically be renewed for additional three consecutive (3)
    year terms unless terminated prior to the expiration date in accordance with
    this Agreement.

[11]

The relevant termination, amendment and waiver provisions in the Agreement
    are as follows:

5.03
Termination upon expiration
.
    Either party shall have the right to terminate this Agreement upon the expiration
    of three (3) years from commencement by written notice to the other to be given
    at least one hundred eighty (180) days prior to the expiration of this
    Agreement. Notwithstanding the foregoing, in the event that the Corporation
    terminates this Agreement, the Consultant shall have the right to extend this
    Agreement, with fees as detailed in section 2.01, for a further twelve (12)
    months following the date of expiration.

5.04
Continuing Obligations upon
    Termination
. [] The Corporation shall have no further obligations
    under this Consulting Agreement upon termination under Section 5.03 above,
    except to pay for services provided by the Consultant prior to termination.

[]

6.06
Amendments
    and Waivers
.    No amendment to this Consulting Agreement shall be
    valid or binding unless set forth in writing and duly executed by the parties.
    No waiver of any breach of any term or provision of this Consulting Agreement
    shall be effective or binding unless in writing and signed by the parties, nor
    shall any such waiver be deemed a waiver of similar or dissimilar provisions or
    conditions at the same or at any prior to subsequent time.

The Arrangement Between
    the Parties After August 2008

[12]

On August 29, 2008 (12 days before the deadline
    to give notice that the Agreement would not be renewed), Steve Smith,
    then-Chief Financial Officer of Cara, met with Ganz. According to Smith, the
    purpose of the meeting was to discuss the existing agreement and next steps
    with respect to that agreement because if Cara wanted to change the contract,
    it had to be done prior to six months otherwise it was an automatic renewal clause.

[13]

Following the meeting, Ganz sent an email to
    Smith advising him that,

It was a pleasure meeting with you today. I
    look forward to working with you and know the future is exciting. Let this
    email serve to remove the
auto renewal
from my contract. I look forward to
    our discussions, in early 2009, after the new HQ moves and Data Centre builds
    quiet down. [Emphasis in original.]

[14]

Ganz confirmed that the words auto renewal
    refer to s. 2.01 of the Agreement. He stated however that this served to remove
    all of s. 2.01 of the Agreement (including the first sentence, which provided
    that the agreement shall commence on the date hereof and shall continue for a
    period of three consecutive years thereafter). He therefore takes the position
    that this was an agreement of indefinite term, terminable on 180 days notice pursuant
    to s. 5.03.

[15]

Smith responded to Ganz on September 2, 2008 that,

I too look forward to discussing with you the
    terms of our new arrangement that will take effect after your current agreement
    with Cara comes to an end in March 2009.

[16]

On September 2, 2008, Smith also sent an email
    to Caras in-house counsel, confirming that he and Ganz discussed the March
    2009 expiration of the Agreement and the 6-month notice period to avoid
    automatic renewal, and that we will come to a mutually agreeable position on a
    new agreement closer to the expiration date. Smith advised that he had also told
    Ganz that there was an immediate need for a waiver of the automatic renewal
    clause as a result of Caras changing needs or for an equivalent notice letter
    from Smith to Ganz indicating that the current agreement would not be renewed
    under its current terms and would be allowed to expire.

[17]

In early 2009, the parties met to discuss the
    terms of a new arrangement. Smith sent an email to Ganz on January 26, 2009
    saying that the [c]urrent agreement between Jack and Cara expires as scheduled
    March, 2009 and summarizing terms for a new agreement. Smith asked Ganz to
    advise if there was anything that he missed and recorded that Ganz had no
    additional comments to add. No new agreement was signed.

[18]

Draft terms were again communicated in May 2010,
    and March 2012. The recitals in those draft agreements which were never signed
    provide that, the parties hereto and to the Original Agreement, hereby
    mutually agree that the Original Agreement terminated fully effective midnight
    March 5, 2010, save and except for the Continuing Obligations upon Termination
    set out in section 5.04 of the Original Agreement. Ganz struck all references
    to the Original Agreement from the draft agreements exchanged by the parties.

[19]

Throughout the eight-year relationship, Ganz
    submitted his invoices with the words: As per Agreement dated March-10-2006.

[20]

At one point, Cara suggested that Ganzs
    remuneration be reduced to approximately $10,416.66 per month and that his
    hours be reduced. However, the original amount set out in the Agreement
    continued to be paid to Ganz until 2014, when the services of JGC were no
    longer required.

Evidence From
    Cara Representatives as to Whether the Agreement Was Terminated

[21]

Smith left Cara in 2013. He was examined
    pursuant to r. 39.03 of the
Rules of Civil Procedure
, R.R.O. 1990,
    Reg. 194, by a Summons to Witness served by Cara.

[22]

When asked on examination, whether the Agreement
    was terminated, Smith said:

A. This is definitely part of the grey
    area.

Q. Part of the grey area. And what do you mean
    by grey area?

A.
I mean that the question would arise,
    was the original agreement terminated or not
? What role does Sean Reagan
    [sic] play going forward? What does the new agreement with Jack Ganz look like?
There were a number of open-ended things and we continued to move along
    business as usual until we sorted that out
. So we were in a very grey area
    as to where exactly we stood with respect to that contract. That's what I mean.



Q. The grey area was the Robinson instruction
    to keep Ganz in place.

A. And what that -- yes, and the ergo to that
    is what does that look like going forward and is it a continuation or is it a
    new contract or what is it? That was totally uncertain and Don left it that
    way. Our responsibility was to keep things going so we did in that time of
    uncertainty.

Q. So therefore, you and Mr. Ganz understood
    that post-March '09 nothing would change in relationship to his arrangements.

A. No, I can't say that. That's part of the
    grey area. I don't know. We were not given clarity from Don.
All Don said
    was, "Jack cant
leave the business. I
    understand, Steve, you need to cut costs. Find a way to work with Jack to keep
    him in the business and keep IT running and you two sort out what that might
    look like going forward
. [Emphasis
    added.]

[23]

Smith testified that Don Robinson, Caras
    President and Chief Executive Officer, wanted to ensure that Ganz remained in
    the business. He thought that Ganz added tremendous value to the business and
    that we should find a way of dealing with the cost of the contract.

[24]

Smith later testified that the termination of
    the Agreement and the development of a new agreement were inextricably linked.
    Smith agreed that it was a fine line to walk to try to modify Ganzs
    agreement without allowing or enabling Ganzs whole team to walk away at a
    crucial time. Neither he nor Robinson nor Regan wanted Ganz or his team to
    leave Cara.

[25]

Smith further testified that Sean Regan, Caras
    senior vice-president and principal shareholder, did not want anything changed in
    Ganzs contract at any time as Regan felt that Ganz was essential to the
    overall plan to build the company and become a public company.

[26]

In 2012, Sean Regan took over dealings with Ganz
    from Smith. On April 23, 2012, he sent an email to Caras general counsel discussing
    the possibility of a new arrangement with JGC. In that email, he stated that:

1.3 b. Although Jack does not have a contract
    (he actually does but he does not enforce it as he is too much of a gentleman),
    Cara should give him 6 months notice as Senior Technical Advisor before
    reverting to 2 days on this.

[27]

While there were discussions about changing the
    arrangement and reducing the time and consulting fees, no changes to the fee
    arrangement were made.

[28]

From the time the Agreement was entered into in March
    2006 to the time JGC was advised their services were no longer required in October
    2014, JGC invoiced Cara monthly for the $35,000 monthly fee set out in the
    Agreement. Throughout that time, all of JGCs invoices read, As per the
    Agreement dated March-10-2006. Cara continued to pay JGC $35,000 every month,
    as it would have under the Agreement.

[29]

Smith testified that Caras then CEO, Don
    Robinson was aware there was uncertainty as to whether the Agreement continued
    to govern the relationship but chose to leave it that way.

[30]

In October 2013, Cara Operations Ltd. merged
    with Fairfax Financial Holdings Inc. and new management was put in place.


Termination of
    the Relationship

[31]

In January 2014, Caras new chief financial officer,
    Kenneth Grondin advised Ganz that he understood that in 2014, Ganz had agreed
    to reduce his services and fees to approximately $10,000 per month.

[32]

Ganz disputed the termination of his arrangement
    and the attempts to reduce his hours. He wrote to Grondin that in his view the
    Agreement remained in force and effect and that he expected the terms therein
    to be honoured.

[33]

Grondin replied to say Caras records indicated
    that the Agreement had expired as of March 2009 and all of Caras obligations
    under the Agreement had been satisfied.

[34]

Nevertheless, JGC continued to send monthly
    invoices for the amount set out in the Agreement and Cara continued to pay the
    amounts set out in the Agreement.

[35]

On September 3, 2014, Grondin emailed Ganz
    confirming that Cara would no longer require JGCs services beyond October 31,
    2014.

[36]

In December 2014, the appellant commenced this
    Claim for damages.

[37]

In April 2015, Cara became a public corporation.
    Grants of options in the public corporation to Caras senior leadership team
    were ratified in December 2014.

JGCs Claims

[38]

JGC
    alleges that Cara terminated the Agreement in September 2014, shortly before
    going public in April 2015, thereby depriving Jack Ganz of the opportunity to
    participate in the employee incentive plan and receive Cara stock options.

[39]

JGC
    claims damages for breach of the contractual terms in the Agreement in the
    amount of $2,000,000 as well as $25,000,000 representing the value of stock
    options that Cara awarded to its management. In the alternative, JGC claims
    damages in the sum of $2,000,000 representing reasonable notice at common law
    on the basis that Ganz was a dependent contractor. JGC also claimed that Cara
    breached its implied duty of good faith by terminating JGC shortly before its
    initial public offering to avoid including him in the employee incentive plan.

Caras Defence

[40]

Cara
    claims the Agreement expired on March 9, 2009, although Cara acknowledged that JGC
    had extended it by a year so that the date of termination was March 9, 2010. Cara
    claimed that after March 2010, JGC provided services and was paid on a month-to-month
    basis for the next four years.

C.

THE CONCLUSIONS OF THE MOTION JUDGE

[41]

The motion judge held that there was no genuine
    issue for trial and granted Caras motion for summary judgment, dismissing JGCs
    action.

[42]

First, the motion judge found the automatic
    renewal provision in s. 2.01 of the Agreement was waived by Ganz. The Agreement
    was therefore terminated on March 9, 2009, subject to JGCs right to extend it
    for a period of 12 months to March 9, 2010.

[43]

At paras. 102-4 of her reasons, the motion judge
    held that after the termination of the Agreement in 2009 and the 12-month
    extension period ended in March 2010:

Based on the evidence on this motion, the
    arrangement appears to have been
ad hoc
. The only terms that are evidenced by the parties conduct is that
    JGC would continue to provide services and Cara would continue to pay the
    amount under the Consulting Agreement, until the parties agreed otherwise.
    Those were the essential terms. The parties conduct does not evince a mutual
    intent to be bound beyond those terms, for example, on the length of the
    engagement or when and how the arrangement could be terminated. There is no
    evidence of any agreement that further terms from the Consulting Agreement
    would apply, specifically, JGCs ability to participate in the employee
    incentive plan.

There is little evidence to support Caras
    position that the parties agreed to a month to month arrangement. Mr. Ganz
    referred to the NetOps Groups arrangement as month to month. However, there
    was never any contract for the NetOps services. There was no mention of month
    to month in relation to JGC in the documentary evidence until an email from
    Mr. Grondin dated September 3, 2014. By that time, Cara was transitioning JGC
    out. In his examination, Mr. Smith acknowledged that if the parties had a month
    to month arrangement, JGC could have left with a months notice.

Contrary to JGCs position, however, Cara is
    not required to demonstrate no genuine issue requiring a trial as to whether
    there was a month to month arrangement in order to succeed on its motion. It is
    sufficient that Cara demonstrate that, due to the waiver of the Renewal Clause,
    the Consulting Agreement expired in March 2010 and that no other written
    agreement was struck to take its place.

[44]

The motion judge also found that Ganz was not a
    dependent contractor, and, in any event, his claim for common law reasonable
    notice was statute barred under s. 4 of the
Limitations Act
,
2002
,
    S.O. 2002, c. 24, Sched. B, because it was commenced more than two years after
    the cause of action arose. The motion judge noted that neither JGCs original
    nor amended pleadings alleged a breach of the duty of good faith, which served
    to demonstrate that the dependent contractor claim was very different from
    JGCs original breach of contract claim, and thus statute barred.

D.

THE Issues

[45]

The issues raised by JGC on this appeal are:

1)

Did the motion judge
    err in law by finding that Ganz had waived the auto renewal provision of the
    consulting agreement?

2)

What terms governed the
    parties relationship after Ganz sent an email purporting to remove the auto
    renewal provision in the Agreement?

3)

Was Ganz a dependent contractor?

4)

Was the reasonable
    notice claim statute-barred?

5)

Did JGC plead a breach
    of the duty of good faith? and

6)

Did the motion judge
    improperly shift the burden of proof to the responding party?

E.

ANALYSIS AND CONCLUSION

(1)

Did the Motion Judge Err in Law by Finding That Ganz Had
    Waived the Auto Renewal Provision of the Consulting Agreement?

[46]

One party to an agreement may choose to
    forego reliance on a contractual right but only where the party making the
    choice has full knowledge of the right and makes an unequivocal and conscious
    decision to forego that right with full understanding of the consequences. The
    court must apply a stringent test before finding unilateral waiver of a
    contractual right because no consideration moves from the party in whose
    favour a waiver operates. An overly broad interpretation of waiver would
    undermine the requirement of contractual consideration:
Saskatchewan River
    Bungalows Ltd. v. Maritime Life Assurance Co.
, [1994] 2 S.C.R. 490,
    at p. 500.

[47]

There is no question that after the parties met
    on August 29, 2008 (12 days before the deadline to give notice that the Agreement
    would not be renewed), Ganz sent an email to Smith stating, Let this email
    serve to remove the auto renewal from my contract and indicating that he was
    looking forward to discussions with Cara.

[48]

The motion judge found that this constituted a
    waiver by JGC of the auto renewal provision in the Agreement and that the waiver
    was accepted by Cara in Smiths email of September 2008. She found that as a
    result, the Agreement was terminated effective March 2010 (including the
    one-year extension exercised by JGC).

[49]

In our view, the motion judge erred in law by concluding that Ganz
    unilaterally waived the auto renewal provision of the agreement for no
    consideration. It is not clear from the record that Ganz had full knowledge of
    his rights or an unequivocal and conscious intention to abandon those rights.
    Further, it is clear from the record, in particular the email exchange quoted
    at paras. 13 and 15 above, as well as the internal email quoted in para. 16,
    that in his discussion with Smith, Ganz was asked to remove the provision as a
    favour to Cara, and in exchange, they would negotiate the terms of a new
    agreement to govern their future relationship. This was not a waiver for no
    consideration in accordance with the doctrine in
Saskatchewan River
    Bungalows
.

(2)

W
hat
Terms
Governed the Parties Relationship After
Ganz Sent the Email Purporting to Remove the Auto Renewal Provision
    in

the Agreement
?

[50]

Although the motion judge erred in law by
    finding that Ganz waived the auto renewal clause, it is clear from the record
    that following the 2008 emails, the parties continued their relationship but
    did not come to an agreement on what governed that relationship.

[51]

In our view, the following factors, taken
    together, suggest that the terms of the agreement between Cara and JGC after
    that and until JGCs services were terminated, are not clear:

a)

Caras representative, Smith testified that the
    termination date of the Agreement and establishment of a new agreement were
    intertwined;

b)

He also said that whether the Agreement was
    terminated is a grey area and that another Cara representative, Sean Regan,
    did not want anything changed in Ganzs contract at any time;

c)

Smith testified that it was totally uncertain
    whether the arrangement going forward was a continuation of the Agreement or a
    new contract, and that another Cara representative, Don Robinson, left it that
    way;

d)

Regan wrote that Ganz actually does [have a
    contract] but he does not enforce it as he is too much of a gentleman;

e)

The recitals in the draft agreements in 2010 and
    2012 refer to the Agreement and seem to indicate that the Agreement had not
    been terminated;

f)

The invoices sent by JGC throughout the course
    of their relationship all read: As per the Agreement dated March-10-2006 and
    the amounts billed to and paid by Cara throughout the course of their
    relationship were as set out in the Agreement;

g)

Cara discussed reducing the remuneration from
    $35,000 per month to approximately $10,000 per month but the amounts paid were
    never reduced and JGC continued to invoice and be paid $35,000 per month until
    termination in 2014;

h)

No new agreement was ever executed.

[52]

Moreover, there is testimony that was not
    adduced on the motion by either party that may assist the trier of fact to
    understand the contractual terms between the parties. This includes:

a)

Regans explanation of his statement that Ganz
    has a contract but chooses not to enforce it, and

b)

Robinsons awareness that there was uncertainty as
    to whether the Agreement continued to govern the relationship but chose to
    leave it that way.

[53]

Ganz testified at his examination for discovery
    that he understood the Agreement to be for a 9-year term (3 consecutive
    renewals of 3 years) and that it would end in March 2015. On cross-examination
    he confirmed that that was his understanding at the time.

[54]

The motion judge recognized that after Ganz
    purported to remove the auto renewal provision in the Agreement, There is
    little evidence to support Caras position that the parties agreed to a month
    to month arrangement. Instead, she held that they were operating pursuant to
    an
ad hoc
arrangement where the only agreed terms were the services to
    be provided and the amounts to be paid and that JGC waived the autorenewal
    provision in the Agreement such that it was terminated effective March 10,
    2010.

[55]

The removal of the auto renewal provision was
    not done in accordance with s. 6.06 of the Agreement which provides that, No amendment
    to this Consulting Agreement shall be valid or binding unless set forth in
    writing and duly executed by the parties.

[56]

The motion judge correctly noted that parties
    can by their conduct, demonstrate that they do not intend to be bound by
    clauses in an agreement notwithstanding a clause in the agreement that requires
    changes to be executed in writing:
Colautti Construction Ltd. v. City of
    Ottawa
(1984), 46 O.R. (2d) 236 (C.A.); see also
Shelanu Inc. v. Print
    Three Franchising Corp.

(2003), 64 O.R. (3d) 533 (C.A.), at paras.
    50-60.

[57]

However, in this case, Caras own representative,
    Smith, acknowledged that the question would arise, was the original agreement
    terminated or not? ... What does the new agreement with Jack Ganz look like?
    There were a number of open-ended things and we continued to move along
    business as usual until we sorted that out. So we were in a very grey area as
    to where exactly we stood with respect to that contract.

[58]

Long after Ganz sent his email in 2008, Cara
    recognized that it was important to preserve the relationship with Ganz and JGC.
    What is not clear is whether and to what extent other terms in the Agreement
    were still in effect, other than the payment terms. For example, was the stock
    option provision still in effect? Was there a notice requirement and if so,
    what was it?

[59]

We therefore find that the motion judge made
    palpable and overriding errors in concluding on the basis of this record that
    there was no genuine issue for trial and that,

a)

[i]t is sufficient that Cara demonstrate that,
    due to the waiver of the Renewal Clause, the Consulting Agreement expired in
    March 2010 and that no other
written
agreement was struck to take its
    place (emphasis added); and

b)

the only terms evidenced by the parties conduct
    after March 2010 were that JGC would provide services and Cara would continue
    to pay the amount under the Agreement, until the parties agreed otherwise.

[60]

Given the considerable uncertainty surrounding
    the contractual negotiations in the record and, in particular, evidence that
    verbal agreements were reached but not memorialized in correspondence or
    crystalized in a contract, there was simply not enough evidence to summarily
    dispose of the action.

[61]

We therefore conclude that there is a genuine
    issue for trial as to the terms of the contractual agreement between the
    parties after August of 2008, and what rights flow from those findings.

[62]

Because we would remit the issue of determination
    of the contractual terms governing the relationship between the parties at the
    time services were terminated, and given that further evidence may be adduced
    at trial, the issues of whether Ganz was a dependent contractor, whether there
    was a breach of good faith, whether the limitation period expired, and what right
    to remuneration may flow from these determinations, should be addressed by the
    trial judge once all of the evidence has been adduced and assessed.

F.

Disposition and Costs

[63]

For the above reasons, the appeal is allowed,
    the summary judgment is set aside, and the matter is referred for trial. Costs
    of the appeal are payable by the respondent to the appellant in the amount of
    $20,000, as agreed. If the parties cannot agree on the costs of the motion,
    they may file written submissions of no more than four pages, the appellants
    submissions to be filed by January 10, 2022, and the respondents by January
    24, 2022.

Released: December 20, 2021 K.F.

K.
    Feldman J.A.

Harvison
    Young J.A.

J.A. Thorburn J.A.


