Lozinik v Sutherland, 2012 ABQB 440

Court of Queen ’ s Bench of Alberta Citation: Lozinik v Sutherland, 2012 ABQB 440 Date: 20120712 Docket: 1101 16208 Registry: Calgary Between: Daniel T. Lozinik Plaintiff - and - Cindy Sutherland, Doug Geeraert and Ray Patel Defendants Editorial Notice: On behalf of the Government of Alberta personal data identifiers have been removed from this unofficial electronic version of the judgment. _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice C. Jones _______________________________________________________ I. The Application

[ 1 ] This matter was heard before me on June 8, 2012 as a special chambers application. There was both an application and a cross-application. Mr. Lozinik (“Lozinik”) sought various forms of relief against the Defendants Doug Geeraert (“Geeraert”), Ray Patel (“Patel”) and Cindy Sutherland (“Sutherland”). His application, filed February 29, 2012, requested the following:

a) summary judgment;

b) double costs (Rule 4.29(1));

c) recognition that his claim is a “common law claim to be adjudicated in a common law de jure Court”;

d) an order directing the Defendants to complete a Request for Disclosure in a format which he has constructed or be found to be in contempt of court, with

summary judgment granted against them;

e) an order waiving the dispute resolution process (Rule 4.16(2));

f) an order criminally charging the Defendants with criminal fraud;

g) payment of punitive damages in the amount of $180,000;

h) payment of pecuniary damages of $10,080,000; and

i) an order directing the Defendants to complete confidentiality agreements. [ 2 ] The Defendants cross-application, filed March 14, 2012 requested:

a) summary dismissal of Lozinik’s claim;

b) that service of Lozinik by email to [...] shall be deemed good and sufficient service for all purposes of this action;

c) invocation of Rule 9.4(2)(

c) with respect to the form of judgments and orders;

d) an order directing that bills of costs awarded to the Defendants may be assessed ex-parte ;

e) an order restraining Lozinik from filing any further applications in connection with his action until the earliest of: (

i) this court’s decision regarding the Defendants’ application to strike the plaintiff’s claim; (ii) this court’s decision regarding the merits of the Defendants’ application for

summary judgment; and

(iii) affidavits of records are served and questioning is complete.

f) costs under column 5 of

Schedule C, payable forthwith;

g) other directions regarding management of this action; and

h) abridging time for service. [ 3 ] It was not made clear by Lozinik during argument if he continued to press for completion of a Request for Disclosure in a format which he had constructed and which did not conform with the requirements of the Alberta Rules of Court ("Rules"). I note that in his brief attached to his affidavit of May 18, 2012 ("Lozinik Brief") he refers at para. 50 to the Request for Disclosure which he sought to have the Defendants complete.

He asserts that his Request for Disclosure document "substantiates and supports all allegations against the defendants". [ 4 ] Tab 2 of the Lozinik Brief contains a copy of his Request for Disclosure and para. 31 of his affidavit of February 27, 2012 ("February 27th Affidavit") obliquely refers to it.

He neglects to mention in his materials that he proceeded with his application for an order directing completion of his Request for Disclosure, together with an application for an order directing case management. [ 5 ] He notes at para. 7 of the Lozinik Brief that his application for case management was heard by Justice Veldhuis on March 30, 2012. In fact, his application for case management and his application for an order directing completion of his Request for Disclosure were heard on March 30, 2012 by Justice Park. He dismissed both applications.

That matter appears to be res judicata and I will not consider it further. II. Background [ 6 ] This action stems from a failed attempt on Lozinik's part to elicit financial commitment from the Defendants Geeraert and Patel in the development and introduction of technology which Lozinik claims to have developed ("Lozinik Project"). Sutherland had known Lozinik from his previous involvement with a mutual employer. In September 2010, she invested in the Lozinik Project, entering into a confidentiality agreement with his corporation, RMO Group Inc.

She later sought return of her funds. [ 7 ] On October 24, 2011, Lozinik and Geeraert met for the first time, a meeting arranged by Sutherland. Geeraert's initial expression of interest, emerging from that meeting, led to Lozinik and Geeraert exchanging emails and a further meeting on November 4, 2011 ("November 4th Meeting"). Patel attended part of the November 4th Meeting. [ 8 ] Lozinik's version of discussions which took place at the November 4th Meeting differs from that of Geeraert and Patel.

A series of emails between Lozinik and Geeraert ensued, resulting in Gaaraert advising Lozinik on November 14, 2011 that he was not prepared to invest in the Lozinik Project. A final email exchange took place between them on November 15, 2011. III.

Summary Judgment [ 9 ]

Section 7.3 of the Rules of Court provides as follows: 7.3

(1) A party may apply to the Court for

summary judgment in respect of all or part of a claim on one or more of the following grounds:

(

a) there is no defence to a claim or part of it; (

b) there is no merit to a claim or part of it; (

c) the only real issue is the amount to be awarded.

(2) The application must be supported by an affidavit swearing positively that one or more of the grounds described in subrule (1) have been met or by other evidence to the effect that the grounds have been met.

(3) If the application is successful the Court may, with respect to all or part of a claim, and whether or not the claim is for a single and undivided debt, do one or more of the following: (

a) dismiss one or more claims in the action or give judgment for or in respect of all or part of the claim or for a lesser amount; (

b) if the only real issue to be tried is the amount of the award, determine the amount or refer the amount for determination by a referee; (

c) if judgment is given for part of a claim, refer the balance of the claim to trial or for determination by a referee, as the circumstances require. [ 10 ] What objectives do these provisions seek to achieve? The Defendants' brief quotes at para. 38 from the Supreme Court of Canada's decision in Canada (Attorney General) v. Lameman , 2008 SCC 14 , [2008] 1 SCR 372. At para. 10 of that decision the Supreme Court states that: The

summary judgment rule serves an important purpose in the civil litigation system. It prevents claims or defences that have no chance of success from proceeding to trial. Trying unmeritorious claims imposes a heavy price in terms of time and cost on the parties to the litigation and on the justice system. It is essential to the proper operation of the justice system and beneficial to the parties that claims that have no chance of success be weeded out at an early stage. Conversely, it is essential to justice that claims disclosing real issues that may be successful proceed to trial. [ 11 ] How should a chambers judge approach a

summary judgment (dismissal) application? The protocol to be followed in analyzing the merits of an application for

summary judgment (dismissal) is different from the protocol to be followed in rendering judgment at trial. The following excerpts from volume 1 of the Alberta Civil Procedure Handbook, 2011 , Stevenson & Cote (Juriliber, Edmonton, 2011) (the "CPH") pinpoint those differences and help to clarify the scope of the Court's power in respect of an application for either

summary judgment or

summary dismissal: Judgment cannot be given if there are difficult or intricate legal issues, or if the evidence conflicts. [7-9] The affidavit for the motion must make out a prima facie case with no holes in it, though the Chambers Judge can draw reasonable inferences. [7-13] The entire basis for

summary judgment cannot be inadmissible hearsay. [7-13, footnote 2] If the opposing affidavits clash on relevant facts, the master or chambers judge can rarely prefer one over the other. He or she cannot weigh evidence, or credibility….In other words, one looks at the facts deposed to by the party opposing judgment, and sees if the law

permits judgment on those facts. [7-15] The defence (or the cause of action, if the defendant moves for

summary judgment) need only be arguable to resist

summary judgment. The defence (or claim, if the defendant moves) need not be certain, and need not even have a 50% chance of success. A reasonable doubt on a legally relevant point is enough to prevent

summary judgment…Where the defendant moves for

summary judgment, he or she has an initial evidentiary burden, but then the plaintiff must show that his suit has a real chance of success. The test of "plain and obvious" is the proper test for

summary judgment in favour of a defendant. [7-16, 17] There is no opposing affidavit which disagrees on a necessary factual question. [7-23] Material factual issues cannot be decided on such a motion. [7-19, footnote 1] [ 12 ] It is clear that the onus on the party seeking

summary judgment or

summary dismissal is a difficult one to meet. The same authors reinforce these observations in their work the Civil Procedure Encyclopedia , Stevenson & Cote, Vol 2

Chapter 31 (Juriliber, Edmonton, 2003) (the "CPE"). They note as follows: If the two sides swear to inconsistent versions of the same material facts, usually there cannot be

summary judgment. Of course there could be

summary judgment, if even the version of the facts advanced by the losing party is compatible with the judgment. [31-12] Leave to defend must be given and judgment refused if the plaintiff’s or the defendant’s affidavits clash on relevant points. That is because the task of the judge hearing the

summary judgment motion is only to decide whether there is a genuine issue as to material facts requiring a trial…And in some cases the defendant should be allowed to make the plaintiff prove his case. A full trial is needed if cross-examination and live evidence are needed to get the true facts. [31-13] [ 13 ] The CPE pre-dates the current version of the Rules. The former version of the Rules contained somewhat different language than the current version. As noted, however, in Elbow River Marketing Ltd. Partnership v. Canada Clean Fuels Inc ., 2012 ABQB 277 at para. 56 : The test for

summary judgment under new rule 7.3 is the same as under the old rules: Manufacturers Life Insurance Co. v. Executive Centre at Manulife Place Inc ., 2011 ABQB 189 , 48 Alta. L.R. (5th) 178 at para. 11 ; Encana Corp . v. ARC Resources Ltd. , 2011 ABQB 431 at para. 7 . [ 14 ] Accordingly, the comments above from the CPE may inform this Court's decision regarding the appropriate test to be applied. [ 15 ] The same presumption regarding conflicting evidence appears to apply to applications for both

summary judgment and

summary dismissal. As noted at para. 36 of the Defendants' brief: In the context of an application for

summary dismissal, the court must accept as true the facts averred by the party opposing the application, unless those facts have been disturbed in cross-examination. Where the evidence in the applicant's affidavit contradicts the evidence advanced by the respondent in its affidavit, the evidence of the applicant must be disregarded, as conflicts in evidence can only be resolved at trial. However, if evidence is adduced that is of assistance to the respondent, the court may consider it in determining the application. In other words, the court assumes that the facts deposed to by the respondents are true, and then determines whether, on that assumption, a

summary dismissal of the claim should be granted. [ 16 ] In assessing Lozinik's request for

summary judgment, I must assume that facts deposed to by the Defendants are correct. Based on that assumption, I must then, in accordance with Rule 7.3(1)(a), determine if there is no defence to Lozinik's claim or to any part of it.

[17] In assessing the Defendants' request for

summary dismissal, I must assume that facts deposed to by Lozinik are correct. Basedon that assumption, I must then, in accordance with Rule 7.3(1)(b), determine if there is no merit to Lozinik's claim or to any part of it. [18] In order to determine if I should grant

summary judgment in favour of Lozinik or

summary dismissal in favour theDefendants, it is first necessary to determine what action or actions Lozinik has brought against the Defendants. IV. Lozinik's Grounds for Seeking Relief [19] Lozinik represents himself and though he has taken great care to research and articulate the basis upon which he believes hehas suffered injury, it is first necessary for me to determine if anything he has asserted potentially rises to the level of a cause of action.As noted at 31-42,

section 2 of the CPE, a plaintiff moving for

summary judgment must file an affidavit, or in any event, some kind ofsworn evidence. Further, as noted at 7-12 of the CPH: The Rule no longer sets detailed requirements for the affidavit, but one "swearing positively" or "other like evidence" is necessary;without it, the motion cannot get off the ground. [20] Do the Lozinik Brief and the February 27th Affidavit establish the necessary basis upon which Lozinik's application mayproceed? [21] Much of Lozinik's argument, in addition to assertions of fact which he offers as the foundation for the relief he seeks, is foundin the Lozinik Brief.

That brief is not an affidavit. However, in the February 27th Affidavit he swears that he has personal knowledge ofthe matters which he deposes to. Recognizing that Lozinik represents himself, I am prepared for purposes of his application to construebroadly the term "other like evidence" referred to above. I believe that to be a reasonable approach because I believe, as demonstratedbelow, that the February 27th Affidavit does, itself, assert a factual basis sufficient to identify one or more possible causes of action.

TheLozinik Brief serves to supplement those assertions and, together, those two documents articulate the factual basis upon which Lozinik’sapplication is based. [22] The Lozinik Brief and the February 27th Affidavit raises numerous issues. A. Fraudulent Misrepresentation [23] The distinction, if one still exists at all, between fraudulent misrepresentation and the tort of deceit is blurred. In Kelemen v.El-Homeira, 1999 ABCA 315, 250 AR 67 (Alta. CA) (“Keleman”), the Alberta Court of Appeal attempted to draw a distinction betweenfraudulent misrepresentation and the tort of deceit.

At para. 5, the Court explained: There are two bases upon which liability could be founded in this case, namely, on the tort of deceit or on the contract action offraudulent misrepresentation inducing a contract. The causes of action are discrete, although they share some common features and, asthe learned author Fleming says, one action tends to colour the other: J.G. Fleming, The Law of Torts, 9th ed. (New South Wales: LBCInformation Services, 1998) at 695. The tort action is founded in law whereas the contract action is based in equity. The differenceaffects the remedies and defences.

Either can be the basis for a claim for damages but it is only the contract action that allows rescission.The duty to mitigate is relevant to both. [24] Courts do not, however, always draw such a sharp distinction between the two concepts.

While it is safe to say that fraudulentmisrepresentation began as an action in contract and the tort of deceit has existed as a discrete cause of action since as early as Pasley v.Freeman (1789), 3 T.R. 51, the two closely related actions have increasingly converged as courts have begun to recognize concurrentliability in contract and tort. [25] The leading authority on concurrent liability is BG Checo International Ltd. v. British Columbia Hydro & Power Authority, (SCC), [1993] 1 SCR 12, in which the Supreme Court of Canada considered whether a defendant can be found

concurrently liable in contract and tort for making a negligent misrepresentation. McLachlin and La Forest JJ. explained at para. 98 that“(s)ubject to the substantive and procedural differences that exist between an action in contract and an action in tort, both the duty of careand the liability may be concurrent in contract and tort. In such circumstances, it is for the plaintiff to select the cause of action mostadvantageous to him or her.” [26] Many courts use the terms fraudulent misrepresentation, fraud and the tort of deceit indistinguishably. For example, Goss J.stated at para. 14 of HSBC Bank Canada v.

Lourenco, 2012 ABQB 380: “(t)he tort of deceit, sometimes called fraud or fraudulentmisrepresentation, is based on a false representation made by one person to another, knowingly, whereby damage is caused to the otherin reliance on that false representation.” [27] Similarly, in Dhillon v. Dhillon, 2006 BCCA 524, the B.C. Court of Appeal considered the relationship between fraud and thetort of deceit. At para. 77, Thackray J.A. stated that “(w)hile fraudulent activities in the civil context (i.e.

"civil fraud") can occur ininnumerable ways, the ‘civil fraud’ cause of action is recognized in Canada as the tort of deceit, also referred to as the tort of fraud orfraudulent misrepresentation.” The terms fraudulent misrepresentation and the tort of deceit were also used interchangeably at para. 114of Village on the Park, Re, 2009 ABQB 497, 85 RPR (4th) 65, at para. 56 of Catalyst Pulp & Paper Sales Inc. v. Universal Paper ExportCo., 2009 BCCA 307, and at para. 33 of Battrum v.

MacKenzie Estate, 2010 BCSC 1285, amongst many other cases. [28] It may be more accurate however, to state that fraudulent misrepresentation, in addition to giving rise to a possible right ofaction in contract, is the key element of the tort of deceit. For example, at para. 24 of Mosher v. Wright, (1992) (NSSC), 94 DLR (4th) 254, Hart J.A. of the Nova Scotia Court of Appeal held that “(t)he tort of deceit has to be based on a fraudulentmisrepresentation to induce a course of conduct which turns out to be detrimental to the person induced.” Park J. took a similar view atpara. 1137 of Dechant v.

Law Society (Alberta), 2010 ABQB 656, endorsing the view of Fridman at para. 747 of the Law of Torts inCanada, 2nd ed. (Toronto: Thompson, 2002) that “(t)he tort of deceit is based on the making of a fraudulent misrepresentation.” [29] In

summary, fraudulent misrepresentation may give rise to remedies in both contract and under the tort of deceit, which willbe discussed later. Assuming the existence of a contract, the presence of fraudulent misrepresentation may give rise to contractualremedies. A contract induced through fraudulent misrepresentation is voidable at the option of the party defrauded. The equitableremedy of rescission may also be granted.

Here, other than in the context of breach of covenant, Lozinik does not assert the presence ofa contractual relationship with the Defendants. [30] The February 27th Affidavit implies that an oral contract arose as a result of Lozinik’s agreement to disclose technology inconsideration for undertakings by Geeraert and Patel to sign confidentiality agreements. [31] As noted below, I leave open the possibility of Lozinik pursuing his action for breach of contract. I do not, therefore, considerit necessary to consider further the concept of fraudulent misrepresentation in a contractual context.

Lozinik seeks to have Geeraert andPatel compelled to sign confidentiality agreements. My decision does not deny him that opportunity. [32] Accordingly, we may confine our analysis of fraudulent misrepresentation to its implications for the existence of the tort ofdeceit which, as stated, will be discussed later. [33] What fraudulent misrepresentation(

s) does Lozinik assert were made? 1. failure to sign confidentiality agreements [34] Lozinik alleges that the Defendants fraudulently misrepresented that they would sign confidentiality agreements. This isexpressly stated in para. 6 of the February 27th Affidavit where Lozinik notes as follows: The Plaintiff claims the defendant(

s) manipulated the Plaintiff's good nature and reputation by fraudulently misrepresenting themselvesand their intentions, in order to gain access to proprietary information.

[ 35 ] He further states at para.14 of the February 27th Affidavit that: The Plaintiff claims the defendant Geeraert stated he would sign the Confidentiality Agreement upon correction of the previous statement [that being removal of his job title]. [ 36 ] He further states at para. 15 of the February 27th Affidavit that: The Plaintiff claims Geeraert asked to see the prototype via photos and video disclosed by Plaintiff when it was established by defendant that he would acknowledge the Confidentiality Agreement when changes were made. [ 37 ] Lastly, he also states at para. 19 of the February 27th Affidavit that: The Plaintiff claims the defendant Doug Geeraert remained in the meeting asking to see the prototype generated from the Plaintiff's computer that was involved in the same meeting, and upon the condition that was agreed to by the defendant Doug Geeraert that a Confidentiality Agreement would be acknowledged. [ 38 ] An allegation of fraudulent misrepresentation may also be inferred from para. 23 of the Lozinik Brief where he states: It is fact at the second meeting [November 4, 2011] Lozinik showed defendant(

s) the electronic "motherboard" of Solar Tracking System and Tracking Eye for Solar prototype, on the promise of verbal agreement the Confidentiality Agreement would be signed and completed… [ 39 ] It is less clear from Lozinik's materials what Patel did or did not undertake to do in connection with the signing of a confidentiality agreement before he left the November 4th Meeting.

However, it can be inferred from para. 20 of the February 27th Affidavit that Lozinik takes the position that Patel led him to believe that he would sign a confidentiality agreement before Lozinik began sharing details of his technology with him: The Plaintiff claims he is possession of, intellectual property (IP), Trademarks and Patent(

s) regarding the prototype, and the defendants fraudulently misrepresented themselves gaining access to information proprietary to the Plaintiff, without completing the Confidentiality Agreement. [ 40 ] Accordingly, one of Lozinik's claims is that the Defendants (or at least Geeraert and Patel), represented that they would sign confidentiality agreements before Lozinik disclosed what he considered to be proprietary information. 2.

Failure to provide financing [ 41 ] Another of Lozinik's claims, arguably falling under the head of fraudulent misrepresentation, is that the Defendants led him to believe that they would provide financing which would allow him to proceed with development of the Lozinik Project, or at least with the stage known as the verification/validation process. In his Application filed February 27, 2012, he alleges at paras. 2 and 3 on page 2 under the heading "Grounds for making this application" as follows: 2. Re: Monies sought: The Plaintiff has commenced an action against the defendant(

s) seeking damages for time lost in releasing Plaintiff's Utility prototype in the Global marketplace for the benefit of the Global economy. 3. The Plaintiff was initially only seeking fifty thousand ($50,000.00) from the defendant(

s) to complete the Validation/Verification

process by an Engineering firm enabling the Plaintiff to secure CSA, UL and ANSI certification for Global sales, but the Defendant(

s) were adamant that more funding was required and they were the ideal group to partner with to complete final procedure prior to manufacturing and marketing. [ 42 ] Lozinik alleges that, based on the Defendants’ representations, he declined to pursue a consulting arrangement with an entity with which he had been previously engaged. He asserts that he was induced not to return to work with that entity as a result of assurances, at least by Geeraert, that they would invest in his enterprise. In this regard, he states as follows at para. 26 of the Lozinik Brief: It is fact due to the defendant(

s) actions subsequent to not signing the Confidentiality Agreements, The Plaintiff/Lozinik claims the defendant(

s) irreparable actions caused Lozinik to cancel an Oil and Gas contract due to the defendant(

s) interest to participate in the completion of Prototype Validation and Verification process, as evidenced in E-Mail transmission constructed by defendant Doug Geeraert dated October 25, 2011 as cited in Affidavit of Records and verbally stated in the boardroom of the defendant(

s) employer, Glencoe Resources Ltd. [ 43 ] The February 27th Affidavit arrives at the same point where, at para. 50, Lozinik challenges para. 10 of the Defendants' Amended Statement of Defence.

At para. 10 it is noted that: The Defendants do not have and never have had any knowledge of the "Oil and Gas contract" referenced by the Plaintiff in paragraph 10 of the Amended Statement of Claim, nor do the Defendants have any information regarding the actions alleged to cause the Plaintiff to cancel the contract. [ 44 ] At para. 50 of the February 27th Affidavit Lozinik states: Item 10 also claims the defendant Geeraert was told of the situation the Plaintiff was involved in (regarding an existing Oil & Gas employment contract of the Plaintiff) and that an immediate response of behalf of defendant(

s) would be appreciated. Mr. Geeraert stated he understood the situation and went on further to state his brother was unemployed for a number of years and was forced to seek employment elsewhere until a position in his field of expertise became available. The Plaintiff further claims the defendant(

s) purport another fabrication of the truth (lie) item 10, by their denial to knowledge of the Plaintiff's circumstances. [ 45 ] He asserts at para. 71 of the Lozinik Brief that this default cost him $180,000 in lost wages and income. [ 46 ] Lozinik is also seeking $10,080,000 which he alleges in his Application filed February 27, 2012 represents three months of lost revenue. This allegation results from his perception that the Defendants' decision not to participate in this opportunity somehow delayed development and marketing and therefore resulted in lost revenue.

This alleged loss results from Lozinik's belief that the Defendants fraudulently misrepresented their intentions regarding financial participation in the Lozinik Project. B. Tort 1. Business Tort [ 47 ] Lozinik alleges that the Defendants are liable in tort, more specifically, "business tort". Para. 34 of the February 27th Affidavit seems to suggest that by fraudulently misrepresenting their intentions, the Defendants gained access to proprietary information and that this access has interfered with Lozinik’s economic and business relationships and caused him economic loss.

2. Conspiracy [ 48 ] Lozinik alleges at para. 37 of the February 27th Affidavit that the Defendants are guilty of the "torts of conspiracy and abuse of process". His views in this regard seem to be reaffirmed at para. 48 of the February 27th Affidavit where he states: Item 9 [referring to the defendants' amended statement of defense] claims the defendant(

s) lack of business acumen by avoiding discussion or signing of Confidentiality Agreement, by encouraging the Plaintiff to expose more information of the prototype and Intellectual Property in a pre-meditated fashion. 3. Miscellaneous allegations grounded in Tort [ 49 ] Lozinik also alleges the torts of deceit, abuse of process and the possible tort of false pretences, though his only discussion relating to false pretences is in the context of the Criminal Code, R.S.C. 1985, c. C-46 (“ Criminal Code ”) and not the law of tort. C.

Fraud [ 50 ] At para. 23 of the Lozinik Brief, Lozinik alleges that the Defendants are guilty of "promissory fraud". Specifically, he asserts that promissory fraud arises because the Defendants induced him to disclose technology on the promise of signing a confidentiality agreement. D. Breach of Covenant [ 51 ] Lozinik alleges breach of covenant at para. 24 of the Lozinik Brief. He asserts that Geeraert covenanted to sign a confidentiality agreement. He infers at para. 23 of the Lozinik Brief that both Geeraert and Patel undertook to sign a confidentiality agreement. E.

Conflict of Interest [ 52 ] Lozinik alleges at para. 29 of the Lozinik Brief that the Defendants acted in conflict of interest in not disclosing involvement with "similar projects". F. Miscellaneous [ 53 ] In addition to the allegations set forth above, Lozinik alleges at para. 31 of the Lozinik Brief that he has commenced an action against the Defendants for breach of confidentiality, irreparable harm, fraud, and recklessness. [ 54 ] His Application, dated February 27, 2012, seeks an order "to criminally charge Cindy Sutherland, Doug Geeraert and Ray Patel for perpetrating a Fraudulent act upon the Plaintiff".

V. Lozinik's Possible Causes of Action [ 55 ] Assuming, as I have indicated above I must, that Lozinik's evidence represents the correct version of events, does that

evidence disclose one or more causes of action and, if it does, against whom? A. No Cause of Action -

Summary Judgment Declined and Dismissal Warranted [ 56 ] It is possible to eliminate fraud (in the criminal context) because this Court has no authority to direct that an individual be prosecuted for criminal fraud. Similarly, no distinct cause of action exists for recklessness or irreparable harm, though each of those assertions may constitute the basis for, or consequences of, other causes of action.

Furthermore, conflict of interest may describe a situation which could cause an individual to act inappropriately in a set of circumstances but it does not describe a separate cause of action. [ 57 ] Promissory fraud can arise in situations where a promise was made by someone when he or she did not intend to perform the promise when it was made. The tort of promissory fraud does not appear to have been mentioned in a Canadian decision at any level of court.

It is a common cause of action in the United States, however, it does not currently provide a basis for a cause of action in Canada. [ 58 ] Accordingly, I would deny Lozinik

summary judgment in respect of any of those assertions and would dismiss his action against all of the Defendants, to the extent it purports to be founded on:

a) recklessness;

b) irreparable harm;

c) criminal fraud;

d) conflict of interest; or

e) promissory fraud. [ 59 ] Lozinik alludes in the Lozinik Brief to breach of confidentiality. Nowhere in the Lozinik Brief or in the February 27th Affidavit does he describe the basis of this allegation. Rather, he seeks to compel Geeraert and Patel to execute confidentiality agreements, based on what he asserts they promised to do. For greater certainty, to the extent that Lozinik takes the position that he has a cause of action against the Defendants for breach of confidentiality I am dismissing any such action as the facts, as alleged in his own materials, do not disclose a basis for asserting such a breach.

B. Possible Causes of Action [ 60 ] I begin this portion of my judgment with the heading "Possible Causes of Action". That heading is not meant to imply that Lozinik's evidence, if believed, discloses a triable issue. Rather, it is meant to refer to causes of action that cannot be dismissed out of hand on the basis that they simply do not exist. 1. Breach of Covenant [ 61 ] Breach of covenant involves violation of an express or implied promise to do or not to do something.

Lozinik alleges that Geeraert and Patel orally agreed with Lozinik that, if he disclosed proprietary information to them, they would sign confidentiality agreements.

2. Tortious interference with business relationships [62] Tortious interference with business relationships is rarely discussed in Canadian case law. The closely related tort of unlawfulinterference with economic relations is somewhat more common, though still rarely litigated. Dufferin Real Estate Ltd. v. Giralico,[1989] OJ No 1525 (“Dufferin”), is the leading case on unlawful interference with economic relations.

In that case, Ewaschuk J. set outthe following test at para. 28: The elements of the tort are as follows: (1) existence of a valid business relationship or expectancy; (2) knowledge by the defendant ofthe relationship or expectancy; (3) intentional interference inducing or causing a termination of the relationship or expectancy by unfairor unlawful means (fair competition is permissible); (4) proximate cause; and (5) resultant damages. See Prosser and Keeton on The Lawof Torts, 5th ed. (1984) at p. 1005 where they state that the origin of the tort is found in Temperton v.

Russell, [1893] 1 Q.B. 715 and is alegitimate extension of the tort of inducing breach of contract. . . . [63] Related torts involve deceptive practices (such as deceit or injurious falsehood) or improper market practices (such asconspiracy, intimidation, or inducement to breach a contract). [64] In Ed Miller Sales & Rentals Ltd. v. Caterpillar Tractor Co., (AB KB), 17 Alta. L.R. (3d) 251, (“EdMiller”), at para. 340 Berger J. of the Alberta Court of Queen's Bench (as he was then) cited an

article by Professor G.H.L. Fridmanpublished in The Tort Law Review, July 1993, vol. 1, no. 2, p. 99, at para. 340 for the following: What this tort [unlawful interference with economic relations] seems to cover, therefore, among other possibilities, is conduct whichrenders it impossible, or, at the very least, more difficult, for the plaintiff to enter into a contractual relationship with a third party that isonly projected. [65] In Gershman v.

Manitoba (Vegetable Producers' Marketing Board) (1977), (MB CA), 69 DLR (3d) 114,the Manitoba Court of Appeal held at para. 20 that unlawful interference with economic relations applies not just where the plaintiffloses the opportunity for formation of a contract, but also where he or she loses the opportunity to extend his or her already existingcontractual relationship. [66] It appears that tortious interference with business relationships applies not just to prospective business relationships, but toestablished and ongoing business relationships.

The tort seems to apply not just to situations where contractual relationships are lost, butwhere existing relationships are made more difficult (i.e. burdened with additional costs and complications).

Variations of this cause ofaction apply to situations involving deceitful and improper market practices. [67] Lozinik alleges that Geeraert's email communications with him led Lozinik to conclude that it would not be necessary for himto re-engage with the entity to which he had been providing consulting services to because Geeraert would provide sufficient funds topermit him to proceed with the next phase of development. [68] Applying the five elements discussed in Dufferin and the above quote from Ed Miller to Lozinik’s evidence, presumed to betrue, I find no basis in law for an action grounded in tortious interference with business relationships.

Lozinik has offered no evidence ofany past, ongoing or future consulting relationship. He has provided no evidence which would suggest that Geeraert intentionallyinduced or caused a termination of (or failure to re-establish) any such relationship. He has offered no evidence to support any claim hemight have for damages. 3. Conspiracy [69] The tort of conspiracy exists if (

i) the predominant purpose of someone's conduct is to cause another injury, whether or not themeans were lawful, or (ii) a defendant's conduct is unlawful and directed towards the plaintiff in circumstances where the defendantshould know that injury to the plaintiff is likely to, and does, result. In circumstance (ii) it is not necessary that the predominant purposeof the defendant's conduct is to cause injury.

[70] Lozinik alleges that Geeraert acted with intent to injure Lozinik by inducing him not to re-engage with the entity to which heformerly provided consulting services. Lozinik alleges that Geeraert and Patel acted with intent to injure Lozinik by inducing him todisclose proprietary technology with the promise of signing a confidentiality agreement. The inference he would have us draw is thatthey had no intention of signing any such agreement and that their actions inhibited his ability to proceed with development of theLozinik Project. [71] Lozinik’s evidence, presumed to be true, does not satisfy me that either (

i) the predominant purpose of the Defendants’conduct was to cause Lozinik injury or (ii) the Defendants’ conduct was unlawful and directed towards Lozinik. 4. Fraudulent Misrepresentation and the Tort of Deceit [72] The tort of deceit arises "whenever a person has made a fraudulent statement that intentionally causes another person to relyon it to her detriment" (Philip H. Osbourne's The Law of Torts (Irwin Law Inc.: Toronto, 2007), (“Osborne”) at p. 298). Most casesinvolving the tort of deceit deal with fraudulently induced contracts but a contractual relationship is not required.

There are four elementsto an action in deceit: misrepresentation, fraud, reliance and damage. [73] Lozinik asserts that the Defendants made false statements, that they were knowingly false, that they were made with theintention to deceive Lozinik, that the false statements induced Lozinik to act and that Lozinik suffered damages as a result.

Lozinikalleges that Geeraert and Patel promised to sign a confidentiality agreement and that Geeraert's email communications with Lozinik roseto the level of a promise to invest in the Lozinik Project. [74] If I accept Lozinik’s evidence regarding discussions at the November 4th Meeting, he may have a basis for asserting that hewas induced to disclose proprietary information on the basis that confidentiality agreements would be signed by Geerraert and Patel. Ipreserve his right to proceed on the basis of breach of covenant.

Lozinik has not, however, offered any evidence which suggests that hehas suffered damage as a result of failure to execute confidentiality agreements. [75] I see no evidence in the email correspondence between Lozinik and Geeraert which suggests that Geeraert made anyrepresentations about financing upon which Lozinik could reasonably rely. The representations, as described by Lozinik and reflected inemail communications, made by Geeraert appear to be nothing more than vaguely enthusiastic statements.

This is not the type offraudulent misrepresentation found in cases like Kelemen, where positive statements are made to induce an individual to invest in afraudulent transaction. It is not apparent how Lozinik relied to his detriment on anything Geeraert said in his emails. He claims he lostsome potential income but this seems at most only loosely related to the allegedly fraudulent inducements made by the Defendants. 5. Abuse of Process [76] Abuse of process does constitute a cause of action; however, it does not apply to the case at bar.

At para. 7 of Tsiopoulos v.Commercial Union Assurance Co., (ON SC), 57 OR (2d) 117, Henry J. of the Ontario Superior Court of Justicestated: It is well settled that there is at law a tort known as abuse of process. This cause of action arises when the processes of law are used foran ulterior or collateral purpose. It is defined as the misusing of the process of the Courts to coerce someone in some way entirelyoutside the ambit of the legal claim upon which the Court is asked to adjudicate.

It occurs when the process of the Court is used for animproper purpose and where there is a definite act or threat in furtherance of such purpose. Grainger v. Hill (1838), 4 Bing. (N.C.) 212,132 E.R. 769; Guilford Industries Ltd. v. Hankinson Management Services Ltd., (BC SC), [1974] 1 W.W.R. 141, 40D.L.R. (3d) 398; Atland Containers Ltd. v. Macs Corp. (1974), (ON SC), 7 O.R. (2d) 107, 17 C.P.R. (2d) 16, 54D.L.R. (3d) 363 (Ont. H.C.); Unterreiner v. Wilson (1982), (ON SC), 40 O.R. (2d) 197, 24 C.C.L.T. 54, 142 D.L.R.(3d) 588 (Ont. H.C.), affirmed (1983), (ON CA), 41 O.R. (2d) 472, 146 D.L.R. (3d) 322 (Ont.

C.A.). [77] As noted in Osborne at page 250:

There are four elements to the tort [of abuse of process] First, the defendant must have brought the civil action or process. Second, the proceedings must be brought for a collateral and improper purpose. Third, there must be evidence of some overt act or threat, independent of the litigation, designed to secure the defendant's improper purpose. Fourth, the plaintiff must prove damage. [ 78 ] Clearly, this tort does not apply to the case at bar. No one brought an action, collateral or otherwise, against Lozinik. There is also no evidence of threats.

Even if there were damages, they do not stem from abuse of process as the requirements for the tort have not been met. 6. False Pretences [ 79 ] Obtaining credit by false pretences is an offence under section 362(1) of the Criminal Code . That

section states: "Every one commits an offence who (. . .) (

b) obtains credit by a false pretence or by fraud”. [ 80 ] There is virtually no Canadian case law that considers a possible tort of "false pretences." At para. 34 of Helpfast Personnel Inc. v. Newcastle Logistics Corp. , 2011 ONSC 2906 , 87 BLR (4th) 304 (" Helpfast Personnel Inc.

"), Price J. states that: When an employee or officer of a corporation gives cheques to another in payment of goods or services, or to secure credit, whether for himself or the corporation, knowing that there are insufficient funds in the account on which the cheques are drawn to cover them, his actions amount to an intentional tort of false pretences or fraud. [ 81 ] Nearly identical wording was used by Abraham Davis D.J. at para. 81 of 1664550 Ontario Inc. v. 1240393 Ontario Ltd. , 2011 CarswellOnt 14713 (" 1664550 Ontario Inc. ").

In these cases, the supposed tort of "false pretences" was considered only with respect to the actions of an employee or officer of a corporation. Price J. also relied heavily on the abovementioned Criminal Code provision in his analysis. The possible existence of a tort of "false pretenses" owes more to careless language that inappropriately mixes Criminal Code sanctions and genuine causes of actions from tort law.

If there is a separate tort of "false pretences", the decisions in Helpfast Personnel Inc. and 1664550 Ontario Inc. indicate that this tort is largely focused on misfeasance in the corporate context of a corporate officer or employee and likely does not apply to the case at bar. [ 82 ] Lozinik has provided no evidence to support a basis for this cause of action. His action in this regard is dismissed. VI. Disposition A. Lozinik's Request for

Summary Judgment in Respect of Possible Causes of Action [ 83 ] With respect to Lozinik's request for

summary judgment against the Defendants in connection with the seven causes of actions which I find could conceivably exist, being: 1. breach of covenant; 2. tortious interference with business relationships; 3. conspiracy; 4. fraudulent misrepresentation; 5. deceit; 6. abuse of process; and 7. false pretences,

I dismiss that request in its entirety. Applying the tests outlined in

section III. above with reference to: (

a) the affidavit of Sutherland dated March 14, 2012; (

b) the affidavit of Geeraert dated March 14, 2012; and (

c) the affidavit of Patel dated May 4, 2012, and assuming the assertions set forth in the Defendants' respective affidavits to be true, there would, as contemplated in Rule 7.3(1)(a), be a defence to each of his actions. B. The Defendants' Request for

Summary Dismissal in Respect of Possible Causes of Action (

a) Cindy Sutherland [ 84 ] Even if I accept Lozinik’s evidence, I am unable to identify a triable issue or a cause of action as it would relate to Sutherland. Lozinik’s actions against her are dismissed in their entirety. (

b) Ray Patel [ 85 ] Even if I accept Lozinik’s evidence, I am unable to identify a triable issue or a cause of action as it would relate to Patel except as may be founded on breach of covenant . Lozinik ’ s actions against him are dismissed, except for those founded on breach of covenant. (

c) Doug Geeraert [ 86 ] Even if I accept Lozinik’s evidence, I am unable to identify a triable issue or a cause of action as it would relate to Geeraert except as may be founded on breach of covenant. Lozinik’s actions against him are dismissed, except for those founded on breach of covenant. [ 87 ] I would emphasize that the evidence which Lozinik offers, and which may be potentiality relevant to one or more causes of action available to him, relates exclusively to what he alleges Geeraert and Patel said to him at the November 4 th Meeting.

Nothing in the email correspondence provided to me, or in respect of the discussions which allegedly took place between Lozinik and Geeraert on October 24, 2011, discloses any reasonable basis for a cause of action against any of the Defendants. C. Lozinik's Request to Compel the Defendants to Sign Confidentiality Agreements [ 88 ] Lozinik acknowledged during argument that he wanted Geeraert and Patel to sign confidentiality agreements so that he would not be exposed to claims of his other investors that he breached his undertakings to them to secure such agreements before disclosing proprietary information.

He indicated that he was attempting to "manage" his exposure to an action for breach of contract at the hands of his investors by compelling Geeraert and Patel to execute such agreements. He also expressed general frustration and regret for having taken individuals into his confidence in the expectation that they would assist in financially underwriting the Lozinik Project. [ 89 ] Lozinik specifically seeks an order compelling the Defendants to sign confidentiality agreements. Sutherland appears to have signed one already.

If there is any basis for such a request it appears to devolve from his assertion that Geeraert and Patel covenanted at

the November 4 th Meeting to execute confidentiality agreements if Lozinik disclosed his technology. Lozinik will have to establish at trial that either or both of them gave such a covenant and that specific performance is warranted. D. Costs [ 90 ] With respect to costs, Lozinik sought double costs in accordance with Rule 4.29(1) while the Defendants sought costs under column 5 of

Schedule C, payable forthwith. In light of the decisions above, I would invite the parties to make further submissions to me in writing within thirty days of the date of this judgment with respect to both the basis for and quantum of costs they seek. E. Other Matters [ 91 ] I have dismissed substantially all of Lozinik’s actions against the Defendants. He should not infer from the fact that I have not summarily dismissed all of his actions that I believe he has a reasonable chance of success. I would remind him that in

summary dismissal/summary judgment applications I am required to assume that the evidence of the person defending against judgment or dismissal is to be believed, whereupon the search for a possible sustainable cause of action may proceed. [ 92 ] The Defendants sought other directions regarding the management of this litigation. If Lozinik proposes to continue the single action which I have not dismissed I would be prepared to entertain their requests in that regard. Heard on the 8th day of June, 2012. Dated at the City of Calgary, Alberta this 12th day of July, 2012. C. M. Jones J.C.Q.B.A. Appearances: Daniel T.

Lozinik representing himself Sharon E. Borgland of Borden Ladner Gervais for the Defendants