Ghost Pine Creek Ltd v Vogogo Inc, 2017 ABQB 160

Court of Queen’s Bench of Alberta Citation: Ghost Pine Creek Ltd v Vogogo Inc, 2017 ABQB 160 Date: 20170306 Docket: 1401 13112 Registry: Calgary Between: Ghost Pine Creek Ltd. Plaintiff - and - Vogogo Inc. and Geoffrey Gordon Defendants _______________________________________________________ Reasons for Judgment of J.T. Prowse , Q.C., Master in Chambers _______________________________________________________ [ 1 ] The plaintiff Ghost Pine Creek Ltd. (“Ghost Pine”), holding company for Stan Carney (“Carney”), sold shares which it owned in Redfall Technologies Inc. (“Redfall”) back to Redfall.

Carney alleges that the shares were worth far more than Ghost Pine sold them for based on information which was known at the time of sale to Redfall and to the defendant Geoffrey Gordon (“Gordon”) but not known to Carney. [ 2 ] Carney alleges that both the defendant Vogogo Inc. (“Vogogo”), which is the successor by amalgamation to Redfall, and Gordon, are liable to compensate Ghost Pine for the loss it suffered pursuant to the ‘insider trading’ provision found in section 130(1) of the Alberta Business Corporations Act , RSA 2000, c. B-9 (the “Act”). [ 3 ] Ghost Pine applies for

summary judgment against Vogogo and Gordon.Vogogo and Gordon reply that Carney has not shown that Ghost Pine’s claim is ‘unassailable’ so as to meet the onus of proof required for

summary judgment. To the contrary, Vogogo and Gordon assert that there are numerous factual disputes which can only be determined in a trial, so that the

summary judgment application

should be dismissed. [ 4 ] As will be explained, one key issue is whether the information in question, which was not known to Carney, was material or not. My conclusion is that the plaintiff has clearly established that the information was material [ 5 ] The other key issue is whether Carney could have himself discovered the information if he had exercised reasonable diligence. I find that the evidence on this issue is not strong enough to be ‘unassailable’ in favour of the plaintiff, and therefore I am dismissing the claim for

summary judgment.

Section 130 of the Alberta Business Corporations Act [ 6 ] The relevant part of

section 130 of the Act is as follows: 130(1) An insider who sells to or purchases from a shareholder of the corporation or any of its affiliates a security of the corporation or any of its affiliates and in connection with that sale or purchase makes use of any specific confidential information for the insider’s own benefit or advantage that, if generally known, might reasonably be expected to affect materially the value of the security (

a) is liable to compensate any person for any direct loss suffered by that person as a result of the transaction, unless the information was known or in the exercise of reasonable diligence should have been known to that person at the time of the transaction, ... (emphasis added) The two key issues: (

i) materiality and (ii) reasonable diligence (

i) materiality [ 7 ] The critical date in the following chronology is February 20, 2014, which is the date when Ghost Pine signed documents conveying the bulk of its shares in Redfall for $0.09 per share. [ 8 ] By that date, Gordon knew many facts about progress made in obtaining financing and a public offering for the Redfall shares which were not known to Carney.

These facts are recited in the following chronology and summarized in paragraph 49 of Carney’s written argument. [ 9 ] Despite the valiant argument of Gordon’s counsel to the contrary, to me it is plain and obvious, and unassailable, that this information “might reasonably be expected to affect materially the value” of the Redfall shares which Ghost Pine was selling. [ 10 ] Certainly the proposed financing and public offering remained highly contingent, but not as contingent as before, and no reasonable seller would have settled for $0.09 a share if it knew of this information. (ii) reasonable diligence [ 11 ] Gordon asserts that Carney did not know about the progress being made in obtaining financing and a public offering for the Redfall shares because he did not ask sufficient questions about those topics, and had he asked, then Gordon would have provided the details to him. [ 12 ] In other words, Carney/Ghost Pine did not carry out ‘reasonable diligence’ which is a condition to qualifying for compensation pursuant to section 130(1) (

a) of the Act , quoted above. [ 13 ] In my view, Carney has an arguable response as follows: (

i) what is ‘reasonable’ diligence depends on the relationship between the parties at the time, and Carney, as an information technology specialist, had throughout their relationship (to the knowledge of both of them) relied on Gordon, as the business specialist, to keep him advised of developments in Gordon’s efforts to obtain financing, (ii) Gordon’s conduct crossed over from mere non-disclosure into active deception in order to discourage the chances of Carney making further enquiries, and, (iii) Gordon’s assertion that he would have provided the information if requested is not credible in light of the evidence of active deception already undertaken by Gordon. [ 14 ] I will consider the foregoing arguments in the context of what transpired once I set out the chronology.

Chronology of Facts [ 15 ] Following is a chronological merger of various facts asserted in the parties’ written arguments, which I have modified and commented on according to my understanding of the evidence. [ 16 ] 2008 - Redfall was incorporated. It was a payment processing company that serviced web-based businesses in the United States and Canada. Gordon and Carney were the founders of Redfall. They each had the official title of Managing Partner, although later on Gordon externally assumed the title of Chief Executive Officer and President and Carney externally assumed the title of Chief Technology Officer.

Gordon and Carney were also the two initial directors and shareholders (through their personal holding companies) of Redfall. Carney's main role and contribution at Redfall was developing the company's proprietary technology. In 2008 and 2009, Carney spent

significant time designing and building the web-based payment processing technology for Redfall. He designed and coded 90% of the initial platform before Redfall hired another software developer to help. This technology was ultimately branded as "Vogogo". The Vogogo technology developed by Carney was the main product marketed by Redfall at all relevant times. Gordon has acknowledged that he "was not involved in this technology". [ 17 ] 2009 - Redfall successfully integrated the Vogogo technology into the two largest online poker sites in the world, who were its key clients.

This technology processed data between the poker companies and third-party banking vendors to allow those vendors to process and remit payments between the poker companies and their customers. During this period, Rodney Thompson (“Thompson”) joined Redfall as the head of sales and marketing.

Thompson also later purchased (through his holding company) Redfall shares from Carney and Gordon so that each of Carney, Gordon and Thompson held a 33% interest in Redfall (through their holding companies). [ 18 ] Mid-2010 - Redfall lost its two key online poker clients due to legal challenges that forced the clients to withdraw from the U.S. market. As a result, Gordon and Carney tried to expand Redfall's business into new markets using the revenues earned from its lost online poker clients. Carney and his team worked to expand the Vogogo technology in order to grow Redfall's business.

Among other things, Redfall launched a Vogogo.com web application in April 2011 in Canada. Redfall also significantly improved and evolved the Vogogo technology through major revisions. [ 19 ] 2012 - Despite improvements and expansions to the Vogogo technology, Redfall was unable to successfully expand into new markets. By 2012, Redfall's business and financials were suffering significantly. Redfall began to focus on fundraising initiatives to keep it in operation. Jay Cowles was hired as Redfall's vice president of finance to help with these fundraising initiatives.

Gordon and Cowles took the lead in pursuing these initiatives. One of the financing mechanisms being explored by Redfall was the amalgamation of Redfall with an eligible “capital pool company” (a “CPC”) with the aim of qualifying the amalgamated entity to be listed on the TSXV (a “CPC Transaction”). In light of Redfall’s position as of the end of 2012, and its need for funding, it was contemplated that the CPC Transaction being considered by Redfall required a multiple step process, including: (

i) Additional financing, to pay for the significant expenses anticipated by Redfall in relation to the contemplated CPC transaction and to provide Redfall with sufficient working capital to continue operations, pay salaries and other administrative expenses; (ii) A subsequent and successful private placement financing by Redfall in support of the CPC Transaction, through which Redfall would issue an additional tranche of treasury shares to new investors interested in the subsequent amalgamation; and (iii) A subsequent amalgamation between Redfall and the CPC, with a listing of the resulting company on the TSXV. [ 20 ] May, 2013 – Two separate CPC entities were being considered by Redfall for the proposed transaction: Cana Venture Capital Corp. (“Cana”) and Southtech Capital Corporation (“Southtech”).

At this time, and for the next number of months, Redfall pursued the Cana CPC. On May 2, 2013, Gordon provided Carney with a breakdown of the multiple steps involved in the CPC transactions being contemplated. This step reflects on the reliance which Carney was placing on Gordon as the business specialist to keep Carney informed. [ 21 ] July, 2013 – As an example of Carney relying on Gordon for advice on progress towards refinancing, one financing initiative that Gordon undertook was with AVAC Ltd., a Calgary based venture capital firm.

Carney made several enquiries of Gordon regarding progress with respect to obtaining financing from AVAC. For example, on July 15, 2013, Carney emailed Gordon and asked whether Redfall had received "any word from AVAC" regarding the investment. [ 22 ] In or around July 2013, Carney advised Gordon that he wanted to leave Redfall.

Carney wanted to move on to other opportunities and he wanted no more involvement in his day to day responsibilities as the CTO of Redfall. [ 23 ] Mid-August 2013 - Gordon advised Carney that the CPC deal with Cana Venture and Axiom would be moving forward, but that the success of any such deal was subject to the success of Redfall’s contemplated financing efforts. [ 24 ] September 10, 2013 - Redfall, Cana Venture, Axiom, and 1669800 Alberta Ltd. entered into a Business Combination Agreement (the Cana BCA) that contemplated the amalgamation of Redfall and Cana Venture (the Cana CPC Transaction).

Two other parties expected to eventually get involved in the transaction were Sterling Payment Solutions Inc. (Sterling) and Integral Wealth Securities Ltd. (Integral). [ 25 ] The agreement with Cana expressly provided that it was contingent upon a successful private placement financing by Redfall by October 1, 2013 (the “Redfall Financing”).

The Redfall Financing, as contemplated by the Cana Agreement, required Redfall to raise not less than $6,000,000 in exchange for the issuance of shares in Redfall at a value of $0.38 per share. [ 26 ] Attempts to complete the Redfall Financing began in September, 2013, and continued into October, but met with no success.

Despite numerous presentations and a “road show” attempting to secure investors in Redfall’s proposed amalgamation, during which the company made a number of presentations to potential investors, the Redfall Financing attracted no subscriptions. [ 27 ] December 21, 2013 - After having difficulty attracting the necessary financing to complete the deal, Gordon caused Redfall to terminate the Cana BCA and end the Cana CPC Transaction. [ 28 ] Gordon had advised Carney earlier, on December 9, 2013, of the likelihood of the failure of the Cana transactions.

In light of this expected failure, Gordon had been having discussions with Cam Chell (“Chell”) regarding alternate potential financing options for

Redfall.

Chell was the principal of Business Instincts Group Inc. (“BIG”), a local consulting and business development firm, and a shareholder of, and investor in, Redfall, both of whom were known to Carney. [ 29 ] By December 21, 2013, Gordon, on behalf of Redfall, had agreed on a letter of intent between Redfall and Limitless I Corp. (“Limitless”), a company controlled by Chell and affiliated with BIG, pursuant to which it was proposed that Limitless would, in exchange for a secured convertible debenture, loan between $2,000,000 and $3,000,000 to Redfall, following which Redfall would make reasonable commercial efforts to pursue and complete a second CPC transaction.

Gordon signed, on behalf of Redfall, the agreed form of letter of intent and sent it to Limitless for execution. [ 30 ] Negotiation and pursuit of the Limitless LOI and the Southtech CPC Transaction predated the termination of the Cana CPC Transaction and had been going on for some time.

For example, in mid-December 2013, Gordon and Thompson met with the Dale Johnson, a Southtech director. [ 31 ] December 23, 2013 - Gordon emailed Carney and advised him of the termination of the Cana CPC Transaction, stating in the subject line of the email "Staying private for now" and in the body of the email "FYI, there was no financing in sight so we unilaterally terminated. Give me a call is [sic] you have any questions". [ 32 ] Despite signing the Limitless LOI two days earlier on December 21, 2013, Gordon did not in this email advise Carney of this very relevant development.

Arguably the statement that “there was no financing in sight” was false given the Limitless LOI. [ 33 ] Late December 2013 - Gordon and Carney had one or more telephone conversations regarding Carney’s resignation and the next steps for Redfall in relation to Redfall’s pursuit of alternate financing.

Gordon advised Carney at that time that he was in discussions with Chell and BIG regarding financing and another proposed CPC Transaction. [ 34 ] January 1, 2014 - In response to Carney’s inquiry as to “what happened to the BIG deal”, Gordon accordingly advised Carney on that date that Redfall was “[s]till working on a deal with BIG”.

Again, one would have thought that a correct answer to Carney’s enquiry would have led to Gordon disclosing the fact that Gordon had agreed to a form of letter of intent with Limitless (even though the fully executed LOI had not yet been received back from Limitless), but Gordon did not make this disclosure. [ 35 ] When asked about his answer to Carney’s question about the BIG deal, Gordon testified as follows: Q. Just to be clear, in response to Mr. Carney's request for information about the BIG deal, you didn't advise Mr. Carney that the Limitless LOI had been signed by yourself by that point; right? … A.

So, no, I had not. Q. You had not mentioned that you had already signed a Limitless LOI? A. Correct. Q. And you never updated Mr. Carney and told him that the LOI itself had been executed by both parties; right? A. It was not executed by both parties at that point. Q. But you never followed up and told him? A.

No, I do not. [ 36 ] January 9, 2014 - Carney exchanged a series of text messages with Rodney Thompson, Redfall’s incoming director, in which Carney proposed the sale of Ghost Pine’s shares in Redfall. [ 37 ] January 10, 2014 - Carney formally resigned as an officer and director of Redfall. [ 38 ] January 15, 2014 - Carney and Gordon exchanged a series of text messages regarding a possible buyout of Ghost Pine’s shares and discussed the fact that a second CPC involving Chell and BIG was being pursued by Redfall: Gordon: hey give me a shout. I was talking to legal about the buyout, need to run something by you.

Carney: Call now? Gordon: sure Gordon: $200k even, 3,833,334 shares, 5.2c per. You keep 500,000 shares and retain 4.25% ownership. That would work well going forward. Thoughts? Carney: Hey sorry I had to do a Costco run. Noticed I missed a few calls. Gordon: sent you some numbers, let me know if that works and I can get Janan to draft something up. FYI, I think you want to be below 5%... we are still pursuing a deal with Cam [Chell] that would involve the CPC and Axiom, Sterling, etc. If we get that done, you will have no escrow being under 5%.

Carney: Sorry just crunching numbers. I don’t really care about being restricted. Gordon: ok, well we would. One less principal to have to disclose, PIF, deal with, etc. Carney: $250k and I keep 1.5mill shares. If the deal with Cam has issues or something else arises we can talk again. Carney: 1.5mill would leave me just below 10% ownership.

TSXV PIF is 10% ownership if I recall. [ 39 ] It is arguable that Gordon was providing misleading information in the above exchange when he told Carney "We are still pursuing a deal with Cam that would involved the CPC and Axiom, Sterling, etc…" The CPC which was being pursued was not the old Cana/Axiom/Sterling CPC which had already failed. Here are Gordon’s answers when he was cross-examined on that point: Q. And you state, third line from the bottom of your text: (as read) We are still pursuing a deal with Cam that would involve the CPC and Axiom, Sterling, et cetera.

If we get that done, you will have no escrow being under 5 percent. Do you see that? A. I do. Q. So you wrote that text to Mr. Carney? A. I did. Q. And at least at that time, you were having no conversations with Sterling about a – A. No. Q. -- deal; right? That would be inaccurate? A. That's accurate. Q. Inaccurate. The statement that you were still pursuing a deal with Sterling in your text is an inaccurate statement? A. It's inaccurate, and it was well-known that Sterling was no longer a part of anything. They hadn't been -- they weren't even technically a part of the first one. Q.

But that's something you stated to Mr. Carney on this date, at least; right? A. Obviously I did. [ 40 ] Gordon’s falsehood left Carney with the misimpression that Gordon was trying to resurrect the failed Cana CPC Transaction with Axiom. He did not know that Gordon was pursuing the new, and much more promising, Southtech CPC Transaction: Q. Your understanding is they were working on the Cana CPC deal again? A.

They were trying to resurrect the Cana CPC deal again with Sterling, Axiom, and Cam. [ 41 ] To be fair, it is clear that Carney was at least aware that a second CPC Transaction was being pursued, and the following cross-examination transcript makes it clear that, in seeking to retain a larger share of Ghost Pine’s shares, Carney was hoping that the CPC Transaction would succeed, and that any remaining Redfall shares would become more valuable as a result: Q But on January 15th, 2014 your counter offer involves you keeping more shares, correct? A And more money, correct.

Q So you wanted to keep a larger shareholding interest in the company if you could? A And a greater cash settlement as well. Q And you wanted to keep those extra shares in the company just in case it went bankrupt? A A gamble. Q I put it to you that you wanted to keep a larger share of the company because you knew that a second CPC deal was in the works, and if it succeeded it would result in a significant increase in the value of Redfall's shares, correct? A I knew Geoff was working with the groups listed, Axiom, Sterling, with another Hail Mary deal.

I wanted a larger -- I wanted more cash, and if the Hail Mary deal came through, you know, that would have been -- more money would have been fine. [ 42 ] Carney did not make further enquiries in relation to what he described as the “Hail Mary” CPC Transaction being pursued by Redfall prior to the sale of Ghost Pine’s shares: Q So other than the text log we went through you never asked any questions about what you called the Hail Mary play, right? A Yeah, I don't recall. I don't recall.

[ 43 ] January 20, 2014 - BIG provided Redfall with a draft letter of intent that proposed the business combination of Redfall and Southtech to form a new company called Vogogo, and a private placement of Redfall shares (the Southtech LOI). According to the draft Southtech LOI, the value of Redfall shares in the private placement was $0.50 per share.

Gordon did not share this information with Carney. [ 44 ] January 23, 2014 - Chell told Redfall that there was "high quality interest in the convert…and we have a real shot a [sic] raising money on the public financing and a much better price…" This "interest" involved the "President of Canaccord, head of instructional sales at Canaccord, CEO of Clarus, Vic Choy, thee [sic] top retail broker at Canacord [sic], CIBC, GMP. #3 senior guy at Dundee, Couple of notable commentators/newsletter guys, Rob, Me…"; [ 45 ] On that same date, Chell advised Gordon that Limitless was interested in increasing its investment in Redfall from $2 million to $2.5 million, and Gordon confirmed that this would be possible.

Gordon did not share this information with Carney. [ 46 ] February 1, 2014 - Redfall and BIG entered into a consulting agreement pursuant to which BIG would provide consulting services to assist Redfall with its ultimate goal of amalgamating with Southtech and becoming a public company; Ghost Pine was never advised of the consulting agreement between Redfall and BIG: Q. And at no time prior to the -- him delivering his share transfer agreement to you on February 20, 2014, did you ever tell Mr. Carney about any consulting arrangement or service contract between Redfall and BIG; right? A.

That we were contemplating it? No. Q. Or that it had actually been executed. A. No, I did not. [ 47 ] February 3, 2014 - Carney wrote to provide Gordon with a new offer to sell all but 500,000 of Ghost Pine’s shares for $400,000, and to ask whether Chell or another party might buy a portion of the shares directly to assist with a deal going forward: I’ve had time to think about the prior SMS conversation we had. The short of it is I would surrender all but 500,000 shares for $400,000. I know that might put you in a difficult place but realize that is not my intention.

I’ve wondered if Cam [Chell] or another party would consider buying some directly to alleviate any strain it might cause as part of a deal going forward but I have no idea what that would look like.

I also have concerns about structuring the deal as a contract but we can cross that bridge when we get to it. [ 48 ] On this date, Redfall and Limitless were in the process of negotiating and drafting the terms of the Limitless secured debenture contemplated in the draft letter of intent dated January 20, 2014 but Gordon did not advise Carney of this. [ 49 ] February 4, 2014 - Gordon replied to Carney and advised that the company was in such poor financial condition that it simply lacked the ability to purchase Ghost Pine’s shares at that price, but that Gordon would reach out to another potential investor, Andy McCreath (“McCreath”), in order to gauge his interest in purchasing Ghost Pine’s shares directly. [ 50 ] February 5, 2014 - Carney sent Gordon an email confirming that he and McCreath had met and agreed to the terms of McCreath’s purchase of the majority of Ghost Pine’s shares in Redfall, at $0.09/share, with Ghost Pine retaining 500,000 shares in Redfall.

What Gordon knew, but Carney did not, was that McCreath was not in fact purchasing the bulk of these shares for his own account, but had arranged with Gordon that the bulk of Ghost Pine’s shares would be surrendered to Redfall’s treasury. This is made evident by a text message that Gordon sent to Chell on February 5, 2014: Also, finally worked out a deal with Stan. 345K for all but 500K shares. Andy McCreath helped me broker it, so I want to let him [buy]..500K of those shares. You okay with that?

That's 3.3M shares surrendered back to treasury. [ 51 ] To be fair, Carney agreed to sell his shares to McCreath without making further enquiries at that time as to any progress being made by Gordon as to the status of Gordon’s efforts to arrange for new financing or a new CPC transaction: Q So you agreed to sell the shares you did agree to sell for 9 cents a share? A Correct. Yes. Q Prior to reaching your agreement with Andy and approximate to that date had you ever asked Gordon what the status of the potential deal with BIG was? A No, I don't recall.

Q Did you make any inquiries of anybody at Redfall about the status of the CPC deal? A I don't recall. Q Did you talk to Andy McCreath about the status of the CPC deal? A Yeah, I don't recall. [ 52 ] On the other hand, on Gordon did not tell Carney, on this same date when Carney was agreeing to sell his shares for 9 cents each, that Chell had told Gordon the following:

…if we take this current [private placement] to just under $3M I can have the next $10M secured at .70. Noodle on it – the dilution works out better than we ever discussed/imagined it would be at this point.

From a regulatory perspective, I need to see if we can do the [qualifying transaction] at .52 [ 53 ] February 11, 2014 - Unbeknownst to Carney, Chell was appointed to the board of Redfall as Redfall and Limitless had finalized and executed a Secured Convertible Debenture (the “Limitless Debenture”), which provided for the provision by Limitless of $2,000,000 in debt financing, at a rate of 10% interest, for which Redfall provided a general security interest, with a right to convert the loan to equity at Limitless’ sole discretion. [ 54 ] Pursuant to the Limitless Debenture, Limitless provided Redfall with a $2,000,000 loan, which was received on February 12, 2014, and was subject to a detailed set of restrictions. [ 55 ] When asked about whether he had advised Carney of these developments, Gordon testified as follows: Q.

I'm right that you never told Mr. Carney that Redfall had, in fact, received this money; right? A. I did not. … Q. Again, you never told Mr. Carney about the closing of the Limitless debenture; right? A. I did not. Q. And you never provided him with a copy of that document? A.

I did not. [ 56 ] It may well be that, had he been provided with this information, Carney could have refused to carry through with the sale of the shares which took place 3 days later, because the sale documents tendered to him were for a sale of shares to Redfall, not a sale to shares to McCreath as had been discussed. [ 57 ] February 14, 2014 - Gordon provided Carney with share sale documents on February 14, 2014.

Carney, not knowing that McCreath was actually buying the shares for Redfall rather than for McCreath himself, was surprised that in the share sale documents indicated that it would be Redfall, and not McCreath, purchasing Ghost Pine's shares. [ 58 ] February 19, 2014 - the day before the completion of the Share Sale, the deemed value of Redfall shares under the upcoming private placement was $0.75 per share: Q. And as we saw in some of the correspondence that we looked at earlier today, that price ultimately went from 52 cents and then to 70 cents and then, as we see, February 19, 2014, to 75 cents? A.

Correct. [ 59 ] Carney was never advised of the price to be paid for Redfall shares in the private placement component of the Southtech CPC Transaction: Q. I take it, sir, that you never shared this private placement financing price of 75 cents with Mr. Carney prior to February 20, 2014; right? A. I didn't discuss any of the details of these negotiations with Stan [Carney]. Q. Including this particular price of 75 cents? A. Including this. [ 60 ] February 20, 2014 - Carney signed the share sale documents for the sale to Redfall at 9 cents per share and returned them to Redfall, completing the share sale.

Reasonable diligence [ 61 ] As stated previously, Carney’s strongest argument is that his diligence was ‘reasonable’ given the relationship between the parties at the time, and the fact that Carney, as an information technology specialist, had throughout his relationship with Gordon, relied on Gordon, as the business specialist, to keep him advised of developments in Gordon’s efforts to obtain financing. [ 62 ] Evidence as to the relationship between Carney and Gordon, and Carney’s reasonableness in relying to the extent he did on Gordon to be forthcoming, is subtle and nuanced, and should be evaluated by a trial judge, not adjudicated based on the affidavits and cross-examination transcripts submitted on this application. [ 63 ] Accordingly, I am not satisfied that Carney has established to the ‘unassailable’ level of proof required for

summary judgment that he conducted ‘reasonable’ diligence as required by

section 130 of the Act . Whether Gordon would have revealed the information in question even if asked [ 64 ] Carney asserts that, even if he did not conduct reasonable diligence, Gordon would not have provided the information in any event, which makes the issue of reasonable diligence irrelevant.

[65] This argument succeeded for the plaintiff in Tongue v Vencap Equities Ltd., (1995) (AB KB), 17Alta.L.R. (3d) 103, 146 A.R. 321, aff’d 1996 ABCA 208 , 39 Alta.L.R. (3d) 29, 184 A.R. 368. [66] The difficulty with this submission is that Gordon has asserted under oath that, if specifically asked, he would have providedthe hidden information. [67] Carney can challenge this assertion at trial and argue that Gordon’s conduct crossed over from mere non-disclosure into activedeception in order to discourage the chances of Carney making further enquiries, and, accordingly Gordon’s assertion should bedisbelieved. [68] The problem with this argument is that credibility issues generally cannot be determined on a

summary judgment application. [69] Carney argues that there are exceptions to this general rule, and that Gordon’s assertion that he would have divulged thehidden information if asked is a bald, self-serving assertion that is of no evidentiary value.

See Guarantee Co. of North America vGordon Capital Corp., (SCC), 1999 CarswellOnt 3171, 1999 CarswellOnt 3172, [1999] 3 S.C.R. 423. [70] It is true that there are exceptions to the rule and that where the evidence of the non-moving party [Gordon] is eitherdestroyed by cross-examination on affidavit, or the introduction of other evidence rendering that party's evidence completely non-credible, then that evidence can be ignored: Janvier v 834474 Alberta Ltd., 2010 ABQB 800, 2010 CarswellAlta 2483 at para.15. [71] However, the evidence before the Court, on the issue of whether Gordon should be believed when he asserts that he wouldhave disclosed the hidden evidence if asked, falls short of making Gordon’s assertion ‘completely non-credible’. [72] The determination of whether Gordon would have revealed the hidden information if directly asked is something that only atrial judge can determine.

The existing record before the Court on this

summary judgment application is not sufficient to lead to anadjudication and disposition of that issue that is fair and just to both parties: Whitecourt Power Limited Partnership v ElliottTurbomachinery Canada Inc., 2015 ABCA 252 at paragraph 9. Disposition [73] For the reasons given I dismiss the plaintiff’s

summary judgment application. If the parties cannot agree on costs of theapplication then may seek a ruling from me in that regard. Heard on the 27th day of February, 2017. Dated at the City of Calgary, Alberta this 6th day of March, 2017. J.T. Prowse, Q.C. M.C.Q.B.A. Appearances: Andrew F. Sunter Andrea Sam Burnet, Duckworth & Palmer LLP or the Plaintiff Matthew Vernon Peacock Linder Halt & Mack LLP for the Defendants