Niqitaq Fisheries Ltd. Plaintiff/FIRST DEFENDANT BY COUNTERCLAIM And: baffin Fisheries Coalition SECOND Defendant BY COUNTERCLAIM And: dudley Fowler Defendant/PLAINTIFF BY COUNTERCLAIM, 2019 NLSC 122

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Niqitaq Fisheries Ltd. v. Fowler , 2019 NLSC 122 Date : June 14, 2019 Docket : 201701G6894 Between: Niqitaq Fisheries Ltd. Plaintiff/FIRST DEFENDANT BY COUNTERCLAIM And: baffin Fisheries Coalition SECOND Defendant BY COUNTERCLAIM And: dudley Fowler Defendant/PLAINTIFF BY COUNTERCLAIM Before: Justice Daniel M. Boone Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: March 14, 2019

Summary: The Plaintiff applied for

Summary Trial of an action for breach of contract. The Court determined that the matter was appropriate for

Summary Trial and that, although the Defendant raised a genuine issue for trial, the record allowed the Court to interpret the contract and decide the issue. The Plaintiff’s

interpretation of the contract was correct and judgment was granted in favour of the Plaintiff.

Appearances: Philip J. Buckingham and Andrew G. Ronan Appearing on behalf of the Plaintiff / First Defendant and Second Defendant by Counterclaim Christopher J. Peddigrew Appearing on behalf of the Defendant /Plaintiff by Counterclaim Authorities Cited: CASES CONSIDERED: Hryniak v. Mauldin, 2014 SCC 7; Marco Ltd. v. Newfoundland Processing Ltd., (NLSC), 130 Nfld. & P.E.I.R. 317, 405 A.P.R. 317 (Nfld. S.C.(T.D.)); Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53; Young v.Noble, 2016 NLCA 58; Telford v. Holt, (SCC), [1987] 2 S.C.R. 193; Canadian Imperial Bank of Commerce v.

TuckerrIndustries Inc. (1983), (BC CA), 46 B.C.L.R. 8, 149 D.L.R. (3d) 172 (C.A.); Govt. of Newfoundland v. Nfld. Ry. Co.,[1888] C.C.S. NO. 40, 13 App. Cas. 199 (P.C.); Coba Industries Ltd. v. Millie's Holdings (Can.) Ltd. (1985), (BC CA),65 B.C.L.R. 31, 20 D.L.R. (4th) 689 (C.A.) RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sched. D REASONS FOR JUDGMENT Boone, J.: INTRODUCTION [1] This is an Application by the Plaintiff/Defendant by Counterclaim for

Summary Judgment on, and

Summary Trial of, itsaction. Following cross-examination of deponents, the Plaintiff conceded that the Defendant had raised a triable issue sufficient to avoidSummary Judgment. The Application for

Summary Trial proceeded to hearing. [2] The Plaintiff/First Defendant by Counterclaim (“Niqitaq”) is a seafood processor. The Second Defendant by Counterclaim(“Baffin”) is a wholly-owned subsidiary of Niqitaq. Niqitaq and Baffin were engaged in joint business operations. Nothing turns on anyfurther precision in description of the relationship or business operations of these parties, and I will refer to them together asNiqitaq/Baffin.

The Defendant (“Fowler”) was an employee of Baffin, but worked within these joint business operations. [3] The Plaintiff filed Affidavits sworn by Christopher Flanagan (“Flanagan”), the current CEO of Niqitaq/Baffin, David Taylor(“Taylor”), the CFO of Niqitaq/Baffin up to March 2017, and Glenn Grandy (“Grandy”), the current CFO of Niqitaq/Baffin. Fowlerfiled his own Affidavit and an Affidavit from Garth Reid, former CEO of Niqitaq/Baffin.

The parties relied on excerpts from thediscovery of each of Flanagan, Taylor, Fowler and Reid, and each of those deponents was also cross-examined in the hearing of thisApplication. [4] Niqitaq/Baffin advanced $219,450 to Fowler. Niqitaq/Baffin says that this money was provided for Fowler to use on behalf ofNiqitaq/Baffin for the purpose of acquiring seafood quotas from fishermen or processors. Fowler agrees that Niqitaq/Baffin paid themoney to him, but alleges that the money constituted retroactive compensation for overtime and a retention bonus.

Niqitaq/Baffin saysthat it advanced the money on condition that Fowler return it if he was unsuccessful in acquiring quotas, and it took a Promissory Notefrom Fowler as security for repayment. Fowler says that only the incentive bonus portion of the advance was subject to conditionalrepayment if he did not stay employed by Niqitaq/Baffin for ten years from the date of the advance. [5] In the alternative, Fowler pleads the defence of equitable set-off in respect of his claim for wrongful dismissal. He alsocounterclaims for wrongful dismissal. [6] Fowler opposes the Application for

Summary Trial on the ground that the issues presented cannot be resolved withoutdeterminations of credibility and that, therefore, there is both a genuine issue for trial and it would be unjust to resolve those issues onthis Application. In the alternative, Fowler says that even if judgment is granted in favour of Niqitaq/Baffin, then that judgment ought tobe stayed until his counterclaim for wrongful dismissal is determined. [7] I have decided the Application for

Summary Trial should be allowed and judgment should be entered against Fowler in favourof Niqitaq/Baffin. ISSUES

[ 8 ] The issues for determination are as follows: 1. Is this case one appropriate for

summary trial? 2. Has the Respondent raised a genuine issue for trial? 3. Is it nevertheless possible and appropriate to decide the issues on the application on the existing record? 4. What was the contract between Niqitaq/Baffin pursuant to which the amount of $219,450 was paid to Fowler? 5. If the preceding issues are determined in favour of Niqitaq/Baffin, then is the defence of equitable set-off available to Fowler? 6.

If the preceding issues are determined in favour of Niqitaq/Baffin, then should judgment on the action of Niqitaq/Baffin be stayed pending resolution of Fowler’s counterclaim for wrongful dismissal? Background [ 9 ] Niqitaq/Baffin seeks judgment on the debt claim. It says that it advanced $219,450 to Fowler, and that Fowler agreed to repay it on demand. Repayment was secured by a Promissory Note. Fowler admits that he signed the Note, and he does not plead any defence such as non est factum or duress, which would obviate the enforceability of the Note.

Rather, Fowler’s position is that the Note does not reflect the true transaction between him and Niqitaq/Baffin. Promissory Note [ 10 ] The claim of Niqitaq is for repayment of $219,450 advanced to Fowler. Niqitaq says that these funds were advanced for a limited purpose and that the advance was secured by a Demand Promissory Note. The Note was prepared by Niqitaq solicitors on the instruction of Taylor.

It was signed by Fowler on December 19, 2016, and Taylor witnessed Fowler’s signature. [ 11 ] The Note was a one-page document in standard terms as follows: DEMAND PROMISSORY NOTE Date: December 20 th , 2016 Amount: $219,450.00 Dudley Fowler (“Fowler”) in consideration of a loan from Niqitaq Fisheries Ltd. (“NFL”), hereby promises to pay to NFL, its successors or assigns, on demand, the principal sum of Two Hundred Nineteen Thousand Four Hundred and Fifty Dollars ($219,450.00) (the “Principal Sum”) without interest.

AND IT IS FURTHER AGREED that in the event that Fowler fails to pay the Principal Sum within ten (10) days from the date of demand, Fowler shall be liable for interest thereon at the rate of 12% per annum, from the date of this Promissory Note to the date of payment, and all costs of NFL (including legal fees on a solicitor and client basis) in relation to the default. AND IT IS FURTHER AGREED that this Promissory Note is binding upon the parties hereto and their successors and assigns and shall enure to the benefit of NFL and its successors and assigns.

FOR VALUE RECEIVED . [ 12 ] Fowler conceded that he signed the Note and he agreed on cross-examination that he had the capacity to understand the terms of the Note when he did so. He also conceded that he received a demand for repayment, and that he has not repaid the amount demanded. [ 13 ] Fowler says, however, the Note did not reflect the terms of the advance. Fowler’s Employment with Niqitaq/Baffin [ 14 ] In order to understand the factual dispute, some background concerning the relationship between the parties is necessary. [ 15 ] Fowler worked for Niqitaq/Baffin from June 2012 to October 27, 2017.

He was originally hired in June 2012 as skipper on a fishing vessel owned by Niqitaq/Baffin and continued in that position until February, 2015. At that time, Reid approached him and asked that he take on a position as Fleet Operations Manager. Fowler testified he was initially reluctant to take that position as the compensation would be considerably less than he could earn as skipper.

However, Reid told him that when the company achieved an undefined business stability, Fowler would be retroactively compensated for the discrepancy in remuneration. [ 16 ] In May 2015, Fowler signed a written contract with Baffin providing for a salary of $120,000. The contract did not include any terms concerning retroactive compensation or overtime pay but did include a reference to incentive pay. [ 17 ] In their Affidavits, both Fowler and Reid testified that Fowler worked a considerable amount of overtime while in the position of Fleet Operations Manager.

Fowler did not present any evidence that he kept track of this overtime in any way. In his Affidavit, Flanagan said that he examined the company records and could not find any records of Fowler working overtime. Neither Fowler nor Reid attested in their Affidavits as to how much they believed was owed to Fowler for overtime. On cross-examination Fowler said the amount was between $178,000 and $188,000; Reid said he estimated it to be in excess of $170,000.

Neither gave any evidence as to the number of hours or rate of pay used to calculate the overtime allegedly owed. [ 18 ] According to both Fowler and Reid, in the fall of 2016 Reid told Fowler that the company was on better financial ground so it could honor assurances given to Fowler regarding pay discrepancy and retroactive compensation. Reid’s evidence did not describe the measure of stability he applied to determine that the company was financially stable enough to pay Fowler.

[ 19 ] In December 2016, Fowler signed a new contract pursuant to which his salary increased to $166,416. The contract specifically provided that the position was not eligible for overtime pay. [ 20 ] Flanagan’s Affidavit, based on review of corporate records, attested that Fowler received all incentive pay owing to him during his time as Fleet Operations Manager. Specifically, in 2015 he was paid a Christmas bonus of $7,100 and incentive bonus of $18,000; in 2016 a Christmas bonus of $11,595 and incentive bonus of $20,374. [ 21 ] Niqitaq/Baffin terminated Fowler’s employment on October 27, 2017.

The termination letter stated that the termination was for cause and it referred to a business review and forensic audit commissioned by the Board of Directors and prepared by Deloitte. The Parties offered Different Explanations for the Advance of $219,450 [ 22 ] The fundamental disagreement at the heart of this litigation relates to the purpose for the advance of $219,450 by Niqitaq/Baffin to Fowler in December 2016. (

i) Niqitaq/Baffin says it advanced the funds for purchase of shrimp quota [ 23 ] Niqitaq/Baffin says that it advanced the money to Fowler for his use to acquire shrimp quota for the company to utilize. The evidence in support of this position came from Taylor, with supporting circumstantial evidence from Grandy. [ 24 ] According to Taylor, in the fall of 2016 he attended a meeting with Fowler and Reid during which Reid explained to Taylor that he wanted Niqitaq/Baffin to advance funds to Fowler because Fowler was going to act on behalf of the company to acquire shrimp quota.

Taylor asked Fowler for backup information regarding the quota purchase and Fowler then provided him with a handwritten document titled “Shrimp Quota” detailing 57 tonnes of shrimp or quota to be purchased at a price of $3,850 per tonne, equal to $219,450. [ 25 ] This direction caused Taylor concern because it was not Niqitaq practice to advance funds directly to a senior official for such a purpose.

In order to protect the company and ensure that funds would be repaid to Niqitaq in the event that Fowler did not purchase quota, Taylor instructed Niqitaq legal counsel to draft a Promissory Note securing repayment. [ 26 ] On December 19, 2016, before the work by legal counsel was completed, Taylor received an email from Fowler asking if funds had been deposited in his account. Taylor replied, asking when the funds were needed and noting that the Note would not be ready until the next day. He received a reply from Fowler saying the funds were needed that day.

Regardless, the transaction did not occur until December 20 when Fowler signed the Promissory Note. Taylor witnessed Fowler’s signature. He then gave Fowler a cheque for $219,450. He instructed Niqitaq accounting staff to create a journal entry in that amount recording a receivable owing to Niqitaq from Fowler. [ 27 ] During the winter of 2017, Taylor enquired of Reid whether there had been any documentation regarding the use of the funds provided to Fowler. Reid told him that documentation would be forthcoming by end of fiscal year, March 31, 2017. Taylor left Niqitaq in March, 2017.

He never received any documentation regarding use of the funds during his remaining time with Niqitaq. [ 28 ] Grandy replaced Taylor as Niqitaq CFO in March, 2017. Later that month, Grandy received an enquiry from Niqitaq external auditors about paperwork related to the purchase of shrimp quota. Another employee of Niqitaq/Baffin, Nicholas Cline, communicated this request to Reid.

Cline also provided Reid with a draft form of letter regarding the purchase of the quota that would satisfy the auditors. [ 29 ] On cross-examination, Reid admitted that Cline asked him about documentation supporting the purchase of shrimp quota and that he was given a draft form of letter for the vendor of the quota to complete. He provided this draft letter to another fish processor, Quinlan Brothers Ltd., and asked that Quinlan print the letter on Quinlan’s letterhead, sign it, and return it to him. Once this was done, Reid passed the executed letter on to Cline.

Reid admitted on cross-examination that he arranged this even though he knew that Niqitaq had not purchased any shrimp quota from Quinlan. The letter stated that Niqitaq had purchased 57 tonnes of shrimp quota for $219,450. Reid gave no explanation on cross-examination for telling Niqitaq officials and auditors that a shrimp quota purchase from Quinlan had been completed when it had not. (ii) Fowler says that the advance was for overtime pay and incentive bonus [ 30 ] Fowler says that, in December 2016 Taylor gave him a cheque for $219,450, with no explanation.

He says that he had been expecting some funds as promised by Reid and therefore did not ask Taylor the reason that he had been given this money. Instead, he asked Reid the purpose, and for an explanation as to why the cheque was for so much. He testified that Reid told him the cheque was partly retroactive compensation for overtime and extra work, and partly incentive to remain employed with Niqitaq/Baffin. [ 31 ] Fowler testified that he was not told - at any time - that the money advanced was to be used by him to purchase shrimp quota for the use of Niqitaq/Baffin.

He admitted that he had prepared the handwritten document mentioned earlier titled “Shrimp Quota” detailing 57 tonnes of shrimp or quota to be purchased at a price of $3,850 per tonne, equal to $219,450, and that he gave this document to Taylor as requested by Reid. According to Fowler, the fact that the cheque was in the precise amount Fowler had previously told Taylor was required to purchase 57 tonnes of shrimp quota was only a coincidence. [ 32 ] Fowler acknowledged signing the Promissory Note.

The promise to repay the money is inconsistent with Fowler’s explanation for the purpose for which Niqitaq/Baffin paid the money to him. By way of asserting a resolution to this inconsistency, he testified that on two previous occasions he had been advanced money by Baffin or another Niqitaq-affiliated company. The first time was as a retention bonus as incentive for remaining employed with the company for five years; the second, for the purpose of advance training.

On both those occasions, the money was advanced on condition and repayable if he did not fulfill the conditions. He satisfied the conditions and did not have to repay either advance. Although he had not been required to sign a promissory note on either of these earlier occasions, he assumed that the Promissory Note was required in this instance because some of the money had been advanced to him as a retention bonus that would have to be repaid if he did not stay with the company.

Fowler did not explain why he signed a Promissory Note for the repayment of money, most of which he believed was paid to him for overtime he had already worked. [ 33 ] Fowler also did not explain the inconsistency between, on one hand, his description of Taylor handing him a cheque unexpectedly and without explanation and, on the other hand, the funds being provided to him following an email in which he asked Taylor whether funds had been advanced yet. [ 34 ] Fowler did not report the amount of $219,450 as earnings on his income tax return.

He said that he thought that the company would take care of income tax owing, but he did not ask Reid or Taylor whether this was done. (iii) Reid describes the purpose of the advance differently than Niqitaq and Fowler [ 35 ] Reid was the CEO of Niqitaq/Baffin at the time that the funds were advanced to Fowler. His employment was terminated for cause following a forensic audit commissioned by the company Board of Directors. Niqitaq/Baffin has issued action against him claiming $1.8 million allegedly converted to his personal use.

Reid’s Affidavit evidence was adduced on behalf of Fowler, and he was cross-examined. [ 36 ] In his Affidavit, Reid said that he acknowledged that Fowler signed a Promissory Note securing an advance of $219,450.

However, he asserted that the company did not intend the money to be repayable on demand because some of the money was for retroactive compensation and some paid to induce Fowler to remain employed with Niqitaq/Baffin, which Fowler would only have to repay if he quit employment within 10 years of the Promissory Note. [ 37 ] On cross-examination, Reid changed his testimony regarding the purpose of the advance of the money to Fowler. He said that in October 2016 he and Fowler discussed the possible purchase of shrimp quotas on behalf of Niqitaq/Baffin.

On his instruction, Fowler prepared the handwritten document named Shrimp Quotas and presented it to Taylor. He also acknowledged that he instructed Taylor to advance $219,450 to Fowler for use in purchasing shrimp quotas. Reid also felt that the company owed Fowler for overtime pay and compensation for extra work, and he believed that it had an obligation to Fowler to fulfill a promise to make up the difference between his salary as skipper and as Fleet Operations Manager. He therefore told Fowler that he if he was not successful in purchasing shrimp quotas, then he could keep the money advanced for his own.

No time line was set for the point at which Fowler could abandon the search for quota and keep the money, and as far as Reid was aware, Fowler continued to search for quotas until the fall of 2017 when the company fired both men. He admitted that he did not tell anyone else at the company of this arrangement with Fowler. He did not direct anyone to account for income tax withholdings on the money paid to Fowler, and did not consider whether the company had any obligation to do so. He said that he was not aware that Fowler used the money for personal purposes in December, 2016.

Finally, he said that, notwithstanding the discussions regarding quota purchase, he considered the $219,450 to have been Fowler’s money “from Day 1.” The Forensic Audit and the Demand for Repayment [ 38 ] The Board of Niqitaq/Baffin requested Deloitte to conduct a forensic investigation of company finances. The Forensic Investigation Interim Report was entered into evidence. The Report identified questionable financial dealings and apparent personal use of significant funds by Reid.

The Report categorized the advance of $219,450 to Fowler as “questionable” although noting that it was recorded in the draft financial statements as prepaid shrimp quota. Finally, insofar as is relevant to this case, the report recommended that the amount of $219,450 be booked as a business loss “on the basis that the advance to Mr.

Fowler had no apparent business purpose.” [31] According to Flanagan, after the report was completed, Fowler was invited to meet with company representatives to provide information regarding the reason for the advance, but he failed to attend. [32] Niqitaq/Baffin then issued a demand for repayment of the amount due under the Promissory Note. According to Flanagan, Fowler has not repaid the money. [ 39 ] Fowler acknowledged that he received the demand for repayment and did not repay any of the amount demanded.

Summary Trial Rules and Case Law [ 40 ] The Plaintiff’s Application is taken pursuant to Rule 17A of the Rules of the Supreme Court, 1986 , S.N.L. 1986, c. 42, Sched. D , the pertinent parts of which read as follows: 17A.01

Summary Trial 17A.01(1) A plaintiff or defendant may, after defence has been filed and at any time prior to the proceeding being placed on a trial list, apply to the Court with supporting affidavit material or other evidence for

summary trial seeking judgment on or dismissal of all or part of the claim in the statement of claim, as the case may be 17A.03 Disposition of Application 17A.03(1) Where the Court is satisfied that there is no genuine issue for trial with respect to a claim or defence, the Court shall grant

summary judgment accordingly.

17A.03(2) Where the Court decides that there is a genuine issue with respect to a claim or defence, a judge may nevertheless grantjudgment in favour of any party, either upon an issue or generally, unless (

a) the judge is unable on the whole of the evidence before the Court on the application to find the facts necessary to decide thequestions of fact or law; or (

b) it would be unjust to decide the issues on the application. 17A.03(3) Where the Court is satisfied that the only genuine issue is the amount to which a party is entitled, the Court may order a trialof that issue or grant judgment with a reference to determine the amount. 17A.03(4) Where the Court is satisfied that the only genuine issue is a question of law, the Court may determine the question and grantjudgment accordingly. 17A.03(5) Where a party claims an accounting and the responding party fails to satisfy the Court that there is a preliminary issue to betried, the Court may grant judgment on the claim with a reference to take accounts. [41] In Hryniak v.

Mauldin, 2014 SCC 7, the Supreme Court described

summary trial rules as important tools to ensure timely,proportional, and cost-effective access to justice. The Supreme Court directed broad

interpretation of such rules in order to achieve thosepolicy goals. [42] In this jurisdiction, the proper approach to application of Rule 17A was the subject of detailed consideration by Justice Green,as he then was, in Marco Ltd. v. Newfoundland Processing Ltd., (NL SC), 130 Nfld. & P.E.I.R. 317, 405 A.P.R. 317(Nfld. S.C.(T.D.)). After consideration of the policy basis for the Rule, and the application of similar rules in other Canadianjurisdictions, Justice Green at paragraph 76 of the decision, set out the following principles to guide the application of the Rule:: 76 … 1.

The object of Rule 17A is to promote the general objective of the Rules of Court of providing an expenditious and inexpensivedetermination of proceedings on their merits, by screening out claims that cannot survive the "good hard look". 2. The burden is on the applying party to satisfy the court that: (

a) there is no "genuine issue for trial" or, (

b) if there is a genuine issue, the record before the court enables the court to find the facts necessary to decide that issue and it wouldnot be unjust to the responding party to do so. 3. To bring himself or herself within the Rule the applying party must: (

a) in a case where he or she has the ultimate burden of proof on the merits, put forward an evidentiary basis for the claim which, ifconsidered alone, would prove each element of the cause of action; or (

b) in a case where the other party has the burden of proof on the merits, put forward an evidentiary base establishing a defence to theclaim as defined in the pleadings or tending to show that the other party's claim has no substance to it. 4. In either of the foregoing cases, the applying party's case must consist of an organized set of facts set out in a coherent way, eitherfrom primary sources or the best sources available, including admissions on interrogatories and discoveries, that constitute proof of a

proper foundation of the claim or defence, as the case may be. 5. In assessing whether the applying party's evidentiary basis is present, the court must take into consideration not only the affidavit and other documentary evidence presented on behalf of the applying party but also the results of any cross-examination, if allowed, of the applying party's deponents. 6. The opportunity to avail of cross-examination is in the discretion of the court so as to ensure promotion of the philosophy of the rule of providing expeditious and inexpensive paper trials. Cross-examination would likely be appropriate where: (

a) there is some disputed issue disclosed on conflicting affidavits, the resolution of which is necessary to the ultimate outcome of the case; (

b) even though the applicant for cross-examination has not filed a conflicting affidavit, the purpose of cross-examination is to address information that is not within the knowledge of the cross-examiner's own deponents, provided the court can be convinced from other sources (eg. the pleadings), that there is a substantive point of difference between the parties; (

c) there is other good reason to test the veracity of a statement that is directly related to a material fact in dispute. Unlike cross-examination on a full trial, cross-examination on affidavits would not generally be permissible for the purpose of attacking credibility generally. If that is necessary, then that is probably a good indication that the case should go to trial. 7.

If the applying party satisfies the threshold test for the application of the rule by putting forward an evidentiary basis for his or her position, the responding party then has an evidentiary burden to demonstrate that there is a genuine issue for trial. This cannot be accomplished by showing an issue raised by the pleadings. The argument on a Rule 17A application takes place at a level below the pleadings within the forums of evidence and legal argument.

The responding party must therefore "put his best foot forward" since failure to do so may lead the court to conclude that there is in fact no genuine issue for trial. The responding party should therefore set out in affidavits, or answers given on interrogatories or oral discoveries, an evidentiary foundation for his or her case so that the court can see that there is a genuine issue of fact or law that is joined and has to be resolved before the court can make an ultimate determination on the merits. 8.

Where the issue is one of fact, the responding party may demonstrate the existence of a genuine issue by filing his or her own affidavit or other material or, where cross-examination of the applying party's deponents is allowed, it may be demonstrated from answers given on such cross-examination or, where the responding party's own deponents are cross-examined, from favourable answers thus elicited.

Where the issue is a legal one, the responding party would be expected to demonstrate the existence of the legal issue, by the citation of appropriate authority, in the memorandum of law which is required to be filed pursuant to Rule 17A.02(6) . 9. There will be a "genuine issue for trial" if the issue in question is not spurious and the issue relates to a material fact or point of law that is necessary to be decided to resolve the ultimate controversy between the parties.

Obviously, there will not be a genuine issue for trial if the responding party can put forward no evidence that could constitute either a defence or a claim in law. 10. The court must approach the test for application of Rule 17A on an issue by issue basis. Just because it is determined that a particular issue must go to trial, it does not follow that the court cannot adjudicate summarily on other issues if the pre-conditions for the application of Rule 17A have been made out in respect of those other issues. 11. In presenting an evidentiary base in support of or in opposition to an application for

summary trial, both parties have an obligation not to "scoop-shovel", to use the phrase employed in the Inspiration Management case, disjointed affidavits and other material on the chambers judge, but must set out the evidence in a concise and organized way that demonstrates the issues in dispute and why they can or cannot be dealt with by way of

summary trial. Failure to do so may result (if the culprit is the applying party) in the Court concluding as a threshold matter, that the case is not appropriate for determination by way of

summary trial; or (if the culprit is the responding party), in the court concluding that no genuine issue for trial has been demonstrated.

12. If there is no genuine issue for trial, the court must give judgment in favour of the applying party. If the only genuine issue is a question of law the court may proceed to decide the issue and give judgment accordingly. 13. Where there is a genuine issue for trial, the court must then go on to consider whether, on the evidence as presented, it is nevertheless possible and appropriate to decide the issues on the application on the basis of the existing record. At this point, the inquiry changes focus.

The responding party had an obligation to put his or her best foot forward to demonstrate that there was a genuine issue for trial. Having done so, the focus shifts, to some extent, to a determination of the court's "comfort level" with the state of the record as being able to justify a determination on the genuine issues that have been identified. The court must be satisfied by the applying party that the evidentiary record is "sufficient for adjudication", to borrow the phrase used in the Inspiration Management case.

In making that determination the court must keep in mind that it is entitled, on a common sense basis, to draw inferences from the evidence and from failure of a party to comply with Rule 17A.02(4) and (5 ). It does not mean that the chambers judge must nevertheless be satisfied that if the proceeding went through the full trial process the result would inevitably be the same as would be given on

summary trial. It simply means that so long as the chambers judge is satisfied that there is a sufficient evidentiary backdrop against which findings of fact can be made and in which there are no material unanswered questions, he or she should be able to adjudicate on the merits. 14. A closed list of factors which the chambers judge must consider in determining this issue cannot be given. The list would obviously include: (

a) whether there are conflicts in the evidence which can be resolved by reference to other known facts and whether those facts are themselves proven on the record; (

b) whether there are issues of credibility which can be resolved without the necessity of observing the demeanor of the witnesses or of having more elaborate explanation of facts to which they have deposed; (

c) whether material evidence from a "principal player" is absent [this is particularly important where the absent evidence is from the applying party's side. It may be less significant where the evidence is absent from the responding party's case, in light of his general obligation to "put his best foot forward"]. In the end, this determination is a matter of discretion for the trial judge to determine whether he or she is confident that the court has the factual substratum necessary to make an informed decision on the merits. 15.

The requirement that the judge must also be satisfied that it is not "unjust" to decide the issues on the application reinforces the notion that the chambers judge should be satisfied that the court has a sufficient handle on the facts to make an informed decision. Thus, if it is clear that there is other material evidence available which might materially affect the result and the chambers judge concludes that he or she would not be deciding the case against the true factual background, he or she might well conclude that it would be unjust to deal with the matter by way of

summary trial. While a party has an obligation to put his or her best foot forward, there might well be a valid explanation for the absence of such other evidence, for example, if the information is in the hands of the other party. In addition, other factors that would have to be considered by the court to determine the "justice" of proceeding would be: (

a) the amount involved; (

b) the complexity of the matter; (

c) its urgency; (

d) any prejudice likely to arise by reason of delay; (

e) the cost of taking the case forward to a conventional trial in relation to the amount involved;

(

f) the course of the proceedings to date. 16. If the court is satisfied on the foregoing matters, then it should proceed to adjudicate on the merits of the claim and, in so doing, apply the same standards of adjudication and burden of proof as would apply on a full trial. 17.

Although one would expect that an applying party would not apply unless he or she clearly felt that there was considerable strength in the case, it is nevertheless possible that, if a court determines that it is appropriate to try the case summarily, the responding party could be successful in convincing the court that, on the record, judgment should be entered in his or her favour.

Having set the machinery of Rule 17A in motion, the applying party will not then be able to complain if judgment goes against him or her. [ 43 ] This Court has endorsed and applied the Marco principles on numerous occasions, and the Court of Appeal has approved the framework set out in that case as the appropriate approach to the proper application of Rule 17A. Application to this Case (

i) This case involves an exercise in

interpretation of a contract [ 44 ] The parties agree that Niqitaq/Baffin paid $219,450 to Fowler and that Fowler retained this money for his own use notwithstanding the demand for repayment by Niqitaq/Baffin.

Both parties rely on an alleged contract: Niqitaq/Baffin says that it agreed to advance the money to Fowler for use in purchasing shrimp quota expecting that he would pay it back if he did not purchase a quota; Fowler says that he was paid the money as an incident of a contract collateral to his main employment contract, and that he only had to pay back a portion of it if he failed to stay employed with the company for a certain period of time. [ 45 ] Neither party asserts that the Promissory Note constituted the entire contract between the parties governing the right of Fowler to use or retain, or his requirement to repay, the money advanced.

Both parties assert that the question whether Fowler was expected to repay the money was at least partly conditional. [ 46 ] In Creston Moly Corp. v. Sattva Capital Corp. , 2014 SCC 53 , the Supreme Court put to rest any question that a Court in interpreting a contract must look to the surrounding circumstances, defined as anything which helps to demonstrate the intentions of the parties in entering a contract. [ 47 ] The essential nature of this dispute as an exercise in contractual

interpretation underpins the analysis of the application of the

summary trial rule. In order to determine whether this case is one that can and should be decided by

summary trial, I must be satisfied that I have before me sufficient evidence of the surrounding circumstances to discern the intentions of the parties and interpret their contract. (ii) The threshold question: is this case one appropriate for

summary trial? [ 48 ] As described by Chief Justice Green in Young v. Noble , 2016 NLCA 58 , at paragraph 27 , the threshold question on an application for

summary trial is “whether the applicant has provided some evidentiary basis for the assertions made and whether the nature of the case is such that it is potentially capable of being dealt with in the attenuated manner contemplated by a

summary trial.” [ 49 ] The Plaintiff has put before the Court the Promissory Note and demand, as well as evidence that tends to demonstrate, unless contradicted, that the advance referenced in the Promissory Note was provided to Fowler to use to purchase shrimp quota that was never purchased.

Niqitaq/Baffin presented evidence in support of the Application in an organized and concise manner, and provided affidavit evidence from executive officers of Niqitaq/Baffin as well as emails (including from and to Reid and Fowler) contemporaneous with the advance, and other internal company documents that supported the assertion the money was advanced to Fowler to use to purchase quota and that he did not do so. [ 50 ] A case involving the

interpretation of a relatively simple contract where evidence is adduced of surrounding circumstances supporting an applicant’s assertion of the meaning of the contract is one that would normally be amenable to resolution by

summary trial. I find that this is such a case and the threshold issue is therefore resolved in favour of the Applicant. (ii) Has the Respondent raised a genuine issue for trial? [ 51 ] Once the threshold question is resolved in favour of an applicant, the onus is on the party opposing

summary trial to satisfy the Court that there is a genuine issue for trial. As described by Justice Green in principle 9 from Marco : “There would be a genuine issue for trial, if the issue in question was not spurious and related to a material fact or point of law that was necessary to be decided to resolve the ultimate controversy between the parties.” [ 52 ] Fowler asserts an

interpretation of the contract that is different from the

interpretation put forward by Niqitaq/Baffin and has supported his assertion with his own Affidavit and that of Reid, both of whom attested to the advance to Fowler being partly to pay money owed to Fowler and partly as an incentive bonus. This alternate

interpretation is plausible and supported by evidence. If Fowler established on the balance of probabilities that his

interpretation of the contract is correct, then he would not have to repay that portion of the money representing overtime and retroactive pay; the requirement to repay the balance characterized as incentive bonus and determination of the date at which interest would start to be applied to that balance would at least have to await the outcome of the wrongful dismissal claim. [ 53 ] I find that Fowler has raised a genuine issue for trial.

(iii) Is it nevertheless possible and appropriate to decide the issues on the application based on the existing record? [ 54 ] In order to determine this issue, I must (see principle 14 in Marco and paras. 28 and 29 from Young v. Noble ) decide whether I have sufficient comfort level with the factual record (including Affidavits, documentary exhibits, and evidence given viva voce on cross- examination) to allow me to make the findings of fact and draw the necessary, common sense inferences, to properly adjudicate this dispute. In making that determination, I must bear in mind that I may on

summary trial resolve conflicting evidence if the proven facts, and common sense inferences from proven facts, allow ( Marco , principle 14(a)). I may also make findings of credibility, although not determinations of general credibility ( Marco , principles 14(

b) and 6). In other words, I may determine on

summary trial whether a witness’s evidence regarding a particular fact or document is reliable, in the sense of being plausible, internally consistent, and consistent with proven facts and inferences from proven facts; but if I cannot decide the matter without making a determination whether a witness is generally believable or honest, then

summary trial is not appropriate. [ 55 ] The evidence presented on this Application included all documents and emails related to the issues mentioned by any of the witnesses. The parties provided affidavits and discovery transcripts from those principally involved in the matter, and several were cross-examined. [ 56 ] The Plaintiff did present evidence (particularly the Forensic Interim Report) and cross-examine (before an objection that was upheld) the Defendant’s witnesses related to this issues of general credibility.

However, I find that it is not necessary for me to resolve those issues in order to decide this matter. In that regard, I note that the only aspect of the report I have considered is the

section dealing directly with the advance of $219,450. [ 57 ] I find it is both possible and appropriate on

summary trial to decide the issues presented by the Plaintiff. (iv) The evidence supports the Plaintiff’s position [ 58 ] As I noted earlier, this case is one of contract

interpretation: was the money advanced by Niqitaq/Baffin to Fowler for his use to purchase shrimp quota on behalf of the company; or was the money paid to Fowler as an incident of his employment contract in compensation of money owed for overtime and retroactive pay, and to provide a conditional incentive bonus. [ 59 ] I find that the evidence is consistent with the position put forward by Niqitaq/Baffin that the money was advanced to Fowler for the use of purchasing shrimp quota for the company.

My reasons follow. [ 60 ] Taylor, Reid and Fowler all testified that they met during the fall of 2016 to discuss Fowler acting on behalf of Niqitaq/Baffin to acquire shrimp quota. The plan proposed by Reid was that the company would advance funds to Fowler to use to make that purchase. Reid asked Fowler to provide Taylor with backup information supporting the purchase. That was when Fowler prepared the handwritten document titled shrimp quota and presented it to Taylor.

That document contained Fowler’s calculations (57 tonnes at $3,850 per tonne = $219,450 ) for the contemplated purchase. [ 61 ] This manner of arranging the purchase seems unusual. Ordinarily, one would expect that the employee would arrange the sale and then the company would pay the vendor directly. The unusual nature of the transaction also caused Taylor concern and led him to consider a means to protect the company and ensure that funds would be repaid to Niqitaq if Fowler did not arrange the quota purchase.

In order to provide that protection, he instructed Niqitaq legal counsel to draft the Promissory Note securing repayment from Fowler. [ 62 ] Although the email exchange between Taylor and Fowler on the day before funds were advanced does not mention shrimp quota, that email exchange is consistent with the company position in this Application. Taylor never knew about any arrangement to pay Fowler retroactive pay and an incentive bonus.

The only reason known to Taylor that Fowler would enquire about funds was for the purchase of shrimp quota. [ 63 ] Taylor’s insistence on the Promissory Note was consistent with the Niqitaq/Baffin position, and not with Fowler’s.

If the money was, as Fowler alleged, to be paid partially for money already then owed to Fowler, then there would have been no reason to insist on the Promissory Note being signed, at least for the full amount of the advance. [ 64 ] Further, Taylor instructed Niqitaq accounting staff to create a journal entry showing the full amount of the advance as a receivable owing to Niqitaq from Fowler. Again, this is consistent with the position of Niqitaq/Baffin and inconsistent with that of Fowler. [ 65 ] The best evidence in support of the Niqitaq/Baffin position is the most obvious.

The cheque provided to Fowler and the principal amount of debt stated to be secured by the Promissory Note were precisely the same as the amount Fowler calculated that he needed to purchase 57 tonnes of quota. Fowler was given opportunity on cross-examination to explain this coincidence in a manner consistent with his position, but he could not do so. [ 66 ] Taylor, Cline, and the company auditors all enquired later about documentation supporting the quota purchase.

Although this conduct occurred after the funds had been advanced, it is consistent with the company position that it intended the advance to be used for the purchase of quota. [ 67 ] On the other hand, no document in evidence expressly stated that the advance was for the purposes alleged by Fowler. There was no calculation supporting the amount of $219,450 being due to Fowler for overtime pay and retroactive pay.

If the money was partially in compensation for overtime, then it would have been paid on an agreed rate of pay multiplied by the number of hours worked (or even estimated to have been worked) or on some other considered basis. If a portion of the amount was paid as an incentive bonus only required to be repaid if Fowler left the company early, then it would be expected that he would have been concerned to clearly identify that aspect of the advance, and certainly that he would not sign a Promissory Note agreeing to repay the entire advance on demand.

If he believed that he had already, through overtime, earned entitlement to the greater portion of the advance, then surely he would have refused to sign a Promissory Note agreeing to repay that portion.

[68] Fowler did not report the amount paid to him as income, and nor did he ask whether the company did, or whether the companywould account for the income tax that would have been due, at least on the overtime pay. [69] Reid did not tell the company accounting staff that the advance was ever to be retained by Fowler for overtime or retroactivepay or for an incentive bonus. Even if Reid had the authority to authorize such a payment to Fowler, it is inconceivable that he would doso without ensuring that a proper accounting had been undertaken.

Moreover, when asked in 2017 about the use of the advance for thepurchase of shrimp quota, Reid did not respond by advising the internal and external accountants that the funds ought to be recorded asrelated to Fowler’s employment benefits, but rather, he set about to obtain what appears to have been false documentation supporting anonexistent transaction for the purchase of quota. [70] The Plaintiff has established on a balance of probabilities that its

interpretation of the contract for the advance of funds reflectsthe agreement of the parties. [71] In making that finding, I reject the evidence of both Reid and Fowler adduced by the Defendant, for the reasons outlined. [72] However, I also note, in any event, the evidence of Reid and Fowler could not have supported the

interpretation advocated forby the Defendant. Fowler and Reid did not agree on the terms of the contract. They did not agree on the amount of the advanceallegedly earned for overtime. Fowler testified that there was never a mention made at the time of the advance of using the funds for thepurchase of shrimp quota. Reid testified that the agreement was that Fowler would use the money at first instance to attempt to purchasequota, but if unsuccessful then he could keep the money.

Reid testified that he was unaware that Fowler started using the money as hisown immediately upon it being given to him, although Reid understood that Fowler was continuing to source quotas for purchase untilthe fall of 2017. The dealings between Fowler and Reid would not support a contract as the parties were not ad idem on the terms of thatcontract and those terms were too uncertain to enforce. [73] I therefore find the Plaintiff’s

interpretation of the contract is, on a balance of probabilities, the correct

interpretation. Thecontract between the parties provided that Niqitaq/Baffin advanced funds to Fowler, not for his personal use, but to acquire 57 tonnes ofshrimp quota for the use of the company, and to repay the funds if he was not successful in the acquisition. The Promissory Note was anelement of that contractual arrangement and is enforceable in accordance with its terms as the quota was not acquired and demand wasmade for repayment. The principal amount of the note with interest and costs is due to the Plaintiff. The defence of equitable set-off [74] The Defendant did not plead a defence of set-off. However, at the

Summary Trial he argued that he was entitled to pursue sucha defence. In essence, he argued that any claim by Niqitaq/Baffin ought to be set-off against his claim for wrongful dismissal. [75] The defence offered is not one of legal set-off. Legal set-off requires that both claims be debts and that the claim sought to beset-off cannot be one for damages: Telford v. Holt, (SCC), [1987] 2 S.C.R. 193; Canadian Imperial Bank of Commercev.

Tuckerr Industries Inc. (1983), (BC CA), 46 B.C.L.R. 8, 149 D.L.R. (3d) 172 (C.A.). [76] Equitable set-off is available where the claim sought to be set-off is an unliquidated claim, and could in theory be applied wherethe claim sought to be set-off is for damages for breach of an employment contract. [77] However, equitable set-off requires more than that the defendant have a claim against the plaintiff.

Equity only considers set-off if the claim of the defendant is intertwined with the claim of the plaintiff such that it can be said that it is “flowing out of andinseparably connected with the dealings and transactions which also give rise to the subject of the [plaintiff’s claim]” Govt. ofNewfoundland v. Nfld. Ry. Co., [1888] C.C.S. NO. 40, 13 App. Cas. 199 (P.C.), at 212-213. [78] In Telford v.

Holt, supra, the Supreme Court of Canada endorsed the following statement of principles regarding equitable set-off distilled from the English case law by MacFarlane, J.A. in the British Columbia Court of Appeal decision of Coba Industries Ltd. v.Millie's Holdings (Can.) Ltd. (1985), (BC CA), 65 B.C.L.R. 31, 20 D.L.R. (4th) 689 (C.A.): 1. The party relying on a set-off must show some equitable ground for being protected against his adversary's demands: Rawson v.Samuel, [1841] . . . 41 E.R. 451 (L.C.) 2. The equitable ground must go to the very root of the plaintiff's claim before a set-off will be allowed: [Br.

Anzani (Felixstowe) Ltd. v.Int. Marine Mgmt (U.K.) Ltd. . . . [1979] 2 All E.R. 1063]. 3. A cross-claim must be so clearly connected with the demand of the Plaintiff that it would be manifestly unjust to allow the plaintiff toenforce payment without taking into consideration the cross-claim: [Fed. Commerce and Navigation Co. v. Molena Alpha Inc. . . . [1978]3 All E.R. 1066]. 4. The plaintiff's claim and the cross-claim need not arise out of the same contract: Bankes v. Jarvis, [1903] 1 K.B. 549 (Div. Ct.); Br.Anzani. 5. Unliquidated claims are on the same footing as liquidated claims: [Nfld. v. Nfld. Ry.

Co., [1888] 13 App. C. 199 (P.C.)] [79] In this case, the claim of Fowler is somewhat connected to the claim of Niqitaq/Baffin in only one sense: Fowler says that he

was fired because of allegations of misuse of the funds advanced. However, Fowler has not demonstrated any equitable ground for being protected against the claim by Niqitaq/Baffin for return of the funds advanced. I have found that Fowler has no reason to retain the funds advanced and, if anything, equity favours immediate return of the funds that were advanced to him for a purpose he did not fulfill and appears to have had no intention of fulfilling.

I make no finding as to whether Fowler’s failure to return the funds to Niqitaq/Baffin constituted cause of his dismissal from employment, but I see no equitable ground to postpone the promised repayment. Whether enforcement of the Plaintiff’s judgment ought to be stayed pending resolution of the counterclaim [ 80 ] The Defendant seeks, alternatively, an Order staying enforcement of the Plaintiff’s judgment pending resolution of his counterclaim for wrongful dismissal. The

Summary Trial Rule allows for consideration of a stay where the defendant sets up a counterclaim: 17A.04 Granting of Judgment 17A.04(1) A plaintiff who obtains judgment under this rule may proceed against the same defendant for any other relief and against any other defendant for the same or any other relief. 17A.04(2) Where it appears that the enforcement of a

summary judgment granted under this rule ought to be stayed pending the determination of any other issue in the proceeding or in a counterclaim or third party claim, the Court may so order on such terms as are just. [ 81 ] The Rule does not provide for an automatic stay of a judgment after

summary trial on a main action until the determination of a counterclaim. The decision whether to do so is based on an exercise of discretion on terms that are just. [ 82 ] In the counterclaim, Fowler asserts that he was wrongfully terminated. Even if he had remained in the employ of Niqitaq/Baffin, then he would have been required to repay the money advanced.

I see no reason why he ought to be allowed to retain the money pending the outcome of the counterclaim, [ 83 ] Fowler did not demonstrate or even assert that there is a risk that Niqitaq/Baffin will not be able to answer for a judgment on the counterclaim. [ 84 ] Fowler has not demonstrated that judgment on the Plaintiff’s action ought to be stayed pending the determination of his counterclaim. [ 85 ] The Plaintiff shall have judgment in the amount of $219,450 together with interest at the rate provided in the Promissory Note from the date of demand, and the costs of its action (but not defence of the counterclaim) including this Application taxed on Column 3. _____________________________ Daniel M.

Boone Justice