Thornridge Holdings Limited v. Ryan, 2023 NSSC 11

SUPREME COURT OF Nova Scotia Citation: Thornridge Holdings Limited v. Ryan , 2023 NSSC 11 Date: 20230111 Docket: 5097252 Registry: Halifax Between: Thornridge Holdings Limited Plaintiff - and - Michael Gordon Ryan Defendant DECISION Judge: The Honourable Justice Darlene Jamieson Heard: November 28, 2022, in Halifax, Nova Scotia Counsel: Christopher W. Madill & Sarah A. Walsh, for the Plaintiff Victor Goldberg, KC and Matt McEwen for the Defendant By the Court: Introduction [ 1 ] On October 7, 2021, Thornridge Holdings Limited (“Thornridge”) filed a Notice of Action against Michael Gordon Ryan (“Mr.

Ryan”) seeking payment of monies it alleges are owing pursuant to a promissory note dated February 26, 2015 (referred to as the “Large Note”). [ 2 ] Thornridge pleads that, as part of a series of transactions in February 2015, Thornridge agreed to advance the sum of $3,667,819 to Mr. Ryan. According to Thornridge, under the terms of the Large Note, Mr. Ryan was to pay the $3,667,819 to Thornridge on the date and to the extent that Mr. Ryan received any amounts owing to him in respect of the sale of his shares in Envirosystems Incorporated, or any successor thereof pledged as security for the Large Note.

Thornridge pleads that in June 2018, the shares of the investors in Envirosystems were exchanged for shares of Terrapure Environmental Ltd., following Terrapure’s acquisition of Envirosystems. Thornridge further pleads that on August 17, 2021, investors in Terrapure sold their shares to GFL Environmental Inc. in the course of GFL’s acquisition of Terrapure. Thornridge says GFL’s acquisition of Terrapure was a “Liquidity Event” triggering repayment under the Large Note. [ 3 ] On December 1, 2021, Mr.

Ryan filed a Notice of Defence pleading, in part, that Thornridge never requested that he pledge his shares of Envirosystems as security for the Large Note. He pleads that no other shares or property was ever pledged as security, the Large Note remains unsecured. Mr.

Ryan further pleads that the Large Note was intended by all parties to be of limited recourse, with his repayment obligations limited to the net proceeds received upon either the sale of the shares of Envirosystems or the shares of successor corporations pledged as security for the loan, up to the face value of the promissory note. [ 4 ] On April 29, 2022, Thornridge filed a motion for

summary judgment. In the motion, Thornridge seeks an order granting

summary judgment of the plaintiff’s claim with costs. The motion was scheduled for hearing on October 27, 2022, before Justice Peter Rosinski. Affidavits and briefs were filed by the parties. [ 5 ] Thornridge filed a rebuttal brief on September 13, 2022, which raised a number of objections to the affidavit of Mr. Ryan sworn on September 8, 2022 (“Ryan affidavit”). Mr. Ryan took the position that these admissibility issues should be resolved prior to the

summary judgment motion. On October 27, 2022, Justice Rosinski adjourned the motion to November 28, 2022 before me. [ 6 ] On November 10, 2022, Mr. Ryan filed a motion seeking leave to file a supplemental affidavit pursuant to Civil Procedure Rules 13.06 (4) (

b) and 23.12. [ 7 ] I agreed to hear both motions together on November 28, 2022, and also to hear the motion for

summary judgment on January 20, 2023.

Evidence on the Motions [ 8 ] With reference to the admissibility objections, the issue relates to portions of the Ryan affidavit. The parties each filed briefs, and Thornridge filed a rebuttal affidavit sworn by Mr. Robert Gillis on September 13, 2022. On the motion by Mr. Ryan for leave to late file an affidavit, he filed a proposed affidavit with his brief. Thornridge filed a response affidavit sworn by Mr. Gillis on November 15, 2022. Objections to the Affidavit Evidence of Mr. Ryan [ 9 ] The Thornridge motion is for an order striking certain paragraphs, or parts thereof, from the Ryan affidavit. It seeks to strike the evidence on several bases, including that it: (

a) is inadmissible hearsay and failure to identify the source of the information; (

b) is evidence of a subjective belief about the terms of a written contract; (

c) is irrelevant; (

d) lacks foundation; (

e) is a violation of the parol evidence rule; (

f) is a plea/legal submission; (

g) speaks to the state of mind of someone other than himself; and/or, (

h) is speculation. [ 10 ] As set out in the attached chart, Thornridge takes issue with 28 separate paragraphs of the Ryan affidavit. The bulk of Thornridge’s objections are based on hearsay, relevance and the parol evidence rule. Thornridge also asserts that the promissory note signed on February 26, 2015 in the amount of $529,800 (the “Small Note”) referred to in Mr. Ryan’s affidavit is irrelevant. [ 11 ] With respect to the various hearsay objections, Thornridge submits, in part, that although Mr.

Ryan states Thornridge advised or suggested the information to him, he does not state that an actual person told him anything. Although Thornridge agrees that corporations act and speak through their agents, it says Mr. Ryan has not identified any agent or employee of the plaintiff that advised him of the information contained at paras. 26, 28, 29, 43, 44, 45, 49 and 67. It says merely referencing “Thornridge” is insufficient, as it is not known whether these alleged statements were made by persons who had authority to speak on behalf of Thornridge, or authority to bind Thornridge.

Without this information the evidence is patently unreliable and inadmissible hearsay. [ 12 ] Mr. Ryan says none of the challenged paragraphs are hearsay but are descriptions of exhibits attached to the affidavit. He further says that most of the challenged portions are not offered for the truth of their contents, but rather as a description of the attached evidence, all of which is relevant to the surrounding circumstances leading to the Large Note.

He further says that if the paragraphs are hearsay, they should be admitted because the statements they describe were made by representatives of Thornridge, and are admissible either as an admission by a party or under the principled exception to hearsay. He submits that where statements are made by a representative of a party, they are admissible against the principal as an admission as long as they were made within the scope of the agent’s authority. Mr. Ryan refers to both Thornridge’s Chief Financial Officer, Mr. Gillis, and Mr.

Nick Betts, President of Thornridge at the relevant times, and says any proposals or representations they made in the course of their duty are admissible. Mr. Ryan says that Thornridge’s affiant in the

summary judgment motion is Mr. Gillis, and his admissions are admissible. He is available for cross- examination and has sworn evidence in this matter. He says that it is not hearsay that is at the heart of Thornridge’s objections, but rather disagreement about the stated facts. [ 13 ] Mr. Ryan says, alternatively, that any alleged statements made by Thornridge should be admissible under the principled exception to hearsay. He says the statements are necessary because they go to the surrounding circumstances and Mr. Ryan does not have access to anyone at Thornridge to testify to the statements directly.

He says the evidence is reliable because it is supported by exhibits which were produced by Thornridge, and because Thornridge had Mr. Gillis available to dispute any of the statements if they had wished to do so. [ 14 ] Mr. Ryan says the Small Note is relevant. I will further address the specific positions of the parties with regard to the Small Note in my analysis. [ 15 ] In relation to the objection based on the parol evidence rule, Mr. Ryan says it does not apply to preclude evidence of surrounding circumstances. He says in instances of vague contractual wording, such as here, this evidence is vital.

He says all of the evidence submitted by Mr. Ryan describes circumstances to aid the court in

interpretation of the Large Note. He says none of it is intended to vary the wording of the Large Note. He says there were clear objective intentions of the parties when forming the Large Note, and he gives evidence of the relevant facts and discussions that occurred at the time. He says the challenged evidence is not purely subjective intention but rather pertains to the overall objective intent of the parties while negotiating and contracting at the time of drafting. [ 16 ] Attached to this decision as Appendix “A” is a chart setting out Thornridge’s objections and Mr. Ryan’s responses.

The Law [ 17 ] Civil Procedure Rule 39 addresses the contents of affidavits. It states: 39.01 Scope of Rule 39

A party may make and use an affidavit, and a judge may strike an affidavit, in accordance with this Rule. 39.02 Affidavit is to provide evidence

(1) A party may only file an affidavit that contains evidence admissible under the rules of evidence, these Rules, or legislation.

(2) An affidavit that includes hearsay permitted under these Rules, a rule of evidence, or legislation must identify the source of the information and swear to, or affirm, the witness' belief in the truth of the information. . . . 39.04 Striking part or all of affidavit

(1) A judge may strike an affidavit containing information that is not admissible evidence, or evidence that is not appropriate to the affidavit.

(2) A judge must strike a part of an affidavit containing either of the following: (

a) information that is not admissible, such as an irrelevant statement or a submission or plea; (

b) information that may be admissible but for which the grounds of admission have not been provided in the affidavit , such as hearsay admissible on a motion but not supported by evidence of the source and belief in the truth of the information.

(3) If the parts of the affidavit to be struck cannot readily be separated from the rest, or if striking the parts leaves the rest difficult to understand, the judge may strike the whole affidavit.

(4) A judge who orders that the whole of an affidavit be struck may direct the prothonotary to remove the affidavit from the court file and maintain it, for the record, in a sealed envelope kept separate from the file.

(5) A judge who strikes parts, or the whole, of an affidavit must consider ordering the party who filed the affidavit to indemnify another party for the expense of the motion to strike and any adjournment caused by it. [Emphasis added] [ 18 ] I note as well that Rule 22.15 deals with rules of evidence on motions. It sets out those instances where hearsay evidence is admissible. One of those is where the matter involves a procedural right. That is not the situation here. The Rule states: 22.15(1) The rules of evidence apply to the hearing of a motion, including the affidavits, unless these Rules or legislation provides otherwise.

(2) Hearsay not excepted from the rule of evidence excluding hearsay may be offered on any of the following motions: (

a) an ex parte motion, if the judge permits; (

b) a motion on which representations of fact, instead of affidavits, are permitted, if the hearsay is restricted to facts that cannot reasonably be contested; (

c) a motion to determine a procedural right; (

d) a motion for an order that affects only the interests of a party who is disentitled to notice or files only a demand of notice, if the judge or the prothonotary hearing the motion permits; (

e) a motion on which a Rule or legislation allows hearsay.

(3) A party presenting hearsay must establish the source, and the witness' belief, of the information.

(4) A judge, prothonotary, commissioner, or referee may act on representations of fact that cannot reasonably be contested. [ 19 ] Only admissible evidence is to be considered on motions for

summary judgment. In MacAulay v. Ali , 2013 NSSC 271 , Justice Wood (as he then was) said the following with reference to the Nova Scotia Court of Appeal decision in Abbott and Haliburton Company v. WBLI Chartered Accountants , 2013 NSCA 66 : [8] The principle that only admissible evidence should be considered on a motion for

summary judgment was reiterated by the Nova Scotia Court of Appeal in the recent decision of Abbott and Haliburton Company v. WBLI Chartered Accountants , 2013 NSCA 66 , where the Court stated at para. 159: A judge hearing a motion for

summary judgment should only hear admissible evidence. Here, the motions judge committed no error in striking the affidavit of Mr. O’Hearn. However, the motions judge did not articulate and apply the correct legal principles in determining if Ms. MacMillan’s affidavit was admissible. [ 20 ] Waverley (Village Commissioners) v. Nova Scotia (Minister of Municipal Affairs), 1993 NSSC 71 , remains the leading authority on proper affidavit evidence. It has been applied consistently by this court in motions to strike portions of affidavits and has been affirmed by our Court of Appeal. Justice Davison set out various principles regarding affidavit evidence at pp. 11-12:

It would [be] helpful to segregate principles which are apparent from consideration of the foregoing authorities and I would enumeratethese principles as follows: 1. Affidavits should be confined to facts. There is no place in affidavits for speculation or inadmissible material. An affidavit should nottake on the flavour of a plea or a summation. 2. The facts should be, for the mots part, based on the personal knowledge of the affiant with the exception being an affidavit used in anapplication.

Affidavits should stipulate at the outset that the affiant has personal knowledge of the matters deposed to except where statedto be based on information and belief. 3. Affidavits used in applications may refer to facts based on information and belief but the course of the information should be referredto in the affidavit. It is insufficient to say simply that “I am advised.” 4. The information as to the source must be sufficient to permit the court to conclude that the information comes from a sound sourceand preferably the original source. 5.

The affidavit must state that the affiant believes the information received from the course. Relevance [21] Before evidence can be said to be relevant, it must be probative of a fact in issue. The Supreme Court of Canada in R. v. White,2011 SCC 13, said the following regarding relevance: [36] ...In order for evidence to satisfy the standard of relevance, it must have "some tendency as a matter of logic and human experienceto make the proposition for which it is advanced more likely than the proposition would be in the absence of that evidence". [22] In addition, in R. v.

Arp (SCC), [1998], 3 S.C.R. 339, the court indicated that: [38] ... To be logically relevant, an item of evidence does not have to firmly establish, on any standard, the truth or falsity of a fact inissue.

The evidence must simply tend to "increase or diminish the probability of the existence of a fact in issue". ... [23] David Paciocco, Palma Paciocco, and Lee Stuesser in The Law of Evidence, Eighth Edition (Toronto: Irwin Law Inc., 2020),discuss the concept of “materiality” at pp. 33-34: Regardless of the kind of proceeding, courts or tribunals resolving issues of fact are being asked to settle particular controversies. Theyare not interested in information about matters other than those that need to be settled. Evidence that is not directed at a matter in issue isinadmissible because it is "immaterial".

By contrast, "evidence is material if it is directed at a matter in issue in the case." [24] They explain the relationship between materiality and relevance at pp. 35-36: The concept of materiality describes the relationship between evidence and the matters in issue; logical "relevance" is about therelationship between evidence and the fact it is offered to prove. There is no legal test for identifying relevant evidence. Relevance is amatter of logic, based on inferences drawn from everyday experience and common sense.

If it is not clear what a party is seeking toprove, they should be called upon to explain their theory of relevance. Then logic and human experience should be applied to judgewhether the evidence supports the inference that the party seeks to have drawn. To continue with the robbery example, evidence that thealleged robber had downloaded a map of the area where a bank that was robbed was located would be relevant in linking the accused tothe robbery.

Evidence that the accused had downloaded movies about bank robbers would not be relevant because it is not specificenough to support a logical inference that the accused is the robber. [25] The evidence must have some tendency to advance a material inquiry. It is a modest standard and evidence will be received if itmeets the standard unless its probative value is outweighed by the prejudice it may cause if admitted. In this case, the issue on themotion is whether the court should grant

summary judgment of the plaintiff’s claims set out in the Notice of Action. As such, affidavitsfiled on the motion must be relevant to the claims advanced. The analytical framework to be applied on motions for

summary judgmenton the evidence pursuant to Rule 13.04 are set out in Shannex Inc. v. Dora Construction Ltd., 2016 NSCA 89 at para. 34. There are fivesequential questions. The first question is as follows: [34] I interpret the amended Rule 13.04 to pose five sequential questions: First Question: Does the challenged pleading disclose a ‘genuine issue of material fact’, either pure or mixed with a question oflaw? [Rules 13.04(1), (2) and (4)] If Yes, it should not be determined by

summary judgment. It should either be considered for conversion to an application under Rules13.08(1)(

b) and 6 as discussed below [paras. 37-42] or go to trial. The analysis of this question follows Burton’s first step. A “material fact” is one that would affect the result. A dispute about an incidental fact - i.e., one that would not affect the outcome - willnot derail a

summary judgment motion: 2420188 Nova Scotia Ltd. v. Hiltz, 2011 NSCA 74 , para. 27, adopted by Burton, para.41, and see also para. 87 (#8). The moving party has the onus to show by evidence there is no genuine issue of material fact. But the judge’s assessment is based on all

the evidence from any source. If the pleadings dispute the material facts, and the evidence on the motion fails to negate the existence of agenuine issue of material fact, then the onus bites and the judge answers the first question Yes. [Rules 13.04(4) and (5)] Burton, paras. 85-86, said that, if the responding party reasonably requires time to marshal his evidence, the judge should adjourn themotion for

summary judgment.

Summary judgment isn’t an ambush. Neither is the adjournment permission to procrastinate. Theamended Rule 13.04(6)(

b) allows the judge to balance these factors. Hearsay [26] In King v. Gary Shaw Alter Ego Trust, 2020 NSSC 288, which involved a motion to strike portions of an affidavit, JusticeNorton said the following regarding hearsay evidence: [12] Hearsay is one of the most common objections made to the introduction of evidence.

It has been defined by the Supreme Court ofCanada as follows: Written or oral statements, or communicative conduct made by persons otherwise than in testimony at the proceeding in which it isoffered, are inadmissible, if such statements or conduct are tendered as proof of their truth or as proof of assertions implicit therein. [R. v.Bradshaw, 2017 SCC 35, at para. 1 and 20] [13] Sopinka says: The usual hearsay circumstance covered by the rule is where the witness testifies as to what someone else, who is not before the court,said. However, the modern

interpretation of hearsay also encompasses prior out-of-court statements made by the very witness who istestifying in court when such earlier statements of the witness are tendered to prove the truth of their contents. [Supra, at p. 249] [14] The defining features of the rule are that the purpose of adducing the evidence is to prove the truth of its contents and the absence ofthe contemporaneous opportunity to cross-examine the declarant. It is the inability to test the reliability of the evidence by cross-examination of the declarant that makes the admission of such evidence unfair and inadmissible.

The rule recognizes the difficulty of thetrier of fact assessing the probative value, if any, to be given to a statement made by a person who has not been seen or heard and whohas not been subject to cross-examination. [R. v. Khelawon, 2006 SCC 57 , [2006] 2 S.C.R. 787] [27] Justice LeBlanc in Canadian National Railway Company v. Halifax (Regional Municipality), 2012 NSSC 300, said thefollowing in relation to assessing hearsay objections: [6] The "essential defining features" of hearsay are ...

"(1) the fact that the statement is adduced to prove the truth of its contents and (2)the absence of a contemporaneous opportunity to cross-examine the declarant." (Khelawon at para. 35) It must be emphasized that it is"only when the evidence is tendered to prove the truth of its contents that the need to test its reliability arises." (Khelawon at para. 36)Further, Charron J. said for the court in Khelawon, (paras. 37-38) that while an out-of-court statement by a witness who testifies will behearsay if adduced for the truth of its contents: When the witness repeats or adopts an earlier out-of-court statement, in court, under oath or solemn affirmation, of course no hearsayissue arises.

The statement itself is not evidence, the testimony is the evidence and it can be tested in the usual way by observing thewitness and subjecting him or her to cross-examination. The hearsay issue does arise, however, when the witness does not repeat or adoptthe information contained in the out-of-court statement and the statement itself is tendered for the truth of its contents. ... [7] Charron, J. went on to discuss the challenges of recognizing hearsay, at paras. 56-58: The first matter to determine before embarking on a hearsay admissibility inquiry, of course, is whether the proposed evidence ishearsay.

This may seem to be a rather obvious matter, but it is an important first step. Misguided objections to the admissibility of anout-of-court statement based on a misunderstanding of what constitutes hearsay are not uncommon. As discussed earlier, not all out-of-court statements will constitute hearsay. Recall the defining features of hearsay. An out-of-court statement will be hearsay when: (1) it isadduced to prove the truth of its contents and (2) there is no opportunity for a contemporaneous cross-examination of the declarant.

Putting one's mind to the defining features of hearsay at the outset serves to better focus the admissibility inquiry. As we have seen, thefirst identifying feature of hearsay calls for an inquiry into the purpose for which it is adduced. Only when the evidence is being tenderedfor its truth will it constitute hearsay.

The fact that the out-of-court statement is adduced for its truth should be considered in the contextof the issues in the case so that the court may better assess the potential impact of introducing the evidence in its hearsay form. [8] Second, by putting one's mind, at the outset, to the second defining feature of hearsay — the absence of an opportunity forcontemporaneous cross-examination of the declarant, the admissibility inquiry is immediately focussed on the dangers of admittinghearsay evidence. Iacobucci, J. in R. v.

Starr, 2000 SCC 40 , [2000] 2 S.C.R. 144 identified the inability to test the evidence asthe "central concern" underlying the hearsay rule. Lamer, C.J. in U. (F.J.) expressed the same view but put it more directly by stating:"Hearsay is inadmissible as evidence because its reliability cannot be tested" (para. 22). [28] The Nova Scotia Court of Appeal in McKinnon Estate v. Cadegan, 2021 NSCA 79, discussed the governing framework forhearsay: [33] The development of the principled approach did not displace the traditional categories for hearsay exceptions.

In fact, whenevidence falls within an established common law exception, it will only be excluded in rare cases. The Supreme Court explained this inKhelawon: 42 It has long been recognized that a rigid application of the exclusionary rule would result in the unwarranted loss of much valuable

evidence. The hearsay statement, because of the way in which it came about, may be inherently reliable, or there may be sufficientmeans of testing it despite its hearsay form. Hence, a number of common law exceptions were gradually created. A rigid application ofthese exceptions, in turn, proved problematic leading to the needless exclusion of evidence in some cases, or its unwarranted admission inothers.

Wigmore urged greater flexibility in the application of the rule based on the two guiding principles that underlie the traditionalcommon law exceptions: necessity and reliability (Wigmore on Evidence (2nd ed. 1923), vol. III, _ 1420, at p. 153). This Court firstaccepted this approach in Khan and later recognized its primacy in Starr. The governing framework, based on Starr, was recentlysummarized in R. v. Mapara, [2005] 1 S.C.R. 358, 2005 SCC 23, at para. 15: (

a) Hearsay evidence is presumptively inadmissible unless it falls under an exception to the hearsay rule. The traditional exceptions tothe hearsay rule remain presumptively in place. (

b) A hearsay exception can be challenged to determine whether it is supported by indicia of necessity and reliability, required by theprincipled approach. The exception can be modified as necessary to bring it into compliance. (

c) In "rare cases", evidence falling within an existing exception may be excluded because the indicia of necessity and reliability arelacking in the particular circumstances of the case. (

d) If hearsay evidence does not fall under a hearsay exception, it may still be admitted if indicia of reliability and necessity areestablished on a voir dire. [29] The court in McKinnon Estate, supra, set out the law on party admissions as an exception to the hearsay principle: [35] As this passage indicates, once hearsay evidence is determined to fall within a common law exception, the burden shifts to the partyopposing admission because inherent reliability is presumed. They must demonstrate the circumstances represent one of the rare caseswhere the evidence is not, in fact, necessary or reliable.

In contrast, under the principled approach, the burden remains on the proponentto establish that the evidence is both necessary and reliable. [36] In my view, the proper sequence to be followed when considering the admission of hearsay evidence is as follows: 1. Can the proponent establish that the evidence falls within one or more common law exceptions? 2. If a common law exception applies, can the opposing party show this is the "rare case" where the evidence should be excludedbecause it is not necessary or reliable? 3.

If it is not a "rare case", should the evidence be excluded because its prejudicial effect exceeds its probative value? 4. If not admissible as a common law exception, is the evidence admissible under the principled analysis from Khelawon ? [37] Where a statement is made by a party, either orally, in writing, or by conduct, it represents an admission. It should be presumptivelyaccepted into evidence at the request of an adverse party provided it is relevant and its probative value is not exceeded by its prejudicialeffect. Dr. Cadegan argued Mr.

McKinnon's notes were an admission which meant the trial judge should have started his analysis withthat question. He erred by not doing so. … [40] In Schneider, the British Columbia Court of Appeal considered the admissibility of similar evidence — an incomplete fragment ofconversation. The court described the trial judge's role in determining whether evidence was sufficiently relevant to go to the jury: [69] Applying this framework, the appellant is wrong to say that in assessing relevance, the trial judge was obliged to determine — infact — whether the overheard words constituted an admission.

Rather, the words said to have been spoken by the appellant were relevantif "capable of being an admission" (Ferris (C.A.) at paras. 26, 27, 29, 31, 38; emphasis added). [70] At this stage of the admissibility analysis, a trial judge is concerned with logical relevance. As explained by Doherty J.A. in R. v.Abbey, 2009 ONCA 624, leave to appeal ref'd [2010] S.C.C.A No. 125, logical relevance requires: [82] ... that the evidence have a tendency as a matter of human experience and logic to make the existence or nonexistence of a fact inissue more or less likely than it would be without that evidence ....

Given this meaning, relevance sets a low threshold for admissibilityand reflects the inclusionary bias of our evidentiary rules .... [Internal references omitted; emphasis added.] [71] In R. v. Arp, (SCC), [1998] 3 S.C.R. 339, it was made clear that to be logically relevant, "an item of evidence doesnot have to firmly establish, on any standard, the truth or falsity of a fact in issue. The evidence must simply tend to 'increase or diminishthe probability of the existence of a fact in issue'. ...

As a consequence, there is no minimum probative value required for evidence to berelevant" (at para. 38; internal references omitted; emphasis added). See also R. v. Blackman, 2008 SCC 37at paras. 29 — 30. [72] The Crown sought to tender the words overheard by WS as an admission of responsibility for the death of Ms. Kogawa. Clearly,that was a material issue at trial. To meet its burden on logical relevance, the Crown was required to show that those words were capableof

interpretation as an admission. In assessing whether the Crown met that burden, the question for the judge to decide was whetherthere was "some evidence upon which [the] jury could conclude the meaning of the uttered words": Alcantara at paras. 138 — 139. [73] If the answer was "yes", the judge was obliged to move to the second stage of the analysis and determine whether she should keepthe evidence from the jury because its prejudicial effect outweighed its probative value. It is only then that a trial judge engages in a

weighing of the evidence, albeit on a limited scale. The purpose of the limited weighing is to assess legal relevance. Again, withreference to para. 82 of Abbey: ... Relevance can also refer to a requirement that evidence be not only logically relevant to a fact in issue, but also sufficiently probativeto justify its admission despite the prejudice that may flow from its admission.

This meaning of relevance is described as legal relevanceand involves a limited weighing of the costs and benefits associated with admitting evidence that is undoubtedly logically relevant .... [Internal references omitted; emphasis added.] [41] The court summarized the principles to be applied as follows: [75] It is apparent from the voir dire ruling in this case that the trial judge correctly instructed herself on the legal principles she wasbound to apply in determining admissibility.

She asked whether there was some evidence upon which the jury could conclude themeaning of the words conveyed through WS (at para. 19). Once satisfied the evidence was logically relevant, she went on to assess legalrelevance by asking whether its probative value outweighed the "prejudicial effect that it might be used improperly" (at para. 21). [30] With regard to the admissions by a party exception to the hearsay rule, I note that one need only illustrate that a statement iscapable of being an admission to be admissible. [31] As was pointed out in Toronto Dominion Bank v.

Cambridge Leasing Ltd. 2006 NBQB 92, where no specific person from thereferenced corporate entity is identified as having made the statement or statements (admission), the evidence as presented is veryunreliable.

This is clearly in keeping with our Civil Procedure Rule 39.02, which states that an “affidavit that includes hearsay permittedunder these Rules, a rule of evidence, or legislation must identify the source of the information and swear to, or affirm, the witness' beliefin the truth of the information.” [32] Finally, I note that when an out-of-court statement is offered simply as proof that the statement was made, it is not consideredto be hearsay. Such evidence is admissible as long as it has some probative value.

In this circumstance, the person indicating that thestatement was made is available for cross-examination. The question is one of relevancy. Does the statement have a purpose aside fromthe truth of its contents? If yes, it may be admissible for that limited purpose. The trier of fact must be cautious concerning the limitedrelevancy of the statement – its relevance lies in the fact that it was made, not in the fact that its contents are true. Submissions [33] As stated by the Court of Appeal in Canadian National Railway v.

Teamsters Canada Rail Conference, 2017 NSSC 10,“Submissions do not constitute evidence” (para 49). In Canadian Imperial Bank of Commerce v. CNH Capital Ltd., 2013 NSCA 35, theCourt of Appeal commented on the prohibition against statements in the nature of a plea or submission: [81] First: CNH Capital Canada says that the statements are a "submission" or "plea" which must be excluded under Civil ProcedureRule 39.04(2): 39.04

(2) A judge must strike a part of an affidavit containing either of the following: (

a) information that is not admissible, such as an irrelevant statement or a submission or plea; CNH Capital Canada submits that Rule 39.04(2) codifies Justice Davison's statement in Waverley (Village) v. Nova Scotia (ActingMinister of Municipal Affairs) (1993), 1993 NSSC 71 , 123 N.S.R. (2d) 46 (N.S. S.C.): [20] It would be helpful to segregate principles which are apparent from consideration of the foregoing authorities and I would enumeratethese principles as follows: Affidavits should be confined to facts. There is no place in affidavits for speculation or inadmissible material.

An affidavit should nottake on the flavour of a plea a summation. [82] I agree with Justice Davison's statement from Waverley. But I disagree that the challenged statements in the affidavits of Messrs.Bayne and Tucci are a "submission" or "plea". What is objectionable under Rule 39.04(2)(

a) is a conclusory statement that embodies orassumes a point of law. Whether, how, and the degree to which Ford Credit's identity was important to the Bank are questions of fact, asI have explained earlier (para 63). [Emphasis added] [34] It is important to note that a witness can describe an event they have experienced. As noted in Armoyan v. Armoyan, 2013NSCA 99, solely because a word has a potential legal meaning or use does not automatically mean that an affiant who uses the worddoes so for a legal purpose (paras. 146 – 147). Speculation [35] Cases are to be decided on facts, not guess-work.

Speculation as to what the facts might be, what another person had in theirmind, what could happen, etc., has little, if any, probative value. However, witnesses can give estimates or approximations of distance,time, etc. Contractual

Interpretation and Surrounding Circumstances [36] It is important to remember that the affidavit evidence offered is in the context of a claim pursuant to a legal agreement – apromissory note. The

interpretation of certain clauses of the Large Note are in issue. Neither ambiguity nor rectification have beenpleaded. Mr. Ryan, in response to some of the admissibility objections of Thornridge, submits that the evidence is evidence of

surrounding circumstances admissible in aid of

interpretation of the promissory note. I will, therefore, spend some time dealing withinterpretation of contracts and admissibility of surrounding circumstances. [37] In the

interpretation exercise, the words of the agreement are always the starting point. The Supreme Court of Canada said inSattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 that the overriding concern is to determine the objective intent of the parties,through the application of legal principles of

interpretation and consistent with the surrounding circumstances: 47 Regarding the first development, the

interpretation of contracts has evolved towards a practical, common-sense approach notdominated by technical rules of construction. The overriding concern is to determine "the intent of the parties and the scope of theirunderstanding" (Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21, [2006] 1 S.C.R. 744 (S.C.C.), atpara. 27 per LeBel J.; see also Tercon Contractors Ltd. v. British Columbia (Minister of Transportation & Highways), 2010 SCC 4,[2010] 1 S.C.R. 69 (S.C.C.), at paras. 64-65 per Cromwell J.).

To do so, a decision-maker must read the contract as a whole, giving thewords used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time offormation of the contract. Consideration of the surrounding circumstances recognizes that ascertaining contractual intention can bedifficult when looking at words on their own, because words alone do not have an immutable or absolute meaning: No contracts are made in a vacuum: there is always a setting in which they have to be placed....

In a commercial contract it is certainlyright that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of thetransaction, the background, the context, the market in which the parties are operating. (Reardon Smith Line, at p. 574, per Lord Wilberforce) 48 The meaning of words is often derived from a number of contextual factors, including the purpose of the agreement and the natureof the relationship created by the agreement (see Geoffrey L. Moore Realty Inc. v. Manitoba Motor League, 2003 MBCA 71, 173 Man.R. (2d) 300 (Man.

C.A.), at para. 15, per Hamilton J.A.; see also Hall, at p. 22; and McCamus, at pp. 749-50). As stated by LordHoffmann in Investors Compensation Scheme Ltd. v. West Bromwich Building Society (1997), [1998] 1 All E.R. 98 (U.K. H.L.): The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of itswords. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using thosewords against the relevant background would reasonably have been understood to mean. [p. 115] … 49.…Yet in contractual

interpretation, the goal of the exercise is to ascertain the objective intent of the parties — a fact-specific goal —through the application of legal principles of

interpretation… [Emphasis added] [38] As the court said in Sattva, supra, while the surrounding circumstances will be considered in interpreting the terms of acontract, they must never be allowed to overwhelm the words of the agreement: 57 While the surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowed tooverwhelm the words of that agreement (Hayes Forest Services, at para. 14; and Hall, at p. 30). The goal of examining such evidence isto deepen a decision-maker's understanding of the mutual and objective intentions of the parties as expressed in the words of the contract.The

interpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract (Hall, atpp. 15 and 30-32). While the surrounding circumstances are relied upon in the interpretive process, courts cannot use them to deviatefrom the text such that the court effectively creates a new agreement (Glaswegian Enterprises Inc. v. BC Tel Mobility Cellular Inc.(1997), (BC CA), 101 B.C.A.C. 62 (B.C. C.A.)). 58 The nature of the evidence that can be relied upon under the rubric of "surrounding circumstances" will necessarily vary from case tocase.

It does, however, have its limits. It should consist only of objective evidence of the background facts at the time of the execution ofthe contract (King, at paras. 66 and 70), that is, knowledge that was or reasonably ought to have been within the knowledge of bothparties at or before the date of contracting. Subject to these requirements and the parol evidence rule discussed below, this includes, inthe words of Lord Hoffmann, "absolutely anything which would have affected the way in which the language of the document wouldhave been understood by a reasonable man" (Investors Compensation Scheme, at p. 114).

Whether something was or reasonably ought tohave been within the common knowledge of the parties at the time of execution of the contract is a question of fact. [Emphasis added] [39] Contracts are not made in a vacuum. The case law is clear that surrounding circumstances (context or factual matrix) areimportant in interpreting the words, as such evidence will assist a trier of fact in understanding the objective intention of the parties, asexpressed in the words. In short, it is perfectly proper to look at surrounding circumstances to assist in determining what the parties werecontracting about.

Evidence of the surrounding circumstances is admissible even if there is no ambiguity in the wording of theagreement. However, the subjective intent of the parties is not a consideration. It is of no value to the

interpretation process, where thereis no ambiguity alleged, for a party to give evidence as to what the terms of the contract mean to them. [40] Surrounding circumstances or the factual matrix is broad, and may include many things, but the case law is clear that it doesnot include evidence of negotiations leading up to the final agreement or the subjective intentions of the parties. Neither Mr. Ryan’ssubjective intention nor Thornridge’s subjective intention in entering the agreement is admissible. Contractual

interpretation is an objective endeavor, not a subjective one. As was said by Geoff R. Hall in Canadian Contractual

Interpretation Law, 3rd ed. (Markham:LexisNexis Canada, 2016) at page 33: A further limitation on the scope of the factual matrix is the requirement that it must be assessed objectively. Since contractualinterpretation is an objective exercise, the factual matrix consists only of objective facts known to the parties at or before the date of

contracting. It also consists only of what is common to both parties, as opposed individualized versions of the factual matrix particular toonly one of the contracting parties. [Emphasis added] [41] Although predating Sattva, supra, the Ontario Court of appeal in Kentucky Fried Chicken Canada v. Scott's Food Services Inc., (ON CA), [1998] O.J. No. 4368 (Ont. C.A.), said: 27 Where, as here, the document to be construed is a negotiated commercial document, the court should avoid an

interpretation thatwould result in a commercial absurdity. Rather, the document should be construed in accordance with sound commercial principles andgood business sense. Care must be taken, however, to do this objectively rather than from the perspective of one contracting party or theother, since what might make good business sense to one party would not necessarily do so for the other. [Emphasis added] [42] While also predating Sattva, the Manitoba Court of Appeal in Geoffrey L. Moore Realty Inc. v.

Manitoba Motor League, 2003MBCA 71 discussed the rationale for excluding evidence of negotiations: 20 In the well-known decision Prenn v. Simmonds, [1971] 3 All E.R. 237 (U.K. H.L.), Lord Wilberforce began by noting the obviousreasons why evidence of negotiations should be excluded (at p. 240): There were prolonged negotiations between solicitors, with exchanges of draft clauses, ultimately emerging in cl 2 of the agreement.

Thereason for not admitting evidence of these exchanges is not a technical one or even mainly one of convenience (although the attempt toadmit it did greatly prolong the case and add to its expense). It is simply that such evidence is unhelpful. By the nature of things, wherenegotiations are difficult, the parties' positions, with each passing letter, are changing and until the final agreement, although converging,still divergent. It is only the final document which records a consensus.

If the previous documents use different expressions, how doesconstruction of those expressions, itself a doubtful process, help on the construction of the contractual words? 21 He continued by commenting on the importance of evidence of the "genesis" and "aim" of the transaction (at p. 241): In my opinion, then, evidence of negotiations, or of the parties' intentions, . . . ought not to be received, and evidence should be restrictedto evidence of the factual background known to the parties at or before the date of the contract, including evidence of the "genesis" andobjectively the "aim" of the transaction. 23 More recent cases, while recognizing the basic principle that evidence of negotiations is not admissible, have considered evidence ofnegotiations in reference to the commercial objective and factual matrix.

One illustrative example is Langley LowCost Builders Ltd. v.474835 B.C. Ltd., [2000] 7 W.W.R. 46, 2000 BCCA 365 (B.C. C.A.), which relies on the principles articulated in Prenn v. Simmonds,McEachern C.J.B.C. opined (at para. 29): [I]t is important to remember that negotiations between the parties are not relevant in determining the meaning of the language used bythe parties. This is because parties often change their views and positions during negotiations.

The fact that the parties were innegotiations, and the reasons for these negotiations, however, including the commercial objectives of the parties is relevant as a part ofthe factual matrix, or factual underpinning of the agreement: Prenn v.

Simmonds, . . . . 24 When there is no ambiguity, the courts are not often called upon to consider the commercial reality of the transaction in the sense ofdetermining a "sensible commercial result." Iacobucci J. commented on this in Eli Lilly (at para. 56): When there is no ambiguity in the wording of the document, the notion in Consolidated-Bathurst [ (SCC), [1980] 1S.C.R. 888] that the

interpretation which produces a "fair result" or a "sensible commercial result" should be adopted is notdeterminative. Admittedly, it would be absurd to adopt an

interpretation which is clearly inconsistent with the commercial interests of theparties, if the goal is to ascertain their true contractual intent. However, to interpret a plainly worded document in accordance with thetrue contractual intent of the parties is not difficult, if it is presumed that the parties intended the legal consequences of their words. 25 When is a contract or a phrase ambiguous? Difficulty in interpreting a contract is not synonymous with ambiguity (PaddonHughesDevelopment Co. v. Pancontinental Oil Ltd. (1998), 1998 ABCA 333 , [1999] 5 W.W.R. 726 (Alta. C.A.)).

An ambiguousphrase has been described as one that is "reasonably susceptible of more than one meaning" (Hi-Tech Group Inc. v. Sears Canada Inc.(2001), (ON CA), 52 O.R. (3d) 97 (Ont. C.A.) at para. 18 (C.A.), and as one with a "double or devious meaning, thatis to say, one word or one expression or a series of expressions capable on its face or in its application of two or more meanings" (Eco-Zone Engineering Ltd. v. Grand Falls-Windsor (Town) (2000), 5 C.L.R. (3d) 55, 2000 NFCA 21 (Nfld. C.A.) at para. 9, quoting LeitchGold Mines Ltd. v. Texas Gulf Sulphur Co. (1968), (ON SC), [1969] 1 O.R. 469 at 524 (Ont.

H.C.). This cannot bedetermined until the full text of the contract is considered, in light of the surrounding circumstances at the time of its execution, ifnecessary. 26 In brief

summary then, to determine the intentions of the parties expressed in a written contract, one looks to the text of the contract asa whole. In doing so, meaning is given to all of the words in the text, if possible, and the absence of words may also be considered. Ifnecessary, the text is considered in light of the surrounding circumstances as at the time of execution of the contract. The goal is todetermine the objective intentions of the parties in the sense of a reasonable person in the context of those surrounding circumstancesand not the subjective intentions of the parties. If, after that analysis, the text in question is ambiguous, extrinsic evidence may beconsidered. [Emphasis added]

[43] Regarding Thornridge’s objections that some of the affidavit evidence violates the parol evidence rule, the court in Sattva,supra, addressed the relationship between surrounding circumstances and the parol evidence rule as follows: Considering the Surrounding Circumstances Does Not Offend the Parol Evidence Rule 59 It is necessary to say a word about consideration of the surrounding circumstances and the parol evidence rule.

The parol evidencerule precludes admission of evidence outside the words of the written contract that would add to, subtract from, vary, or contradict acontract that has been wholly reduced to writing (King, at para. 35; and Hall, at p. 53). To this end, the rule precludes, among otherthings, evidence of the subjective intentions of the parties (Hall, at pp. 64-65; and Eli Lilly & Co. v. Novopharm Ltd., (SCC), [1998] 2 S.C.R. 129 (S.C.C.), at paras. 54-59, per Iacobucci J.).

The purpose of the parol evidence rule is primarily to achievefinality and certainty in contractual obligations, and secondarily to hamper a party's ability to use fabricated or unreliable evidence toattack a written contract (C.J.A., Local 579 v. Bradco Construction Ltd., (SCC), [1993] 2 S.C.R. 316 (S.C.C.), at pp.341-42, per Sopinka J.). 60 The parol evidence rule does not apply to preclude evidence of the surrounding circumstances.

Such evidence is consistent with theobjectives of finality and certainty because it is used as an interpretive aid for determining the meaning of the written words chosen bythe parties, not to change or overrule the meaning of those words.

The surrounding circumstances are facts known or facts thatreasonably ought to have been known to both parties at or before the date of contracting; therefore, the concern of unreliability does notarise. 61 Some authorities and commentators suggest that the parol evidence rule is an anachronism, or, at the very least, of limited applicationin view of the myriad of exceptions to it (see for example Gutierrez v. Tropic International Ltd. (2002), (ON CA), 63O.R. (3d) 63 (Ont. C.A.), at paras. 19-20; and Hall, at pp. 53-64).

For the purposes of this appeal, it is sufficient to say that the parolevidence rule does not apply to preclude evidence of surrounding circumstances when interpreting the words of a written contract. [44] One of the objections raised by Thornridge is that some of the evidence offered is simply Mr. Ryan’s subjective intention. Asindicated above, surrounding circumstances do not include a party’s subjective intent. It is on rare occasion that the court would considera party’s subjective intention during the

interpretation exercise. This is not one of those occasions. As noted above, Mr. Ryan has notpleaded that the Large Note contains an ambiguity. I note there is reference to ambiguity in Mr. Ryan’s brief on the merits of thesummary judgment motion. However, on the issue of admissibility, it was not raised nor argued. In fact the opposite is the case -- heargues that it is not subjective intention that appears in the impugned affidavit but the objective intention of the parties. He says in hisbrief on admissibility the following: All the evidence submitted by Mr. Ryan describes circumstances to aid the Court in the

interpretation of the Large Note. None of it isintended to vary the wording of the Large Note. It is Mr. Ryan’s position that there were clear objective intentions of the parties whenforming the Large Note, and he gives evidence of the relevant facts and discussions being had at the time. … The challenged evidence is not pertaining to Mr. Ryan’s purely subjective intentions, but rather to the overall objective intent of theparties while negotiating and contracting at the time of drafting. (pages 10 and 11) [45] Mr.

Ryan further says multiple times in his responses to the objections (see Appendix “A”) that the evidence in Mr. Ryan’saffidavit that is being challenged is not evidence of Mr. Ryan’s subjective intention, but descriptions of exhibits or evidence of theobjective intention of the parties or the objective factual matrix. [46] He has argued that surrounding circumstances should be considered which, as I have pointed out above, is part of theinterpretation exercise. The parties submit they have competing

interpretations of the Large Note. Clearly an ambiguity must besomething more than simply the existence of competing

interpretations. If this were the definition of ambiguity, parol evidence would beadmitted in most cases involving contract

interpretation. To admit evidence of subjective

interpretation, there must be more than simplyan argument about competing

definitions. At this preliminary motion on admissibility, without more, I am certainly not in a position toopine as to whether there is an ambiguity in the wording of the Large Note, nor was I asked to do so. Analysis [47] It is with the above legal principles in mind that I make my findings regarding the admissibility objections of Thornridge. It isimportant to note that there are two stages in which evidence is evaluated. We are at the initial stage, being the admissibility stage, whereevidence is evaluated for its compliance with the rules of admissibility.

Even when evidence passes the threshold of admissibility, that isnot the end of the exercise. At the hearing on the merits, the trier of fact makes the ultimate decision in the case by weighing theevidence and applying its finding to the relevant rules of substantive law. The standards to be met before evidence is ruled admissibleshould not be confused with the ultimate standard of proof before facts are found in the ultimate case. Evidence that is admitted issometimes given little or no weight at the merits hearing or trial.

The strength of the evidence and the ultimate use to which it is put is aquestion of fact, not to be resolved at this initial admissibility stage. In this motion, I am dealing solely with the first stage -- theadmissibility of certain evidence contained in the affidavit of Mr. Ryan filed on the motion for

summary judgment. [48] The next step in the current matter, being a motion for

summary judgment, is distinct from the second step of weighingevidence, as for example, would occur in a trial of the action on the merits. Here, the affidavit in issue has been filed on a motion forsummary judgement. The Court of Appeal has been clear that a judge hearing a

summary judgment motion is not to weigh evidence. InHatch Ltd. v. Atlantic Sub-Sea Construction and Consulting Inc., 2017 NSCA 61, our Court of Appeal cautioned that, in determiningwhether the evidence is sufficient to support the pleading, the motion judge must not draw inferences or weigh evidence: [23] The role of the motions judge on a

summary judgment motion is to determine whether the challenged claim discloses a genuine

issue of material fact (either pure or mixed with a question of law). The onus is on the moving party to show there is no genuine issue of material fact. If it fails to do so the motion is dismissed. A material fact being one that would affect the result. [24] The motions judge must determine whether the evidence is sufficient to support the pleading, but he/she cannot draw inferences from the available evidence to resolve disputed facts. [25] This prohibition on weighing evidence was addressed by Saunders, J.A. in Coady . After discussing the law of

summary judgment in Nova Scotia, he provides a list of principles, including: [87] . . . 10.

Summary judgment applications are not the appropriate forum to resolve disputed questions of fact, or mixed law and fact, or the appropriate inferences to be drawn from disputed facts. 11. Neither is a

summary judgment application the appropriate forum to weigh the evidence or evaluate credibility . [ 49 ] This matter is early in the litigation process and I am considering admissibility objections to affidavit evidence prior to a

summary judgment motion. My findings in relation to the affidavit evidence are confined to the context in which they are currently considered. The Small Note [ 50 ] Mr. Ryan says the Small Note executed on February 26, 2015 is relevant. He says it is relevant to determining how much – if anything – he owes on the Large Note. He says it is directly relevant that Thornridge is seeking payment for the amounts Mr. Ryan received from the shares pledged to the Small Note in two separate actions, particularly where this amount has already been repaid to Thornridge in other litigation. [ 51 ] Mr.

Ryan says in his Notice of Defence: 30. In the alternative that the promissory note is determined to be secured by shares of successor corporations to Envirosystems held by Mr. Ryan, Thornridge’s right of recovery is limited to the net proceeds of any sale of such shares which may have already or might in the future occur. [ 52 ] Mr. Gillis, Chief Operating Officer of Thornridge, says in his affidavit sworn on September 1, 2022 at para. 22: Based on my involvement in the these transactions, I know that Mr. Ryan owned 2,057,827 common shares in Terrapure when they were sold to GFL.

Thornridge, for its common shares, received approximately 95 cents per share. On that basis, the proceeds from Mr. Ryan’s shares in the GFL Acquisition were in the range of $1.9 M. [ 53 ] Mr. Ryan says that within this referenced $1.9M is the amount he received on the Small Note. He asks how Thornridge can say the Small Note is not relevant when it is included by Mr. Gillis in his calculation of the $1.9M. Regardless, Mr.

Ryan also argues that since the Small Note and the Large Note were signed the same day, and the Small Note includes shares pledged while the Large Note does not, this illustrates that Thornridge turned its mind to the question of share pledge and chose not to include it in the Large Note wording. He says the existence of another note for which shares were pledged is part of the factual matrix relevant to the

interpretation of the Large Note. [ 54 ] Thornridge says the Large Note is payable according to its own terms, and what is payable under the Small Note has no bearing whatsoever on the amount payable under the separate Large Note. It is not “central” to the cause of action, as suggested by the defendant Mr. Ryan. [ 55 ] Thornridge disputes Mr. Ryan’s suggestion that it is seeking payment only up to the extent of the amounts Mr. Ryan received from pledged shares. Thornridge says that is not an accurate characterization of its position in the litigation related to the Large Note or the Small Note.

Thornridge says it is seeking payment for the full amounts owing under both the Large Note and the Small Note. [ 56 ] I am satisfied the Small Note has relevance. It can be said to have some tendency to advance a material inquiry. [ 57 ] On February 26, 2015, there were a number of contracts entered into that formed part of the overall transaction including both the Large Note and the Small Note. Thornridge describes the February 2015 agreements as a series of corporate transactions. The Envirosystems transaction closed on February 26, 2015. [ 58 ] The exhibits to Mr.

Ryan’s affidavit indicate that on February 26, 2015, a number of agreements were executed between the parties. These include a Promissory Note (the Large Note) with Mr. Ryan as the debtor and Thornridge Holdings Limited as the creditor, and also a General Release referencing the long term incentive plan of Thornridge Holdings Limited for Mr. Ryan; an Option Agreement between 3287166 Nova Scotia Limited and Mr. Ryan; an Exercise Note executed but with the day in February 2015 left blank; a Promissory Note between 3287166 Nova Scotia Limited and Mr. Ryan (the Small Note); a Share Pledge Agreement with Mr.

Ryan as the pledgor and Thornridge Holdings Limited as the creditor; an Appointment of Agent Agreement with Thornridge Holdings Limited as creditor, Mr. Ryan as primary agent, and Michael Tringali as secondary agent. [ 59 ] The Small Note says that Mr. Ryan, the debtor, has subscribed to a certain number of shares of 3287166 Nova Scotia Limited. Thornridge is described as the creditor. Mr.

Gillis in his affidavit sworn September 1, 2022 says that the Envirosystems transaction involved Thornridge selling the majority of its shares to 3287166 Nova Scotia Limited on February 26, 2015. [ 60 ] The principle that a contract is to be interpreted as a whole also requires consideration of related contracts entered into as part

of a single overall transaction. While, on this preliminary motion, I have not digested all of these documents, it would appear, given theparties noted as being involved in the transaction and the fact the documents were all executed on February 26, 2015, that each has somerelevance to the overall transaction. Individual contracts that are part of a series of related contracts should not be interpreted in isolation.The doctrine of related contracts is simply an extension of the principle that a contract is to be interpreted as a whole.

It also incorporatesthe principle of context for contract or surrounding circumstances. The doctrine can, where appropriate, help to achieve interpretiveaccuracy and give effect to the intentions of the parties. If contracts are considered in isolation from related contracts, different interpretive results could ensue. (See Canadian Contractual

Interpretation Law, 3rd ed., supra) [61] The Ontario Court of Appeal elaborated on the related contracts doctrine in Salah v. Timothy’s Coffees of the World Inc. 2010ONCA 673 , [2010] O.J. No. 4336 (Ont. C.A.): 16 The basic principles of commercial contractual

interpretation may be summarized as follows. When interpreting a contract, thecourt aims to determine the intentions of the parties in accordance with the language used in the written document and presumes that theparties have intended what they have said. The court construes the contract as a whole, in a manner that gives meaning to all of its terms,and avoids an

interpretation that would render one or more of its terms ineffective. In interpreting the contract, the court must haveregard to the objective evidence of the "factual matrix" or context underlying the negotiation of the contract, but not the subjectiveevidence of the intention of the parties. The court should interpret the contract so as to accord with sound commercial principles andgood business sense, and avoid commercial absurdity. If the court finds that the contract is ambiguous, it may then resort to extrinsicevidence to clear up the ambiguity.

Where a transaction involves the execution of several documents that form parts of a largercomposite whole — like a complex commercial transaction — and each agreement is entered into on the faith of the others beingexecuted, then assistance in the

interpretation of one agreement may be drawn from the related agreements. See 3869130 Canada Inc. v.I.C.B. Distribution Inc. (2008), 2008 ONCA 396 , 66 C.C.E.L. (3d) 89 (Ont. C.A.), at paras. 30-34; Dumbrell v. RegionalGroup of Cos. (2007), 2007 ONCA 59 , 85 O.R. (3d) 616 (Ont. C.A.), at paras. 47-56; SimEx Inc. v. IMAX Corp. (2005), (ON CA), 11 B.L.R. (4th) 214 (Ont. C.A.), at paras. 19-23; Kentucky Fried Chicken Canada v. Scott's Food ServicesInc. (1998), (ON CA), 41 B.L.R. (2d) 42 (Ont. C.A.), at paras. 24-27; and Professor John D.

McCamus, The Law ofContracts (Toronto: Irwin Law Inc., 2005), at pp. 705-722. [Emphasis added] [62] At this stage, it is not clear to me whether each and every one of the February 26, 2015 agreements forms parts of a largersingle transaction.

However, there is sufficient evidence before me to conclude that the Small Note has relevance at least insofar as it is acontract entered into on the same date as the Large Note, along with various other contracts, and it has some relationship to theEnvirosystems transaction that closed on the same date, being February 26, 2015. [63] As to the merits of the admissibility objections raised by Thornridge, in the attached Appendix "A", I have reviewed each ofthe statements objected to and have made rulings on each as to admissibility. Mr.

Ryan’s Motion for Leave to File a Supplementary Affidavit [64] The motion brought by Mr. Ryan seeks leave to file a supplemental affidavit. The affidavit was first referenced incorrespondence to the court on October 31, 2022. Mr. Ryan says the information contained in the proposed affidavit was received byhim on October 18 and 28, 2022. The proposed affidavit contains facts that he says are relevant to the term “successor”, as used in theLarge Note.

He says the evidence in the supplemental affidavit concerns whether Terrapure BR LP (“BatteryCo”) is a “successor” toEnvirosystems. [65] Rule 23.12 contemplates the filing of affidavits, with permission, after the deadlines set out in Rule 23.11. It states: 23.12 No further affidavit

(1) A party may only file an affidavit after a deadline in Rule 23.11 with permission of a judge.

(2) On a motion to permit a late affidavit, the judge must consider all of the following: (

a) the prejudice that would be caused to the party who offers the affidavit, if the motion proceeds without that affidavit; (

b) the prejudice that would be caused to other parties by allowing the affidavit to be filed, including the prejudice caused byan adjournment, if an adjournment would result; (

c) the prejudice caused to the public if motions set by appointment are frequently adjourned when it is too late to make thebest use of the time of counsel, the judge or court staff.

(3) A judge who allows a late affidavit may order the party filing the affidavit to indemnify any other party for expenses resultingfrom the filing, including expenses resulting from an adjournment. [66] Rule 13.04(6) addresses the issue of new evidence sought to be adduced in a

summary judgment motion. The Rule states: 13.04

(6) A judge who hears a motion for

summary judgment on evidence has discretion to do either of the following:

a) determine a question of law, if there is no genuine issue of material fact for trial;

b) adjourn the hearing of the motion for any just purpose including to permit necessary disclosure, production, discovery,presentation of expert evidence, or collection of other evidence. [Emphasis added]

[ 67 ] The Nova Scotia Court of Appeal said in Shannex Inc. v. Dora Construction Ltd. , supra ,

summary judgment is not an ambush, nor is an adjournment permission to procrastinate. Justice Fichaud specifically referred to Rule 13.04 (6)(

b) and indicated the subsection allows the judge to balance these factors: Burton , paras. 85-86, said that, if the responding party reasonably requires time to marshal his evidence, the judge should adjourn the motion for

summary judgment.

Summary judgment isn't an ambush. Neither is the adjournment permission to procrastinate. The amended Rule 13.04(6)(

b) allows the judge to balance these factors. (para.34) [ 68 ] Rule 13.04(6) makes it clear that it is within the court's discretion, on the hearing of the motion, to adjourn the hearing for any just purpose, including to permit the "collection of other evidence." [ 69 ] I addressed the filing of a late affidavit on a motion for

summary judgment in Trout Point Lodge Limited v. Automattic Inc ., 2019 NSSC 317 , where I said the following: 27 The filing of late affidavits is typically unusual and requires the leave of the Court. A moving party should be very careful to ensure it has marshalled all evidence necessary for its

summary judgment motion. It cannot assume an adjournment will be available for ill- prepared attempts at

summary judgment. However, in appropriate circumstances, where it is just to do so under rule 13.04, late evidence may be allowed. As an example, a late affidavit of the Plaintiffs was also allowed. This motion was originally scheduled for March 19, 2019, but was adjourned due to the Plaintiffs' request to file a late surrebuttal affidavit. This Court granted the request, as the Plaintiffs argued that the March 2019 affidavit of Ms. Zhu, filed by the Defendant, raised "a very important point" that was previously unknown to the Plaintiffs and "may seriously prejudice the Plaintiffs." 28 The exercise of the Court's discretion under Rule 13.04 (6)(

b) will depend on the circumstances. The Court should be concerned with such factors as whether there will be prejudice to either party that cannot be adequately compensated in costs, whether the affidavit is relevant to a determination under Rule 13, whether the requesting party has caused unreasonable delay, whether there has been an oversight, etc.

In addition, as Rule 23.12 contemplates, not only prejudice to the parties but also possible prejudice to the public, caused by motions being frequently adjourned when it is too late to make use of the time set aside by counsel, the judge and court staff, should be considered. Where the interests of justice favour the Court admitting the late affidavit, the opposing party should be provided with an opportunity to respond. 29 Here, I find there will be no prejudice to the Plaintiffs caused by the late filing of the Zhu supplemental affidavit and no prejudice was argued by the Plaintiffs.

There is no evidence the Defendant has unduly delayed the motion for

summary judgment, as the prior adjournment was due to the Plaintiffs seeking to file a surrebuttal affidavit after all filing timelines had passed. The supplemental affidavit is relevant to the issue of whether, as a host, the Defendant has immunity for copyright infringement by blog creators in both Canada and the United States. The Defendant's position is that it is exempt from liability under either the United States or Canadian legislation. Automattic seeks to introduce the affidavit in response to questions from the Court as to the sufficiency of the evidence in relation to this issue.

The Defendant says it was an oversight in not presenting this evidence which only became apparent as a result of the questions posed by the Court during oral argument. The Defendant may well be prejudiced if the evidence is not allowed, as a further affidavit could potentially allow the Court to determine that the issue has no prospect of success under Rule 13, thereby avoiding a full trial of the issue.

In light of the above, and the fact the Plaintiffs will be provided with an opportunity to respond to the evidence and file further submissions addressing the affidavit, I am prepared to exercise the discretion provided under Rule 13.04(6)(

b) to allow the late filing of the affidavit. 30 In Voltage Pictures, LLC v. Salna , 2019 FC 1047 (F.C.), although dealing with the Federal Court Rules, Justice Boswell noted the factors that should be considered when determining whether to allow a late filed affidavit: 31 The relevant factors to be taken into account in deciding whether leave to file a further affidavit should be granted are:relevancy of the proposed affidavit; absence of prejudice to the opposing party; assistance to the Court; and the overall interest of justice ( Pfizer Canada Inc. v.

Rhoxalpharma Inc. , 2004 FC 1685 (F.C.) at paras 15 and 16 ). . . . 31 Late introduction of evidence has been allowed even in situations involving a trial, where the trial was complete and the decision had been rendered. The Nova Scotia Court of Appeal in Griffin v. Corcoran , 2001 NSCA 73 (N.S. C.A.), was addressing an issue of whether to reopen a trial to consider new evidence after the trial was complete and a written decision had been issued (although not the final Order).

The Court of Appeal said, where key evidence has been overlooked or an untruth only lately detected, there are strong arguments of justice in favour of allowing the Court to reopen its consideration of the matter: 62 The principles which guide the exercise of this discretion attempt to balance the requirements that parties bring forward their whole case and that there must be finality in litigation with the need to reach a result that is just in substance.

In other words, the judge must take account of the, at times, competing goals of employing fair procedure and achieving right results. . . . 64 The application to reopen a trial is one that may be made in an almost limitless variety of situations. A considerable degree of flexibility is needed in the applicable law if it is to deal justly with such diverse situations. It is preferable, therefore, for this Court to articulate the fundamental principles that must be considered, weighed and balanced and leave their application to the discretion of the

trial judge. In saying this, however, I would emphasize that the reopening of a trial after the judge has given a decision is an extraordinary and rare step that must be undertaken with great caution. 65 The decision must be informed by a balancing of the risk of both procedural and substantial injustice to both parties... . . . 68 While fair and orderly procedure is essential, so is reaching a correct result on the merits. Genuine mistakes, oversights or even poor judgment should rarely defeat a just cause.

If key evidence has been overlooked or an untruth only lately detected, there are strong arguments of justice in favour of allowing the court to reopen its consideration of the matter. The more important the evidence would be to the outcome of the case, the stronger the argument in favour of its reception. To rephrase a familiar adage, justice must not only appear to be done; it must in fact be done. [Emphasis added] (See also Doug Boehner Trucking & Excavating Ltd. v. United Gulf Developments Ltd. , 2004 NSSC 180 (N.S.

S.C.) ) [ 70 ] In considering the relevant factors, I find there will be no prejudice to the plaintiff caused by the late filing of the Ryan supplemental affidavit. The only prejudice claimed by Thornridge is that it will have to respond to evidence which it claims is irrelevant. However, I note that Thornridge has already filed a response affidavit sworn by Mr. Gillis on November 15, 2022. There is no evidence before me that Mr. Ryan has delayed the motion for

summary judgment, as the prior adjournment was due to the plaintiff seeking to advance objections to the admissibility of Mr. Ryan’s affidavit. The motion to file the late affidavit was efficiently addressed at the same time. [ 71 ] In essence, the opposition advanced by Thornridge is on the basis of relevance. It says t he proposed affidavit goes well beyond a mere clarification of timing; it introduces an entirely new issue, which is ultimately not relevant to the matters in dispute on the

summary judgment motion. [ 72 ] Thornridge submits that leave to file the affidavit should be denied because it does not meet the threshold for relevance to the Rule 13 motion. It is not relevant to any material fact in issue. Thornridge says in its brief (pages 2-4): On March 15, 2021, the majority shareholders of Terrapure entered into an agreement to sell Terrapure and its subsidiaries, excluding the battery recycling business owned by Terrapure which now operates as Terrapure BR LP (“ BatteryCo ”), to GFL Environmental Inc., a waste management company with headquarters in Toronto, Canada (“ GFL ”).

BatteryCo and the battery recycling business were to be carved out of the transaction and retained by the existing shareholders. … The BatteryCo was created from a number of other partnerships and wholly owned subsidiaries of Terrapure which were formed between January 14 and 20, 2015, more than three years before Terrapure acquired Envirosystems. BatteryCo is entirely separate from Envirosystems. At no time prior to the GFL Acquisition did Envirosystems ever own or operate a battery recycling business.

Battery recycling was not an industry in which Envirosystems carried on business. [ 73 ] Thornridge’s says its position on the

summary judgment motion is that:

(1) Terrapure was a successor to Envirosystems;

(2) GFL acquired all of the shares of Terrapure; (3) the interests of the investors in Terrapure, as a successor to Envirosystems, have been disposed of; and (4) this, by definition, is a “Liquidity Event” as defined in the Large Note. [ 74 ] Thornbridge says it does not matter – and it is not relevant for the Rule 13 motion – whether the battery recycling business is a “successor” or not. The issue on the motion is simply whether any successor to Envirosystems was sold, not whether “the” successor was sold.

It says on this point, the court does not even need to determine whether Terrapure was a “successor” to Envirosystems because Mr. Ryan has admitted in his Defence that Terrapure was “the successor” to Envirosystems. [ 75 ] Thornridge says that even if the battery business is a “successor” (which is not admitted), the fact remains that the interests of the investors in a successor (Terrapure) of Envirosystems have been sold or disposed of. The legal status of the battery business is completely moot, and that issue is entirely irrelevant to the position being advanced by Thornridge on the

summary judgment motion. [ 76 ] Mr Ryan says the proposed affidavit does not raise a new legal issue; instead, it provides further relevant evidence in support of an issue – the existence of successor corporations – already raised in his submissions and addressed by Thornridge in its rebuttal submittal. Mr. Ryan further says the information included in the proposed affidavit corrects his previous understanding regarding the creation of BatteryCo as described at para. 65 of his initial affidavit.

He submits that the information, at the very least, puts in question whether BatteryCo is a successor to Envirosystems Incorporated. [ 77 ] I am not, on this preliminary motion, determining the merits of the

summary judgment motion. The parties each advance competing

interpretations of the wording of the Large Note. The Large Note uses the words “any successor” in the following clause: Place and Time of Payment .

All amounts shall be paid to the Creditor at its registered office or designated location on the date and to the extent that the Debtor, or his personal representative or heirs, receives any amounts owing to the Debtor in respect of the sale of Debtor’s shares of Envirosystems Incorporated, or any successor thereof pledged as security for this Note, upon a “Liquidity Event”, as such term is defined in the Envirosystems Incorporated Stock Option Plan adopted as of February 26, 2015 as amended from time to time (the “Plan”) or any other liquidation in which the Debtor receives any alternative consideration.

Proceeds shall not include dividends for purposes hereof and the date of the receipt of such proceeds on a Liquidity Event shall be the “Maturity Date”.

[Emphasis added] [ 78 ] Mr. Ryan specifically references his holding shares in successor corporations in his Defence. He pleads the following at paras. 26 to 30: 26. Through a series of corporate transactions, Mr. Ryan’s shares of Envirosystems were transferred for shares in successor corporations after February 2015. 27. At no time did Mr. Ryan ever pledge any shares held in any successor corporations of Envirosystems as security for the Promissory Note. 28. As Mr. Ryan has never received proceeds from the sale of shares pledged as security for the Promissory Note, no “Maturity Date” has occurred. 29.

As no “Maturity Date” has occurred Thornridge is unable to demand payment of the Promissory Note, and no amoun

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