Raised Performance Media Inc. v. Pleiades Robotics Inc., 2020 NSSC 326

SUPREME COURT OF Nova Scotia Citation: Raised Performance Media Inc. v. Pleiades Robotics Inc., 2020 NSSC 326 Date: 20201119 Docket: Hfx No . 466742 Registry: Halifax Between: Raised Performance Media Inc., d/b/a, "Brave New World," a body corporate Plaintiff v. Pleiades Robotics Inc., aka "Pleiades Consolidated, Inc.,"a/k/a "Pleiades Consulting Incorporated," and d/b/a "Pleiades Holdings, Inc.," as bodies corporate; Patrick Edwards-Daugherty, an individual; and Francis X. Taney, Jr., an individual Defendants Judge: The Honourable Justice D.

Timothy Gabriel Heard: September 1, 2020, in Halifax, Nova Scotia Counsel: Derek B. Brett, for the Plaintiff Francis X. Taney, Jr., on his own behalf and on the behalf of the other Defendants By the Court: Introduction Overview [ 1 ] The parties have brought competing motions for

summary judgment on evidence. Both were heard on September 1, 2020. [ 2 ] The Plaintiff, Raised Performance Media Inc. ("Raised Performance") entered the fray on October 1, 2019. On that date, it filed its motion pursuant to Civil Procedure Rule 13.04. [ 3 ] Next, on August 11, 2020, the Defendants filed their own motion, for partial

summary judgment, also on evidence, respecting certain claims that the Plaintiff had brought against the Defendants (which latter I will refer to, initially as Robotics (2013)). According to its Defence, not only is this company now known as Pleiades Consolidated Inc. ("Consolidated"), but Consolidated has spawned, in 2015, Pleiades Holdings Inc. ("Holdings"), and a “new” Robotics: “Robotics (2015)”. The Defendant’s motion, among other things, seeks a dismissal of the Plaintiff’s claims against Holdings and some of those against Robotics (2013). [ 4 ] It is these two motions for

summary judgment to which these reasons will relate.

But there have been other motions subsequently filed. [ 5 ] For example, in its brief filed in response to the Defendant's motion noted above, the Plaintiff seems to “apply” to amend its pleadings, and seek permission to add “Spiri Robotics Inc.”, and “Spiri Robotics USA, LLC” as Defendants. [ 6 ] Also, on August 20, 2020, Raised Performance filed another motion, this one seeking to amend its pleadings and add two Defendants, to add another claim relating to "fraudulent preference", and to delete reference in its pleadings to certain other claims that it had initially advanced.

Cumulatively, I refer to these as “the other motions”. The Plaintiff intends to abandon certain claims [ 7 ] As part of its “other motions”, the Plaintiff evidences an intent to abandon its claims for replevin, declaratory relief and consequential damages (all of which had been targeted in the Defendants’ previously filed and competing motion for partial

summary judgment). Those claims will therefore be dismissed. In addition, they were inappropriate to a claim by the Plaintiff for

summary judgment in any event. [ 8 ] To explain, “replevin” refers to a right possessed by someone claiming entitlement to ownership or possession of property (that is alleged to have been wrongfully taken or to have been otherwise wrongfully detained) to get it back before trial, upon providing proper

security. When “replevin” is sought, the Court does not determine the right to ownership or possession as between the parties inter se. It merely determines who is to possess the chattel(

s) and under what circumstances, pending the determination by the Court at trial as to ownership. [ 9 ] I observe that Civil Procedure Rule 43.01 provides: 43.01(1) A temporary recovery order is available in limited circumstances, before a proceeding is heard and determined, to obtain possession of property claimed in the proceeding.

(2) A party may obtain temporary possession of property, in accordance with this Rule. [ 10 ] This would appear to substantively codify the relief which would have been provided by the common law concept of replevin. It would also appear to relegate it to an interlocutory motion pending a determination on the merits of the case in which it has arisen. As a result, it would not have been possible to grant “summary judgment” to the Plaintiff with respect to a replevin claim, in any event. [ 11 ] As to "declaratory relief", it appears from the context in which it is sought to be related to the issue of replevin.

Otherwise, and in any event, I would have determined that it has not been pleaded with enough specificity to permit further consideration within the context of a motion of this type. This claim, too, will be dismissed on the basis of the Plaintiff’s appropriate (albeit belated) acknowledgement. [ 12 ] So too, the claim for consequential damages, which the Plaintiff has also conceded. [ 13 ] The balance of the Plaintiff’s “other motions” will not be dealt with in these reasons.

The Plaintiff is at liberty to pursue one or more of them at its option, once the necessity of doing so has been considered in light of this decision. [ 14 ] As a consequence, I will proceed to address the parties’ competing motions for

summary judgment. In the Defendant’s case, I will treat its motion as one seeking dismissal of the Plaintiff’s remaining claims, those which the Defendants have targeted and have not already been abandoned/dismissed as per the above (“the remaining claims”). Background

i) General [ 15 ] Raised Performance is a Nova Scotia based software development company. Its President is Michael Rizkalla ("Rizkalla"). [ 16 ] The Defendant, Robotics (2013) is engaged in the development, marketing, licensing and support of flying robots. It has been evident throughout the course of the pleadings associated with these motions, and those related to the action itself, that the Plaintiff is of the view that Holdings, which is a company registered in Nova Scotia as of 2015, is also a Defendant. Like so many other “suppositions” in this matter, this is not a clear-cut proposition.

However, given that Holdings has responded to this claim, I will assume, for the purposes of these reasons, that it is properly a party, although I make no finding in this regard. [ 17 ] September 28, 2014 was the date upon which Raised Performance and Robotics (2013) entered into a "User Experience, Design and Development Agreement ("the Agreement"). Clause 1 provided as follows:

(1) The Company agrees to engage and the developers agree to be responsible for and to perform the duties set out in

Schedule “A” hereto on the terms and conditions set out herein. Provided the Developers have not defaulted in its obligations under this Agreement, the Company agrees to pay the Developers compensation as set out in

Schedule “A” hereto, plus applicable HST on the payment terms outlined in

Schedule “A”. Developer shall be responsible for remitting all taxes (including income taxes and HST) arising pursuant to this Agreement. [ 18 ] The Agreement also contained the following: 8. Limitation of Liability: Except for company's obligation to pay the developers the sum set forth in

schedule “A” in exchange for developers timely and satisfactory performance of the services described in

schedule “A”, company shall not be liable for any loss or damage that may arise in connection with this agreement, including, without limitation, any direct, indirect, special, exemplary, punitive, or consequential damages including lost or anticipated profits arising out of or in any way related to this agreement, regardless of whether company was advised of the possibility of such damages. [ Emphasis added] [ 19 ]

Schedule "A” of the Agreement was comprised of two contracts between Raised Performance and Robotics (2013), each of which was subject to the terms of the Agreement. These contracts were sent to Raised Performance on December 29, 2014, but had been backdated to take into account previous discussions between the parties. [ 20 ] The first agreement, or "statement of work", was effective September 28, 2014. It provided (in part) as follows: A. RPMI [“Raised Performance”] will perform the following items of work (the "Work"): 1. PHASE ONE

Developer's personnel shall conduct a two day meeting, on October 2 and 3, 2014, with Company's personnel for the purpose of understanding Company's requirements for the Applications. On or before November 28, 2014, Developer will deliver to Company a recommended set of specifications ('Specifications") for the Applications, which will include style and branding guidelines, a mockup of the Applications showing the flow of the user experience, as well as how the user interacts with each page of the Applications, the action, functionality and appearance of each page in the Applications. Along with the Specifications, Developer will deliver a proposed

schedule for the delivery of the Applications and associated budget. Pleiades will pay RPMI $40,800.00 plus applicable HST for this work. B.

Schedule for Payment 1. Pleiades will pay RPMI $5,000 on or before December 31, 2014. 2. Pleiades will pay RPMI an additional $5,000 on or before January 31, 2015. 3. Pleiades will pay RPMI the remaining amount due within 5 days of receiving funding from Atlantic Canada Opportunities Agency ("ACOA") with respect to the Work.

Pleiades will diligently execute its claims for ACOA funding as expeditiously as possible, including requesting advance payments from ACOA and will notify RPM! [sic] of the date of submission to ACOAt and in the event that funding is received prior to January 31, 2015, will pay RPM! [sic] whatever balance is then outstanding in connection with the Work. [ 21 ] The second statement of work, effective November 21, 2014, related to a Consumer Electronics Show ("CES"), which was expected to take place in January 2015. It provided (in part): A. RPMI will perform the following items of work (the "Work"): 1.

Visual Programming Language ("VPL") RPMI will create a click through demonstration, deployable on an iPad, in a landscape orientation only, that simulates what the actual operation of the VPL will be, including depicting buttons being dragged across the screen via a touch screen functionality, and simulating the use of the VPL to command Spiri to perform one or more actions. The demonstration will follow the script attached hereto as Addendum 1 — November 28, 2014. RPMI will not program this functionality onto Spiri itself.

Rather Pleiades will be responsible for pre-programming the functionality onto Spiri that will carry out the same actions simulated by the click through demonstration. RPMI will deliver the demonstration to Pleiades on or before January 5, 2105 [sic]. Pleiades will pay RPM] $87,048 plus applicable HST for this work. 2. Promotional Videos RPMI will create two animated promotional videos. RPMI is responsible for the overall production of the videos, including the incorporation of the voiceovers and all other audio visual elements.

RPMI is also responsible for managing and supervising the efforts of the Loogaroo company, which will be creating the animations. The first video will be a narrated animation, approximately 1 minute in length, that depicts a user using and interacting with the Visual Programming Language ("VPL") to control Spiri. The second video will be a narrated animation, approximately 30 seconds in length, that depicts a user using and interacting with the joystick controller to control Spiri. The two videos will proceed in accordance with the two scripts attached hereto as Addenda 2 and 3, respectively.

RPMI will deliver the first video to Pleiades on or before January 6, 2015, and deliver the second video to Pleiades will be delivered [sic] as soon as required by Pleiades.

Pleiades will pay RPMI $37,871 plus applicable HST for this work ($21,904 plus applicable HST for the VPL related video and $15,967 plus applicable HST for the joystick controller related video), together with the amounts reasonably and necessarily spent on out of pocket costs in connection with the creation of the videos, in the amount of $6,325 plus applicable HST. [ 22 ] The second agreement further provided that Robotics (2013) would pay expenses related to the Plaintiff’s support personnel at CES, including several pre-approved expenses. It set out the following: C.

Schedule for Payment 1. Pleiades will pay RPMI $5,000 on or before December 31, 2014. 2. Pleiades will pay RPMI an additional $5,000 on or before January 31, 2015. 3. Pleiades will pay RPMI the remaining amount due within 5 days of receiving funding from Atlantic Canada Opportunities Agency ("ACOA") with respect to the Work.

Pleiades will diligently execute its claims for ACOA funding as expeditiously as possible, including requesting advance payments from ACOA and will notify RPMI of the date of submission to ACOA, and in the event that funding is received prior to January 31, 2015, will pay RPMI whatever balance is then outstanding in connection with the Work. [ 23 ] The Plaintiff says it performed its contractual obligations under both agreements, but that it has never been paid by the Defendants – hence the action in this Court. ii) What is alleged in the pleadings [ 24 ] These proceedings commenced on August 11, 2017 when Raised Performance filed a Notice of Action against Robotics (2013).

The latter was described, in the style of cause, as " Pleiades Robotics Inc., (“Robotics 2013”) a.k.a. Pleiades Consolidated Inc. (which I refer to as "Consolidated" herein) and Pleiades Consulting Inc. ("Consulting"), doing business as Pleiades Holdings Inc. (which I refer to as "Holdings" herein, as noted above).

[ 25 ] The Notice of Action was directed only to Robotics (2013) and the other two named Defendants, Patrick Edwards-Daugherty ("Edwards-Daugherty") and Frances X. Taney, Jr. Mr. Taney is a United States Attorney and appeared at the hearing to present argument not only on behalf of himself, but the other named Defendants. [ 26 ] The Statement of Claim has, among other things, the following to say about the corporate Defendant(s): 5. The Defendant,...

Pleiades [Robotics (2013)], is a Nova Scotia based limited company, that has – since its original date of incorporation, been known by various names, inclusive of "Pleiades Consolidated Inc.", and "Pleiades Consulting Inc.”. Presently, Pleiades [Robotics (2013)] is again Inc. or its own name, while also simultaneously conducting business as under the name of ... Holdings. Both entities contain the same registered officer [sic], the same officers, directors and registered agent, and the same overall purpose. 6. Through knowledge and belief, Defendant Pleiades' [Robotics (2013)] related entity, ...

Holdings, was incorporated during the period relevant to this lawsuit in order to by [sic] and possessed the shares of Defendant [Robotics (2013)] and any other related entities.

Henceforth, unless otherwise indicated, all references to Defendant Pleiades – unless otherwise noted – will be intended to jointly reference both... [Robotics] and ...[Holdings]. [ 27 ] Without any intent to be exhaustive, the Statement of Claim goes on to allege breach of the agreement on the part of the Defendants, and further that the Defendants made fraudulent representations to the Plaintiff and thereby induced it to complete the work required by the Agreement.

It goes on to allege that they have improperly kept or failed to return the Plaintiff's property, thereby providing the latter with the remedy of replevin. These pleadings further allege that the Defendants had been unjustly enriched because they have failed to pay the Plaintiffs for their work, and that the Plaintiffs were entitled to declaratory relief as a result of the misappropriation by the Defendants of their property.

Broadly stated, the Plaintiff sought general, compensatory, aggravated, and punitive damages. [ 28 ] In their Defence, which was dated September 12, 2017, the Defendants have stated, among other things: 5. Consolidated, formerly known as Pleiades Robotics Inc. [Robotics (2013)] , is a separate and distinct entity from Holdings and the current Robotics. In or about September, 2014 consolidated, and no other Defendant, entered into an Agreement (the "Agreement") with Plaintiff, contrary to the allegations through Plaintiff's Statement of Claim.

The terms of the Agreement are in writing and speak for themselves, and the Defendants, therefore, deny Plaintiff's characterizations of the agreement throughout the Statement of Claim to the extent that they inaccurately or incompletely state the Agreement's terms. 6. Neither Holdings nor Robotics [Robotics (2015)], which were formed in November 2015, were neither [sic] in existence at the time Consolidated entered into the Agreement with Plaintiff nor during any time.

That Plaintiff claims to have provided services, and therefore could not have committed any act to induce Plaintiff to provide any of the alleged services at issue, contrary to the allegations throughout Plaintiff's Statement of Claim. [Emphasis added] [ 29 ] As if the foregoing were not fraught with enough complexity, contained in the Plaintiff's brief in opposition to the Defendants’ motion for partial

Summary Judgment, Raised Performance attempts to clarify that it had claimed against only two corporations in its original Statement of Claim – Robotics (2013) (which apparently is currently equivalent to Consolidated) and Holdings.

As pointed out earlier, it has now filed a later motion wherein it seeks to amend its Statement of Claim to add Spiri Robotics Inc. – the current identity of Robotics (2015) – and Spiri Robotics USA, LLC as Defendants, a motion upon which I am not ruling in these reasons. [ 30 ] To return to the Defence, it is alleged that Raised Performance was required to create specifications for software with the intention that Robotics (2013)/Consolidated would be eventually able to use to assist them as they develop and marketed the “Spiri Robot”.

It is alleged that the Plaintiffs failed to deliver work product to the requisite specifications, or, in some respects, at all. [ 31 ] As noted, the second statement of work (the second component of the Agreement) required the Plaintiff to deliver a simulated (VPL) application and create two videos – one related to the VPL application and the other to the application of the “Spiri joystick”. These were intended for demonstrative use at an industry convention (CES) in January 2015. According to the Defence, the Plaintiff did not produce a video for the joystick application.

The other required video was related to the VPL simulation.

It is alleged that this one arrived late, and was not to contractual specifications. [ 32 ] The Defendants also allege that Raised Performance had been advised during the course of contract negotiations that Robotics (2013)/Consolidated was party to an agreement with ACOA, pursuant to which it could obtain reimbursement for a portion of the money that it paid out to the Plaintiff related to work which furthered one or more ACOA projects which were underway related the Defendants’ ventures. [ 33 ] Both of the statements of work (referenced in the Agreement) provided that Robotics (2013)/Consolidated (which I will sometimes hereinafter refer to as simply “Consolidated”) would pay the Plaintiff for the two components of work required pursuant to it, after Consolidated received the associated ACOA funding.

As to the failure to obtain ACOA funding with which to pay the Plaintiff, the Defendants allege: 19. Because Plaintiff did not complete the required work under the SOWs [statements of work] Consolidated did not pay Plaintiff the entire amount set forth in the SOWs. Consolidated could not submit claims for reimbursement to ACOA for alleged work that Plaintiff had not performed, that had not advanced the progress of the project, and that Consolidated had not paid for. Further, none of the Defendants misappropriated any funds obtained from ACOA at any time. [ 34 ] The Defence also raises another issue.

It alleges that, beginning in January 2015, Consolidated experienced unexpected delays

in obtaining private investment and government funding assistance. As a consequence, it was unable to follow through on proposals it previously had made to the Plaintiff. Nonetheless, it alleges that Consolidated made several partial payments to the Plaintiff after January 2015, and others in 2016. [ 35 ] Messrs. Edwards-Daugherty and Taney claim that they intended at all times that Consolidated would pay the Plaintiff for work that it satisfactorily completed and delivered, and that neither they, or any of the corporate Defendants, made any intentionally false statements.

They allege that, in effect, by the summer of 2016 the Plaintiffs were demanding that the Defendants pay them the entire contractual amount owed, while simultaneously refusing to deliver the work product required by the statements of work, or to credit Consolidated for the payments that had been provided, or acknowledge the deficiencies in the parts of the work product that had been provided. [ 36 ] Moreover, the Defendants have denied that the Plaintiff at any time provided them with materials that incorporate any intellectual property (or, indeed, anything at all) that Consolidated (or any related entity) is using or has used in association with, or to promote, Spiri products.

They also deny that either Consolidated or any associated corporate entities has/have made use of the VPL simulation which was provided, and which (in any event) the Defendants say was defective. [ 37 ] The foregoing (although not exhaustive) should suffice to place the competing motions for

Summary Judgment on evidence in context. Issues [ 38 ] Simply stated, the issues consist of whether it is appropriate to grant either the Plaintiff's motion for

Summary Judgment on the evidence, or that of the Defendants for partial

Summary Judgment on the evidence. Some preliminary matters (

i) The applicable legal principles [ 39 ] Recourse to Rule 13.04 is necessary at the outset. That Rule provides: 13.04(1) A judge who is satisfied on both of the following must grant

summary judgment on a claim or a defence in an action: (

a) there is no genuine issue of material fact, whether on its own or mixed with a question of law, for trial of the claim or defence; (

b) the claim or defence does not require determination of a question of law, whether on its own or mixed with a question of fact, or the claim or defence requires determination only of a question of law and the judge exercises the discretion provided in this Rule 13.04 to determine the question.

(2) When the absence of a genuine issue of material fact for trial and the absence of a question of law requiring determination are established,

summary judgment must be granted without distinction between a claim and a defence and without further inquiry into chances of success.

(3) The judge may grant judgment, dismiss the proceeding, allow a claim, dismiss a claim, or dismiss a defence.

(4) On a motion for

summary judgment on evidence, the pleadings serve only to indicate the issues, and the subjects of a genuine issue of material fact and a question of law depend on the evidence presented .

(5) A party who wishes to contest the motion must provide evidence in favour of the party’s claim or defence by affidavit filed by the contesting party, affidavit filed by another party, cross-examination, or other means permitted by a judge.

(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] [ 40 ] The decision of Fichaud, J.A. in Shannex Inc. v. Dora Construction Ltd., 2016 NSCA 89 , is generally cited in this context.

Shannex provides the legal scaffolding necessary to properly apply Rule 13.04 to the circumstances of an individual case. [ 41 ] Five sequential questions must be posed: 34. … • First Question: Does the challenged pleading disclose a “genuine issue of material fact”, either pure or mixed with a question of law? [ 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 Rules 13.08(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 theoutcome - will not 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 isbased on all the evidence from any source. If the pleadings dispute the material facts, and the evidence on the motion fails to negate theexistence of a genuine 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 adjournthe motion 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. • Second Question: If the answer to #1 is No, then: Does the challenged pleading require the determination of a question oflaw, either pure, or mixed with a question of fact? If the answers to #1 and #2 are both No,

summary judgment “must” issue: Rules 13.04(1) and (2). This would be a nuisance claimwith no genuine issue of any kind – whether material fact, law, or mixed fact and law. • Third Question: If the answers to #1 and #2 are No and Yes respectively, leaving only an issue of law, then the judge“may” grant or deny

summary judgment: Rule 13.04(3). Governing that discretion is the principle in Burton’s second test: “Does thechallenged pleading have a real chance of success?” Nothing in the amended Rule 13.04 changes Burton’s test. It is difficult to envisage any other principled standard for a

summaryjudgment. To dismiss summarily, without a full merits analysis, a claim or defence that has a real chance of success at a later trial orapplication hearing, would be a patently unjust exercise of discretion. It is for the responding party to show a real chance of success. If the answer is No, then

summary judgment issues to dismiss theill-fated pleading. • Fourth Question: If the answer to #3 is Yes, leaving only an issue of law with a real chance of success, then, under Rule13.04(6)(a): Should the judge exercise the “discretion” to finally determine the issue of law? If the judge does not exercise this discretion, then: (1) the judge dismisses the motion for

summary judgment, and (2) the matterwith a “real chance of success” goes onward either to a converted application under Rules 13.08(1)(

b) and 6, as discussed below [paras.37-42], or to trial. If the judge exercises the discretion, he or she determines the full merits of the legal issue once and for all. Then thejudge’s conclusion generates issue estoppel, subject to any appeal. This is not the case to catalogue the principles that will govern the judge’s discretion under Rule 13.04(6)(a). Those principles willdevelop over time. Proportionality criteria, such as those discussed in Hryniak v. Mauldin, 2014 SCC 7 , [2014] 1 S.C.R. 87, willplay a role. A party who wishes the judge to exercise discretion under Rule 13.04(6)(

a) should state that request, with notice to the other party.The judge who, on his or her own motion, intends to exercise the discretion under Rule 13.04(6)(

a) should notify the parties that thepoint is under consideration. Then, after the hearing, the judge’s decision should state whether and why the discretion was exercised. Thereasons for this process are obvious: (1) fairness requires that both parties know the ground rules and whether the ruling will generateissue estoppel; (2) the judge’s standard differs between

summary mode (“real chance of success”) and full-merits mode; (3) the judge’schoice may affect the standard of review on appeal. [Underlining added] [42] The Court in Shannex went on to discuss the recognized legal principle which requires the parties to put their "best footforward" in this type of application: 36. … Under the amended Rule, as with the former Rule, the judge’s assessment of issues of fact or mixed fact and law depends onevidence, not just pleaded allegations or speculation from the counsel table.

Each party is expected to “put his best foot forward” withevidence and legal submissions on all these questions, including the “genuine issue of material fact”, issue of law, and “real chance ofsuccess”: Rules 13.04(4) and (5); Burton, para. 87. [Emphasis added] [43] To the same effect, Bryson JA, in Nova Scotia Association of Health Organizations Long-Term Disability Plan Trust Fund v.Amirault, 2017 NSCA 50, pointed out: 15. Putting one’s best foot forward is an important obligation of parties to a

summary judgment motion. A respondent to a

summaryjudgment motion “must lead trump or risk losing” (Goudie v. Ottawa (City), 2003 SCC 14 at ¶ 32). Assuming there has been adequatetime for disclosure, an absence of evidence cannot be overcome by arguing that something might turn up in the future. The SupremeCourt emphasized the obligation of the parties in Canada (Attorney General) v. Lameman, 2008 SCC 14: 19. We add this. In the Court of Appeal and here, the case for the Plaintiffs was put forward, not only on the basis of evidence actuallyadduced on the

summary judgment motion, but on suggestions of evidence that might be adduced, or amendments that might be made, ifthe matter were to go to trial. A

summary judgment motion cannot be defeated by vague references to what may be adduced in thefuture, if the matter is allowed to proceed. To accept that proposition would be to undermine the rationale of the rule. A motion for

summary judgment must be judged on the basis of the pleadings and materials actually before the judge, not on suppositions about what might be pleaded or proved in the future. This applies to Aboriginal claims as much as to any others. [Emphasis in original] [ 44 ] As I implement the framework outlined in Shannex , I am neither to weigh evidence or assess credibility. For example, as I apply question one, I am simply to determine whether any of the claims in issue discloses a genuine issue of material fact, either on its own or intertwined with a question of law. If the answer is yes, I must refuse to grant

summary judgment with respect to that particular claim. ii) The concepts – a further discussion [ 45 ] Farrar, J.A. discussed some of these concepts further in Hatch Ltd. v. Atlantic Sub-Sea Construction and Consulting Inc., 2017 NSCA 61 : 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 . [Underlining added] 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. [Emphasis in original] 26. The law is clear that judges on

summary judgment motions under Rule 13.04 are not permitted to weigh evidence; but what does “weighing the evidence” mean? 27. Black’s Law Dictionary (10 th ed.) defines weight as follows: weight of the evidence . (17c) The persuasiveness of some evidence in comparison with other evidence <because the verdict is against the great weight of the evidence, a new trial should be granted>. See BURDEN OF PERSUASION. Black’s Law Dictionary , 10th ed, sub verdo “weight of the evidence” [Emphasis in original] 28.

Wigmore on Evidence explains the distinction between admissibility and weight at §12: Admissibility, then, is a quality standing between relevancy, or probative value, on the one hand, and proof, or weight of evidence, on the other hand. Admissibility signifies that the particular fact is relevant and something more, - that it has also satisfied all the auxiliary tests and extrinsic policies.

Yet it does not signify that the particular fact has demonstrated or proved the proposition to be proved, but merely that is received by the tribunal for the purpose of being weighed with other evidence . [Emphasis in original] John Henry Wigmore, Evidence in Trials at Common Law , 3rd ed, Vol 1 (Toronto: Little, Brown and Company, 1983) 29. The Canadian Encyclopedic Digest , volume 24, Title 62, also addresses the issue: 52. Admissibility is always a question of law for the trial judge.

Questions of admissibility should not be confused with questions of weight, which is the emphasis placed upon the evidence once admitted . Evidence is often admissible, yet afforded no weight by the trier of fact. So long as it is admissible, the strength of the evidence, and the use to which it is put, is a question of fact, and not one of law . [Emphasis in original] 30.

Weighing the evidence is to determine what use can be made of the evidence or the persuasiveness of it on a matter in issue in the proceeding once it is admitted. (iii) Back to Shannex [ 46 ] So, I return to the first of the five sequential questions which must be posed according to the Shannex framework. I have noted that the analysis required by the first question involves consideration of whether there exists a genuine issue of material fact either on its own or mixed with a question of law with respect to each of the remaining claims noted in the parties’ pleadings. If “yes”, I must dismiss

the motion for

summary judgment with respect to the particular claim being scrutinized. [ 47 ] As it turns out, I need only to make use of this first question in order to dismiss each of these competing motions in its entirety. Genuine issues of material fact exist with respect to all of the remaining claims. A. The Plaintiff’s motion for

summary judgment (

i) First claim: Breach of contract [ 48 ] There is no dispute of material fact that relates to whether a contract (“the Agreement”) existed between the parties. [ 49 ] However, the Plaintiff contends that the Agreement was breached in a number of ways. These “ways” boil down to the following: (

a) Robotics (2013)/Consolidated’s failure to pay the required monies to Raised Performance for he work it did, and the further work required of it; (

b) Robotics (2013)/Consolidated’s failure to make efforts, or at least timely efforts, to file for ACOA payments; and (

c) The allegation that Robotics (2013)/Consolidated deliberately did things which contradicted its contractual obligations to expeditiously file for ACOA approval. [ 50 ] I will discuss sequentially each of the manners in which it is alleged that the Defendants breached the contract. First, however, a brief discussion about Holdings.

Holdings [ 51 ] In the amendments which the Plaintiff has indicated to the Court it will be seeking to its Statement of Claim, it intends to raise an allegation that Holdings is an alter ego of Robotics (2013) (and, therefore, of Consolidated). [ 52 ] However, in this motion, I may only deal with the pleadings as they are presently constituted, in light of the evidence which has been adduced.

Holdings was not incorporated until 2015. “Potential” liability on the part of Holdings (as an alleged alter ego of Consolidated) could only exist (to begin with) if a finding of liability on the part of Consolidated could be made. I will return to this when the Defendants’ motion is considered. Alleged breach #1: Failure to pay the required monies to Raised Performance for the work it did, and the further work required of it. [ 53 ] The payment terms set out in each of the statements of work have been discussed earlier.

Consolidated was required to make a $5,000.00 payment on or before December 31, 2014, and a second one on or before January 31, 2015. Remittance of a third (essentially, a balloon) payment was required from Consolidated within five days of receiving ACOA funding. [ 54 ] The parties appear to be in agreement that the first two required payments (of $5,000.00 each) were made. Raised Performance says: The payment terms in the Parties' contracts are contained within the included statements of work. ...

These terms of payment are identical across both statements of work, and can be divided into two separate categories: 1) four smaller payments of $5,000.00 each, spaced roughly one month apart; and 2) a balloon payment to be made upon the promised funding of the corporate Defendants by ACOA. The corporate Defendants made the first payment of $10,000.00 on January 2, 2015 which was meant to be paid by December 31, 2014, in breach of what parties' contract required ...

However, the corporate Defendants failed to make the second $10,000.00 payment, as was contractually required to be done by January 31, 2015, thereby breaching the contract between the parties, and requiring the Plaintiff to pay interest in financing charges upon this outstanding obligation. ( Plaintiff's brief, December 4, 2019, pp.5-6 ) [Emphasis added] [ 55 ] As to the next "set" of contractually stipulated $5,000.00 payments, Mr. Rizkalla stated: 16. Raised Performance's contracts with the Defendants obligated the latter to pay Raised Performance a second payment of $10,000.00 on January 31, 2015.

This payment was not received contract [sic] with the Defendants required and has not been received to this day. ( Rizkalla affidavit, October 3, 2019 ) [ 56 ] However, Exhibit “I” to the same affidavit contains a series of emails which began on July 11, 2016. The first was from Mr. Taney to Mr. Rizkalla relating to the VPL invoice: Upon our receipt of reimbursement from ACOA for the video, we would pay over that reimbursement to Raised [Performance] as partial payment of the invoice relating to the VPL.

I also note that Raised [Performance] recognizes that Pleiades has previously paid $10,000 to Raised [Performance], which Pleiades would consider as paid toward that invoice . [Emphasis added] [ 57 ] I note that reference to the VPL invoice relates to the second statement of work. In any event, Rizkalla's reply to the Taney email referenced above indicates, in part:

The initial $10,000 paid by Pleiades has been taken into account on the balance that is currently owing. [ 58 ] One

interpretation of this correspondence would be, if the $10,000.00 was attributable toward the VPL invoice, rather than split between the two invoices, that Consolidated did pay Raised Performance, cumulatively, the four $5,000.00 payments required pursuant to the statements of work. [ 59 ] I was only able to note one other piece of evidence related to Consolidated's payments to Raised Performance. It was provided by Mr. Edwards-Daugherty, in his affidavit of January 22, 2020, as follows: 83. Mr.

Rizkalla's statement that Consolidated did not pay Plaintiff any sum subsequent to January 2015 is also false, because Consolidated did pay Plaintiff amounts toward what Plaintiff was claiming in 2016, even though Consolidated had no contractual obligation to do so because Consolidated had not yet received ACOA's assistance. [ 60 ] It is also fair to observe that the Defendants themselves provided nothing to establish that additional payments (or, in fact, what payments) were made to Raised Performance. [ 61 ] Considered holistically, there appears to be ambiguity as to how much Raised Performance was paid, and when. [ 62 ] I have similar reservations with respect to the clarity of the evidence presented in relation to whether Raised Performance actually fulfilled its obligations pursuant to the contract. [ 63 ] Indeed, whether it did so seems to be vehemently disputed.

For example, the first statement of work contemplated a meeting between Raised Performance and Consolidated personnel in order that the former might familiarize itself with Consolidated's requirements for certain of the applications (“apps”). Following this, delivery of a recommended set of specifications for the apps (which would include style and branding guidelines), a detailed mockup of the apps, a proposed

schedule for the delivery of the apps, and an associated budget was required. [ 64 ] Mr. Edwards-Daugherty attests in his affidavit of January 22, 2020: 35. Plaintiff never delivered the "specifications" called for by the statement of work attached as exhibit B to Mr. Rizkalla's affidavit, despite Consolidated's repeated requests that Plaintiff do so. [ 65 ] The second statement of work bore the title "2015 Consumer Electronics Show (CES) Related Work".

Pursuant to that statement, among other things, Raised Performance was required to create a "click through" presentation to simulate what would be involved in the actual operation of the VPL. In the process, it was to depict buttons which could be dragged across the screen via a touchscreen functionality, and it was also to simulate the manner in which the VPL could be used to direct the Spiri robot to perform certain actions. As we have seen, the Plaintiff was also contractually obligated to complete and deliver two videos. [ 66 ] Once again, in his affidavit of January 22, 2020, Mr.

Edwards-Daugherty provided the Defendant's position with respect to this contractually required work: 36. Plaintiff did not deliver any mockup or demonstration of the "visual programming language" (VPL) in a manner timely for CES. 37. The VPL mockup that Plaintiff actually did deliver in an untimely manner did not contain the contractually required functionality in numerous material respects.

No assets related to the VPL were ever delivered, such as source code, markup code, scripts, installation instructions, libraries, architecture documents either four the demonstration or for the anticipated final version, graphical elements such as icons, wireframes, unit test descriptions. Consolidated saw no evidence of a coordinated development effort as in no Git or other source code repository, no roadmap documentation, no code guidelines, no choices regarding libraries, programming languages or environments to use, no access to anything consolidated contester verified.

Further, the demonstration was defective and incomplete, meaning that not all of the active icons worked or did is expected and that features Consolidated and intended to demonstrate were absent. 38. In addition, the demonstration was not interactive. Clicking icons caused events like in a slideshow, but Consolidated could not enter data or select alternative inputs and can only click specific elements in a specific order. The demonstration did not demonstrate how the VPL would interact with Spiri. The purpose of the VPL was to program flight plans into Spiri.

Nothing in the demo showed a way to pass flight plans to Spiri or what the contents of that communication would be. For this reason alone, the work deliver did not demonstrate a visual programming language or comply with the contractual requirements. [ 67 ] As to the videos themselves, Edwards-Daugherty testified on cross-examination to concerns with issues related to one of them, which necessitated a re-recording of the voiceover. Moreover, he said that the other video was never received. [ 68 ] Reference to Exhibit “3”, appears to show that Mr. Rizkalla contacted Mr.

Edwards-Daugherty on December 19, 2014, to advise him that the Plaintiff's animation house "is not able to meet the timeline for CES for video two", expressing the view that it would take until "mid-January" (by necessary implication, it would not be available for the CES). In response, Edwards-Daugherty directed Rizkalla to abeyance or hold off work on the second video so as to "focus all our available energy on what we can pull off for CES." [ 69 ] There appeared to be a suggestion by Raised Performance during its’ counsel's argument that it had been directed to cease work on the second video.

However, on the basis of the evidence that has been presented thus far, it would appear to have only been after the Plaintiff had advised Edwards-Daugherty that the video could not be made available in time for the CES, in any event, that this became the case. [ 70 ] Certain collateral arguments were also made by Raised Performance at the hearing. For example, counsel argued that in his view there was no evidence that Consolidated had advised the Plaintiff that its work was incomplete or unsatisfactory prior to June 2016.

He alluded to other emails that went back and forth which he said demonstrated that the Defendant had proposed several different plans

for paying off the Plaintiff's invoices. He raised further issues with respect to the affidavit evidence of Messrs.

Edwards-Daugherty andTaney, suggesting that it was not credible in the face of other evidence that he referenced. [71] It is clear, however, that I am not to weigh conflicting evidence or assess credibility in this type of motion. [72] What is equally clear, in my view, is that there are genuine issues of material fact as to whether the Plaintiff properlydischarged all of its obligations under the Agreement, what payments were actually made by Consolidated to the Plaintiff, and whenthese payments were made.

Alleged breach #2: The Defendants’ failed to diligently or expeditiously file for ACOA payments [73] Foundational to this contention is the following paragraph, which was included in each of the two statements of work: … [Consolidated] will diligently execute its claims for ACOA funding as expeditiously as possible, including requesting advancepayments from ACOA and will notify [Raised Performance] of the date of submission to ACOA, and in the event that funding isreceived prior to January 31, 2015 will pay [Raised Performance] whatever balance is an outstanding in connection with the work. [Emphasis added] [74] It is difficult to interpret the phrase requiring the Defendant to "diligently execute its claims for ACOA funding asexpeditiously as possible" (“the ACOA clause”) without knowing more of the milieu or surrounding factual matrix in existence when theAgreement was made. [75] The modern rule of contractual

interpretation may, in some cases, require consideration of the surrounding circumstancesknown to the parties at the time the contract was made. In Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Justice Rothsteinconcluded: 47. … the

interpretation of contracts has evolved towards a practical, common-sense approach not dominated by technical rules ofconstruction. The overriding concern is to determine "the intent of the parties and the scope of their understanding" (Jesuit Fathers ofUpper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21, [2006] 1 S.C.R. 744, at para. 27, per LeBel J.; see also TerconContractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, [2010] 1 S.C.R. 69, at paras. 64-65, per CromwellJ.).

To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning,consistent with the surrounding circumstances known to the parties at the time of formation of the contract. Consideration of thesurrounding circumstances recognizes that ascertaining contractual intention can be difficult 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 Moore Realty Inc. [page 658] v. Manitoba Motor League, 2003 MBCA 71, 173 Man.

R.(2d) 300, at para. 15, per Hamilton J.A.; see also Hall, at p. 22; and McCamus, at pp. 749-50). As stated by Lord Hoffmann in InvestorsCompensation Scheme Ltd. v. West Bromwich Building Society, [1998] 1 All E.R. 98 (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] [Emphasis added] [76] This is not to say that the surrounding circumstances can override or alter the intention of the parties or the language of thecontract. Obviously, they cannot be used to create a "new contract" between the parties. To this point, Justice Rothstein, in SattivaCapital, continued: 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. B.C. Tel Mobility Cellular Inc.(1997), (BC CA), 101 B.C.A.C. 62). 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, [page 662] at paras. 66 and 70), that is, knowledge that was or reasonably ought to have been within the knowledge ofboth parties at or before the date of contracting. Subject to these requirements and the parol evidence rule discussed below, this includes,in the 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]

[ 77 ] Any attempt to ascertain the surrounding circumstances so as to gain insight as to the parties’ intentions, or how that phrase ought to have been reasonably understood will be ill-fated on the basis of the evidence adduced by the Plaintiff in support of its motion. So, too, any attempt to reconstruct the vantage from which the agreement was negotiated. [ 78 ] For example, consider what Mr. Rizkalla says in his affidavit of October 3, 2019: 9.

After considerable discussion in negotiations between the parties-and based upon representation by Pleiades Robotics regarding its existing support from ...[ACOA] for these specific projects - a Master Services Agreement was negotiated between the parties and executed in October 2014. At no point during these negotiations or discussions did any of the Defendants represent that there was anything that would prevent and/or hinder them from filing for ACOA reimbursement . [ 79 ] He goes on to describe some difficulties that were encountered in obtaining payment from the Defendants, then adds: 24.

Throughout the course of the e-mail exchanges with the Defendants, I learned that the Defendants had failed to inform us of barriers to their filing for ACOA reimbursement. These barriers would have affected Raised Performance's willingness to engage in a contractual relationship with the Defendants, had Raised Performance known about them during the contract negotiation phase. [ 80 ] Next, in his affidavit of August 18, 2020, Mr. Rizkalla continues: 11. The misrepresentations made by the Defendants, through Mr. Edwards-Daugherty and Mr.

Taney, made me believe that ACOA funding had already been approved and would be dispensed shortly following the completion of my company's work. If this had not been so, I would never have authorized the work for the Defendants to commence and be completed. My company does not undertake work without any firm, established promise of prompt compensation. ... 14. Prior to signing the Master Services Agreement in December 2014, both Mr. Edwards-Daugherty and Mr.

Taney made promises and representations that ACOA funding had already been established such as to make certain the prompt payment for my company services. [ 81 ] Mr. Rizkalla's evidence suggests that, in his mind, the ACOA funding was effectively in place by the time of the agreement was executed. He says that his understanding was that all Consolidated needed to do was to submit a claim in order to obtain funds with which to pay for work performed by Raised Performance. [ 82 ] Not so, says Mr. Edwards-Daugherty. Once again, I refer to his affidavit of January 22, 2020: 11.

As of the third and fourth quarters of 2014, Consolidated was attempting to assemble a package of financing that consisted of an equity investment of $350,000 to $500,000 from a private investor named Laura Urtnowski, a $200,000 loan from the Atlantic Canada Opportunities Agency (“ACOA”), a $125,000 loan from the Business Development Bank of Canada (“BDC”), and a loan of $227,000 from the Royal Bank of Canada “RBC”). 12.

In the fall of 2014, Consolidated also entered into discussions with Plaintiff regarding the potential of Plaintiff performing certain software development and other work for Consolidated in support of Consolidated’s commercialization efforts. 13. From an early stage in the discussions with Plaintiff, Consolidated made clear that Consolidated would be planning and relying on obtaining this package of investment and assistance to enable Consolidated to pay for plaintiff’s services. … 15. I never or promised Plaintiff that any of the financing was certain, or that it would be achieved by any date certain. 16.

I never made any misrepresentations regarding the status of any application or attempt to obtain any part of the financing package. 17. Notwithstanding Michael Rizkalla’s false testimony in his affidavit to the contrary, Consolidated’s personnel also told Plaintiff on multiple occasions that there were multiple sources of funding involved with the package. 18. One such example is the document that is attached as Exhibit D to the affidavit of Michael Rizkalla, Consolidated’s employee Caroline Glass sent Mr.

Rizkalla an email on November 10, 2014 stating in pertinent part that “I spoke with Patrick [Edwards- Daugherty] and he submitted the plan to our funding agencies.” A true copy of that document is attached hereto as Exhibit A. 19. Another such example is a document that Plaintiff produced in discovery in this matter, which is an email that Consolidated’s Chief Operating Officer Francis X. Taney, Jr. sent Mr.

Rizkalla an email dated December 29, 2014 which in pertinent part referenced a need to describe the work Plaintiff claimed to have performed “in a way that matches up with the tasks that the funding agencies have authorized.” A true and correct copy of that document is attached hereto as Exhibit B. 20. When the parties executed their contract (the “Agreement”) on December 29, 2014, (see Rizkalla Affidavit Exhibits A-

C) Consolidated made Raised aware that Consolidated had not obtained ACOA funding, and that there was no commitment on ACOA’s part or date certain for Pleiades’ receipt of any funding . For that reason, the Agreement referenced Consolidated’s involvement in further efforts to obtain funding. [Emphasis added] [ 83 ] Then, in his affidavit of August 24, 2020, he adds: 17. Mr. Rizkalla has previously obtained ACOA funding for his company and therefore knows that pursuant to its programs, ACOA reimburses companies in arrears for approved actual expenditures pursuant to an ACOA approved project.

[ 84 ] All of which is to say, perhaps at greater length than was necessary, that there remain genuine issues of material fact in dispute which would impinge upon the way that a Court would or should interpret what was required by the “ACOA clause”. Among other things, this impacts upon the alacrity with which the Defendants were to pursue ACOA funding as well as what representations were made beforehand, and how the phrase was/or ought to have been understood by the parties to the Agreement.

Alleged breach #3: Intentionally taking steps contrary to their contractual obligations to expeditiously file for ACOA approval. [ 85 ] In his affidavit filed on October 3, 2019, Mr. Rizkalla states that: 26. Through the discovery process, we discovered that the Defendants had actively and knowingly taken steps that acted to prevent the Defendants from filing for ACOA reimbursement... 27. The Defendants' contract with ACOA explicitly states that any "material changes... to [Defendants'] operation" requires the ACOA's prior approval.

This contract further defines "material changes" to include corporate restructuring efforts. And yet the Defendants engaged in a corporate restructuring beginning in November 2015 while simultaneously representing to Raised Performance that they could file for ACOA money diligently and expeditiously... [ 86 ] With respect, this argument rests upon a significant oversimplification. The contract between Robotics (2013) and ACOA is reproduced at Exhibit “M” to Mr. Rizkalla's affidavit of October 3, 2019. The first page is a letter from one Rob MacDonald (ACOA) to the attention of Mr. Edwards-Daugherty.

It is dated February 6, 2015. It states, in part: Please find attached a contribution agreement for funding under the Business Development Program for your review and signature. This agreement is open for acceptance for sixty (60) calendar days from the date that appears on this letter. ... Once we receive the signed forms, we will provide you with information on how to submit claims under the project ... [ 87 ] The agreement with ACOA itself contains multiple separate appended documents, including articles of agreement, and six schedules. [ 88 ] The following provisions appear at

article 2 of the Articles of Agreement: 2.0 The Project 2.1 The Recipient [Robotics 2013/Consolidated] will carry out the Project as described in

Schedule 2 – Statement of Work, will make claims in accordance with

Schedule 3 – Claims and Costs Principles, will issue the reports required under

Schedule 4 – Reporting Requirements, will make repayments in accordance with

Schedule 6 – Repayment Schedule, and will fulfil its other obligations hereunder in a diligent and professional manner using qualified personnel. 2.2 the Recipient shall commence the project on or before February 8, 2015 (hereinafter referred to as "the Project Commencement Date") [ 89 ] Next,

Article 3 defines the contribution from ACOA, and the circumstances under which it will be forthcoming: 3.1 The Contribution 3.1 Subject to all other provisions of this agreement, ... [ACOA] shall make a Contribution ("the Contribution") to the Recipient, with respect to the Project, calculated as the lesser of: (

a) the assistance rate percentage of the Eligible Costs as stated on

Schedule 2 – Statement of Work; and (b) $199,915.00 [ 90 ]

Article 5, in turn, deals with payments, the relevant portions of which follow: 5.0 Payments 5.1 The Agency will pay the Contribution to the Recipient in respect of Eligible Costs incurred, as listed in

Schedule 2 – Statement of Work, on the basis of itemized claims submitted in accordance with the procedures set out in

Schedule 3 – Claims and Costs Principles. 5.2 The Agency will not contribute to any cost incurred by the Recipient prior to October 30, 2014. The Agency will not accept any cost incurred after the Project Completion Date, unless otherwise agreed to in writing, by the Agency. 5.3 Prior to the initial payment the Recipient shall provide the Agency with the following information: (

a) the completed and signed Pre-authorized Debit/Direct Deposit Authorization (PAD) form as provided by the Agency; and (

b) written confirmation of the balance of financing, in a manner satisfactory to the Agency; (

c) maintain an equity position of $2,000,000 . Unless otherwise authorized by the Agency in writing, this level of equity shall be maintained until the end o the Control Period; and (

d) the signed Subordination Agreement.

… [Emphasis in original] [ 91 ] Then, we move on to

Article 9: 9.0 Payments 9.1 The Recipient shall provide the Agency with confirmation of the Project financing commitments specified in

Schedule 2 – Statement of Work . [Emphasis in original] [ 92 ] Among other things, it is also necessary to consider

Schedule 1 –

Article 3.0 in this context: 3.0 Other Financing 3.1 The Recipient remain solely responsible for providing or obtaining the funding, in addition to the contribution, required to carry out the project and fulfil the recipient's other obligations under this agreement. [ 93 ] Now we get to the clause referenced by the Plaintiff at the outset of this argument: 12.0 Material Changes 12.1 No material changes will be made to the estimated total scope or nature of any element of the project or element of the Recipient's operation which would affect the completion of the project, without the prior written consent of ... [ACOA].

A material change includes, but is not limited to, ownership, control, management, financing, location, size of facilities, timing, expected results, or other government contributions with respect to the project. With its request for consent, the Recipient will provide, in a timely manner, all documentation and information as may be required by ... [ACOA] [ 94 ] The final page of

Schedule 1 provides the project description.

This includes the project costs that were anticipated: machinery/equipment $179,965.00 product development $492,135.00 marketing activities $247,900.00 TOTAL: $920,000.00 [ 95 ] That amount was to be financed as follows: ACOA – BDP repayable $199,915.00 Cash flow from Operations $45,085.00 Equity Investment $350,000.00 BDC – term debt/loan $125,000.00 RBC – term debt/loan $200,000.00 TOTAL: $920,000.00 [ 96 ] In its agreement with ACOA, it is clear that Consolidated's funding with ACOA was contingent upon, in part, the $350,000.00 equity investment referenced above, as well as the requirement that it maintain an equity position of at least $2,000,000.00.

Antecedent to any payments made by ACOA was the requirement that Consolidated provide it with written confirmation of the balance of financing, so as to satisfy ACOA that all was as it should be. [ 97 ] Within the context of these motions, the Defendants allege that the $350,000.00 equity investment was to have been made by a person named Laura Urtnowski. The Defendants have alleged that securing her promised contribution became unexpectedly problematic. [ 98 ] For example, Mr. Edwards-Daugherty states in his affidavit of January 22, 2020: 11.

As of the third and fourth quarters of 2014, Consolidated was attempting to assemble a package of financing that consisted of an equity investment of $350,000 to $500,000 from a private investor named Laura Urtnowski, a $200,000 loan from the Atlantic Canada Opportunities Agency (“ACOA”), a $125,000 loan from the Business Development Bank of Canada (“BDC”), and a loan of $227,000 from the Royal Bank of Canada “RBC”). … 14. As of the fall of 2014, I had a good faith belief that Ms. Urtnowski would make her investment in a timely fashion for purposes of the financing package, including but not limited to Ms.

Urtnowski’s verbal promises to do so, the fact that Ms. Urtnowski signed a term sheet indicating her intent to do so, and the fact that Ms. Urtnowski provided proof of necessary funds to make the investment. …

39. Despite her assurances given in late 2014 that she would make the contemplated investment in early 2015, in early 2015, Ms. Urtnowski advised Consolidated that she was not prepared to invest in Consolidated in early 2015 as she had previously indicated. 40. Among other things, Ms. Urtnowski required, as a condition precedent for her investment, that Consolidated undertake a corporate restructuring . 41. In early 2015, Consolidated began taking steps to effectuate the requested corporate restructuring. 42.

The corporate restructuring eventually involved the creation of two separate entities, Holdings and Robotics, and the renaming of Pleiades Robotics, Inc. as Pleiades Consolidated, Inc. in November, 2015. 43. As of October, 2015, after considerable negotiations, Consolidated and Ms. Urtnowski entered into a new term sheet setting forth the terms of Ms. Urtnowski’s potential investment. 44. Although in Consolidated’s view, Consolidated met the conditions set forth in the new term sheet, Ms. Urtnowski continued to decline to make the contemplated investment throughout 2015. 45.

As a consequence of this delayed investment and the cash flow problems that it created, Consolidated defaulted on its loan terms with RBC, and RBC attempted to foreclose against Consolidated with respect to Consolidated’s loan facility with RBC. … 48. Ms. Urtnowski did not make her contemplated investment until late June, 2016 . … 50. Consolidated made every effort to obtain Ms. Urtnowski’s investment and the contemplated governmental assistance as quickly as possible at every step of the process. 51.

Consolidated made no effort to delay or hinder receipt of this investment and assistance, and taking any action to do so would have been directly contradictory to Consolidated’s interests and created an existential threat to Consolidated. [Emphasis added] [ 99 ] Merely to state the above is to make obvious the conclusion to which the Court is inexorably led. For example, if the Court were to find that Mr.

Rizkalla was told or otherwise aware of the requisite multiple funding sources, and that both parties knew or ought to have known that all funding had to be secured before claims could be submitted to ACOA, then these would be facts material to whether Consolidated’s defence (to this particular alleged breach) might have validity. Mr. Taney and Mr. Edwards-Daugherty gave evidence that the corporate restructuring was necessitated entirely to satisfy Ms.

Urtnowski, which in turn was critical to Consolidated's ability to submit claims to ACOA. [ 100 ] Findings of material fact are necessary to address this issue, which must, in turn, be based upon credibility assessments, and the weight of the evidence (including the inferences to be drawn therefrom) to be adduced at trial.

Conclusion – breach of contract [ 101 ] I therefore conclude, that the Plaintiff has failed to discharge its onus, which is to say it has failed to show by evidence that there are no genuine issues of material fact with respect to all three of the bases of its claims for breach of contract. ii) Fraudulent misrepresentation [ 102 ] In its original Statement of Claim, Raised Performance states: 19.

Subsequently, in November 2014, Pleiades, by and through defendant Edwards- Daugherty , indicated that it had submitted all necessary documents to their funding sources (specifically, naming ACOA, amongst others) and indicating that Raised Performance could commence work.

Pleiades stated that Raised Performance had their approval to go forward, and that Raised Performance would thus be reimbursed for its work – regardless of whatever funding sources were secured by defendant Pleiades. [Emphasis added] [ 103 ] At paragraphs 47 – 48, the claim goes on to allege that the fraudulent misrepresentations included "... the intention of the Defendants to compensate Raised Performance for the latter's work product, and also the sources of Defendant Pleiades funding to provide such compensation". [ 104 ] However, in answers to interrogatories (which interrogatories were dated October 21, 2019), the Plaintiff appears to indicate that these misrepresentations were made by Roar Askheim, Caroline Glass, (the Defendant) Francis Taney, and others. ( Taney affidavit, January 22, 2020, Tab “C”, paras. 3 and 4 ) [ 105 ] Mr.

Rizkalla filed an affidavit of August 18, 2020. Therein, while he once again appears to attribute the allegedly fraudulent statements to Mr. Edwards-Daugherty, he also implicates Mr. Taney: 10. But for the promises made by the Defendants, through Mr. Edwards-Daugherty and Mr. Taney , for timely compensation flowing to my company, I would of authorized the work that my company completed in a timely, efficient manner. My company's entire team had worked very hard on the accurate, timely completion of the defendants projects.

11. The misrepresentations made by the Defendants, through Mr. Edwards-Daugherty and Mr. Taney made me believe that ACOAfunding had already been approved and would be dispensed shortly following the completion of my company's work. If this had not beenso, I would never of authorize the work for the Defendants to commence and be completed. My company does not undertake workwithout any firm, established promise of prompt compensation. 12. I believe that the Defendants, Mr. Edwards-Daugherty and Mr.

Taney, who are directly involved in all negotiations, decision-making, and later discussions with my company, falsely and fraudulently misrepresented its funding status in an effort to have mycompany complete work. [Emphasis added] [106] Included in the evidence presented in the motion were several emails entered by the Plaintiff.

Raised Performance argued thatthese emails establish that there are no material facts in issue with respect to the fraudulent misrepresentations. [107] First was an email from Caroline Glass (Technical Art Director at Robotics (2013)) to Mr.Rizkalla: Hi Mike, I spoke with Patrick [Edwards-Daugherty] and he has submitted the plan to our funding agencies. We expect to have officialacknowledgement of the proposal by the end of the week. According to their rules, you are allowed to begin work as soon as we receivethe acknowledgement, and we will let you know the moment we hear from them.

As discussed, now would be a good time to get the ball rolling on the contract. Frank, [Mr. Taney] can you please get in touch with Mikeand begin drafting it? It would be great if it could be ready by the time we hear back from the funding agencies. Next meeting will be Monday at EST 1:30 again. Thanks! Caroline [Emphasis added] [108] This kicked off a chain of emails between Messrs. Rizkalla, Taney and Edwards-Daugherty. The first was dated November 21,2014, and in it Mr. Rizkalla stated: Hi guys, Here's our budget for CES. I also need to clear invoicing on the first round of work we did.

We ended up at 34 days in total to get here (including these last designs we just did and R&D leading up to the visual programminglanguage) at $1200 per day so worked out to $40,500. Let me know how you would like us to invoice? I would love to backdate it for our year end but I know you may want that to be part of anewer invoice for funders? Thanks Mike [109] A reply was forthcoming on November 27, 2014 from Mr. Edwards-Daugherty with the words "this reflects our discussions and Iagree to the budget." Mr.

Taney also responded within minutes (rather flamboyantly) with the words "release the Krakken." [110] These emails, the Plaintiff says, together with the fact that Consolidated did not file for ACOA reimbursement in 2015 or 2016,constitute proof that Edwards-Daugherty and Taney had fraudulently misrepresented the status of the ACOA funding, in effectrepresenting that it had been approved and would be available for dispersal to the Plaintiff immediately after Raised Performancecompleted its work. [111] However, it is helpful to bear in mind what must be proven in order to sustain a claim of fraudulent misrepresentation.

As Moir, J.noted in Gallagher Holdings Ltd. v. Unison Resources Inc., 2018 NSSC 251: 392. The applicants refer me to Justice Saunders' decision in Grant v. March, (NS SC), [1995] 138 N.S.R. (2d) 385(SC) and the Ontario Superior Court decision in Bodzan v. 1226619 Ontario Inc. 2013 ONSC 5941, which took a statement of theelements of fraudulent misrepresentation from Justice MacPherson's decision in Amertek Inc. v. Canadian Commercial Corp. (2005), (ON CA), 76 O.R. (3d) 241 (OCA). 393.

At para. 20 of Grant, Justice Saunders quotes from Cheshire & Fifoot (6th ed.) at p. 241, including: "...a fraudulent statement is afalse statement which, when made, the representor did not honestly believe to be true". Justice Saunders also provides at para. 21,DiCastri's (3rd ed) list of elements applicable in a case of repudiation for fraud, which are similar to those later framed in Bodzan andAmertek for fraudulent misrepresentation: (1) the defendant made a false representation to the plaintiff;

(2) the defendant a. knew the representation was false; b. had no belief in the truth of the representation; or c. was reckless as to the truth of the representation; (3) the defendant intended that the plaintiff should act in reliance on the representation; (4) the defendant did act on the representation; and (5) the plaintiff suffered loss by doing so. [ 112 ] Messrs. Edwards-Daugherty and Taney have not contested the authenticity of the above referenced emails which the Plaintiff has cited. But their evidence, as earlier discussed, is that they made it clear to Mr.

Rizkalla that Consolidated planned upon and relied upon obtaining funds from multiple sources in order to fund its payment for the Plaintiff's services. As a consequence, there is a dispute of fact as to what the Plaintiff was told about the ACOA funding when the parties entered into the contract. [ 113 ] I have already determined that the above fact is material to the breach of contract claim. But is it also material to the Plaintiff’s claim based upon fraudulent misrepresentation? [ 114 ] In Sinclair v. Fierro , 2014 NSCA 5 , the Court noted: 25. What is a dispute of material fact? 26.

In 2420188 Nova Scotia Ltd. v. Hiltz , 2011 NSCA 74 , the majority said: 27. The disputed fact under Stage 1 must be “material”, ie. essential to the claim or defence. A dispute over an incidental fact will not derail a

summary judgment motion at Stage 1. 27. In Hiltz (see para 30 ) the parties disputed whether Mr. Alex had even voiced the alleged representation. The existence of that representation was the basis of Mr. Hiltz’ claim. If the representation had not been made, his claim would fail. But if the representation had been made, his claim possibly could succeed, depending on the trial judge’s determination of other issues. The outcome potentially pivoted on the disputed fact. So the disputed fact was material, not incidental. Accordingly, the majority held that the first branch of the

summary judgment test was not satisfied, meaning the second branch was irrelevant,

summary judgment was not available, and the matter should go to trial. 28. Similarly, in Burton , para 42, Justice Saunders spoke of material facts as “important factual matters that anchor the cause of action or defence”. [Emphasis added] [ 115 ] Earlier, in Hiltz , Fichaud, J.A. had written for the majority: 32. … [my colleague] agrees that whether Mr. Alex made a representation is a factual dispute, but says the factual dispute is not “material”. My colleague’s reason is that Mr. and Mrs.

Hiltz “had full opportunity to ‘lead trump’ or ‘put their best foot forward’ ”, but “[t]hey did not set out in their affidavit material any evidence that could substantiate a contract between them and Mr. Alex personally”. Similarly, my colleague says earlier in his reasons that, once Mr. Alex’s “affidavit clearly challenges the existence of any contractual relationship with the respondents . . .”, “[i]t was then up to the respondents to put their best foot forward, refuting or countering the defendants’ evidence, or risk

summary dismissal”. My colleague asks “So, what was the best foot forward by the respondents?”, and concludes that “absolutely no evidence was presented” to support a personal contractual obligation from Mr. Alex. 33. My colleague’s approach would erase the boundary between what the authorities have described as a sequential two stage test, and would convert

summary judgment into a single stage that weighs the merits out of the starting block. Under the authorities from the Supreme Court of Canada and this Court cited above, if there is a material dispute of fact then the motion for

summary judgment is dismissed, and the motions judge never addresses the merits of whether the responding party has refuted the evidence of the moving party. The merits - including whether one party’s evidence refutes the other party’s evidence - are left for the trial judge. If there is a material dispute of fact then, to defeat the

summary judgment motion, Mr. and Mrs. Hiltz need not refute Mr. Alex’s evidence. They will have to do that at trial. 34. My colleague says that a dispute of fact is not “material” unless the responding party’s evidence refutes the moving party’s evidence. So the chances of success would enter Stage 1. In my view, the word “material” in Stage 1 is not code for collapsing the two stages into one.

If the merits occupied the first stage, there would be no point to a second stage. [Emphasis added] [ 116 ] Clearly, as I stated earlier, there is a material fact in issue which goes directly to the extent of the representations made to, and the knowledge which Mr. Rizkalla (the Plaintiff's directing mind) possessed as to what must take place before ACOA funding could be made available, both at the time the agreement was made between the parties, and the time that the emails referenced above from Ms. Glass and Messrs. Edwards-Daugherty and Taney were received. It is directly related to not only the

interpretation to be attributed to the ACOA clause in the contract, but, among other things, whether any misrepresentations (if any can be established on the basis of the emails or otherwise) were actually relied upon by the Plaintiff. Even if reliance can be established, it must be shown that the damages claimed are

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