1059217 Ontario Inc., 1231671 Ontario Inc., John Vanleeuwen, Robert Nemy, Michelle Nemy, Robbie Holdings Ltd., PV Labs Inc., David Ippolito, AWG Technical Services Inc., Gusenbauer Dentistry Professional Corporation, Brian Perry, Marcel Verner, Meyer Ventures Investments LLC, Harmon Family Partnership, Mertz Holdings, Dundurn Capital Partners Inc., Jeffrey Wilson, William Hahn, William Collins, Bryant William Bertrand, Lawrence Trevor Kryt, Todd Stennett, William Stennett, Gaye Stennett, Cameron, 2023 NBKB 146

File No.

SJC-271-2020 IN THE COURT OF KING’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF SAINT JOHN CITATION: 2023 NBKB 146 BETWEEN: 1059217 Ontario Inc., 1231671 Ontario Inc., John Vanleeuwen, Robert Nemy, Michelle Nemy, Robbie Holdings Ltd., PV Labs Inc., David Ippolito, AWG Technical Services Inc., Gusenbauer Dentistry Professional Corporation, Brian Perry, Marcel Verner, Meyer Ventures Investments LLC, Harmon Family Partnership, Mertz Holdings, Dundurn Capital Partners Inc., Jeffrey Wilson, William Hahn, William Collins, Bryant William Bertrand, Lawrence Trevor Kryt, Todd Stennett, William Stennett, Gaye Stennett, Cameron Shankland, Doug Parent, Marlboro Heights Financial Inc., Garry Dool, Tom Stevenson, Lorraine Stevenson and Gerhard Renner, PLAINTIFFS - and – General Motors Ventures LLC, Geodigital International Inc., NGP Energy Technology Partners LP, NGP ETP LLC, Emerald Cleantech Fund III, L.P., North Sky Direct Fundy IV LP, Cleantech Alliance Direct Fund, LP, Cleantech Growth Fund III, LP, Enertech Capital Partners IV LP, Enertech Capital Partners IV (Canada) LP, Gina Domanig, Bruce Gordon, Jon Lauckner, Mike Pohlen, Scott Ungerer, Danny Zouber, Chris Warrington, Robert Lutz, Sherwin Prior, David Zabetakis, David B.

Horn and Connie Capone DEFENDANTS DECISION BEFORE: Justice Darrell J. Stephenson AT: Saint John, N.B. DATE OF HEARING: March 9, 2023 DATE OF POST-HEARING SUBMISSIONS: March 31, 2023 DATE OF DECISION: August 25, 2023 COUNSEL: Joseph Groia, Adam J. Wygodny and Bethanie Pascutto, for the Plaintiffs Josh J.B. McElman, K.C. & Bailey Campbell, for GeoDigital International Inc., Bruce Gordon, Mike Pohlen, Danny Zouber, Chris Warrington, Robert Lutz, David Zabetakis, David J. Horn and Connie Capone

Linda Fuerst & Randy Sutton, for General Motors Ventures LLC, Sherwin Prior, Jon Lauckner William Chalmers & Tony Gioia, for Emerald Cleantech Fund III, L.P., Cleantech Growth Fund III, LP, Enertech Capital Partners IV LP, Enertech Capital Partners IV (Canada) LP, Gina Domanig, and Scott Ungerer Stephenson, J. [ 1 ] This is my decision in the matter of three security for costs motions filed by the Defendants in the within matter as follows:

a) Motion filed by Emerald CleanTech Fund III LP, North Sky Direct Fund IV LP, CleanTech Alliance Direct Fund LP, CleanTech Growth Fund III LP, EnerTech Capitol Partners IV LP, EnterTech Capital Partners IV (Canada) LP, Gina Domanig and Scott Ungeret (collectively, the “ AB Defendants ”) on February 7, 2023;

b) Motion filed by General Motors Ventures LLC, Sherwin Prior and John Lauckner (collectively, the “ NRF Defendants ”) on February 3, 2023; and

c) Motion filed by Bruce Gordon, David Horn, Robert Lutz, David Zabetakis, Mike Pohlen, Danny Zouber, Connie Capone and Chris Warrington (collectively the “ C & P Defendants ”) on February 15, 2023. (collectively, the “Motions ”).

(2) The within Action has been before the Court for sometime. It was originally commenced by the filing of a Notice of Application on April 15, 2019 in the Judicial District of Moncton. That Application was subsequently converted to the Action under a Consent Order issued by this Court on September 10, 2020. That was followed by the hearing of the Motion brought on behalf of GeoDigital International Inc. (the ” Corporation ”) challenging the jurisdiction of this Court to adjudicate upon the matters at issue in the Action. A copy of the Court’s November 25, 2020 decision in that Motion is attached hereto as

Schedule “A” (the “ 2020 Decision ”). Paragraphs 4 – 7 thereof describe the parties hereto, paragraph 10 the corporate / transactional history giving rise to the Action, paragraphs 11 – 12 the claims being made by the Plaintiffs under the Action and the balance of the 2020 Decision the complexities of the issues to be addressed by the Court. Capitalized terms used herein and not otherwise defined that are defined in the 2020 Decision shall have the meaning assigned thereto therein.

(3) The Motions were brought pursuant to Rule 58 of the Rules of Court . Rule 58.01 reads as follows: 58.01 A plaintiff may be ordered to furnish security for costs where it appears that (

a) he is ordinarily resident out of New Brunswick, (

b) the defendant has a judgment or order against the plaintiff for costs in another action, and those costs remain unpaid in whole or in part, (

c) he is a nominal plaintiff, and there is reason to believe that he has not sufficient assets in New Brunswick to pay the costs of the defendant if ordered to do so, ……………………………………………………………….

(4) In Comstock Canada Ltd. v. Potash Corporation of Saskatchewan Inc. and AMEC Limited, 2011 NBQB 127, Justice Grant,quoting from the Court’s earlier decision in Brunswick Printing v. Centennial Office Equipment et al, , reviewed theapplication of Rule 58.01 (see paragraphs 7 – 9 thereof) . As in the Comstock case, the Record before the Court is clear. None ofthe Plaintiffs are New Brunswick residents and the Defendants have filed the Motions as required under Rule 58.02 properly supportedby the requisite affidavit evidence. Consequently, Rule 58.01 is engaged and the sole issue before the Court is whether I exercise mydiscretion thereunder to make an order for security for costs.

(5) In Sandfire Capital Limited Partnership v. Keough, 2017 NBQB 123, following a canvass of applicable jurisprudence, JusticeRideout observed as follows: “17. The above authorities suggest, if one of the criteria found in Rule 58.01 is met and a triable issue in the pleadings is raised, theCourt will normally order security for costs.”

(6) However, it is clear from the jurisprudence that security for costs is a purely discretionary remedy to be granted by the Court inappropriate cases. The objective of the Court must be to achieve equality between the litigants such that a plaintiff is not deprived of itsability to pursue its claim while at the same time affording the defendant an appropriate ability to recover costs in the event the plaintiffis unsuccessful. See: Isabelle v. Campbelton Regional Hospital, (1987) (NB KB), 80 NBR (2nd) 181, Canadian National GrowersInc. v. Irishview Estates, 2019 NBQB 86 and Williamson et al v. Gillis et al, 2011 NBCA 53

(7) It is also noteworthy that section 167(3) of the BCA contemplates (references) the granting of security for costs by the Court wherean oppression remedy is sought under

section 166 of the BCA.

(8) In preparation, and to provide appropriate context, for the hearing of the Motions, the Court made a procedural order on January 9,2023 whereunder the Plaintiffs agreed to quantify the damages being claimed in the Action and the Defendants to file Bills of Costsreflecting their legal fees and disbursements to date and projected costs for services to be provided on the go forward. Pursuant to thesedirections, the Court has been advised as follows:

a) Plaintiffs’ Claim – is for a maximum amount of $42,400,000.;

b) AB Defendants’ Costs – to February 17, 2023 total $417,998.44 with anticipated costs on the go forward of $977,417.00 for anoverall projected total of $1,395,415.44 (inclusive of $145,563.44 in actual and projected disbursements);

c) NRF Defendants’ Costs – to February 17, 2023 total $254,421.40 with anticipated costs on the go forward of $935,531.44 foran overall projected total of $1,199,952.84 (inclusive of $147,906.62 in actual and projected disbursements); and

d) C & P Defendants’ Costs – to February 17, 2023 total $1,251,414.94 with anticipated costs on the go forward of $1,503,665.00for an overall projected total of $2,815,179.94 (inclusive of $108,100.54 in actual and projected disbursements).

(9) On the basis of the quantum of the Plaintiffs’ claim and these financial projections, the Defendants request that security for costsbe provided separately to each Defendant group in the following amounts:

a) AB Defendants - $1,200,000 (being 2/3 of the total projected costs of $1,395,415.44);

b) NRF Defendants - $1,199,952.84 (an amount equal to their total projected costs); and

c) C & P Defendants - $1,415.466.45 (being 2/3 of $2,125,325.00 – the Scale 5 Tariff “A” cost amount calculated on an award of$42,400,000).

Total requested security for costs under the Motions - $3,815,419.29.

(10) In Comstock Justice Grant referenced the guideline practice of setting security of costs at two-thirds of the total estimated bill ofcosts (see paragraph 11 thereof and paragraph 5 of Justice Morrison’s decision in Windsor Energy et al v. Northrup et al, 2015 NBQB5).

In Comstock, Justice Grant, after observing “the amount claimed by Comstock in this action is $58 million; documentary discoverywill likely involve more than a hundred thousand documents, oral discovery will be at least four weeks and the trial will take a similaramount of time” (paragraph 25 thereof) elected to use Scale 3 of Tariff “A” to Rule 59. He ultimately ordered the posting of security forcosts in favor of AMEC Limited in the amount of $1,400,000 (two-thirds of the Tariff amount of $2,100,00).

Interestingly, Justice Grantexercised his discretion to decline to grant security for costs in favor of Potash Corporation of Saskatchewan Inc. (“PCS”) on the basisthat it could have protected itself contractually and the contract in question required that legal proceeding be commenced in NewBrunswick.

(11) In Windsor Energy, Justice Morrison identified three options for selecting a basis upon which to fix security for costs as follows: “1. Apply the Tariff on an amount involved equal to that claimed in the Plaintiff’s Statement of Claim; 2. Apply the Tariff using a lesser amount than that claimed; or 3. Base the security order on an estimated lump sum costs award.”

(12) Following some discussion of Options 1 and 2, Justice Morrison continued on to observe as follows: “Option 3 also poses some challenges. Lump sum awards crafted in darkness are no longer permissible (Spielo, supra, at para. 160).Further, judges who elect not to apply the Tariff in cases involving quantifiable claims must be able justify the deviation (Spielo, supra atpara. 147). Despite these cautions, I believe Option 3 is the most appropriate for several reasons. First, this is not a costs award but anorder for security for costs. By definition it is speculative to some degree.

Second, it is open to either party to apply for an increase ordecrease in the security once the complexity (or lack thereof) of this litigation becomes apparent. Third, the defendants have provided apreliminary estimate of the trial and discovery time anticipated thus there is some rational basis for estimating the costs on the lump sumapproach. Finally, in my view applying Option 1 will result in an excessive security order and Option 2 cannot be justified on aprincipled basis.

(13) In Prism Transport Ltd. v. UPM – Kymmene Miramichi Inc. and UPM – Kymmene Inc., 2006 NBQB 344, Justice McNallyfollowing discussion of the guideline practice of fixing security for costs at two-thirds of estimated costs, continued on to observe asfollows: [23] The method …… has generally been followed by the Courts in New Brunswick with the modification that the estimate of thepotential costs are usually based on Scale 3 of Tariff A under Rule 59 rather than a skeleton bill of costs – see 036550 v. ShenstoneInvestments Ltd. (NB KB), [1987] N.B.J.

No. 82 (N.B.Q.B.). [24] This general rule has served litigants well in New Brunswick as it engenders a certain degree of predictability with respect to thelikely outcomes of such applications, thus often saving litigants unnecessary expense in filing or defending these types of motions.Nevertheless, a motions judge faced with an application for security for costs must still exercise his or her discretion judicially,consider any particular or unique circumstances applicable to an individual case and, if warranted, modify the general ruleaccordingly.” (emphasis added)

(14) In my view the analysis and commentary from the Comstock, Windsor Energy and Prism Transport decisions reflects theimportance of an exercise of the Court’s discretion that balances the interests of the litigants, taking into account the circumstances of thecase under consideration, to best achieve the objective of equality discussed in paragraph 6.

(15) Here we have requested security for costs pursuant to the Motions in the aggregate amount of $3,815,419.29 (paragraph 9). The Plaintiffs allege that Defendants strategy is to delay the advancement of the Action and exhaust the Plaintiffs financially. In these circumstances, the Plaintiffs maintain that the granting of security for costs would be inappropriate. In the alternative, the Plaintiffs argue that the Bills of Costs submitted by the Defendants are excessive and any security for cost award should take into account this reality.

The Plaintiffs are not claiming impecuniosity and state that they have sufficient assets in Ontario to satisfy any award of costs (no evidence of this was before the Court).

(16) As discussed at the hearing, the Court has made no finding of inappropriate behavior on the part of any party. There were clearly some delays associated with the Covid pandemic and the languishing of the Plaintiffs’ initial Application in the Judicial District of Moncton prior to its transfer to Saint John, but these were beyond the control of the parties. On balance, as I observed during the hearing, the parties have for the most part worked pro-actively with the Court to

schedule and address the various matters and issues that have arisen during the course of this litigation.

(17) An oppression action is, by any measure, a time consuming and document-intensive initiative. There are 31 Plaintiffs and 20 Defendants named in the Action. The Defendants are identified as the Corporation, the holders of common and/or preferred shares of the Corporation, directors of the Corporation and/or Ushr and, in the case of Mr. Horn and Ms. Capone, officers of the Corporation, in each case at various relevant times. The matters addressed in the Action span the periods of time and the transactions described in paragraph 10 of the 2020 Decision, and the parties have agreed on a 40 day discovery schedule.

(18) In these circumstances, it is not surprising that the Bills of Costs submitted by the three Defendant groups are extensive. However, while I do not want to “nickel-and-dime” or go “overly into the weeds” with respect to the Defendants’ cost projections, a few observations are in order:

a) contrary to the C & P Defendants initial advise that in excess of 100,000 documents would be required to be produced, approximately 24,000 documents were disclosed in the C & P Defendants’ Affidavit of Documents, many of which the Court is advised are duplicate - see paragraphs 6 – 7 of the Affidavit of Lauren Allen dated February 28, 2023 (this is not surprising given the repetitive nature of the constating and other documentation routinely delivered in the course of a series of financing / re-organization transactions involving the same entities),

b) the advice of Plaintiffs’ counsel that the majority of individual Plaintiffs are small shareholders who would have little to offer on discovery or at trial appears logical to the Court, based on the Record currently before it,

c) the Defendants’ Bills of Costs to date include time in relation to the granting of the discontinuance against the NGP Entities which was resolved on a without cost basis;

d) the Bills of Costs reflect significant charges in respect of the jurisdictional challenge addressed in the 2020 Decision (for example, paragraph 2 of the February 17, 2023 Actual Bill of Costs of the C & P Defendants reflects fees (exclusive of HST and disbursements) of $200,593.70 much of which appears to be in relation to the challenge) which the Court termed “speculative” and awarded costs of only $15,000 to the Plaintiffs; and

e) the substance of the Plaintiffs’ claims against the Defendants are as outlined in paragraphs 11 – 12 of the 2020 Decision, the Defenses to which (see Tab 2(d) – (N) (pages 72 – 219) of the Record) are substantially consistent: for example, the Defenses filed on behalf of the majority of the individually named Defendants incorporate by reference portions of the Defense filed on behalf of the Corporation (see, for example, the Defense filed on behalf of Bruce Gordon at Tab 2(

G) of the Record); and

f) there are no cross claims among the various Defendant groups.

(19) Against this back-drop, I now move to the issue of security for costs. To begin, I echo Justice Rideout’s observation from Sandfire Capital that if the criteria referenced in Rule 58.01 are engaged “the Court will normally order security for costs”. There is no reason I can identify why the Plaintiffs should be entitled to pursue an oppression remedy in this province absent affording the Defendants a clear right to pursue some level of costs recovery in this jurisdiction in the event the Plaintiffs are unsuccessful. To do so would be contrary to the “equality objective” described in paragraph 6.

Moreover, if as the Plaintiffs assert, they have sufficient assets in Ontario to satisfy an award of costs, it should not work a hardship on them to arrange for the provision of appropriate security in this jurisdiction.

(20) That brings us to the questions of quantum. Like Justice Grant in Comstock and Justice McNally in Prism Transport , particularly in view of the observations set out in paragraph 18, I prefer the predictability of the Tariff. In Comstock , Justice Grant elected to set costs based on Scale 3 as did Justice McNally in Prism Transport . As already observed, advancement or defense of an oppression claim is a time-consuming and document intensive exercise; more so when the allegations span a significant time period and involve multiple parties.

However, the matters at issue are no more complex (likely less so – see paragraph 10) than in Comstock . Consequently, in the circumstances and similar to Justices Grant and McNally, I elect to use Scale 3 of Tariff A.

(21) In Comstock , Justice Grant declined to order security for costs in favor of PCS on the basis it could have protected itself contractually. In Windsor Energy , Justice Morrison declined to make use of the Tariff because in his view it would result in an excessive security for costs award. During oral argument, I observed that the Plaintiffs’ claims against all Defendants are being made on the same basis and there were no cross claims.

In these circumstances, I queried the appropriateness of separate security for costs awards in favor of each Defendant group given that this could conceptually result in 20 different defense teams with 20 separate requests for security for costs as parties are obviously free to retain separate counsel.

(22) In response, at the Court’s invitation, counsel for the Defendants filed consolidated post hearing submissions referencing various decisions (including Justice Grant’s decision in Comstock ) in which there were no cross claims, but separate awards of security for costs were made or entertained by the Court.

(23) To be clear, I accept that the Court has the discretion to make separate security for costs awards in favor of multiple defendants. To conclude otherwise could permit a plaintiff to escape an award of security for costs simply by naming multiple defendants, and at the end of the day the plaintiff is the party who determines which parties will be included as defendants in an action. However, none of this eliminates the need for the Court to assess each request for security for costs on a case-by-case basis and exercise its discretion to achieve the balance referenced in paragraph 6.

As observed in paragraphs 4 – 5 of the Williamson decision, at the end of the day discretion rests with the trial judge to set (or decline to set) security for costs at a level/on a basis that achieves this balance “in accordance with the principles of justice” (paragraph 5, Williamson ).

(24) Scale 3 of Tariff “A” would support a cost award of $1,276,375 plus taxable disbursements on a $42,400,000 claim. Application of the “two-thirds rule” would result in a security for costs award of $855,170 plus some allowance for taxable disbursements.

(25) For the reasons stated in paragraph 18, I am uncomfortable relying solely on the Bills of Costs submitted by the Defendants in fixing security for costs. I am also cognizant of the reality that, unlike in Comstock , where different claims in contract and tort were advanced against the named defendants, the same claims arising out of the same series of transactions are being made against the Defendants the defenses to which are substantially consistent (paragraph 18).

(26) On the basis of these realities, and with a view to achieving equality between the parties, I hereby exercise my discretion to fix the amount of security for costs at $855,170 to be divided between the Defendant groups in amounts appropriately proportionate to the estimates set out in their respective Bills of Costs as follows:

a) C & P Defendants - $444,688.00

b) AB Defendants - $222,344.00

c) NRF Defendants - $188,138.00

(27) To this I will add $50,000 in favor of each Defendant group for taxable disbursements such that the final security for costs awards shall be as follows:

a) AB Defendants - $494,688.00

b) NRF Defendants - $272,344.00

c) C & P Defendants - $238,138.00 Total security for costs awards - $1,005,170.00

(28) In response to any suggestion that these amounts are not adequate to provide the Defendants with proper cost recovery, I again quote Justice Grant from a later unreported decision in the Comstock matter as follows:

“[25] While the evidence clearly establishes that this is complex litigation and the actual legal costs to date are in the millions ofdollars, it is important to keep in mind that this is not a costs award but rather a security for costs award.

Furthermore, the law in thisprovince is clear that no costs award, save solicitor and client costs, is meant to provide substantial indemnity to the successful party: seeDoucet v Speilo Manufacturing Inc. (2011), 2011 NBCA 44 , 372 N.B.R. (2d) 1(C.A.) at paragraph 154. [26] Consequently, while it is helpful to have evidence of the order of magnitude of the actual costs, that evidence is no more thana factor to consider and is certainly not to be used as a guide to determine the appropriate amount.”

(29) Further, I echo Justice Morrison’s observation from Windsor Energy that it is open to any party to apply for an increase ordecrease in the security if that becomes appropriate in the future.

(30) As discussed during the hearing, I will be asking the Court scheduler to convene a further case conference to discuss the form ofthe security of costs.

(31) Finally each party shall bear their own costs with respect to the Motions. DATED at the City of Saint John, N.B. this day of August 2023 _____________________________ Mr. Justice Darrell J. Stephenson Court of King’s Bench – Trial Division