Chaulk Air Inc. v. Gencana Energy Solutions Inc., 2011 NSSC 422

SUPREME COURT OF NOVA SCOTIA Citation: Chaulk Air Inc. v. Gencana Energy Solutions Inc., 2011 NSSC 422 Date: 20111110 Docket: Hfx No. 343068 Registry: Halifax Between: Chaulk Air Incorporated Plaintiff v. Gencana Energy Solutions Incorporated and Kiley Sampson Defendants Judge: The Honourable Justice Michael J. Wood Heard: October 20, 2011, in Halifax, Nova Scotia Decision: November 10, 2011 (Orally) Written Release of Decision: November 15, 2011 Counsel: Douglas B. Skinner and Daniel Watt, for the plaintiff A.

William Moreira, Q.C. and Ian Breneman, for the defendants By the Court : [ 1 ] This proceeding arises out of the refurbishment of a motor vessel purchased by the plaintiff in May, 2010. The plaintiff claims against Gencana Energy Solutions Incorporated for breach of contract in relation to alleged agreements to provide technical

services with respect to the vessel, as well as in negligence. The plaintiff also claims against Kiley Sampson for negligentmisrepresentation with respect to certain assurances allegedly provided to the plaintiff. Mr. Sampson is an officer and shareholder ofGencana. Gencana has counterclaimed against the plaintiff for failure to pay an invoice issued for services provided. [2] This motion is brought by Mr. Sampson seeking

summary judgment on evidence with respect to the personal claim againsthim. In support of his motion, Mr. Sampson filed his own affidavit which was deposed on August 23, 2011. In response, the plaintiff,Chaulk Air Incorporated filed affidavits of Jamie Bradley and David Chaulk, both of which were deposed on October 4, 2011. A replyaffidavit of Mr. Sampson, deposed on October 11, 2011 was also filed. [3] The motion was heard on October 20, 2011, at which time both parties advised that they did not wish to cross-examine anydeponent on the affidavits which had been filed.

Oral submissions were made and the decision was reserved. This is my decision. [4] The relief claimed against Mr. Sampson is set out in para. 41 of the statement of claim. The brief filed on behalf of Mr.Sampson was prepared on the basis that the claims against him were founded in both contract and tort.

That is understandable given thelanguage of para. 41 of the statement of claim, which provides in part: CAI states that in representing himself as a professional and expert in the field of technical management of vessels and complex vesselconversion projects, and in entering into the contract to provide CAI technical management services in relation to the Vessel Refit,Sampson assumed duties to provide CAI with reasonably competent technical management services. ... [5] In oral submissions, counsel for Chaulk advised that the claims against Mr.

Sampson were based solely on negligentmisrepresentation, and that there was no allegation of a contract between Chaulk and Mr. Sampson in his personal capacity. Despite theapparent ambiguity in the pleadings as drafted, the parties proceeded to argue the motion on the basis that the allegations against Mr.Sampson were limited to the tort of negligent misrepresentation. [6] The allegations against Mr. Sampson outlined in para. 41 of the statement of claim can be grouped into three generalcategories: 1. Representations with respect to the qualifications of Gencana and Mr.

Sampson to provide the technical services set out in theGencana proposal. 2. Recommendations with respect to the capabilities of the Harris Pye shipyard. 3. Failure to carry out aspects of the work proposed to be done in relation to the vessel refit. [7] The parties were in agreement with respect to the elements which were required in order to establish liability for negligentmisrepresentation. These are set out in the Supreme Court of Canada decision in R. v. Cognos Inc., (SCC), [1993] 1S.C.R. 87. According to this decision, there are five elements which need to be established, and these are as follows: 1.

A duty of care must exist between the parties. 2. The representation must be untrue, inaccurate or misleading. 3. The representor must have acted negligently in making the misrepresentation.

4. The representee must have relied, in a reasonable manner, on the negligent misrepresentation. 5. The reliance must have been detrimental, in the sense that the representee has suffered damages. [ 8 ] The parties have also agreed on the general principles to be applied for a motion for

summary judgment under Civil Procedure Rule 13 . These principles require the Court to undertake a two part analysis. First, I must determine whether there is a genuine issue of material fact in dispute. If there is, then this is the end of the inquiry and the motion must be dismissed. If there is no genuine issue of material fact in dispute, then I must consider whether the responding party has shown that they have a real chance of success at trial. [ 9 ] It is important to remember that when considering the respondent ’ s chances of success, it is not a terribly high threshold which must be met in order to dismiss the motion for

summary judgment. The Court must always keep in mind that the purpose of a

summary judgment proceeding is to give it the ability to dispose of claims which have no merit without the parties having to incur the time and expense associated with a trial. Caution must be exercised so as to ensure that the party is not deprived of a fair opportunity to have their claim or defence considered by the Court at a full hearing. [ 10 ] In this case counsel also agreed that in order to decide the motion, the Court needed to consider each of the five elements of the negligent misrepresentation cause of action.

Should the Court conclude that the plaintiff has no real chance of success (after application of the two step analysis) with respect to any of the elements of the cause of action, then the

summary judgment motion should be granted. [ 11 ] Although the various misrepresentations alleged to have been made by Mr. Sampson generally arise out of the same set of circumstances, they fall into the three discrete categories noted above, and each will be assessed separately. [ 12 ] If the Court concludes that some but not all of the claims have no chance of success, then they ought to be dismissed. Mr. Sampson should only be required to defend, at trial, those allegations which can meet the relatively low threshold required to survive a

summary judgment motion. [ 13 ] Before dealing with the individual categories of representations, I wanted to comment on the forceful submissions by Mr. Moreira, on behalf of Mr. Sampson, that the second stage of the

summary judgment analysis required the plaintiff to put forward its “ best foot ” from an evidentiary perspective. In making this submission, he seemed to suggest that there was an obligation on the plaintiff to search for and present the best evidence available on the

summary judgment motion. Although this language does appear in some of the case law, in my view it does not raise the evidentiary burden on the responding party beyond the requirement to show some chance of success at trial. Representations with respect to the qualifications of Gencana and Mr. Sampson [ 14 ] There is no material dispute with respect to what was said to Chaulk by Mr. Sampson with respect to his qualifications or those of Gencana.

The statements made are essentially the same as those found on the Gencana website. [ 15 ] The plaintiff did not provide any affidavit evidence to suggest that Gencana or Mr. Sampson did not have the experience and qualifications set out on the website or in the representations made by Mr. Sampson. As a result, I have concluded that there is no reasonable chance of success at trial on this issue, and this aspect of the plaintiff ’ s claim must be dismissed. Representations with respect to the capability of the Harris Pye shipyard [ 16 ] There is no question that Mr.

Sampson was of the view that the Harris Pye shipyard was a suitable facility for the refit of the plaintiff ’ s vessel, and that he advised Chaulk accordingly. Mr. Sampson indicated that it was “ preferable and beneficial ” to use this shipyard. The affidavits filed by the plaintiff provide more details concerning the representations and characterize them as being strong

recommendations. [ 17 ] Counsel for Mr. Sampson conceded in argument that the first three requirements for negligent misrepresentation cannot be disposed of on this motion for

summary judgment, but did submit that the last two requirements (i.e. reliance and damages) could be. [ 18 ] With respect to the issue of whether there was reasonable reliance by the plaintiff, Mr. Moreira says that there is no material dispute of fact as Mr. Sampson is not in a position to contest the plaintiff ’ s statement that it relied on the recommendations made to it. The affidavits filed on behalf of the plaintiff simply say that they relied on the advice from Mr. Sampson in making the decision to have the refit carried out at the Harris Pye shipyard. Mr.

Moreira submits that because there is no further detail providing particulars of the reliance, the affidavits do not meet the burden on the plaintiff to put its best foot forward. As discussed previously, the burden on the plaintiff is to show that it has a real chance of success at trial. [ 19 ] The plaintiff clearly says that it relied on the advice from Mr. Sampson, and whether they did, is a question of fact. Mr.

Moreira pointed out a number of circumstances which could cause the Court to question that assertion, including extensive negotiations between the plaintiff and Harris Pye before entering into an agreement. The weighing of such evidence is clearly something to be left to the trial judge and should not be done on a

summary judgment motion. As a result, I am not satisfied that there are no material facts in dispute on the issue of reliance. [ 20 ] With respect to the issue as to whether the plaintiff has suffered any damages as a result of reliance on the alleged representations by Mr. Sampson, the affidavits filed by both parties indicate that the refit is still not complete despite having started more than a year ago. It also appears that the plaintiff and Harris Pye are in litigation in England with respect to various issues arising out of the refit contract. As with the issue of reliance, counsel for Mr.

Sampson submits that there is no material issue of fact in dispute as Mr. Sampson does not take issue with any of the facts asserted by the plaintiff on the issue of damages (at least for purposes of the

summary judgment motion). He simply asserts that on these facts, the plaintiff is unable to establish a reasonable chance of success at trial. [ 21 ] Paragraph 79 of Mr. Chaulk ’ s affidavit states that despite Mr. Sampson ’ s estimate that the work could be completed within 28 days, it was still incomplete. Paragraphs 80 and 81 state that there have been cost overruns and that the plaintiff has incurred financial losses of over 2.4 million dollars, as well as lost revenue opportunities from the inability to charter the vessel over the last year.

There is essentially no evidentiary backup provided for these statements; however, Mr. Chaulk was not cross-examined and Mr. Sampson indicated, through counsel, that he did not dispute these statements for purposes of the

summary judgment motion. In these circumstances, I am satisfied that the plaintiff has met the burden of showing that it has a real chance of success at trial on this issue. [ 22 ] I have concluded that Mr. Sampson has not met the burden of satisfying me that

summary judgment ought to be granted with respect to the allegations against him concerning the capabilities of the Harris Pye shipyard, and so this portion of the

summary judgment motion is dismissed. Failure to carry out aspects of the work proposed to be done in relation to the vessel refit [ 23 ] These allegations are found in paras. 41(b) - (

d) of the statement of claim. As drafted, these allegations are not really framed as misrepresentations, but rather failure to carry out certain specified tasks in relation to the vessel refit. These were tasks which the plaintiff alleges fall within the contractual responsibilities of Gencana and not Mr. Sampson since there was never any contract with him. [ 24 ] According to the affidavits filed by the plaintiff, Gencana presented a technical management proposal by e-mail on May 6, 2010, which is found at exhibit “ L ” to the affidavit of Mr. Chaulk.

This proposal is clearly made on behalf of Gencana and, according to Mr. Chaulk ’ s affidavit, was accepted by him on behalf of the plaintiff on May 7. On May 17, 2010 there was a further written proposal presented to the plaintiff by Gencana. A copy of the proposal is attached as exhibit “ O ” to Mr. Chaulk ’ s affidavit and he deposes that he accepted that proposal on May 18. [ 25 ] There is no evidence of any representation by Mr. Sampson concerning the work to be carried out other than as encompassed in the two e-mail proposals referred to above.

The plaintiff concedes that these proposals were made by Gencana and did not give rise to any personal contract with Mr. Sampson.

[ 26 ] Although Mr. Sampson disputes the acceptance of the Gencana proposals by the plaintiff, there does not appear to be any dispute of fact with respect to the absence of any personal representations made by Mr. Sampson. In addition, even if the plaintiff is able to argue that representations were made, they have not adduced any evidence that they relied on these representations to their detriment. As a result, I am not satisfied that the plaintiff has provided evidence which establishes a real chance of success at trial in these claims against Mr.

Sampson. [ 27 ] After reviewing all of the evidence and arguments of counsel, I have come to the conclusion that Mr. Sampson ought to be granted

summary judgment with respect to some, but not all, of the plaintiff ’ s claims against him. The allegations for which

summary judgment is granted are found in subparas. (a), (b), (

c) and (

d) of para. 41 of the statement of claim, which would leave for trial only those allegations with respect to the misrepresentations concerning the capabilities of the Harris Pye shipyard. [ 28 ] Given the divided success of the parties, I am inclined to fix the amount of costs on the motion, but have them payable in the cause; however, I will hear from counsel further on that issue. [ 29 ] I also note Civil Procedure Rule 13.07 which requires a judge who dismisses a motion for

summary judgment on evidence to arrange to give directions to the parties concerning the conduct of the proceeding. I believe this provision is triggered by my failure to grant Mr. Sampson ’ s

summary judgment motion in its entirety. I will make arrangements for a motion for directions, unless all parties waive this requirement. _______________________________ Wood, J.