L’art de lutter contre les géants: client de Nelligan O’Brien Payne s.r.l. attribué jugement de 11 millions de dollars après six semaines de procès
mai 1, 2015 Par: Kyle Stout Read Time: 6 minutes

In a 70-page decision released on December 17, 2014, the Ontario Superior Court of Justice, awarded damages in the amount of $ 11 million to Nelligan O’Brien Payne’s client, Rougemount Capital Inc. (“Rougemount”), for breach of contract in Rougemount Capital Inc. v Computer Associates International Inc.

What Happened – Chronology of Events

In 2004, Sixdion was an Indigenous-owned IT company uniquely located to take advantage of federal Indigenous procurement initiatives, and an untapped global Indigenous market for IT and enterprise solutions. Founded in 1997, Sixdion had, by 2004, obtained a significant competitive advantage in the $ 1.25 trillion Canadian Indigenous market. As an Indigenous company, it also benefits from the Procurement Strategy for Aboriginal Businesses (“PSAB”) and Industrial Regional Benefits Programs (“IRBs”) – Federal Government initiatives designed to encourage federal government departments to acquire goods and services from Indigenous companies, and mandating specified Indigenous spending.

By 2004, Sixdion had a successful track record of contracting with the Federal Government, and had secured a number of contracts with large private sector customers. However, Sixdion’s vision extended beyond such traditional markets. By 2004, the principals of Sixdion had decided to shift the focus of their business to the development of an enterprise software solution by Sixdion and known to the Information Centric Community (“ICC”). Through the ICC, Sixdion, Indigenous communities. In order to fund such growth strategy, Sixdion needed an infusion of capital. In 2004, the Principals of Sixdion decided that the best strategy was to bring in a strategic partner or partners, to bring expertise and technology to Sixdion, Sixdion to develop the ICC. One such partner was Computer Associates International (“CA”).

As noted by Justice Sanderson, ” it was CA that first approached Sixdion“. A Sales Account Executive at CA Ottawa Office first contact Sixdion to discuss PSAB benefits through Sixdion. The sales account executive gave evidence that, prior to contacting Sixdion in March, 2004, CA was aware that access to PSAB through an Indigenous partner would provide CA products to the Federal Government. What followed was a series of negotiations involving the principals of Sixth and CA Executive, including the Vice President, Partners, of CA International Inc., who was introduced to the Six Nations by the Senior Manager of Strategic Business Alliances at CA Canada as “the man,” and finally culminating in: (1) a Term Sheet prepared by Sixdion on May 6, 2012 and delivered to CA on May 12, 2012; and (2) “the man”,

Rougemount claimed that by July 30, 2004, the parties have agreed to the six-month financial crisis. in installments: $ 250,000 immediately, $ 250,000 in January 2005 and $ 1 million in April 2005. PSAB products and their products and other federal Indigenous procurement initiatives. Sixdion would give CA warrants exercisable for 10% of the Sixdion shares.

Rougemount further argued that CA breached the contract when, in the midst of internal turmoil, CA executives, $ 2.2 billion in restated revenue, and other appurtenances of accounting fraud allegations, CA representatives in New York unjustifiably retracted killed “the deal.

CA, for its part, claimed that CA never entered into an enforceable contract on July 30, 2004, August 11, 2004, or at any other time. Neither “the man” nor the Executive Vice President who approved the deal to the contract. The use of the term and the terms of the contract is not binding on the term and the terms of the agreement. the subscription agreement mandated in the Term Sheet. In the alternative, CA claimed that because it is particularly important that the agreement be

The Decision

CA and Sixdion entered into a Binding Agreement

As discussed above, in the field of key admissions made by a CA witness during cross-examination, Justice Sanderson rejected CA’s position that the CA executives did not have actual authority to bind CA. Justice Sanderson dismissed $ 1.5 million investment in Sixdion as an acquisition in New York, stating that:

[I] infer and find that I had a $ 1.5 million marketing expense. In essence, a marketing agent gives the additional option of exercising the warrant if it is so. Q and D considered that aspect to be an additional peripheral benefit, not the essence of the deal.

Noting that counsel for the Executive Vice President of the Supreme Court of Justice, Justice Sanderson stated that:

CA held out with the requisite authority and did nothing to suggest that they were not authorized to make the deal. I find the principals of Sixdion reasonably relied on what they say in their Q and D’s authority.


At law, a company may be bound by an employee or agent lacking actual authority where the company represents, or “holds out” that the employee or agent has the requisite authority. This is referred to as ostensible or apparent authority. The Supreme Court of Canada has asserted that the most common representation by conduct. That is, by permitting the agent to act in the conduct of the principal’s business with other persons. As stated by the Supreme Court of Canada in Rockland Industries Inc. v Amerada Minerals Corp of Canada :

Surely, there can be no greater authority than the presence of an agent who has the authority to act in the conduct of the principal.

Interestingly, Justice Sanderson found that the Executive Vice President had the authority to bind the CA to the contract, she would have found that CA was bound on the basis of ostensible or apparent authority.

The decision is an important reminder for clients, especially corporate clients, to ensure that they are used in the following ways: (1) the employee or agent; and (2) third parties dealing with the employee or agent. Where a corporation has a role to play in the performance of certain functions, including the entering into contracts of the corporation, party.

The Essential Terms of the Contract Were Agreed Upon

Citing the decision of the Ontario Superior Court of Justice in Georgian Windpower Corp. v. Stelco Inc. , Justice Sanderson, rejected the submission of counsels. In Georgian Windpower , the Court stated:

What constitutes the “essential terms” under the heading of the contract and what transpires the United Gulf Developments Ltd. v. Iskandar, 2008 NSCA 71, 69 RPR (4th) 176 (NSCA). Cromwell JA (as he then was) stated at para. 1

To have an enforceable contract, there must be agreement between the parties as to all essential terms. To Mayors & Butcher Ltd., a contract … May & Butcher Ltd. v. R. (1929), [1934] 2 KB 17 (UKHL) at p. 21. Determining what terms are ‘essential’ in a particular case is, however, more difficult than stating the principle. Mitsui & Co. (Point Aconi) Ltd. is a manufacturer of Mitsui & Co. v. Jones Power Co., 2000 NSCA 95, 189 NSR (2d) 1 (NSCA), at para. 64.

Justice Sanderson found that the Commitment Letter, CA and Sixdion believed they had settled everything they needed to settle, and that they had agreed to the terms of the contract, ” All that remained was papering the deal. had already reached “.

CA’s Commitment to Investing in Sixdion was Unconditional

Counsel for CA submitted that the Commitment Letter is made out of the following terms and conditions; According to CA, due diligence was required as part of the approval process by CA for all acquisitions. As discussed above, Justice Sanderson rejected CA’s characterization, as the $ 1.5 million investment in Sixdion as an acquisition requires further due diligence by CA in New York. Justice Sanderson found that, in the period leading up to the making of the contract on July 30, 2004, the CA representatives contracting with Sixdion were not characterizing the deal as an acquisition of shares, and therefore did not anticipate that due diligence would be done in the ordinary course. They expected the $ 1. 5 million to be treated as a marketing business expense. In the case of the admission of a witness during a cross-examination, Justice Sanderson further CA: (1) subsequent à CA’s commitment to contract; and (2) in the midst of internal turmoil at CA, as due diligence, stating that:

[I] find that the approval process was instituted in September and October 2004 had nothing to do with due diligence under the 6 Term Sheet. C conceded that what was not due diligence .

I do not know that it would be necessary to carry out any further due diligence. They were anxious for CA and they were able to get to market by early September when the federal government procurement cycle would get into full gear.

Ultimately, Justice Sanderson found that CA unjustifiably subject to the approval of the Contracting State and the approval thereof,

I have found that I had not done so much, but it had not been done so quickly, as in the past.

To be continued …

Kyle Stout is a member of our business law practice group. He can be reached by emailing kyle.stout@nelliganlaw.ca or by calling 613-231-8246. For more information on business law issues, click here for our services, or click here to view our Business Law Focus blog.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2019 Nelligan O’Brien Payne LLP.

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