COURT
    OF APPEAL FOR ONTARIO

CITATION:
The
    Catalyst Capital Group Inc. v. Dundee Kilmer Developments Limited Partnership,
    2020 ONCA 272

DATE: 20200429

DOCKET: C63082

Doherty, Brown and Thorburn JJ.A.

BETWEEN

The
    Catalyst Capital Group Inc.

Plaintiff (Appellant)

and

Dundee
    Kilmer Developments Limited Partnership, Dundee Realty Corporation, KD
    Infrastructure L.P. Kilmer Van Nostrand Co. Limited
, John Doe Corporations Partnerships,
Infrastructure
    Ontario and Ontario Infrastructure and Lands Corporation (Formerly Ontario
    Infrastructure Projects Corporation)
, The Ministry of Infrastructure of
    Ontario and
Her Majesty the Queen in Right of Ontario

Defendants (
Respondents
)

David Moore and Kenneth G.G. Jones, for
    the appellant

Mark A. Gelowitz and Kevin O'Brien, for
    the respondents, Dundee Kilmer Developments Limited Partnership, Dundee Realty
    Corporation, KD Infrastructure L.P., Kilmer Van Nostrand Co. Limited,
    Infrastructure Ontario and Ontario Infrastructure and Lands Corporation
    (Formerly Ontario Infrastructure Projects Corporation)

Christopher P. Thompson, for the
    respondent, Her Majesty the Queen in Right of Ontario

Heard: February 11, 2020

On
    appeal from the order of Justice Frank Newbould of the Superior Court of Justice,
    dated November 28, 2016, with reasons reported at 2016 ONSC 7365.

BROWN J.A.:

I.        OVERVIEW

[1]

The events underlying this action took place
    almost a decade ago, in 2011. Since this proceedings inception in late 2013,
    it has progressed no further than a series of challenges to the adequacy of the
    plaintiffs pleading. This appeal is from part of the most recent order, made
    in 2016, that struck out some of the plaintiffs claims.

[2]

The action concerns a dispute about whether the
    plaintiff, The Catalyst Capital Group Inc. (Catalyst), could participate in the
    financing and development of the Athletes Village for the 2015 Toronto Pan/ParaPan
    American Games (the Project). Catalyst pleads that in 2011 it struck a deal
    to participate in the financing of the Project with a group of the defendants,
    which it styles as DKD: Dundee Kilmer Developments Limited Partnership, Kilmer
    Van Nostrand Co. Limited, Dundee Realty Corporation, KD Infrastructure L.P.,
    and John Doe Corporations Partnerships. Catalyst alleges that DKD broke that
    deal and it seeks significant damages against DKD.

[3]

As well, Catalyst seeks significant damages
    against two Ontario government actors, the Ontario Infrastructure and Lands
    Corporation/Infrastructure Ontario (collectively IO)
[1]
, as well as against the Ontario Crown. IO was responsible for
    procuring and approving bids for the design, construction, finance, and
    post-games marketing of the Project. Catalyst alleges that IO made material
    misrepresentations to it and, together with the Crown, acted tortiously by
    excluding it from participating in the Project.

[4]

The damages sought by Catalyst against DKD, IO,
    and the Crown exceed $110 million.

[5]

Catalyst commenced two actions (now
    consolidated) in November 2013 and January 2014: the first against DKD and IO;
    the second against the Crown. The ensuing six years have seen two separate challenges
    by the defendants to the adequacy of Catalysts statements of claim pursuant to
    r. 21.01(1)(b) of the
Rules
    of Civil Procedure
. At this point, no statements
    of defence have been filed.

[6]

In disposing of the second challenge in 2016,
    the motion judge found parts of the pleading adequate, struck out some parts with
    leave to amend, and struck out other parts without leave to amend. The Divisional
    Court dismissed Catalysts motion for leave to appeal from the part of the motion
    judges order striking out certain claims with leave to amend. This appeal only
    concerns the part of the motion judges order that struck out five of the claims
    without leave to amend.

[7]

For the reasons that follow, I would grant
    Catalysts appeal in part, setting aside the portion of the motion judges
    order dismissing the claims against DKD for breach of s. 29 of the Funding Term
    Sheet, breach of fiduciary duty, and for unjust enrichment and
quantum meruit
.

II.       FACTUAL BACKGROUND

[8]

The chronology of events before the court comes
    from Catalysts 2016 Consolidated Fresh as Amended Statement of Claim (the
    Amended Claim).

October 2010 to
    May 2011

[9]

In October 2010, IO started its solicitation of
    bidders for the design, construction, financing, and post-games marketing of the
    Project by issuing a Request for Qualifications (RFQ). DKD responded to the
    RFQ. IO accepted DKD as qualified to bid on the Project.

[10]

IO then issued a Request for Proposals (RFP) in
    January 2011, at which point DKD began to prepare its bid. While doing so, DKD
    became concerned about the competitiveness of its financial model and the costs
    of the financing options available to it at the time. As a result, in early May
    2011, DKD approached Catalyst and asked it to participate in the financing of
    its bid. However, in its response to the RFQ, DKD had not named Catalyst as a
    member of its proponent team. Consequently, the terms of the RFP required DKD to
    obtain the written consent of IO in order to change the members of its bid team.

May to June
    2011: The oral agreement with DKD

[11]

From May 13, 2011 to June 6, 2011, senior
    executives of Catalyst and DKD held a series of meetings to discuss Catalysts
    participation in DKDs bid. Catalyst pleads that it reached an oral agreement with
    DKD that contained the following terms: (i) Catalyst would allow DKD to conduct
    all material negotiations and discussions regarding DKDs bid with IO and the
    Crown, including those affecting or involving Catalysts participation in the bid
    and the Project; (ii) Catalyst would develop and finalize a financial model to
    form the basis of the financial component of DKDs bid and would provide
    financing in accordance with the finalized model; (iii) DKD would act in good
    faith to protect, promote, and advance Catalysts interests and participation
    in its bid and the Project, including in all of its communications and dealings
    with IO and the Crown; and (iv) DKD would keep Catalyst advised in a timely
    manner of all material developments in connection with its bid, including any
    developments that impacted Catalysts involvement, interests, and participation
    in the bid (the Oral Agreement).

June 2011: The
    governmental representations by IO

[12]

In early June 2011, DKD asked IO to consent formally
    to Catalysts addition as a DKD proponent team member. IO refused.

[13]

However, Catalyst pleads that on or shortly
    after June 15, 2011, IO advised DKD that although it would not consent to add Catalyst
    as a formal proponent team member, Catalyst could nevertheless participate in
    DKDs bid in a manner that did not require such consent. IO represented to DKD that:
    (i) it and the Crown did not have issues or concerns regarding the source of
    DKDs funding or any equity structure DKD would enter with any of its funders,
    including Catalyst; (ii) it and the Crown decided that Catalyst could
    participate and provide funding to DKD for the Project without IOs formal
    consent as long as Catalyst was kept behind the curtain; and (iii) if
    Catalyst provided funding for the Project behind the curtain, no issue or
    difficulty would be raised by IO or the Crown about such participation (the
    Governmental Representations).

[14]

Catalyst pleads that IO made the Governmental
    Representations to DKD in consultation with the Crown, or as a result of
    instructions received from representatives of the Crown, knowing and intending
    that DKD would communicate them to Catalyst and that Catalyst and DKD would
    rely and act upon them.

June 2011: The
    term sheets between Catalyst and DKD

[15]

On June 22, 2011, DKD and Catalyst entered into
    two written agreements that Catalyst alleges were intended to supplement, but
    not replace, the earlier Oral Agreement. One of the written agreements was a Subordinated
    Notes and Letters of Credit Term Sheet (the Funding Term Sheet) that
    contained additional terms and conditions upon which Catalyst would participate
    in and provide funding for the Project. Section 29 of the Funding Term Sheet
    plays a key role in Catalysts allegations against DKD; it will be described in
    more detail later in these reasons.

September to
    November 2011

[16]

DKD was selected as the preferred Project bidder
    on September 2, 2011. In September and October 2011, DKD and Catalyst met with DKDs
    senior lenders (the Lenders) to obtain the consents necessary for Catalysts
    continued participation in DKDs bid.

[17]

Catalyst and the Lenders asked DKD to disclose
    to IO the details of Catalysts involvement in the financing of the Project.
    DKD initially resisted but ultimately met with IO on November 2, 2011 to
    disclose Catalysts involvement in its bid. Catalyst pleads that this
    information was relayed to the Province.

[18]

On November 8, 2011, Catalyst was advised that
    the Province had raised a red flag regarding Catalysts participation in
    the bid. On that date, IO provided a written response to DKDs disclosure of
    Catalysts involvement in the Project, in which it detailed concerns about
    Catalysts involvement and directed DKD to remove Catalyst as a participant in
    the financing model that was proposed for the Project. Catalyst pleads that IOs
    decision resulted from directions and instructions given by Crown officials.

[19]

Thereafter, DKD ceased all efforts to obtain the
    Lenders consent to Catalysts participation. DKD informed Catalyst that the
    Lenders would not consent to Catalysts participation and refused to allow
    Catalyst to participate any further in the Project.

III.      PROCEDURAL HISTORY

The Original
    Statements of Claim

[20]

Catalyst initially commenced two actions, the
    first against DKD and IO on November 7, 2013 (the Original Claim against DKD
    and IO), and the other against the Crown on January 10, 2014 (the Original Claim
    against the Crown) (collectively, the Original Claims).

[21]

In December 2014, DKD, IO, and the Crown successfully
    moved to strike out Catalysts Original Claims as disclosing no reasonable
    cause of action. Although the motion judge struck out the Original Claims in their
    entirety, he granted Catalyst leave to deliver an amended statement of claim
    and to consolidate the actions.

The Amended
    Claim

[22]

Quite some time later, on April 4, 2016,
    Catalyst delivered its Amended Claim. As against DKD, Catalyst alleges that DKD:

a.

breached the terms of the Oral Agreement;

b.

breached s. 29 of the Funding Term Sheet;

c.

breached its fiduciary duty to act in Catalysts interests;

d.

made negligent or fraudulent misrepresentations relied on by
    Catalyst to its detriment; and

e.

deprived Catalyst of profits, benefits, and opportunities that were
    promised to it and that it reasonably expected to gain from its participation
    in DKDs bid and the Project, thereby unjustly enriching DKD or entitling Catalyst
    to compensation on a
quantum meruit
basis.

[23]

As against IO and the Crown, Catalyst alleges
    that:

a.

IO and the Crown breached a public law duty to act to prevent
    Catalyst from being expelled from DKDs winning bid;

b.

the actions of IO and the Crown constituted misfeasance in public
    office;

c.

IO and the Crown made negligent or fraudulent misrepresentations
    relied on by Catalyst to its detriment; and

d.

that it was deprived of profits, benefits, and opportunities that
    were promised to it and that it reasonably expected to gain from its
    participation in DKDs bid and the Project, thereby unjustly enriching IO and
    the Crown or entitling Catalyst to compensation on a
quantum meruit
basis.

[24]

In early 2016, DKD, IO, and the Crown moved to
    strike out Catalysts Amended Claim on the basis that it disclosed no
    reasonable cause of action and certain claims were statute-barred.

[25]

In his November 28, 2016 order, the motion judge
    granted the motions in part:

a.

he refused to strike out the claims against DKD and IO for
    fraudulent or negligent misrepresentation;

b.

he struck out two claims with leave to amend: the claim against DKD
    for breach of the terms of the Oral Agreement and the claim against IO and the
    Crown for misfeasance in public office. In September 2019, the Divisional Court
    denied Catalyst leave to appeal from that part of the motion judges order; and

c.

he struck out five claims without leave to amend, specifically the
    claims against:

1) DKD for breach of s. 29 of the Funding Term
    Sheet;

2) DKD for breach of its alleged fiduciary
    duty to act in Catalysts interests;

3) DKD, IO, and the Crown for unjust
    enrichment and
quantum meruit
because they were statute-barred under
    the
Limitations Act, 2002
, S.O. 2002, c. 24, Sched. B;

4) IO and the Crown for breach of an alleged
    public law duty to act to prevent Catalyst from being expelled from DKDs
    winning bid; and

5) the Crown for fraudulent and negligent
    misrepresentations on the basis that the claims were precluded by s. 2(2)(b) of
Proceedings of the Crown Act
, R.S.O. 1990, c. P.27 (
PACA
).

[26]

The part of the motion judges order dismissing these
    five claims without leave to amend is the subject-matter of this appeal.

IV.     FIRST GROUND OF APPEAL: THE CLAIM AGAINST DKD FOR BREACH
    OF S. 29 OF THE FUNDING TERM SHEET

The issue
    stated

[27]

In its Amended Claim, Catalyst pleads two breach
    of contract claims against DKD. The first is for breach of the Oral Agreement
    that Catalyst alleges it entered into with DKD during the first week of June
    2011. The motion judge struck out this claim but with leave to amend in order
    to identify when, where, and the individuals by whom the Oral Agreement was made.

[28]

The second is based on one of the two written
    term sheets that Catalyst entered into with DKD on June 22, 2011: the Funding
    Term Sheet and the Future Development Blocks Term Sheet. Catalyst pleads that
    the provisions of the term sheets supplemented, but did not replace, those
    contained in the Oral Agreement. Since the Amended Claim referred to both term
    sheets, they were included in the r. 21 record placed before the motion judge.

[29]

Catalyst alleges that DKD breached s. 29 of the
    Funding Term Sheet, which provides:

Each of the DK Group and the Subordinated
    Noteholder agrees that from and after the date of execution of this Term Sheet
    and until such time as the Formal Agreements are entered into, it will not
    enter into any discussions or negotiations or solicit offers or execute any
    agreement relating to the subject matter of this Term Sheet or to the provision
    of financial assistance in connection with the Project (excluding, with respect
    to the DK Group, the Project Documents) with any party other than, in the case
    of the DK Group, the Subordinated Noteholder, and in the case of the
    Subordinated Noteholder, the DK Group.
The parties
    acknowledge that the Senior Financing Term Sheet contains a condition precedent
    in favour of the Lenders with respect to the approval by the Lenders of the
    Subordinated Noteholder, the participation of the Subordinated Noteholder in
    the Project, the manner and terms and conditions of the provision (directly or
    indirectly) by the Subordinated Noteholder of subordinated debt to the Project
    including, without limitation, the terms of this Term Sheet and the
    corporate/partnership structure of ownership and control of the Project at all
    direct or indirect levels (collectively, the CP). The parties acknowledge and
    agree that time is of the essence with respect to the satisfaction of the CP.
    Each of the parties shall negotiate in good faith with each other and the
    Lenders to satisfy the CP.
[Emphasis added.]
[2]

[30]

Section 29 of the Funding Term Sheet is one of
    several provisions in Part H of the agreement, which is titled Binding Nature
    of Term Sheet. Part H begins with s. 27, which provides that the provisions of
    the Funding Term Sheet other than Section 29 and the confidentiality
    obligation set out in the preamble, will not come into effect until such time
    as the Lenders consent to the provision by the Subordinated Noteholder [Catalyst]
    of the Contingency Equity Letter of Credit and the Cost to Complete Letter of
    Credit on the terms and conditions of this [Funding] Term Sheet. Section 28
    specifies when the Funding Term Sheet will expire.

[31]

Section 29 then deals, in part, with the
    exclusivity of negotiations between DKD and Catalyst in respect of the Project.
    It concludes with the obligation of DKD and Catalyst to negotiate in good
    faith with each other and the Lenders to satisfy the [Condition Precedent].

[32]

In its Amended Claim, Catalyst pleads that s. 29
    of the Funding Term Sheet imposed two obligations on DKD:

(i)    an
    obligation to negotiate in good faith with the Lenders and to use its best
    efforts to satisfy the conditions precedent identified in s. 29 of the Funding
    Term Sheet, including taking all reasonable steps to persuade IO and the Crown
    to allow Catalysts participation in the DKD Bid; and

(ii)    a good
    faith obligation to ensure that the structure resulting from the two term sheets,
    DKDs Bid, and any subsequent agreements negotiated after September 1, 2011
    resulted in Catalysts participation behind the curtain in a manner that was
    acceptable to IO and the Crown.

[33]

Catalyst alleges that DKD failed to satisfy both
    obligations, thereby breaching its obligations under s. 29 of the Funding Term
    Sheet and its common law duties of honest performance in relation thereto, its
    duty to negotiate and act in good faith, its duties to use its best efforts, or
    in the alternative reasonable efforts, to obtain the Lenders consent to
    Catalysts continued participation in the Project.

[34]

The motion judge interpreted s. 29 of the
    Funding Term Sheet to mean that DKD was obligated to negotiate in good faith
    with Catalyst and the Lenders to satisfy the condition precedent in favour of
    the Lenders with respect to approving Catalyst to be in the deal. It was not an
    obligation to negotiate with IO: at para. 46. Based on that interpretation,
    the motion judge struck out Catalysts pleading that DKD breached s. 29 of the
    Funding Term Sheet stating, at para. 51, that:

[T]he complaint is not that DKD failed to deal
    with the Lenders to fulfill the condition precedent of the [Funding Term Sheet]
    to permit Catalyst's involvement in the project. Rather
the
    complaint is that although Catalyst and DKD obtained the consent of the
    Lenders, it was afterwards that IO and the Crown had a problem with Catalyst
    and would not agree to Catalyst being involved. The complaint at its core is
    that DKD failed to convince IO to change its mind. However, the [Funding Term
    Sheet] contained no obligation on DKD to negotiate with IO to change its mind.
    Whether it was DKDs fault that IO and the Crown had this problem is not
    relevant to the issue of a breach of the term sheet.
[Emphasis added]

He concluded that [o]nce the IO and
    the Crown had decided not to permit Catalyst to be involved, that was the end
    of the matter for Catalyst. Even if the Lenders agreed to Catalyst being
    involved, it would not affect that: at para. 55.

The positions
    of the parties

[35]

Catalyst submits that the motion judge erred in
    law by adopting too narrow an interpretation of s. 29 of the Funding Term Sheet
    without any analysis or assessment of the impact of the factual matrix upon
    the proper meaning of this provision. It argues that in order to fulfill the
    condition precedent contained in s. 29 of the Funding Term Sheet, DKD was
    required to demonstrate the consent of IO and the Crown to Catalysts
    participation in the Project.

[36]

DKD submits that the motion judge correctly
    concluded that the cause of action alleging a breach of s. 29 could not succeed
    because the Funding Term Sheet contained no obligation on DKD to negotiate with
    IO to change its mind.

The governing principles

[37]

Correctness is the applicable standard of review
    on an appeal from an order made under r. 21.01(1)(b) dismissing a claim as
    disclosing no reasonable cause of action:
Ceballos v. DCL International Inc.
, 2018 ONCA 49, at para. 7.

[38]

Determining whether Catalysts plea that DKD
    breached s. 29 of the Funding Term Sheet discloses no reasonable cause of
    action engages the process of contractual interpretation, specifically
    ascertaining the scope of the obligation to negotiate in good faith contained in
    s. 29.

[39]

A r. 21.01(1)(b) motion focuses on the legal
    sufficiency of a plaintiffs pleading, in the sense of determining whether the
    plaintiff has pleaded the material facts necessary to support a cause of action
    recognized by the law:
Brozmanova
    v. Tarshis
, 2018 ONCA 523, 81 C.C.L.I. (5th)1, at
    paras. 25-26.

[40]

By contrast, contractual interpretation contains
    a strong factual component. It is an exercise in which the principles of
    contractual interpretation are applied to the words of the written contract,
    considered in light of the factual matrix. Contractual interpretation usually
    involves a question of mixed fact and law, except where a question of law can
    be extracted:
Creston Moly
    Corp. v. Sattva Capital Corp.
, 2014 SCC 53, [2014]
    2 S.C.R. 633, at para. 50. A courts consideration of the language of a
    contract always must have regard to the factual matrix that gave birth to the
    contract, even where the contractual provision is not ambiguous:
Dumbrell v. The Regional Group of Companies
    Inc.
, 2007 ONCA 59, 85 O.R. (3d) 616 (C.A.), at
    para. 54. At the same time, the factual matrix cannot overwhelm or displace the
    language of the contract:
Sattva
, at para. 57.

[41]

Given that most contractual interpretation claims
    involve questions of mixed fact and law, r. 21.01(1)(b) usually is ill-suited
    to dispose of such claims prior to trial. That is due to the restrictions built
    into the rule that limit its utility for assessing the factual adequacy of a claim.
    Of greatest significance is the restriction that no evidence is admissible on
    such a motion: r. 21.01(2)(b). This restriction rubs the wrong way against the
    jurisprudences recognition that a party is entitled to lead relevant evidence
    regarding the circumstances surrounding a contracts formation or its context
    to aid in its interpretation:
McDowell v. Fortress Real Capital Inc.
, 2019
    ONCA 71, 91 B.L.R. (5th) 181, at para. 83.

[42]

Yet, some moving party defendants, like DKD,
    contend that r. 21.01(1)(b) is an apt procedural device to strike out a claim
    involving contractual interpretation, pointing to the jurisprudence that holds
    a claim may be struck where it is plain and obvious that the claim has no
    reasonable prospect of success:
Knight v. Imperial Tobacco Canada Ltd.,
2011
    SCC 42, [2011] 3 S.C.R. 45, at para. 17.

[43]

As well, DKD relies on the decision of the
    Superior Court of Justice in
ArcelorMittal Dofasco Inc. v. U.S. Steel Canada Inc
., 2008 CanLII 56932, for the proposition that a court can rule on a
    breach of contract claim on a r. 21 motion where the operative provisions of a
    contract are clear. However, great care must be taken in applying the
ArcelorMittal Dofasco
decision. First, that decision pre-dated
Sattva
.
    Second, in
ArcelorMittal
    Dofasco
the parties agreed that the issue of the
    exercise of the contractual termination right was a question of law, not a
    question of mixed fact and law: at para. 17. Finally, the court held that arguably
    there was no need to consider the factual matrix as there was no ambiguity with
    respect to the interpretation of the termination right: at para. 33. However,
Dumbrell
and
McDowell
teach to the contrary:
Dumbrell,
at para. 54;
McDowell
, at
    para. 83.
[3]

[44]

When the
Rules of Civil Procedure
are
    examined through the lens of
Sattvas
teaching, a r. 20 summary
    judgment motion is better suited than a r. 21.01(1)(b) motion to deal with
    claims involving contractual interpretation because such claims typically
    involve mixed questions of fact and law and always require a consideration of
    the factual matrix. Still, it remains the case that the language of r.
    21.01(1)(b) does not exclude its use to strike out causes of action that turn
    on an issue of contractual interpretation. However, r. 21.01(1)(b) contains
    certain features that reduce the risk of its misuse to dispose of contractual interpretation
    claims.

[45]

First, a motion to strike for failure to
    disclose a reasonable cause of action proceeds on the basis that the facts
    pleaded are true, unless they are manifestly incapable of being proven or are
    patently ridiculous:
Imperial
    Tobacco
, at para. 22;
Transamerica Life Canada Inc. v. ING Canada Inc.
(2003), 234 D.L.R. (4th) 367 (Ont. C.A.), at p. 375. Accordingly, a
    defendant who resorts to r. 21.01(1)(b) must take the plaintiffs pleaded claim
    at its provable highest.

[46]

Second, a court must read the plaintiffs pleading
    generously, making allowances for drafting deficiencies and erring on the side
    of permitting an arguable claim to proceed to trial:
Transamerica
,
    at p. 375;
Raush v.
    Pickering (City)
, 2013 ONCA 740, 369 D.LR. (4th)
    691, at para. 34.

[47]

Finally, r. 21.01(1)(b) imposes a very high
    burden of proof on the moving defendant. It is not sufficient for a moving
    defendant to demonstrate that it is more probable than not that the plaintiffs
    pleading does not disclose a reasonable cause of action. The defendant must
    meet the much higher standard of establishing that the claim as pleaded has no
    reasonable prospect of success.

[48]

At the same time, the notional availability of a
    r. 21.01(1)(b) motion to dispose of a cause of action involving contractual
    interpretation reminds a plaintiff that it must plead clearly the facts upon
    which it relies when making a breach of contract claim. A plaintiff is not
    entitled to rely on the possibility that new facts may turn up as the case
    progresses:
Imperial
    Tobacco
, at para. 22. As well, since r. 25.06(1)
    requires a plaintiff to plead the material facts on which the party relies for
    the claim, where a plaintiffs cause of action puts into play an issue of
    contractual interpretation, its statement of claim must plead the material
    facts of the factual matrix upon which the plaintiff relies.

Analysis

[49]

In permitting Catalyst to proceed with its claim
    for breach of the Oral Agreement, subject to pleading further particulars, the
    motion judge recognized that on a r. 21 pleadings motion the issue is not
    whether a claim could withstand a summary judgment motion or a trial. Instead,
    as he described it, the test is whether the claim is patently ridiculous
    incapable of proof: at para. 39. With respect, the motion judge did not apply
    the same approach when assessing under r. 21.01(1)(b) Catalysts claim that DKD
    breached s. 29 of the Funding Term Sheet.  His reasoning contained two errors
    that attract appellate intervention.

[50]

First, it is a fundamental principle of
    contractual interpretation that a contract must be interpreted as a whole.
    That, in turn, requires a consideration of related contracts entered into as
    part of a larger composite whole: Geoff R. Hall,
Canadian Contractual Interpretation Law, Third Edition
(Toronto: LexisNexis, 2016), at §2.2.6. As explained by this court in
3869130 Canada Inc. v.
    I.C.B. Distribution Inc
., 2008 ONCA 396, 239
    O.A.C. 137, at para. 33:

Where each agreement is entered into on the
    faith of the others being executed and where it is intended that each agreement
    form part of a larger composite whole, assistance in the interpretation of any
    particular agreement may be drawn from the related agreements.

[51]

In the present case, s. 29 of the Funding Term
    Sheet refers to a condition precedent contained in the Senior Financing Term
    Sheet.
[4]
Schedule 1 of the Funding Term Sheet defines Senior Financing Term Sheet as
    the Senior Financing Executive Summary Term Sheet and the Senior Financing
    Common Terms Term Sheet attached to the Lenders Commitment and Mandate
    Letter. None of those documents were included in the record placed before the
    motion judge on the r. 21.01(1)(b) motion.

[52]

That leaves the court in the unsatisfactory position
    of attempting to interpret the condition precedent clauses contained in s. 29
    of the Funding Term Sheet using only the summary description of the condition
    precedent found in the section, without the benefit of reviewing the Senior
    Financing Term Sheet that precisely describes the condition precedent. And without
    the ability to review the Senior Financing Term Sheet, how can the court
    determine whether that document is a related contract relevant to the holistic
    contractual interpretation analysis prescribed by the jurisprudence, including cases
    such as
3869130 Canada
?

[53]

In the present case, the restriction on evidence
    embedded in a r. 21.01(1)(b) motion creates a real risk that a court cannot interpret
    s. 29 of the Funding Term Sheet within the contract as a whole, which
    potentially includes aspects of the Senior Financing Term Sheet. With respect,
    the motion judge did not give sufficient weight to that risk. Accordingly, he erred
    in dismissing Catalysts claim for breach of s. 29 of the Funding Term Sheet on
    the limited r. 21.01(1)(b) record before him.

[54]

Second, in addressing the main point of
    contractual interpretation argued by Catalyst, the motion judge failed to
    consider an important part of the factual matrix, the Oral Agreement that preceded
    the execution of the Funding Term Sheet:
Resolute FP Canada Inc. v. Ontario (Attorney General)
, 2019 SCC 60, 96 B.L.R. (5th) 1, at paras. 29-30.

[55]

Catalyst contends that since s. 29 required DKD to
    negotiate in good faith with  the Lenders to satisfy the [Condition
    Precedent], and since the Lenders would not consent unless IO knew of and
    approved Catalysts participation, s. 29, properly interpreted, includes an
    obligation on DKD to negotiate in good faith to secure IOs consent to
    Catalysts participation in the Project. Unless it did so, the Lenders would
    not consent. That is the interpretation advanced by Catalyst.

[56]

The motion judge did not allow for the
    possibility of such an interpretation. Instead, he reasoned that once the IO
    and Crown had decided against Catalysts involvement that was the end of the
    matter for Catalyst. Even if the Lenders agreed to Catalyst being involved, it
    would not affect that: at para. 55.

[57]

Although the motion judge considered much of the
    pleaded factual matrix, on this point he failed to take into account the Oral
    Agreement. The motion judge was required to take as proven, for purposes of the
    r. 21.01(1)(b) motion, Catalysts pleading at para. 25(f) of the Amended Claim
    that, as part of the Oral Agreement, DKD agreed that it would act in good
    faith to protect, promote and advance Catalysts interests and participation in
    the DKD Bid on the Athletes Village Project.

[58]

When the s. 29 contractual obligation of DKD to
    negotiate in good faith is read in the context of the Oral Agreement, it is not
    plain and obvious that the interpretation of s. 29 proffered by Catalyst has no
    reasonable prospect of success. DKD failed to meet the very high burden
    required to strike out that claim. With respect, the motion judge erred in
    concluding otherwise, and I would allow this ground of appeal.

V.      SECOND GROUND OF APPEAL: THE CLAIM AGAINST DKD FOR
    BREACH OF FIDUCIARY DUTY

The issue
    stated

[59]

In its Amended Claim, Catalyst pleads that while
    it and DKD were sophisticated parties who were not in a fiduciary relationship
    in respect of many of the issues relating to the Project:

[T]he terms of the Oral Agreement, the Term
    Sheets and the representations made by DKD to Catalyst, collectively or
    individually, created a fiduciary relationship between Catalyst and DKD in
    relation to the negotiations that DKD conducted with the Lenders, and with IO
    and the Crown, on Catalysts behalf. Specifically, Catalysts participation in
    the DKD Bid and the Athletes Village Project was conditional on Catalyst
    ceding to DKD its rights and ability to negotiate on its own behalf. In
    exchange, DKD agreed to use its expertise and extensive contacts to benefit
    Catalyst, by negotiating on Catalysts behalf and by promoting and advancing
    Catalysts interests in all negotiations and discussions with the Lenders and
    with IO and the Crown.

[60]

In such circumstances, Catalyst pleads it was
    vulnerable and dependent on DKD to protect and advance its interests and, if
    necessary, to subordinate its own interests in the process. Catalyst alleges
    that

DKD breached its fiduciary obligations, resulting in Catalysts
    exclusion from the Project.

[61]

The motion judge struck Catalysts claim against
    DKD for breach of fiduciary duty without leave to amend. He held that it was plain
    and obvious that Catalyst could not succeed in its claims that a
per se
or
ad hoc
fiduciary relationship existed between Catalyst and DKD.

[62]

Catalyst had pleaded that it was in a joint
    venture relationship with DKD and that joint ventures are a
per se
category of a fiduciary relationship. The motion judge rejected that
    submission. Catalyst does not appeal that finding.

[63]

The motion judge also held that the facts as
    pleaded could not establish an
ad hoc
fiduciary relationship between DKD
    and Catalyst because: (i) Catalyst failed to plead that DKD undertook to give
    up its own interests to protect Catalyst; and (ii) it would be absurd in a
    relationship that existed in this case between two highly sophisticated
    organizations in which DKD was seeking the assistance of Catalyst in the DKD
    bid to think that DKD would have agreed to subordinate its interests to those
    of Catalyst: at para. 65.

[64]

Catalyst submits the motion judge misunderstood the
    narrow scope of its fiduciary duty claim  namely, that DKD stood in a
    fiduciary relationship with an obligation to take all reasonable steps to
    enable Catalyst to remain part of the Project and DKD could not resile from that
    obligation even if it was in DKDs financial interest to do so. Not only was
    the fiduciary relationship limited in scope, it was limited in duration, existing
    only from the time that DKD was selected as the preferred bidder for the
    Project until the commercial close of the RFP with the execution of a project agreement,
    initially scheduled for November 2011. According to Catalyst, during that time,
    DKD had a fiduciary duty to act in the utmost good faith and take all
    reasonable steps to enable Catalysts continued participation in the Project.

Analysis

[65]

To establish the existence of an
ad hoc
fiduciary relationship a claimant must demonstrate three elements:

(i)    an undertaking, express or implied, by the alleged fiduciary
    to act in the best interests of a beneficiary. The claimant must be able to
    point to a forsaking by the alleged fiduciary of the interests of all others in
    favour of those of the beneficiary in relation to the specific legal interest
    at stake;

(ii)    the identification of a defined person or class of persons
    who are vulnerable to the alleged fiduciary in the sense that the alleged
    fiduciary has a discretionary power over them; and

(iii)   the alleged fiduciarys power may affect the legal or
    substantial practical interests of the beneficiary.

Elder Advocates of Alberta
    Society v. Alberta
, 2011 SCC 24, [2011] 2 S.C.R.
    261, at paras. 30-34;
Professional Institute of the Public Service of
    Canada v. Canada (Attorney General)
, 2012 SCC 71, [2012] 3 S.C.R. 660, at
    paras. 124, 128 and 138.

[66]

The motion judge held that Catalyst failed to
    plead the required element of an undertaking. I disagree. A review of
    Catalysts Amended Claim reveals that it substantively pleaded all three
    elements.

[67]

While Catalyst did not use the word undertaking
    to describe DKDs relationship with it, the Amended Claim essentially pleads
    that DKD undertook to act in the best interests of Catalyst and forsake the
    interests of all others in favour of those of Catalyst. The Amended Claim pleads
    that the terms of the Oral Agreement, a potential form of undertaking, included
    the following:

·

para. 25(f): DKD agreed that it would act in
    good faith to protect, promote and advance Catalysts interests and
    participation in the DKD Bid on the Project, including in all of its
    communications and dealings with the IO and the Crown; and

·

para. 25(g): DKD agreed that it would apply the
    experience and expertise that it had represented it possessed in its dealings
    with IO and the Crown, to enable Catalyst to participate in the Project,
    including in the preparation and submission of the DKD Bid and, if DKD was
    selected as the preferred bidder, in any and all subsequent dealings and
    agreements relating to the Project.

[68]

The section of the Amended Claim dealing with
    the alleged breach of fiduciary duty by DKD builds on those pleaded terms to
    allege, in para. 113, that DKD agreed to use its expertise and extensive
    contacts to benefit Catalyst,
by negotiating on Catalysts behalf and by promoting
    and advancing Catalysts interests
in all
    negotiations and discussions with the Lenders and with IO and the Crown
    (emphasis added). In para. 114, Catalyst pleaded that it was in a unique
    position of vulnerability and dependency as it was dependent on DKD to
    communicate with IO and the Crown regarding the terms under which Catalyst
    would be permitted to participate in the [Project]. Catalyst went on to plead,
    in para. 116, that DKD was required to take all necessary steps to protect and
    advance Catalysts interests, and, if necessary,
to subordinate its own interests in the
    process
 (emphasis added). Combined, these
    portions of the Amended Claim adequately plead the undertaking element of the
    breach of fiduciary duty cause of action.

[69]

As well, Catalyst adequately pleads the elements
    of DKDs discretionary power (Amended Claim, paras. 25 and 113-114) and that
    its power might affect the legal or substantial practical interests of
    Catalyst, specifically its participation in the Project (Amended Claim, paras.
    113 and 118).

[70]

The motion judge also held that it would be
    absurd to think that a fiduciary relationship could arise between two
    sophisticated commercial parties like DKD and Catalyst. In making that comment,
    the motion judge strayed beyond the boundaries of examining the sufficiency of
    the pleading on a r. 21.01(1)(b) motion into the realm of assessing the claim
    on the merits in the absence of an evidentiary record.

[71]

The existence of an
ad hoc
fiduciary
    relationship is determined on a case-by-case basis, including in cases of
    commercial transactions:
PIPSC
, at para. 113;
Lac
    Minerals Ltd. v. International Corona Resources Ltd.
, [1989] 2 S.C.R. 574, at pp. 667-668. In the present case, Catalyst
    pleads that the fiduciary duty owed by DKD only covered one aspect of their
    relationship: the negotiations that DKD conducted with the Lenders, and with IO
    and the Crown, on Catalysts behalf: Amended Claim, para. 113. Catalyst claims
    that DKD needed its assistance to finance the Project but insisted on
    conducting all material negotiations with IO in the absence of Catalyst. In
    return, DKD agreed to act in good faith to protect, promote, and advance
    Catalysts interest and participation in its bid. Certainly not a typical
    commercial relationship between two sophisticated parties. But a determination
    as to whether the evidence bears out Catalysts claim properly awaits the
    hearing on the merits, not an evidence-free r. 21.01(1)(b) pleadings motion.

[72]

For these reasons, I would allow this ground of
    appeal.

VI.     THIRD GROUND OF APPEAL: THE CLAIMS AGAINST DKD FOR
    UNJUST ENRICHMENT AND
QUANTUM MERUIT

The issue
    stated

[73]

In its Amended Claim, Catalyst pleads against
    DKD claims for unjust enrichment and
quantum meruit
. The motion
    judge struck out the claims, without leave to amend, on the basis that they
    were statute-barred under the
Limitations Act, 2002
. He held that the
    Original Claim against DKD and IO had not pleaded substantially all of the
    material facts on which the claims of unjust enrichment and
quantum meruit
were based: at para. 35. That led him to conclude that the Amended Claim
    asserted new causes of action well beyond the two-year limitation period.

[74]

Catalyst submits that the motion judge erred,
    arguing that the Original Claim against DKD and IO pleaded the material facts
    needed to support those claims.

Analysis

[75]

I accept this submission. The governing
    principles were stated by this court in
Klassen v. Beausoleil
,
    2019 ONCA 407, 34 C.P.C. (8th) 180, at paras. 27-30:

An amendment [to a statement of claim] will be
    statute-barred if it seeks to assert a new cause of action after the expiry
    of the applicable limitation period:
North Elgin
, at paras. 19-23, 33;
Quality Meat Packers
, at para. 65. In this regard, the case law
    discloses a factually oriented approach to the concept of a cause of action
     namely, a factual situation the existence of which entitles one person to
    obtain from the court a remedy against another person:
North Elgin
,
    at para. 19;
Quality Meat Packers
, at para. 65.

An amendment does not assert a new cause of
    action  and therefore is not impermissibly statute-barred  if the original
    pleading ... contains all the facts necessary to support the amendments ...
    [such that] the amendments simply claim additional forms of relief, or clarify
    the relief sought, based on the same facts as originally pleaded:
Dee
    Ferraro
, at paras. 4, 13-14;
North Elgin Centre Inc.
, at paras.
    20-21;
East Side Mario's Barrie
, at paras. 31-32;
Quality Meat
    Packers
, at para. 65. Put somewhat differently, an amendment will be
    refused when it seeks to advance, after the expiry of a limitation period, a
    fundamentally different claim based on facts not originally pleaded:
North
    Elgin
, at para. 23.

The relevant principle is summarized in Paul
    M. Perell & John W. Morden,
The Law of Civil Procedure in Ontario
,
    3rd ed. (Toronto: LexisNexis, 2017), at p. 186:

A new cause of action is not asserted if
    the amendment pleads an alternative claim for relief out of the same facts
    previously pleaded and no new facts are relied upon, or amount simply to
    different legal conclusions drawn from the same set of facts, or simply provide
    particulars of an allegation already pled or additional facts upon [which] the
    original right of action is based.

In the course of this exercise, it is
    important to bear in mind the general principle that, on this type of pleadings
    motion, it is necessary to read the original Statement of Claim generously and
    with some allowance for drafting deficiencies:
Farmers Oil and Gas Inc. v.
    Ontario (Ministry of Natural Resources)
, 2016 ONSC 6359, 134 O.R. (3d) 390
    (Div. Ct.), at para. 23.

[76]

A claim of unjust enrichment contains three
    constituent elements: (i) an enrichment or benefit to the defendant; (ii) a
    corresponding deprivation of the plaintiff; and (iii) the absence of a juristic
    reason for the enrichment:
Kerr
    v. Baranow
, 2011 SCC 10, [2011] 1 S.C.R. 269, at
    para. 32. The question then is: Did the Original Claim against DKD and IO, read
    generously, plead all the material facts needed to support these three elements
    of the cause of action of unjust enrichment?

[77]

In my view, it did.

[78]

In its Original Claim against DKD and IO, Catalyst
    pleaded the material facts to support all three elements of unjust enrichment:

(i)
Enrichment/benefit of the defendant
: As a
    result of Catalysts involvement, DKD was able to develop a more competitive financial
    model for its bid and submit a lower cost bid, which IO ultimately selected as
    the winning bid: Original Claim against DKD and IO, paras. 16, 22 and 23;

(ii)
Corresponding deprivation
: Catalyst
    invested extensive time and resources in assisting DKD and was deprived of the profits,
    benefits and opportunities promised to it and that it reasonably expect to gain
    from its participation in DKDs bid and Project: Original Claim against DKD and
    IO, paras. 16 and 36; and

(iii)
Absence of a juristic reason for the benefit
:
    The retention of the benefit conferred by Catalyst lacked juristic reason as
    Catalyst was wrongfully excluded from the DKD Bid and the Athletes Village
    Project: Original Claim against DKD and IO, paras. 24-31 and 35.

[79]

Similarly, in its Original Claim against DKD and
    IO, Catalyst pleaded the material facts needed to support the two elements of a
quantum meruit
claim: (i) that the services were furnished at the request, or with
    the encouragement or acquiescence of, the opposing party; and (ii) that in the
    circumstances it would be unjust for the opposing party to retain the benefit
    conferred by the provision of the services:
Consulate Ventures Inc. v. Amico Contracting &
    Engineering

(1992) Inc.
, 2011 ONCA
    418, 278 O.A.C. 216, at para. 8.

[80]

Catalyst pleads that: (i) DKD approached it to
    participate in its bid and requested its services; and (ii) DKDs retention of
    the benefits arising from Catalysts participation in the bid and Catalysts
    exclusion from the Project was unjust in the circumstances of the case: Original
    Claim against DKD and IO, paras. 16, 24-31 and 35.

[81]

The required generous reading of the Original Claim
    against DKD and IO discloses that the claims for unjust enrichment and
quantum meruit
advanced in the Amended Claim are not new causes of action but, rather, claims
    for additional forms of relief based on the same facts as originally pleaded.
    The motion judge erred in striking these claims as statute-barred. I would
    allow this ground of appeal.

VII.    FOURTH GROUND OF APPEAL: THE CLAIM AGAINST IO AND THE
    CROWN FOR UNJUST ENRICHMENT AND
QUANTUM MERUIT

The issue
    stated

[82]

In its Amended Claim, Catalyst also advances
    claims of unjust enrichment and
quantum meruit
against IO and the Crown. The
    motion judge struck out those claims, without leave to amend, as statute-barred
    for the same reasons he struck out the similar claims against DKD. However, the
    motion judge went on to note that he would have struck out the claims in any
    event because it was plain and obvious that they could not succeed. The motion
    judge held that as Catalyst had not pleaded that it provided any services to IO
    and the Crown, IO and the Crown only received an indirect benefit from the
    services Catalyst did provide to DKD. Such an indirect benefit could not ground
    Catalysts unjust enrichment claim against IO or the Crown. Nor could the
quantum meruit
claim succeed because Catalyst failed to plead that its services were
    requested, encouraged, or acquiesced in by IO or the Crown.

[83]

Catalyst submits that the motion judge erred in reaching
    that conclusion. It contends that it pleaded the benefits received by IO and
    the Crown were tangible and substantial: namely, that Catalysts financial
    model significantly reduced the cost of DKDs bid which directly lowered the
    cost of constructing the Project. This benefitted IO and the Crown directly.
    Moreover, as pleaded, IO and Crown encouraged and induced Catalyst to provide
    the benefit through the Governmental Representations.

Analysis

[84]

I am not persuaded by Catalysts submissions. I
    see no error by the motion judge.

[85]

First, Catalysts Original Claim against DKD and
    IO and Original Claim against the Crown failed to plead that either IO or the Crown
    benefitted from the financial model Catalyst provided to DKD or that Catalysts
    actions provided any economic benefit to IO or the Crown. Consequently, in its
    Amended Claim, Catalyst is advancing new causes of action, not additional forms
    of relief on the same facts originally pleaded. The motion judge correctly held
    that the claims for unjust enrichment and
quantum meruit
against IO
    and the Crown were statute-barred.

[86]

As well, I agree with the motion judge that
    Catalysts claims for unjust enrichment and
quantum meruit
against IO
    and the Crown should be struck on the ground that it is plain and obvious they
    cannot succeed. In
Peel
    (Regional Municipality) v. Canada
, [1992] 3 S.C.R.
    762, 98 D.L.R. (4th) 140, the Supreme Court stated, at p. 797, that any enrichment
    or benefit to the defendant must be conferred directly and specifically on the
    defendant and that it is not sufficient that the enrichment or benefit to the
    defendant is indirect:

While not much discussed by common law
    authorities to date, it appears that a further feature which the
benefit must possess if it is to support a claim for unjust
    enrichment is that it be more than an incidental blow-by. A secondary
    collateral benefit will not suffice.
To permit recovery for incidental
    collateral benefits would be to admit of the possibility that a plaintiff could
    recover twice  once from the person who is the immediate beneficiary of the
    payment or benefit (the parents of the juveniles placed in group homes in this
    case), and again from the person who reaped an incidental benefit.  It would
    also open the doors to claims against an undefined class of persons who, while
    not the recipients of the payment or work conferred by the plaintiff,
    indirectly benefit from it. This the courts have declined to do.
The cases in which claims for unjust enrichment have been made
    out generally deal with benefits conferred directly and specifically on the
    defendant
, such as the services rendered for the defendant or money paid
    to the defendant. This limit is also recognized in other jurisdictions. For
    example, German restitutionary law confines recovery to cases of direct
    benefits [Internal citations omitted, emphasis added.]

[87]

Catalysts Amended Claim does not plead that it
    directly provided any services to IO or the Crown. On the contrary, Catalyst
    pleads that it provided services to DKD because DKD wanted to make its bid more
    competitive. There is no suggestion in the factual matrix pleaded by Catalyst
    that IO or the Crown had asked it to provide any services. In these circumstances,
    even if Catalysts financial model significantly reduced the cost of DKDs bid
    and lowered the cost of constructing the Project, any economic benefit received
    by IO and the Crown would constitute an indirect, secondary collateral benefit
    not recoverable through a claim of unjust enrichment.

[88]

In terms of the claim for
quantum meruit
,
    the motion judge correctly observed that Catalyst failed to plead that it
    furnished its services at the request, encouragement, or acquiescence of IO or the
    Crown.

[89]

For these reasons, I would dismiss this ground
    of appeal.

VIII.   FIFTH GROUND OF APPEAL: THE PUBLIC LAW DUTY CLAIM
    AGAINST IO AND THE CROWN

The issue
    stated

[90]

In its Amended Claim, Catalyst pleads what it
    describes as a public law claim, drawing upon the
obiter
comments of Stratas J.A. in
Paradis Honey Ltd. v. Canada (Minister of Agriculture and Agri-Food
)
, 2015 FCA 89, 382 D.L.R. (4th) 720, leave
    to appeal refused, [2015] S.C.C.A. No. 227 (S.C.C.).

[91]

One aspect of Catalysts public law claim replicates
    its discrete misrepresentation claims against IO and the Crown. But there are
    several distinctive elements to the public law duty to act claim that
    Catalyst pleads against IO and the Crown, specifically that IO and the Crown failed:
    (i) to provide DKD with timely and sufficient information to enable DKD and
    Catalyst to structure a financial model that met IO and the Crowns behind the
    curtain requirements; (ii) to act fairly towards Catalyst; (iii) to make
    rational decisions based on factually correct information; (iv) to afford
    Catalyst a fair and reasonable opportunity to answer and alleviate any
    questions, issues, or concerns about its participation in DKDs bid and the
    Project; (v) to act in a non-arbitrary,
bona fide
manner and in a
    manner that respected Catalysts reasonable expectations resulting from the
    Governmental Representations; and (vi) to avoid causing, contributing to, or
    assisting in any breach of contractual and other duties owed by DKD to
    Catalyst. Catalyst pleads that IO and the Crown breached those obligations,
    acted in bad faith, and their reasons for excluding Catalyst were unreasonable
    and indefensible.

[92]

The motion judge struck out Catalysts public
    law claim against IO and the Crown, without leave to amend, for being plain and
    obvious that it could not succeed. While respectfully considering the
obiter
analysis of Stratas J.A. in
Paradis Honey
, the motion judge concluded
    that the
Paradis Honey
framework did not apply to Catalysts case. The motion judge
    explained why at paras. 98-101 of his reasons:

Without in any way denigrating the
obiter
analyses
    of Stratas J.A., I do not think it is at all applicable to this case. What he
    was dealing with was a case involving government policy unique to governmental
    action and he opined that in the future there could be a case to be made to
    permit such a claim to be decided on public law grounds.

In the case against IO and the Crown, however,
    what is central is a claim that could and is quite regularly made against
    private actors, namely a claim for damages arising from an unsuccessful bid in
    a RFP request for bids on a construction project.

In this case, the IO was acting as any other
    owner in seeking to obtain bids to finance and construct the Athletes Village.
    There was nothing in this that was unique to governmental actors. This is no
    different from
Design Services
in which Public Works and Government
    Services Canada launched a "design-build" tendering process for the
    construction of a building. Justice Rothstein for the SCC dealt with the case
    involving rights between the Government and subcontractors by an analyses of
    the common law test of
Anns
. He began his decision by saying: The
    issue in this appeal is whether an owner in a tendering process owes a duty of
    care in tort to subcontractors. It is also no different from
Martel
in
    which a claim arising from a tender process undertaken by the federal
    Department of Public Works was analysed by the SCC on contractual and tortious
    principles applicable to any private person.

I see no basis to depart from cases such as
Design Services
and
Martel
,
which are binding authority, to
    permit a different analysis of claims against a public authority for liability
    under a tender process for a construction contract. To do otherwise would be to
    ignore that binding authority. It is plain and obvious that the public law
    claim pleaded against IO and the Crown cannot succeed and it is struck without
    leave to amend.

[93]

Catalyst submits that the motion judge erred by
    improperly analogizing its claims to those in
Design Services Ltd. v. R.
, 2008 SCC 22, [2008] 1 S.C.R. 737 and
Martel Building Ltd. v. R.
, 2000 SCC 60, [2000] 2 S.C.R. 860. Its public law claim differs
    from the typical claim by an unsuccessful bidder under a tender process for a
    construction contract and lacks the element of indeterminate scope of liability
    that concerned the Supreme Court in
Design Services
and
Martel
.
    Catalyst contends it occupied a special position, as a non-prequalified
    proponent financier, known to IO and the Crown on the facts pleaded, and that
    its expulsion from DKDs winning bid violated the public law principles
    identified by Stratas J.A. in
Paradis Honey
. Although Ontario courts have
    not affirmed the
obiter
reflections in
Paradis Honey
about the
    availability of monetary relief for an administrative law wrong, Catalyst
    contends that its claim based on the framework constructed by Stratas J.A. in
obiter
should
    have been allowed to proceed as a novel cause of action.

Analysis

[94]

I am not persuaded by these submissions. For
    several reasons, I substantially agree with the motion judges analysis.

[95]

First, the context in which Stratas J.A. made
    his
obiter
comments in
Paradis
    Honey
differs materially from the circumstances from
    which Catalysts claim has emerged. At issue in
Paradis Honey
was the
    exercise by a Minister of the Crown of a regulatory discretion to issue permits
    for the importation of bees into Canada. At the material time, the Minister was
    only prepared to issue permits for the importation of a queen and a few
    attendant bees, not for small colonies, or a package, of bees. A class action
    was brought by a group of commercial beekeepers alleging that the government
    defendants had acted negligently and in bad faith by imposing such import
    restrictions.

[96]

The Federal Court struck out the statement of
    claim. A majority of the Federal Court of Appeal (Nadon and Stratas JJ.A.)
    reversed and allowed the claim to proceed. The
ratio
of their decision
    was that the facts as pleaded supported claims in negligence and bad faith: at
    para. 77.

[97]

However, all members of the court expressed the
    view that had the beekeepers attacked the governments conduct by way of
    judicial review and proven their allegations, they would have been entitled to
    an award of administrative law remedies: at paras. 85 and 147. That prompted
    Stratas J.A., writing for the majority, to ask, in
obiter
, whether the
    available administrative remedies could include a monetary award. He expressed
    the view that it was not plain and obvious that a court would decline to
    exercise its remedial discretion against giving the beekeepers monetary relief
    as an administrative law remedy: at paras. 147-148.

[98]

By contrast, the facts pleaded in the present
    case do not concern the exercise by Ontario government actors of discretionary
    powers within a regulatory regime. Catalysts Amended Claim is devoid of any allegation
    of the breach of a statutory duty or discretionary power.

[99]

Instead, the factual context of Catalysts claim
    concerns the process to select the Projects developer. That process was set
    out in the RFP, which IO issued as agent for the Crown: RFP, s. 1.1(1). The RFP
    operated as a Contract A in the tendering process framework adopted by the
    Supreme Court in a series of cases starting with
R. v. Ron Engineering & Construction (Eastern) Ltd
., [1981] 1 S.C.R. 111.

[100]

The RFP set out the rights and obligations of the government
    sponsors and the various proponents and their team members. Section 3.6 of the
    RFP specifically addressed the process to change members of a proponents team.
    Section 3.6(7) reserved to the government sponsors the right, in their sole
    discretion, to refuse to accept a change in an Identified Proponent Party that
    occurs or is requested by the Proponent after the Submission Deadline
    (Technical). In essence, all of Catalysts claims come down to DKD not negotiating
    hard enough or in good faith to secure IOs consent to add Catalyst as a
    proponent team member and IOs refusal to so recognize Catalyst pursuant to s.
    3.6(7) of the RFP.

[101]

Second, to date the Supreme Court has not been prepared to recognize
    a tort duty of care by an owner to a proponent in the context of a tendering
    process, in part because the rights and obligations in the Contract A would
    inform any duty in any event:
Martel
, at para. 106. In
Design Services
, the court was not prepared to recognize a duty of care between an
    owner and the subcontractor of a proponent who had failed in its bid: at paras.
    57-58 and 65-67. Recognizing Catalysts public law claim as a reasonable cause
    of action would run counter to both those decisions.

[102]

Third,
Martel
and
Design
    Services
involved tender processes run by
    government sponsors. In both cases, the Supreme Court applied the standard
Anns/Cooper
[5]
analysis to the question of whether a duty of care existed. No
    special public law duty analysis was conducted. Significantly, for our
    purposes, in
Design
    Services
, the Supreme Court stated, at para. 32:

The appellants economic losses do not fall
    within the first four categories. This case obviously does not involve a
    negligent misrepresentation, a negligent performance of services or a negligent
    supply of shoddy goods or structures.
Neither is this a
    case of independent liability of statutory public authorities, which deals with
    the governments unique public power to convey certain discretionary benefits,
    such as the power to enforce by-laws, or to inspect homes or roadways
    (Feldthusen, at p. 358). Here, the government is not inspecting, granting,
    issuing or enforcing something mandated by law. Instead, the present situation
    is akin to commercial dealings between private parties, not the exercise of
    unique government power
. [Emphasis added]

[103]

This extract from
Design Services
supports the motion judges
    conclusion, at para. 100, that: In this case, the IO was acting as any other
    owner in seeking to obtain bids to finance and construct the Athletes Village.
    There was nothing in this that was unique to governmental actors.

[104]

Fourth, this court has not previously recognized a
Paradis Honey
-type
    claim.
[6]
In
Hughes v. Liquor Control Board of Ontario
, 2019 ONCA 305, 145 O.R. (3d) 401, this court considered the lower
    courts decision to dismiss a class action against the Liquor Control Board of
    Ontario and several retailers alleging violations of the
Competition Act
, R.S.C. 1985, c. C-34. As one ground of appeal, the appellants
    contended that they had established their claim for damages under the
    misconduct by a civil authority claim discussed by Stratas J.A. in
Paradis Honey
.
    This court disposed of the ground of appeal on the basis that even if such a
    claim were adopted in Ontario, relief would not be available to the appellants
    on the facts of the case: at para. 47.

[105]

Finally, in
Merrifield
    v. Canada (Attorney General
), 2019 ONCA 205, 145
    O.R. (3d) 494, leave to appeal refused, 2019 CarswellOnt 14956 (S.C.C.), this
    court discussed at length the conditions supporting and the process required
    for the recognition of a new tort: at paras. 19-26.
Merrifield
stressed
    the importance of the incremental development of the common law and the
    grounding of any new tort in the emerging acceptance in the case law of a new
    type of claim: at para. 20-24. Here, the conditions, at least as argued, do not
    support the recognition of a new tort of misconduct by a civil authority.
    Catalyst relies on a single case,
Paradis Honey
, where comments were made in
obite
r, in a
    context where the government actors were not participating in a commercial
    transaction, as they are here. Moreover, in the present case, the jurisprudence
    very strongly points away from the recognition of such a claim in the tendering
    process where a government actor is the sponsor of the process.

[106]

For these reasons, I conclude that the motion judge did not err in
    striking out Catalysts public law claim, without leave to amend, on the ground
    that that it is plain and obvious that Catalysts public law claim would not
    succeed.

[107]

Given that conclusion, it is not necessary to address the
    submissions of the respondents that the enactment of s. 11 of the
Crown Liability and Proceedings Act, 2019
, S.O. 2019, c. 7, Sched. 17, extinguished in Ontario the kind of
    public law claim described by Stratas J.A. in
Paradis Honey
.

IX.     SIXTH GROUND OF APPEAL: THE CLAIM AGAINST THE CROWN
    FOR MISREPRESENTATION

The issue
    stated

[108]

Catalyst pleads that at the time the Governmental Representations
    were made by IO in about mid-June 2011, IO and the Crown: (i) knew or ought to
    have known that they were untrue; and (ii) knew and intended that the Governmental
    Representations would be specifically and uniquely communicated to, accepted by,
    acted on, and relied on by Catalyst to its detriment.

[109]

The motion judge did not strike out Catalysts misrepresentation
    claim against IO. However, he struck out the claim against the Crown, without
    leave to amend, on the basis that it was precluded by s. 2(2)(b) of
PACA
, which
    states:

Nothing in this Act  (b) subjects the Crown to a
    proceeding under this Act in respect of a cause of action that is enforceable
    against a corporation or other agency of the Crown

[110]

In striking out the claim against the Crown, the motion judge stated
    at paras. 27-28:

To the extent that the pleading of
    Governmental Representations is a pleading of the existing state of mind of IO
    and the Crown, it is actionable if the statements were untrue. Catalyst however
    pleads in several places that the Governmental Representations were promises of
    what IO or the Crown would do in the future (paragraphs 127(a), 136, 137, 139
    and 142) and damages are sought against IO and the Crown on that basis. There
    is no pleading of any contract between Catalyst and IO or the Crown, nor could
    there be as the basis for the claim of Catalyst is that it did not need to be a
    part of the RFP process as it could operate behind the curtain.

Thus the only claim so far as the Governmental
    Representations is concerned is the claim that they were untrue when made. That
    claim as pleaded does not permit a finding that the Crown but not IO could be
    liable for the untrue representation made by IO. The plea is that the untrue
    representations were made by IO. Thus section 2(2)(b) of the
PACA
precludes an action against the Crown for misrepresentation. The
    claim against the Crown for misrepresentation is therefore struck without leave
    to amend.

[111]

Catalyst submits that the motion judge erred in striking out the
    misrepresentation claim against the Crown because it is conceivable that at
    trial it could be found that liability for the Governmental Representations
    could attach to the Crown, but not to IO, thereby bringing the case outside the
    scope of s. 2(2)(b) of
PACA
.

Analysis

[112]

I am not persuaded by Catalysts submission. It is undercut by its
    own pleading of material facts.

[113]

In
Imperial
    Tobacco
, the Supreme Court stated, at paras.
    22-23:

It is incumbent on the claimant to clearly plead the facts upon
    which it relies in making its claim.
A
    claimant is not entitled to rely on the possibility that new facts may turn up
    as the case progresses. The claimant may not be in a position to prove the
    facts pleaded at the time of the motion. It may only hope to be able to prove
    them. But plead them it must.
The facts pleaded are the firm
    basis upon which the possibility of success of the claim must be evaluated. If
    they are not pleaded, the exercise cannot be properly conducted.

Before us, Imperial and the other tobacco
    companies argued that the motion to strike should take into account, not only
    the facts pleaded, but the possibility that as the case progressed, the
    evidence would reveal more about Canada's conduct and role in promoting the use
    of low-tar cigarettes.
This
    fundamentally misunderstands what a motion to strike is about. It is not about
    evidence, but the pleadings.
The facts pleaded
    are taken as true. Whether the evidence substantiates the pleaded facts, now or
    at some future date, is irrelevant to the motion to strike. The judge on the
    motion to strike cannot consider what evidence adduced in the future might or
    might not show. To require the judge to do so would be to gut the motion to
    strike of its logic and ultimately render it useless. [Emphasis added]

[114]

Applying those principles to the present case, in its Amended Claim Catalyst
    clearly identifies the makers of the Governmental Representations as employees
    of IO: Amended Claim, para. 31. The IO employees named in the Amended Claim
    made the representations to DKD which, in turn, communicated them to Catalyst.
    It follows that if, at trial, Catalyst establishes that the IO employees made
    the Governmental Representations, as alleged, and those representations were
    not true, liability would attach to IO.

[115]

Since IO is an agent of the Crown
Ontario Infrastructure and Lands Corporation Act, 2011
, s. 3(1)  liability in respect of the misrepresentation cause of
    action would be enforceable against a corporation or other agency of the
    Crown, thereby bringing the claim pleaded against the Crown squarely within
    the immunity afforded by
PACA
s. 2(2)(b):
Toronto
    (City) v. Longbranch Child Care
, 2011 ONSC 548, at
    para. 44.
[7]

[116]

Consequently, I would dismiss this ground of appeal.

X.      DISPOSITION

[117]

For the reasons set out above, I would allow Catalysts appeal in
    part and set aside paras. 1(a), (b) and (c) of the Order in which the motion
    judge struck out Catalysts claims against DKD for breach of s. 29 of the
    Funding Term Sheet, breach of fiduciary duty, and unjust enrichment/
quantum meruit
.
    I would dismiss the appeal in all other respects.

[118]

This proceeding was started in late 2013. Although it is on the
    Toronto Region Commercial List, the action has not progressed beyond successive
    attacks on the statement of claim. Active single-judge case management would be
    appropriate to move it along to a final adjudication on the merits. Once the
    Commercial List resumes normal operations following the current COVID emergency,
    the parties should appear before a judge of the Commercial List to secure the
    case management of this aging proceeding.

[119]

The Crown successfully resisted Catalysts appeal and is entitled to
    its costs of the appeal fixed in the amount of $10,000, inclusive of
    disbursements and applicable taxes.

[120]

There was mixed success as between Catalyst and DKD on the appeal. I
    would fix the costs of the appeal as between them at $15,000, inclusive of
    disbursements and applicable taxes, but make the costs payable in the cause of
    the action. I would not interfere with the order of the motion judge that there
    should be no order as to the costs of the motion below.

Released:
    DD  APR 29 2020

David Brown J.A.

I agree. Doherty J.A.

I agree. Thorburn
    J.A.

[1]
The
    Ontario Infrastructure and Lands Corporation is the amalgamated corporation
    continued under the
Ontario Infrastructure and Lands Corporation Act, 2011
,
    S.O. 2011, c. 9, Sch. 32, s. 2(1). It carries on business under the name Infrastructure
    Ontario.

[2]
The
    Funding Term Sheet defines the Subordinated Noteholder as Catalyst. Lenders
    were the consortium of financial institutions that were to provide DKD with
    financing for its bid and who were party to a Credit Agreement.

[3]

In
ArcelorMittal Dofasco
, the motion judge did take into consideration the
    surrounding circumstances and business context in interpreting the agreement,
    relying on the undisputed material facts plead in the statement of claim: at
    para. 34.

[4]
Section 29 of the Funding
    Term Sheet states, in part: The parties acknowledge that the Senior Financing
    Term Sheet contains a condition precedent in favour of the Lenders

[5]

Anns v. Merton London Borough Council
, [1977] UKHL 4,
    [1978] AC 728;
Cooper v. Hobart
, 2001 SCC 79, [2001] 3 S.C.R. 537.

[6]
This court considered
Paradis Honey
in
Grand River
    Enterprises Six Nations Ltd. v. Attorney General (Canada
), 2017 ONCA 526,
    at paras. 114-115, but not in respect of the discussion of a novel claim for
    misconduct by a civil authority. This court focused on the analysis in
Paradis
    Honey
using the standard
Anns/Cooper
framework.

[7]
I do
    not find persuasive the view expressed by Cullity J. in
Dumoulin v. Ontario
(2004),
    71 O.R. (3d) 556 (Sup. Ct.), at para. 28, that before a court can apply
PACA
s. 2(2)(b), there must be a finding of liability against the Crown. On that
    basis, Cullity J. took the view that a r. 21.01(1)(b) motion was not the
    appropriate place in which to make a determination on the application of
PACA
s. 2(2)(b). In my view, such a restrictive interpretation of
PACA
s.
    2(2)(b) would unnecessarily foster a multiplicity of litigation and would
    deprive the Crown of the sections stated purpose of protecting it from a
    proceeding if the sections conditions are met.