Executive Summary: Key Legal and Evidentiary Issues

• The key dispute concerned contractual interpretation of consulting agreements and whether Above Food owed fees after terminating services.

• Default judgment was granted against Above Food when it failed to respond, and the main issue was whether that judgment should be set aside.

• The court found that the orders were made on notice and with evidence, not as default judgments under Rule 9-13.

• Above Food failed to demonstrate a credible explanation for its inaction or a potentially meritorious defence.

• The agreements were not clearly limited to fee-for-service; pro rata payments were still owed even after termination.

• The application to set aside the judgments was dismissed, and the consultant's enforcement efforts could proceed.

Background and procedural history

Above Food Ingredients Inc., a Saskatchewan-based agri-food company, entered into two consulting agreements in early 2023—one with Cap Minds Advisory Group LLC and another with Anmoho LLC. Both agreements related to Cap Minds’ efforts to facilitate a potential acquisition by Above Food. Under the terms, each consulting group was to receive fees totaling USD $100,000, to be paid in instalments over four months, regardless of deal completion.

Above Food made the first payment under each agreement but failed to pay the remaining instalments. The consulting groups claimed that, even though the acquisition fell through, the agreements entitled them to full or pro rata compensation. They initiated proceedings in Saskatchewan and served Above Food, which acknowledged receipt but did not respond or participate in the applications.

In January 2024, the Court granted monetary judgments in favour of Anmoho and Cap Minds after unopposed applications. Above Food later brought an application to set aside these judgments under Rule 9-13 of The King’s Bench Rules, arguing they were default judgments and that it had a valid defence.

Court’s analysis on procedural fairness and default judgment

Justice Clackson first addressed whether the January 2024 judgments were true “default judgments.” He concluded they were not. Although Above Food did not appear, the applications were served, supporting affidavits were filed, and the matters proceeded on notice. Therefore, the judgments were not made in default of appearance or defence, but rather were determined on the merits in the company’s absence.

Rule 9-13 allows a court to set aside a judgment obtained in default of appearance or defence, provided the moving party can offer a reasonable explanation for the default and a plausible defence. However, since the rule was not applicable, Above Food had to meet a more demanding test: it had to demonstrate a miscarriage of justice or satisfy the criteria under Rule 13-6 for reconsideration of an existing order. The court found that Above Food failed to meet either threshold.

Analysis of contract interpretation and merits

Even if the merits were relevant, the court addressed Above Food’s asserted defence. The company claimed it had no payment obligation once the acquisition deal failed and services were discontinued. Justice Clackson rejected this argument, holding that the contracts did not condition payment on deal completion. Instead, they required pro rata payment for services rendered before termination. The agreements also allowed for invoicing and payment upon termination, which Cap Minds and Anmoho had done.

Above Food’s attempt to characterize the contracts as fee-for-success was inconsistent with the clear contract wording. The court also noted that Above Food’s strategic silence and lack of engagement during litigation suggested deliberate inaction rather than mistake or confusion.

Conclusion and outcome

The application to set aside the judgments was dismissed. Justice Clackson ruled that the orders were properly obtained on notice, were not default judgments, and that Above Food had not shown any error in law or fact warranting reversal. As a result, the consulting firms were entitled to enforce the judgments against Above Food.

This decision underscores the importance of timely participation in litigation, particularly when a party has been properly served and fails to act. It also highlights the enforceability of consulting agreements even where the underlying transaction does not close.