Executive Summary: Key Legal and Evidentiary Issues

• Interpretation of the consulting services agreement and addendum regarding deferred fees and payment terms

• Determination of whether payment of deferred fees was contingent on Chroma Global Technologies Ltd. going public

• Assessment of the meaning of “deferred” in the context of the parties’ contractual relationship

• Application of the parol evidence rule and contra proferentem in resolving contractual ambiguity

• Evaluation of whether the plaintiff’s resignation triggered the obligation to pay deferred fees

• Consideration of the appropriateness of summary trial and the process for awarding costs

Facts of the case

Abhimanyu Bagai, a chemist with experience in the cannabis industry, worked for Chroma Global Technologies Ltd., a company focused on optimizing cannabinoid extraction from cannabis plants, from January 1, 2021, to May 31, 2023. He was initially hired as a project coordinator and later held the title of Director of Science. His engagement was governed by a consulting services agreement dated January 1, 2021, which provided for a monthly fee of $5,000 plus GST and allowed for termination by either party, with the company required to pay any earned and accrued but unpaid fees up to the date of termination.

In early 2022, Chroma experienced cash flow problems. Mr. David, Chroma’s CEO, informed Mr. Bagai that the company would need to defer payment of a portion of his monthly fees, with the possibility that, if Chroma went public, the deferred portion could be paid in voting shares instead of cash. The parties signed an addendum dated for reference February 1, 2022, which amended the agreement to provide that 50% ($2,500 monthly) would be paid in cash and 50% ($2,500 monthly) would be deferred, to be paid in future cash or voting shares if the company went public, at the company’s option. The addendum also changed the title of Mr. Bagai’s position to Director of Science and confirmed a car allowance.

This arrangement continued until May 2023. On May 15, 2023, Mr. Bagai emailed his resignation, effective May 31, 2023, and requested payment of his deferred fees and a time-frame for payment. Chroma, through Mr. Kwun, acknowledged the addendum and stated that the deferred fees could not be paid at the end of May but would continue to be carried on the company’s records. On May 23, Mr. Bagai asked for further clarity, and on May 24, Chroma reiterated that the deferred fees would be paid either by shares or cash at the company’s option, but no time frame could be provided due to ongoing restructuring and refinancing. As of the commencement of proceedings on July 27, 2023, and at the time of judgment on October 27, 2025, Chroma had not paid the deferred fees, nor had it gone public.

Discussion of policy terms and contractual clauses

The dispute centered on the interpretation of the consulting services agreement and the addendum. The agreement provided for a $5,000 monthly fee and allowed the consultant to terminate the agreement, with the company’s obligation to pay fees earned and accrued but not paid up to the date of termination. The addendum deferred 50% of the monthly fee, to be paid in future cash or voting shares if the company went public, at the company’s option. The defendant argued that payment of the deferred fees was contingent on the company going public and that the plaintiff was seeking to unilaterally amend the addendum by demanding immediate payment. The plaintiff argued that the deferral was temporary and that payment was ultimately required regardless of whether the company went public.

The court reviewed the language of the agreements, the parties’ communications, and the surrounding circumstances. It found that the addendum did not create a new, contingent remuneration system but rather deferred payment to assist with the company’s immediate cash flow problems. The term “deferred” was interpreted as requiring payment within a reasonable time and not at the company’s discretion or only upon a public offering. The court noted that the addendum was not a comprehensive new agreement but an addendum to the existing consulting services agreement, and the obligation to pay fees earned and accrued but not paid remained in force. The court also considered the parol evidence rule and the principle of contra proferentem, concluding that any ambiguity would be resolved against the defendant, who drafted the agreements.

Outcome and ruling

The court granted summary judgment for the plaintiff, Abhimanyu Bagai, finding that the deferred fees became due upon his resignation and were not contingent on the company going public. The court ordered Chroma Global Technologies Ltd. to pay Mr. Bagai $38,500 plus GST for deferred fees and just over $1,000 for unreimbursed expenses. The total amount ordered in favor of the successful party is approximately $39,500 plus GST. The issue of costs was reserved for further written submissions, and the amount of costs, if any, was not determined at the time of judgment.