Executive Summary: Key Legal and Evidentiary Issues

• The defendants moved to strike the plaintiff's claims for negligent misrepresentation and oppression on the ground that they disclosed no reasonable cause of action.
• Central to the negligent misrepresentation claim was whether a duty of care had been sufficiently pleaded and whether the alleged representations related solely to future conduct.
• Proximity and duty of care could not be conclusively assessed at the pleadings stage given the factual complexity of the case and the absence of a fulsome record.
• An oppression claim under s. 241 of the Canada Business Corporations Act turned on whether the defendants used exclusive control over internal corporate operations to frustrate the plaintiff's earnout targets.
• Whether the existence of a contract bars an oppression remedy was a key legal issue, with the court finding the claim sufficiently pleaded despite being a close call.
• Costs were disputed, including the appropriate scale and whether the plaintiff's offer justified a substantial indemnity award from the offer date.

Facts of the case

The dispute arises from a share purchase transaction completed on August 23, 2021, in which the defendants, Crawford & Company, acquired the shares of edjuster Inc., a provider of technology-enabled contents claim handling services. The plaintiff, David Levy, acted as representative of the former shareholders of edjuster Inc. The purchase price included an upfront cash component plus possible earnout payments contingent on post-acquisition performance in each of 2022 and 2023. The 2022 performance target was not met, prompting negotiations that culminated in an amending share purchase agreement dated August 15, 2023. That amendment included a release for claims relating to the 2022 earnouts, a redefined performance target, and additional contractual obligations. The revised 2024 performance target was likewise not achieved, and no further amounts became payable to the former shareholders. The plaintiff commenced this action on July 14, 2025, alleging various breaches of contract, negligent misrepresentation, and oppression. On December 16, 2025, without seeking leave of the court, the plaintiff amended the statement of claim to add a claim for fraudulent misrepresentation, with negligent misrepresentation pleaded in the alternative.

Contractual and statutory provisions at issue

Several contractual and statutory provisions were central to the motion. The amending share purchase agreement contained a release clause and an entire agreement clause, both of which the defendants relied upon in support of their motion to strike; the court noted that both required a fuller factual record to be properly assessed and could not be resolved at the pleadings stage. The oppression claim was brought under s. 241 of the Canada Business Corporations Act. The defendants argued that the oppression remedy was unavailable where the alleged wrongdoing was essentially a breach of contract, while the plaintiff maintained that the defendants' exclusive control over the corporation's internal operations went beyond what the contract could address.

Reasoning and analysis

Justice Roger applied the "plain and obvious" test applicable on motions to strike, under which a claim must be read generously to account for drafting deficiencies and should only be struck if it plainly discloses no reasonable cause of action. On the negligent misrepresentation claim, the court found that while no previously established analogous duty of care category had been identified, this was not a case where it was plain and obvious that proximity and a duty of care could not be established. Relying on 1688782 Ontario v. Maple Leaf Foods Inc., 2020 SCC 35, the court held that a full proximity analysis — encompassing the defendants' undertaking, the plaintiff's reliance, foreseeability, and fairness — required a more complete factual record than was available on a procedural motion. The court further found that the claim was not purely about future representations: drawing on Queen v. Cognos, Inc., [1993] 1 SCR 87, Kelly v. Lundgard, 2001 ABCA 185, and Argyle v. Dickinson, 2025 ONSC 7003, it held that statements of future intent may contain implicit representations of current objective fact, and the plaintiff had pleaded that the defendants lacked a genuine or settled intention at the time the representations were made. On the oppression claim, the court acknowledged the close-call nature of the issue but found that the plaintiff had sufficiently pleaded reasonable expectations and their breach through corporate conduct, consistent with the framework set out in F.N.F. Enterprises, 2023 ONCA 92. The court also confirmed that the plaintiff's amendment to the statement of claim was not a nullity and, to the extent leave was required, it was granted in the absence of any evidence of prejudice.

Ruling and overall outcome

The defendants' motion to strike was dismissed in its entirety. On costs, the court found that the plaintiff was entirely successful and was therefore entitled to costs. While the court declined to award substantial indemnity costs from the date of the plaintiff's offer — finding the offer was not a sufficient compromise to justify that scale — it ordered costs on a partial indemnity basis. Considering the complexity and importance of the motion to the plaintiff, and noting that the defendants' own actual costs exceeded $53,338, the court ordered costs of the motion in the all-inclusive amount of $40,000, payable by the defendants to the plaintiff within 30 days. The plaintiff, David Levy, was the successful party.