Executive Summary: Key Legal and Evidentiary Issues

• Behold Control Equipment Inc. sued RACE Mechanical Systems Inc. and 2700009 Ontario Inc. (c.o.b. Aquire Facilities Management Services) for misappropriation of confidential information, breach of contract, breach of duty of good faith, breach of confidence, and intentional interference with economic relations.
   
• Prior to trial, Behold sought a sealing order over 26 documents containing alleged technical specifications and pricing information, which the court declined to grant because the record could not support a fact-based finding under the Sherman Estate test.
   
• Trevor Strauss, Behold's founder and chief executive officer, was named in a counterclaim that the defendants later abandoned against him at trial.
   
• Following a 24-day trial, the court awarded Behold damages of $2,608,798.00 plus interest and dismissed the defendants' counterclaim.
   
• Costs were contested at length, and the court rejected a distributive, issue-by-issue costs analysis in favour of assessing the parties' overall success.
   
• Quantification of pre-judgment interest turned on which statutory rate and calculation period applied to Behold's past pecuniary losses.
   

Facts of the case

Trevor Strauss began developing a facilities management system, referred to as the "Behold System," in 2012 to allow remote monitoring and control of heating, ventilation, air conditioning, and refrigeration equipment through an interface called the "Dashboard." Behold entered into commercial dealings with RACE Mechanical Systems Inc. and 2700009 Ontario Inc., carrying on business as Aquire Facilities Management Services, governed by a Hardware Agreement, a Software as a Service Agreement, an End User License Agreement, and a Consolidated Agreement merging the first two. Behold alleged that RACE and Aquire misappropriated and misused its confidential technical and pricing information and brought an action for breach of contract, breach of duty of good faith, breach of confidence, and intentional interference with economic relations. RACE and Aquire denied liability and counterclaimed against Behold and Strauss, later abandoning the counterclaim against Strauss at trial. Ahead of a trial scheduled to begin November 14, 2024, Behold brought a motion to seal 26 documents it expected to tender into evidence — 22 alleged to contain technical specifications and four alleged to contain pricing and profitability analysis — arguing that public disclosure would undermine its competitive position. Non-party Starbucks Corporation, whose documents were already subject to a prior production and protection order, did not oppose the motion, and the defendants took no position on it. The trial proceeded for 24 days, well beyond the 14 days originally scheduled, and required determination of 21 issues. In Reasons for Decision released December 19, 2025 (2025 ONSC 7129), the court found in Behold's favour and dismissed the counterclaim. The parties were unable to agree on costs or on the quantification of pre-judgment interest and delivered written submissions on both issues, which the court resolved in an endorsement dated July 24, 2026.

Policy and legislative provisions at issue

The sealing motion turned on section 137(2) of the Courts of Justice Act, which permits a court to order that a document filed in a civil proceeding be treated as confidential and sealed, and on the test for such orders set out by the Supreme Court of Canada in Sherman Estate v. Donovan. That test requires the moving party to establish that court openness poses a serious risk to an important public interest, that the order sought is necessary because reasonable alternative measures will not prevent the risk, and that the benefits of the order outweigh its negative effects, as measured against the "strong presumption in favour of open courts." The motion also engaged the notice requirements of Part VI.G, sections 151–152 of the Consolidated Provincial Practice Direction. On costs, the court applied section 131(1) of the Courts of Justice Act and the factors enumerated in Rule 57.01 of the Rules of Civil Procedure, including the reasonable expectations of the unsuccessful party, the principle of indemnity, the amount claimed versus the amount recovered, the complexity and importance of the issues, and any conduct that lengthened the proceeding unnecessarily. The quantification of pre-judgment interest was governed by sections 127 through 130 of the Courts of Justice Act, particularly section 128(3), which directs that interest on past pecuniary loss be calculated on the total loss at the end of each six-month period and at the date of the order, subject to the court's discretion under section 130 to adjust the rate or period.

Reasoning and analysis

On the sealing motion, the court found that Behold's evidence — chiefly a single affidavit describing the documents in only two broad categories — was conclusory and decontextualized, lacking detail on when and how the documents were created, whether they had been provided to the defendants, or whether any of the underlying information was already in the public domain. The court also noted that the documents were already protected from disclosure through discovery under existing 2020 and 2021 protective orders, reducing the need for a further pre-trial sealing order, and distinguished the authorities Behold relied on because those cases involved interlocutory injunctive relief requiring preservation of the subject matter of the litigation itself, a concern not present here. The court concluded that the confidentiality of the documents was better assessed on a full trial record. On costs, the court declined the defendants' proposed issue-by-issue analysis, following Court of Appeal authority holding that costs should reflect overall success rather than a tally of individual issues, and found that Behold was the successful party notwithstanding that it recovered less than it had claimed. Weighing the Rule 57.01 factors — including the defendants' reasonable cost expectations, the proportionality between costs claimed and damages recovered, the case's complexity, and both parties' contribution to trial inefficiencies — the court found that the defendants' breaches of their documentary production obligations, while contributing to those inefficiencies, did not amount to the "reprehensible, scandalous or outrageous" conduct required for costs on a substantial indemnity basis. On pre-judgment interest, the court rejected the defendants' submission that the statutory interest rate should be drawn from the quarter in which the pecuniary loss was first incurred, holding instead that section 127 fixes the rate by reference to the quarter preceding commencement of the action. Applying that rate to Behold's past pecuniary losses divided into six-month periods, the court calculated the interest owing on each period separately.

Ruling and overall outcome

The court declined to grant Behold's confidentiality motion, dismissing it without prejudice to Behold renewing the request at trial. On the substantive claim, judgment had already been granted to Behold, the successful party, in the amount of $2,608,798.00, and the defendants' counterclaim was dismissed. In the endorsement resolving the outstanding issues, the court fixed Behold's costs of the action and counterclaim on a partial indemnity basis at $1,900,000.00, all inclusive of fees, disbursements, and applicable taxes, payable jointly and severally by RACE and Aquire, and quantified pre-judgment interest owing to Behold at $161,866.13. The judgment did not state a single combined total inclusive of damages, costs, and interest.