The Court of Appeal for Ontario has upheld the appeal of broker who is being sued by his former firm over a transition loan that he refused to repay after the firm shuttered his branch.

Canaccord Genuity Corp. is suing Mark Colosimo and three other brokers who were terminated in 2012 when the firm decided to close its office in Thunder Bay, Ont., demanding the repayment of transition loans they received from the firm in 2011.

According to the appeal court decision, the brokers argue that they don’t have to repay the loans because Canaccord Genuity made a misrepresentation to them when it didn’t tell them that it was closing the office before they signed their loan agreements in 2011. The brokers are also countersuing the firm for damages.

However, a lower court granted a motion from Canaccord Genuity seeking summary judgment against Colosimo and one of the other brokers, Gregory Pilot, who had guaranteed the loan to Colosimo. The motion judge awarded the firm a judgment against Colosimo and Pilot for $187,900. (The summary judgment procedure can be used where one party can demonstrate through written evidence that their case has been proven and that a full trial is not required.)

According to the appeal court decision, Colosimo was enticed to join Canaccord Genuity from Manulife Securities Inc. in 2011. The three other reps — Pilot, Dane Hatton and Timothy Warkentin— that were terminated when the firm closed the Thunder Bay branch were already working for Canaccord Genuity, and signed new loan agreements when the branch converted from a corporate branch to an independent platform in June 2011.

Although the circumstances of the brokers’ relationship to Canaccord Genuity are different, the appeal court found that the motions judge erred by finding that the terms for repayment of their loans were different, and ordering summary judgment concerning Colosimo’s loan.

“The motion judge’s factual error caused her to adopt too narrow an approach,” the appeal court decision says. “She ignored Canaccord Genuity’s course of conduct, the proximity in time, and the similar terms in each defendant’s agreement respecting termination in assessing whether there had been a misrepresentation to Colosimo and its consequences. She did not consider the connection between Colosimo’s hiring and the making of the ‘initial transition loan’. Instead, she focused on the loan to Colosimo in isolation and divorced from the context in which it was made.”

The appeal court ruled that the motion judge erred in granting summary judgment. “Overall, the motion judge was not in a position to reach a fair and just determination on the merits of Colosimo’s defence without considering the evidence of the other defendants,” the appeal court decision says.

“The possibility of inconsistent verdicts with respect to the same agreement and two of the same defences is real and the concern for substantive justice is significant. The motion judge failed to consider the impact of her decision on the other defendants,” the appeal court decision says.

As a result, the appeal court allowed Colosimo’s appeal, set aside the judgment and directed the case go to trial.