Executive Summary: Key Legal and Evidentiary Issues

• Whether the Contingent Share Purchase Option Agreement constitutes an independent unilateral contract or forms part of a larger multilateral arrangement tied to an alleged oral services agreement.

• Enforceability of the Option Agreement in light of Hayes Davis's allegation of failure of consideration concerning mentorship and support services.

• Effect of the plaintiff's non-exercise of share options before their expiry on or by May 17, 2022, on claims for specific performance and damages.

• Application of Sail Labrador principles regarding "intimately connected" agreements and the doctrine of substantial non-performance.

• Availability of equitable relief from forfeiture where the optionor's conduct allegedly hindered or repudiated performance.

• Suitability of summary judgment under Rule 9-6 where material facts, bad faith allegations, and unsettled legal questions remain in dispute.

Background and facts of the case
This matter arises from a dispute between Gordon Blankstein (plaintiff) and Hayes Davis Investments Inc. (defendant), a closely held corporation controlled by the Dalziel family. On May 17, 2019, the parties entered into a written agreement entitled the "Contingent Share Purchase Option Agreement" under which Hayes Davis granted Mr. Blankstein options to purchase up to 2,500,000 Oroco Resource Corp. shares at $0.30 per share. The options were to vest in five tranches of 500,000 shares each, with vesting and expiry dates tied to the "Oroco Exercise"—the date Oroco exercised a separate option it held to purchase shares in another company, which, on the evidence, occurred on February 28, 2020, with shares purchased on March 2, 2020 (the date treated as the Oroco Exercise for purposes of the Option Agreement). Craig Dalziel, President and CEO of Oroco at all material times, had been introduced to Mr. Blankstein in early 2019, and the parties discussed Mr. Blankstein providing mentorship and support services ("Services") in support of Mr. Dalziel's role as President and CEO of Oroco in exchange for share options.

The alleged oral services agreement and related agreements
Mr. Blankstein asserts that around March 2019, he and Craig Dalziel reached an oral agreement under which he would be provided options to purchase up to 4,000,000 Oroco shares as compensation for providing Services—comprising 750,000 share options from Oroco, 750,000 from ATM Holding Corp. ("ATM"), and 2,500,000 from Hayes Davis. On December 1, 2022, Mr. Blankstein filed a separate notice of civil claim (the "Oroco Claim") against Oroco and ATM regarding the share options they were to provide. Mr. Blankstein maintains that the Option Agreement with Hayes Davis was entered in furtherance of this broader oral arrangement and as compensation for his provision of Services.

Termination and pleadings
On December 2, 2019, Hayes Davis wrote to Mr. Blankstein advising it was terminating the Option Agreement effective immediately, noting that the first tranche had vested and that the vested share options would be cancelled if not exercised in accordance with paragraphs 2.3(a) and 2.4 of the Option Agreement. Mr. Blankstein's then-counsel responded on March 18, 2020, asserting that the purported termination was a material breach and demanding written affirmation that the Agreement remained in force; Hayes Davis did not respond. Mr. Blankstein filed his notice of civil claim on March 24, 2021, seeking specific performance or, in the alternative, damages in lieu of specific performance. He later filed an amended notice of civil claim on December 16, 2024, adding "damages for breach of contract" in the further alternative and pleading "unlawful breach and repudiation of the Option Agreement." Hayes Davis filed its response to civil claim on May 17, 2021, and an amended response on December 1, 2023, pleading that the Option Agreement was unenforceable for failure of consideration and that, in any event, all options expired unexercised on or by May 17, 2022.

Clauses at issue and exercise requirements
Central to the dispute are clauses 2.1 through 2.5 of the Option Agreement. Clause 2.2 set a five-tranche vesting schedule keyed to the signing date and the Oroco Exercise; clause 2.3 prescribed that exercise required the optionee to provide "written notice to Hayes" of his intention to exercise, specifying the number of Hayes Shares and paying the associated Purchase Price. Clause 2.4 permitted partial exercise with a minimum of 250,000 shares per exercise. Hayes Davis argued that Mr. Blankstein never provided written notice or tendered payment, and that as an option agreement is a unilateral contract, strict compliance with exercise terms was required under authorities such as Baughman v. Rampart Resources Ltd. Mr. Blankstein attested that, given the purported termination and Hayes Davis's silence in response to his counsel's correspondence, it made little sense to send money to Hayes Davis, as he understood that Hayes Davis had already "clearly communicated" that it did not intend to comply with the Option Agreement.

The legal framework and summary judgment principles
The application was brought by Hayes Davis under Rule 9-6 of the Supreme Court Civil Rules. The court reiterated that the threshold for summary judgment is high, requiring it to be "manifestly clear" or "beyond reasonable doubt" that there is no genuine issue for trial. The applicant bears the evidentiary burden, the court may not weigh evidence or assess credibility beyond determining whether it is incontrovertible, and questions of law will only be determined summarily where the law is well-settled by authoritative jurisprudence and there is no real dispute about material facts.

Analysis – unilateral versus bilateral/multilateral contract
Madam Justice Tucker considered Hayes Davis's principal submission that the Option Agreement was an independent, unilateral contract requiring strict compliance with its exercise terms. Relying on the Supreme Court of Canada's decision in Sail Labrador Ltd. v. Challenge One (The), the court noted that not all options are unilateral contracts; an option may form one element of a larger bilateral contract where there is an "intimate connection" between the agreements. The court found evidentiary support for Mr. Blankstein's position that the alleged oral Services agreement and the Option Agreement were intimately connected, including Hayes Davis's own pleadings alleging that Mr. Blankstein "committed" to provide the Services and that his commitment represented the consideration for the Option Agreement, together with text messages from Craig Dalziel referencing how Mr. Blankstein's "various option agreements should be treated." The court was satisfied there was a bona fide triable issue as to whether the doctrine of substantial non-performance could apply.

Analysis – alternative argument assuming bilateral obligations
Even assuming the Option Agreement involved bilateral obligations, Hayes Davis argued that Mr. Blankstein, having affirmed the contract following the alleged anticipatory breach, failed to exercise the options before they lapsed and therefore never crystallized his right to specific performance or damages. The court reviewed authorities including Zoehner v. Algo Communication Products Ltd., Shaw Production Way Holdings Inc. v. Sunvault Energy, Inc., Inmet Mining Corp. v. Homestake Canada Inc., and Fletton Ltd. v. Peat Markwick Ltd., finding none dispositive. The court noted Inmet's principle that an innocent party may claim specific performance, damages, or damages in lieu in the alternative and is not required to elect among remedies until judgment. The court also relied on Armex Mining Corp. v. Huakan International Mining Inc., where evidence of bad faith regarding the termination of an option agreement was sufficient to enable the plaintiff to proceed to trial, and AD General Partner Inc. v. Gill, which recognized that equitable relief from forfeiture may be available where the optionor's own conduct provides equitable grounds for intervention, such as preventing the optionee from properly exercising the option. The amended notice of civil claim described the December 2019 termination as "purported" and asserted the options were "irrevocable," with aggravated and punitive damages sought on the basis that the purported termination was arbitrary and high-handed.

Ruling and outcome
Madam Justice Tucker concluded that Hayes Davis had not satisfied the court that Mr. Blankstein's claim was bound to fail because he did not comply, or make a formal attempt to comply, with the exercise terms under the Option Agreement, and that no authority foreclosed Mr. Blankstein from arguing that his non-compliance should be excused in the circumstances. The points raised by Hayes Davis were characterized as arguments for trial. The application for summary judgment was accordingly dismissed, with the outcome favouring the plaintiff, Mr. Blankstein, whose claim will proceed to trial. No monetary amount was ordered, granted, or awarded at this stage, as the decision concerns only the dismissal of a summary judgment application; costs and substantive relief remain to be determined at trial.