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Benedetto v. 2453912 Ontario Inc., 2019 ONCA 149 (Hourigan, Miller and Paciocco JJ.A.), February 25, 2019; Lucijanic v. Hashmi, 2019 ONCA 97 (Hoy A.C.J.O., Simmons and Pardu JJ.A.), February 8, 2019
Last month, the Court of Appeal decided two appeals concerning deposits in real estate transactions.
In Benedetto v. 2453912 Ontario Inc., the appellant Salvatore Benedetto signed an agreement for the purchase and sale of real property, stipulating that he was signing as a buyer “in trust for a company to be incorporated without any personal liabilities”. He provided a $100,000 deposit to secure the purchase.
Benedetto subsequently advised the vendor that he would not be closing the transaction and sought the return of his deposit. The respondent refused and brought a summary judgment motion.
The motion judge held that the Ontario Business Corporations Act, R.S.O. 1990, c. B.16 provisions addressing pre-incorporation contracts did not displace the common law rules governing deposits in real estate transactions and concluded that the deposit was forfeited to the respondent.
The Court of Appeal rejected the appellant’s submission that the motion judge erred in his contractual and statutory interpretation.
As the court explained, where a purchaser gives a vendor a deposit to secure contract performance for a real estate purchase and sale, the deposit is forfeited if the purchaser refuses to close the transaction, unless the parties bargained to the contrary. The deposit stands as security for the purchaser’s contract performance. A purchaser’s obligations under a purchase and sale contract are distinct from the obligation incurred by the deposit payer. A deposit’s implied term is that on the purchaser’s contract breach --or, in the case of a pre-incorporation contract, by the promoter on behalf of the intended purchaser-- the deposit is forfeited to the vendor.
In Lucijanic v. Hashmi, the motion judge granted the respondents summary judgment declaring that the appellants breached the terms of an April 1, 2017 agreement to purchase 800 Sales Court, Milton, Ontario, from them. The motion judge ordered that the appellants’ deposit be forfeited and ordered the appellants to pay damages to the respondents.
The appellants did not contest the declaration that they breached the agreement. Rather, they repeated before the Court of Appeal the argument made to the motion judge that in refusing their offer to complete the transaction at a price that was less than stipulated in the agreement, but more than the price at which the respondents ultimately sold the property, the respondents failed to take reasonable steps to mitigate their loss. The appellants claimed that failing to give proper consideration to the respondents’ refusal of this offer led the motion judge to erroneously conclude that there was no genuine issue requiring a trial.
The Court of Appeal rejected this argument, noting that the appellants offered to complete the transaction at a reduced price prior to the agreed upon closing date, and before failing to complete the transaction as required by the agreement. The respondents were under no obligation to mitigate anything until the appellants’ breach of the agreement. Further, after the appellants failed to close, the property was re-listed, and nothing prevented the appellants from making a new offer. The court agreed with the motion judge that there was no genuine issue requiring a trial.
Both appeals were dismissed.
Bonello v. Gores Landing Marina (1986) Limited, 2019 ONCA 127 (Brown, Paciocco and Zarnett JJ.A.), February 20, 2019
In August 2007, the plaintiff, Timothy Bonello, was injured during a game of tug-of-war at a campground operated by the corporate appellant, Gores Landing Marina, of which one of the personal appellants, Joseph Davies Sr., is a principal.
Bonello’s injury was so severe that his left forearm had to be amputated.
In 2009, Bonello commenced an action against the appellants. Following examinations for discovery, the plaintiff amended his claim to add as a defendant Joseph Davies, Jr., the son of the first personal appellant. In his Amended Statement of Claim, Bonello advanced two claims against the appellants: first, that the appellants breached their duties under the Occupiers’ Liability Act, R.S.O. 1990. c. O.2, by failing to ensure that their premises, and the activities carried on there, were reasonably safe, and second, that the appellants were negligent.
In 2010, the appellants initiated a Third Party Claim against the respondent third parties, all of whom participated in the game of tug-of-war.
In 2016, the appellants moved for summary judgment to dismiss Bonello’s action. The third parties moved for summary judgment dismissing the Third Party Claim, but those motions were held in abeyance until the disposition of the appellants’ motion to dismiss the main action.
The motion judge dismissed the action, but the Court of Appeal set aside that order on the ground that consideration was not given to Bonello’s claim in negligence. As a result, there was a genuine issue requiring a trial as to whether the appellants were vicariously liable for any negligence on the part of Davies Jr.
In 2018, the appellants again moved for summary judgment dismissing the action, but the motion judge dismissed their motion. Based on his interpretation of the Court of Appeal’s 2017 decision, he concluded that the defendants were precluded by virtue of issue estoppel from moving a second time for summary judgment. The third parties similarly brought motions for summary judgement, which were heard at the same time. The motion judge granted the motions, dismissing the Third Party Claim.
The appellants appealed from the dismissal of the Third Party Claim.
The appellants submitted that the motion judge erred in failing to recognize that the Court of Appeal’s 2017 decision implicitly accepted that Davies Jr. owed the plaintiff a duty of care, and therefore that the third parties owed a similar duty to the plaintiff.
Brown J.A. explained that no such holding, implicit or otherwise, was apparent in the court’s 2017 decision. In that decision, the court held that a genuine issue requiring a trial existed as to whether the corporate appellant and Davies Sr. were vicariously liable for the actions of the younger personal appellant. The determination of that issue would require an inquiry into whether any duty of care existed, whether it was breached, as well as the nature of the relationship between the appellants.
Justice Brown also rejected the appellants’ assertion that the motion judge erred in failing to recognize that its 2017 decision that there was a genuine issue requiring a trial with respect to whether Davies Jr. ought to have foreseen the risk of injury to the plaintiff, implied that therefore the same genuine issue existed with respect to the third parties. The evidence disclosed differences between the conduct of Davies Jr. and that of the third parties. In assessing whether the Third Party Claim gave rise to a genuine issue requiring trial, the motion judge was satisfied that the record enabled him to reach a fair and just determination on the merits of the third parties’ liability. He thoroughly considered the largely undisputed evidence about the acts and omissions of the third parties in light of the allegations advanced in the Third Party Claim and the applicable legal principles.
Finally, Brown J.A. rejected the appellants’ submission that the motion judge misapplied the principles involved in the two-stage duty of care analysis. He agreed with the motion judge’s conclusion that the evidence of the third parties’ involvement in the tug-of-war did not fall into any of the three circumstances identified in Childs v. Desormeaux, 2006 SCC 18, which impose a positive duty to act. With respect to the alleged commission of an overtly negligent act, the court similarly agreed with the motion judge that the appellants failed to demonstrate reasonable foreseeability of the harm suffered by the plaintiff. Although some of the third parties may have foreseen the possibility of harm, the law requires that the harm be probable. The evidence supported the conclusion that any harm was unforeseeable to them. For those third parties for whom the evidence supported some degree of foreseeability, Justice Brown observed that the appellants still could not overcome the fact that the circumstances did not fall within any of the three categories established in Childs. Accordingly, the third parties owed no duty of care to the plaintiff in this situation.
The appeal was dismissed.
Christopher v. Freitas, 2019 ONCA 84 (Hourigan, Miller and Paciocco JJ.A.), February 6, 2019
The parties were in a common law relationship for a number of years. The litigation between them turned on the family residence, which the parties held as joint tenants.
The residence was acquired in July 2014, with the appellant contributing $5,000 and the respondent $116,000 toward the purchase price. Significant renovations made to the home were paid for from a joint line of credit. Following the parties’ separation, the residence was sold and, after the payment of various expenses, there remained in trust the sum of $140,909.20.
The appellant submitted at trial that the net proceeds from the house sale should be divided equally, while the respondent submitted that the parties should receive the return of their initial contributions and any increase in equity should be divided equally between them.
The trial judge found that the appellant did not meet her onus of rebutting the presumption of resulting trust. Further, as the respondent was not enriched, there was no unjust enrichment.
The Court of Appeal found no basis to interfere with the trial judge’s finding that the appellant did not meet her onus of rebutting the presumption of a resulting trust.
In the court’s view, the trial judge carefully considered the parties’ evidence and concluded that he was unable to determine the respondent’s intent in making his initial contribution. At its highest, the appellant’s evidence was not that the respondent said he intended to gift half the house to her but only that buying the house together was a “fresh start”. It was not unreasonable to conclude on the evidence that the appellant had failed to meet her onus to establish that the respondent intended to gift her half the house at the time of purchase.
With respect to the claim for unjust enrichment, the court held that the trial judge’s finding that the benefits received by the appellant outweighed her contributions was well rooted in the evidence. The trial judge did not err in concluding that there was no unjust enrichment prior to July 2014. For the period of July 2014 to October 2016, when the parties deposited their net income into a joint bank account from which all expenses were paid, the trial judge held that the parties were engaged in a joint family venture during this period. In the court’s view, the trial judge correctly concluded that the only enrichment in issue was the increase in the parties’ equity in the home. Accordingly, the trial judge was correct in finding that there was no unjust enrichment.
The appeal was dismissed.
Grayson Consulting Inc. v. Lloyd, 2019 ONCA 79 (Juriansz, Brown and Roberts JJ.A.), February 6, 2019
In August 2014, the appellant, Grayson Consulting, Inc., obtained a default judgment in the amount of US$451,435,577.37 against the respondent, Clifford Lloyd, in the United States District Court for the District of South Carolina. On December 8, 2017, the appellant commenced an action in Ontario to recognize and enforce the South Carolina judgment. The appellant secured an ex parte Mareva injunction against the respondent.
The motion judge set aside the Mareva injunction, holding that the action to enforce the South Carolina judgment was commenced outside the time period prescribed by the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.
Grayson appealed, seeking orders restoring the Mareva injunction and declaring that its action is not statute-barred.
Writing for the Court of Appeal, Brown J.A. rejected the appellant’s submission that the motion judge erred in holding that time began to run thirty days after the date of the South Carolina judgment. In Independence Plaza 1 Associates, L.L.C. v. Figliolini, 2017 ONCA 44, the court held that: (i) the basic two-year limitation period in section 4 of the Limitations Act, 2002 applies to a proceeding on a foreign judgment, and (ii) the limitation period begins to run, at the earliest, when the time to appeal the foreign judgment has expired or, if an appeal is taken, the date of the appeal decision, unless the claim on the foreign judgment was not discovered within the meaning of section 5 of the Limitations Act, 2002 until a date later than the appeal decision.
As Justice Brown explained, when the time to appeal a foreign judgment expires is a matter of the law of the foreign jurisdiction. In Ontario, foreign law is treated like a fact, the proof of which generally requires opinion evidence from a properly qualified expert. The expert evidence accepted by the motion judge was that the appeal period from the South Carolina judgment expired thirty days after the judgment was issued. The appellant did not commence its enforcement action until more than two years after the expiration period. As a result, it was within the motion judge’s discretion to set aside the Mareva injunction on the basis that the appellant had failed to demonstrate a strong prima facie case that it had commenced the action less than two years after the appeal period expired.
Brown J.A. also rejected the appellant’s submission that the motion judge erred in failing to find that time did not begin to run until it had actual knowledge that the respondent had assets in Ontario. The motion judge concluded that the day on which a reasonable person ought to have known of the matters referred to in section 5(1)(a) of the Limitations Act, 2002 was the date of entry of the South Carolina judgment. He held that once the South Carolina judgment became final (ie. 30 days after August 22, 2014), the appellant was under an obligation to conduct itself with due diligence with respect to seeking enforcement opportunities against Lloyd, and was already in possession of enough information about Lloyd’s real and substantial connection to Ontario that it ought to have taken investigatory steps when the judgment became final, or shortly thereafter. This conclusion was amply supported by the evidence. Throughout the South Carolina litigation, the appellant knew that the respondent was a resident of Ontario, practising law in Hamilton.
The appeal was dismissed.
Ruston v. Keddco MFG (2011) Ltd., 2019 ONCA 125 (Pepall, Trotter and Harvison Young JJ.A.), February 19, 2019
Scott Ruston was fifty-four years old when Keddco MFG terminated his employment in June 2015. Hired by Keddco in 2004 as a sales representative, Ruston, who has only a grade twelve education, quickly moved up through the company’s ranks and was promoted to president in 2011.
At the time of Ruston’s termination, he was told that he was being terminated for cause and that he had committed fraud, but no specifics were provided. When Ruston indicated that he would be hiring a lawyer, Keddco advised him that if he did, it would counter-claim and that it would be “very expensive”.
Shortly thereafter, Ruston filed a statement of claim seeking damages for wrongful dismissal. Keddco responded with a statement of defence and counter-claim in which it alleged cause and claimed damages of $1,700,000 for unjust enrichment, breach of fiduciary duty and fraud, as well as $50,000 in punitive damages.
After an eleven-day trial, the trial judge found that Keddco had failed to prove cause against Ruston or any of its allegations against him. She also found that the counter-claim for $1.7 million in damages was an intimidation tactic and that the appellant had breached its obligation of good faith and fair dealing in the manner of Ruston’s dismissal. The trial judge dismissed the appellant’s counterclaim in its entirety and awarded the respondent significant damages, including damages in lieu of reasonable notice based on a nineteen month notice period, including bonus and benefits; punitive damages in the amount of $100,000; and aggravated and moral damages in the amount of $25,000.
The Court of Appeal dismissed Keddco’s appeal from that decision.
The court rejected Keddco’s submission that the trial judge erred in principle by taking inappropriate factors into account and awarding a notice period beyond the fifteen to seventeen month range. The court observed that the trial judge applied the well-known considerations from Bardal v. Globe & Mail (1960), 24 D.L.R. (2d) 140 (Ont. H.C.J.), and found that several factors justified a notice period of nineteen months, including Ruston’s age, because they made it less likely that he would find employment. Indeed, with the exception of one short period, Ruston had been unable to find a new job following his termination from Keddco. The trial judge’s reasons were well grounded in the evidence before her.
With respect to aggravated or moral damages, the court held that the trial judge correctly noted that employers have an obligation of good faith and fair dealing in the manner of dismissal and also that an employers’ pre- and post-termination conduct may be relevant to the moral damage analysis if such conduct is a component of the manner of dismissal. The court found that the trial judge was alive to the essentially compensatory nature of aggravated damages and identified the conduct that she found to warrant the award, notably the appellant’s threats against Ruston and its counterclaim. The evidentiary record provided ample support for the trial judge’s finding that the manner of dismissal warranted an award of aggravated damages.
Turning to the award of punitive damages, the Court of Appeal noted that the trial judge carefully reviewed all of the appropriate factors, including its guidance from Pate Estate v. Galway-Cavendish and Harvey (Township), 2013 ONCA 669, that the court “must consider the overall damages award when selecting an appropriate punitive quantum” and that it must be careful to avoid double compensation or double punishment. The trial judge referred to the counterclaim threat made by the appellant during the termination meeting, a threat which the appellant carried out. The trial judge also referred to the fact that the appellant had, on the seventh day of trial, reduced its damages claim from $1.7 million to $1.00, and concluded that the appellant had no intention of proving damages but used the claim of $1.7 million to intimidate the respondent. These facts supported her finding of misconduct justifying a punitive damages award.
The court explained that this does not amount to either double recovery or double punishment because aggravated damages aim to compensate a plaintiff for heightened damages caused by the breach of the employer’s duty of good faith and fair dealing in the manner of dismissal, while punitive damages seek to punish and denunciate inappropriate or unfair conduct. There can be no question that the appellant’s conduct rose to the level of conduct deserving of denunciation for the reasons provided by the trial judge.
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