COURT OF APPEAL FOR ONTARIO
CITATION: Marshall v. Sarajlic, 2007 ONCA 109
DATE: 20070220
DOCKET: C44667 C44668
RE:
JOHN MARSHALL and HEIKE GONZE (Appellants)
– and – ZORAN SARAJLIC, ANDRE DRAGUTESCO
And HASSAN AL KAS (Respondents)
A N D B E T W E E N:
JULIAN BALDRY (Appellant (Defendant))
– and – ZORAN SARAJLIC (Respondent (Plaintiff))
BEFORE:
CATZMAN, GOUDGE AND LAFORME JJ.A.
COUNSEL:
Gary Sugar
for the appellants Marshall and Gonze
Julian Binavince
for the appellant Baldry
Zoran Sarajlic in person (self-represented)
Monty Goren
for the respondents Andre Dragutesco and Hassan al Kas
HEARD & RELEASED ORALLY:
February 12, 2007
On appeal from judgment of Justice W. J. Lloyd Brennan of the Superior Court of Justice dated September 15, 2005 and from the order of Justice Brennan dated January 18, 2006 with respect to the costs of the action.
E N D O R S E M E N T
[1] The appellants argue that the contract between the respondents and the company prevented them ever recovering what was owed to them once the bankruptcy occurred.
[2] We disagree. The trial judge did not find that the employees agreed that on bankruptcy these debts would never be payable. Rather, he found that they agreed that the debts owed to them would not be payable until the company was in funds but, in effect, only so long as that remained a possibility. The bankruptcy made this impossible.
[3] There is considerable evidence to support this view of the contract, including that the employees were persuaded to put off payment of their wages because of the prospect that funds would become available.
[4] The consequence is that once the bankruptcy brought to an end the contractual condition suspending the respondents’ right to be paid, those debts were owing.
[5] The determination of the terms of the postponement contract is also fatal to the appellants’ estoppel argument. The respondents’ position concerning their legal rights against the company, and therefore against the appellants, is captured by the terms of the contract. Once the bankruptcy took place, their debts were owing and it would be inequitable to prevent them from enforcing those debts.
[6] Likewise, the contract is the answer to the appellants’ argument concerning the dates of termination of employment of the respondents as the trigger for the limitation period. The contract has the result of making those debts payable only on bankruptcy.
[7] The last argument raised by the appellants is that they say Mr. Sarajlic did not provide evidence that he had proven his claim in bankruptcy. In our view, there was ample evidence from which the trial judge could reach the conclusion he did namely, that the claim had been proven properly in the bankruptcy. We say that particularly in view of the fact that this trial was conducted under the simplified rules.
[8] The issue of costs awarded at trial was raised in argument but only as to quantum. The quantum in our view was a matter that was in the trial judge’s discretion and we see no basis for interfering with it.
[9] Thus, in the appeal brought by Mr. Marshall and Ms. Gonze we are in general agreement with the conclusions reached by the trial judge.
[10] Turning to Mr. Baldry’s appeal, in our view, the appeal must succeed. The six-month limitation period provided by the governing legislation, the Ontario Business Corporations Act, commenced as of May 14, 2001, when the trial judge determined as a finding of fact that Mr. Baldry’s resignation took place. That finding of fact in our view cannot be disturbed in this court.
[11] The respondent argues however that the constraint on suing provided by the Bankruptcy and Insolvency Act changes that limitation period.
[12] We agree with the appellant that the action was out of time when commenced, because it was more than six months after May 14, and because for the purposes of the Bankruptcy and Insolvency Act, Mr. Baldry is a former director not one to whom the constraint applies. Moreover any constraint could be relieved against under s. 69.4 of the Bankruptcy and Insolvency Act.
[13] Thus we find that Mr. Baldry’s appeal as against Mr. Sarajlic must be successful.
[14] In the result, the appeals of Mr. Marshall and Ms. Gonze must be dismissed. The appeal of Mr. Baldry must be allowed.
[15] Costs in the former appeal to counsel for Dragutesco and Al Kas in the amount of $10,000.00 and in the amount of $5,000.00 to the respondent Sarajlic, both inclusive of G.S.T. and disbursements.
[16] In the second appeal the trial judgment is set aside and the action against Mr. Baldry is dismissed. The order for costs at trial is amended to provide that Mr. Sarajlic pay $5,000.00 to Mr. Baldry as his costs of the trial. The costs of the appeal will be paid by Mr. Sarajlic to Mr. Baldry in the amount of $5,000.00. Both figures are inclusive of G.S.T. and disbursements.
“M.A. Catzman J.A.”
“S.T. Goudge J.A.”
“H.S. LaForme J.A.”