Waxman v. Waxman, 2008 ONCA 426

ENDORSEMENT

1Chester Waxman and his sons (the “appellants”) must pay Morris Waxman 50% of the profits and distributions of equity in IWS from December 22, 1983, to June 27, 2002. A reference was held to determine the precise amount owed to Morris Waxman.

2The reference was heard by Master Linton over twenty six days between January and July of 2006, after which the Master released his report (the “Report”). Justice Sanderson, the trial judge in the case, heard motions to confirm or oppose the Report. She found no error in the Master’s decision and confirmed the Report.

3On appeal, the appellants ask this court to find that Sanderson J. erred in confirming the Master’s decision to award compound interest on Morris Waxman’s lost profits. The appellants concede that it was open to the Master to have made such an award. They also acknowledge that the decision was a discretionary one, and therefore, entitled to considerable deference. Unless the Master misdirected himself on the applicable principles of law, or the exercise of his discretion was so clearly wrong as to amount to an injustice, this court ought not to interfere with his decision on the matter. See Capsule Investments Ltd. v. Heck (1993), 12 O.R. (3d) 225 (C.A.).

4We see no basis on which to interfere with the Master’s award of compound interest, as confirmed by Sanderson J. The law, evidence and findings all amply support the award.

5In cases of wrongfully misappropriated trust property, it is open to the court to presume that the injured party is entitled to receive compound interest. See, for example, Bank of America Canada v. Mutual Trust Co., 2002 SCC 43, [2002] 2 S.C.R. 601, Air Canada v. Ontario (Liquor Control Board), [1997] 2 S.C.R. 581 and Brock v. Cole (1983), 142 D.L.R. (3d) 461 (Ont. C.A.).

6Various justifications have been offered for the presumption. Two such justifications are that the court may presume that the injured party would have made the most beneficial use of the funds possible, and that the wrongdoer enjoyed the most beneficial use of the funds. Regardless of which of those two rationales is employed, there was evidence in the present case to justify the exercise of discretion. There was evidence that Morris Waxman, the injured party, placed his money in banks and received compound interest thereon. There was also evidence that many of the bonuses and dividends paid to the appellants, the wrongdoers, were put into highly profitable mutual fund limited partnerships.

7In any event, had the appellants wished to displace the presumption, they were obliged to adduce evidence to rebut it. As the party in possession of the funds they were in the best position to adduce such evidence, if it existed. However, no such evidence was led.

8The Master made no error in principle in the exercise of his discretion. Justice Sanderson made no error in confirming his Report.

9Accordingly, the appeal is dismissed with costs to the respondent fixed in the amount of $10,000, inclusive of disbursements and G.S.T.