Kieswetter Sales and Leasing Ltd. v. 713460 Ontario Ltd., 2008 ONCA 859

CITATION: Kieswetter Sales and Leasing Ltd. v. 713460 Ontario Ltd., 2008 ONCA 859

DATE: 20081217

DOCKET: C47166 and C47173

COURT OF APPEAL FOR ONTARIO

Weiler, Juriansz and MacFarland JJ.A.

BETWEEN

Kieswetter Sales and Leasing Ltd.

Plaintiff (Appellant/Respondent by way of cross-appeal)

and

713460 Ontario Ltd., o/a Heirloom Clock Company, Art of Time Ltd. and Karel Dobes

Defendants (Respondent/Appellants by way of cross-appeal)

COUNSEL:

Graham M. Bennett, for the appellant/respondent by way of cross-appeal

Maureen M. Ward, for the respondent and respondent by way of cross-appeal, Art of Time

James C. Morton, for the appellants by way of cross-appeal, 713460 Ontario Ltd, o/a Heirloom Clock Company and Karel Dobes

Heard and released orally: December 11, 2008

On appeal and cross-appeal from the judgment and the judgment as to costs of Justice Linda M. Walters dated April 24, 2007 and May 30, 2007.

ENDORSEMENT

[1] The plaintiff, Kieswetter Sales and Leasing Ltd. (“Kieswetter”), sued the defendant, 713460 Ontario Ltd., operating as Heirloom Clock Company (“Heirloom”), for breach of a lease agreement and its sole shareholder and officer, Karel Dobes (“Dobes”), personally for inducing breach of the lease agreement. Kieswetter added Art of Time Ltd. (“Art of Time”) as a defendant, alleging that it was liable under the Fraudulent Conveyances Act or was unjustly enriched when it subsequently acquired Heirloom’s assets.

[2] In her judgment dated April 24, 2007, the trial judge found Heirloom liable for breach of the lease agreement and Dobes personally liable as well but she dismissed the claim against Art of Time.

[3] Heirloom and Dobes appealed. At the outset of the appeal, the appeal by Heirloom was abandoned. Dobes argues that the trial judge erred in piercing the corporate veil. Kieswetter appeals against the dismissal of the claim against Art of Time and renews its arguments regarding the Fraudulent Conveyances Act and unjust enrichment.

[4] The trial judge held that Dobes was personally liable because he put Heirloom in the untenable position of having to breach one of the two lease agreements it had entered into. In so doing, she erred. Entering into two lease agreements was not in itself a tortious act outside the scope of Dobes’ authority. Heirloom could have assigned or sublet one of the leased premises or sought to buy out one of the leases. The trial judge made no finding that Heirloom was not a legitimate business. She made no finding that Dobes was acting outside the scope of his authority in entering into the second lease. Her finding that Dobes was not honest related to his attempt on behalf of the company to get out of the lease by testifying that the Kieswetter premises were unsuitable for a clock company and not to the act of entering the second lease. Further, we do not see that Dobes’ actions were on behalf of an identity separate from that of Heirloom. Accordingly, the appeal of Dobes as to personal liability is allowed.

[5] The appeal of Kieswetter Sales respecting unjust enrichment and fraudulent conveyance is dismissed as, in our opinion, the trial judge made no palpable and overriding error in her findings in this regard.

[6] With respect to costs below, we would set aside the order making Dobes personally liable for Art of Time’s costs. Costs of Dobes at first instance are to be assessed in the event that counsel cannot come to any agreement.

[7] As between Dobes and Kieswetter, costs of the appeal are to Dobes and, by agreement, are in the fixed amount of $4,000, all inclusive.

[8] As between Kieswetter and Art of Time, costs of the appeal are to Art of Time and are fixed in the amount of $7,500 all inclusive.

“Karen M. Weiler J.A.”

“R.G. Juriansz J.A.”

“J. MacFarland J.A.”