Corrected decision: The text of the original judgment was corrected on September 22, 2021 and the description of the correction is appended.
Court of Appeal for Ontario
Date: 20210830 Docket: C68390
Benotto, Miller and Trotter JJ.A.
Between
1758704 Ontario Inc. and 1191305 Ontario Inc. Plaintiffs (Respondents/Appellants by way of cross-appeal)
and
Carl Priest Defendant (Appellant/Respondent by way of cross-appeal)
AND BETWEEN
Carl Priest and 1737161 Ontario Limited Plaintiffs by Counterclaim (Appellants/Respondents by way of cross-appeal)
and
1758704 Ontario Inc., 1191305 Ontario Inc. and Martin Donkers Defendants by Counterclaim (Respondents/Appellants by way of cross-appeal)
Counsel: Maanit Zemel, for the appellants/respondents by way of cross-appeal Krista McKenzie, for the respondents/appellants by way of cross-appeal
Heard: April 22, 2021 by video conference
On appeal from the judgment of Justice Annette Casullo of the Superior Court of Justice, dated May 22, 2020, with reasons reported at 2020 ONSC 3222, and from the costs order, dated August 18, 2020.
1These appeals arise from the sale of a business. Almost two years after the deal closed, things went awry. The purchasers/assignees, who are the appellants in this appeal, defaulted on a promissory note, secured by certain assets (i.e., heavy construction equipment). Without notice, the respondents/cross-appellants (hereafter “the respondents”) seized these assets from the appellants, putting them out of business.
2The respondents sued for the money still owing. The appellants filed a counterclaim pleading breach of contract, intentional interference with economic relations, and the tort of conversion based on the seizure without notice.
3In the main action, the trial judge granted judgment in favour of the respondents, based on the unpaid debt. She also dismissed the appellants’ counterclaim, based on her conclusion that the respondents were not required to provide notice to the appellants prior to seizing the assets.
4The appellants originally appealed from the judgment against them in the main action and from the dismissal of the counterclaim. However, at the oral hearing, they focused solely on the counterclaim. The respondents appeal the trial judge’s award of damages.
5I would allow the appeal from the dismissal of the counterclaim. At common law, and under the terms of the Asset Purchase Agreement (“APA”) entered into by the parties, the appellants were entitled to notice before the equipment was seized. This amounted to a breach of contract. I would remit the case to the Superior Court for an assessment of damages. As I see no error in the trial judge’s assessment of damages in the main action, I would dismiss the cross-appeal.
A. Background Facts
(1) Overview
6The appellants are 1737161 Ontario Ltd. (“173 Ltd.”) and its principal, Carl Priest. The respondents are 1758704 Ontario Inc. (“175 Inc.”) and 1191305 Ontario Inc. (“119 Inc.”) and their principal, Martin Donkers.
7In May 2010, the numbered companies entered into an APA, whereby 173 Ltd. Agreed to purchase the assets of 175 Inc. and 119 Inc.
8The APA covered two key transactions. First, 173 Ltd. Agreed to purchase all the assets set out in Schedule “A” of the APA (the “purchased assets”). This purchase was to be satisfied through a promissory note in the amount of $558,740.00, plus 7% annual interest, which Mr. Priest personally guaranteed. The note was payable by monthly blended installments from June 2010 to May 2013.
9Second, 173 Ltd. Agreed to assume a number of third-party leases from 175 Inc. for several pieces of equipment (the “leased equipment”), as set out in Schedule “B” of the APA. 173 Ltd. Was to assume the leases for a loader and an excavator and make all subsequent payments directly to the lessor, John Deere. 173 Ltd. Was to assume the lease for a truck and trailer and make monthly payments to 175 Inc., which would remit the payments to the lessor, General Electric.
10The numbered companies executed a General Security Agreement (“GSA”), which secured payment under the promissory note and granted the corporate respondents security over the purchased assets and leased equipment. The GSA was registered under the Personal Property Security Act, R.S.O. 1990, c. P.10 (“PPSA”).
(2) The First Default: The Leased Equipment
11173 Ltd. Properly assumed the lease for the loader and made all required payments to John Deere until it was paid off in December 2011. 173 Ltd. Also properly assumed the lease for the truck and trailer and made all required payments to 175 Inc. until the truck and trailer were seized in December 2012.
12However, 173 Ltd. Never properly assumed the lease for the excavator. The circumstances surrounding the failed assumption are immaterial. Suffice it to say, 173 Ltd. Took possession of the excavator, but made no payments on the lease. This resulted in arrears for which 175 Inc. was ultimately responsible to John Deere.
13In April 2012, the respondents gave the appellants notice that there was $115,399.12 owing in arrears under the APA and GSA for the unassumed excavator lease. The notice advised that the respondents considered the arrears “an occurrence of an event of default” and, as a result, the arrears for the excavator lease, the amount outstanding under the truck and trailer lease, and the amount outstanding under the promissory note became due and payable in full. The notice further advised the appellants that they had 10 days to satisfy the excavator arrears in full, failing which the respondents would seize the appellants’ assets and sue for any shortfall.
14The appellants made no payments towards the excavator arrears but continued to make monthly payments under the truck and trailer lease, and the promissory note until November 2012.
(3) The Second Default: The Promissory Note
15The appellants made every payment under the promissory note from June 2010 to October 2012. However, on November 18, 2012, the appellants gave Mr. Donkers a cheque for the truck and trailer lease, but made no payment on the promissory note. Instead, Mr. Donkers received an unsigned letter advising him that the appellants were in the final stages of obtaining funding to satisfy the remaining seven payments on the promissory note. The letter asked Mr. Donkers to call Mr. Priest to discuss.
16On November 19, Mr. Donkers emailed Mr. Priest about the missing cheque. Mr. Priest’s response merely referenced the letter and asked Mr. Donkers to call him. Mr. Donkers replied by email, telling Mr. Priest that “putting together financing to pay the balance” was up to him. There is no evidence of any further discussion on the outstanding payment.
(4) Seizure and Sale of Assets and Equipment
17On December 8 and 9, 2012, the respondents seized 173 Ltd.’s assets, including some of the purchased assets, the truck and trailer, and the loader. The respondents did not give the appellants notice; the appellants discovered that their equipment was gone on December 10, 2012 and called the police.
18On December 14, 2012, the appellants received a “Notice to Retain Articles” from Lloyd’s Bailiff Services. [1] The Notice advised 173 Ltd. Of the following: Lloyd’s intended to retain the seized articles; 173 Ltd. Owed 175 Inc. and 119 Inc. $132,634 for “late payments”; and Lloyd’s would be charging ongoing storage fees at $900 per day, or $27,000 per month. The equipment was stored at Call Service Towing/Classic Towing and Storage (“Call Service”), and the storage fees from the date the assets were seized to the date they were sold totalled $160,200.
19Shortly after the seizure, Mr. Donkers began running another business out of the same address as Call Service and used Call Service to store some of his own equipment. Mr. Donkers’ storage costs were considerably less: $1,500 per month for roughly 35% less space than that required to store the seized assets.
B. Procedural History
20This litigation has been lengthy, rancorous, and messy. Although there were multiple actions and many steps in the litigation prior to trial, two events are relevant to the issues on appeal: (a) an appeal to this court (March 17, 2014) from an order granting partial summary judgment to 175 Inc. and 119 Inc.; and (b) a default judgment granted on February 28, 2017 (which was later set aside).
(1) Partial Summary Judgment
21In June of 2013, in an action brought by 175 Inc. and 119 Inc. against Mr. Priest, the companies moved for summary judgment on the promissory note. McDermot J. granted partial summary judgment in which he found Priest had defaulted on the promissory note but ordered a trial on the issue of damages. He also struck Mr. Priest’s Statement of Defence: 1758704 Ontario Inc. v. Priest, 2013 ONSC 5395, 1 P.P.S.A.C. (4th) 279.
22On appeal, this court agreed with McDermot J.’s finding that Mr. Priest defaulted on the promissory note, holding “there can be no dispute about that fact”: 1758704 Ontario Inc. v. Priest, 2014 ONCA 202, at para. 4. However, the court set aside the part of McDermot J.’s order that struck Mr. Priest’s Statement of Defence. The court further held that, “the appellant is not precluded from arguing, on the return of the injunction application and the trial of the issue, that the seizure and sale of the assets was unlawful and should prevent the respondent’s recovery of any deficiency from the appellant” (at para. 8). This decision is referenced in the trial judge’s reasons, discussed below.
(2) The Default Judgment
23The underlying actions were consolidated in April 2014 and the respondents issued and served a consolidated Statement of Claim on July 15, 2016. After failing to file a Statement of Defence, the appellants were noted in default on August 30, 2016, and the respondents appeared before Mulligan J. on February 28, 2017, on a default judgment motion. The appellants did not attend the hearing and Mulligan J. awarded the respondents $368,339.79 in damages, calculated as follows:
- $161,943.65 in damages for the outstanding principal and interest owing under the Promissory Note, calculated from the date of default until the date of the default judgment hearing, plus 7% annual interest from the date of judgment; plus
- $189,804.49 in damages for the outstanding principal and interest owing under the excavator lease, after deducting credits from John Deere’s sale of the equipment, plus 7% post-judgment interest; plus
- $50,814.84 in damages for the outstanding principal and interest owing under the truck and trailer lease, plus 7% post-judgment interest; and minus
- $34,223.19 in credit to the appellants, representing the difference between the respondents’ expenses ($236,082.65) and amount the respondents recovered after selling the seized equipment ($270,305.84).
24The default judgment was set aside on an unopposed motion. At a subsequent appearance before Di Tomaso J. on June 14, 2019, he made an order, on consent, issuing a Writ of Seizure and Sale against the appellants for $383,409.79, being roughly the amount awarded under the default judgment.
C. The Trial Judge’s Reasons
25After reviewing the evidence, the trial judge referred to this court’s earlier decision in this litigation and framed the issues before her as follows (at para. 86):
Mr. Priest’s failure to make the November payment on the Promissory Note has already been judicially determined to be a default, of which I am in full agreement. Pursuant to the GSA, any default permitted Mr. Donkers to pursue the remedies contained in the GSA, including seizure and sale. Thus, the issues before me are:
- Was notice required prior to the 2012 seizure?
- If not, what damages flow from the default?
(1) Notice
26The trial judge found that, by operation of the PPSA, the respondents were not required to give the appellants notice of their intention to seize the equipment as a result of the default on the promissory note.
27The trial judge rejected the appellants’ argument that the duty of good faith in the performance of contracts obliged Mr. Donkers to tell Mr. Priest that he considered the missed November 2012 payment a default on the promissory note and that he intended to seize the equipment: see Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494; C.M. Callow Inc. v. Zollinger, 2020 SCC 45, 452 D.L.R. (4th) 44.
28Consequently, the trial judge dismissed the counterclaim.
(2) Damages
29The trial judge re-calculated the quantum of damages. She resisted the respondents’ invitation to simply endorse the accounting of Mulligan J. on the default judgment. The trial judge said (at para. 99): “I concur to a certain degree, but adjustments are required. Recall that Mulligan J. was presented only with Mr. Donkers’ version of events; I have had the benefit of a full trial, with submissions from all parties.” While Mulligan J. had calculated damages in the amount of $368,339.79, the trial judge awarded $200,865.48.
30Additionally, the trial judge found the appellant Priest to be jointly and severally liable with 173 Ltd. For the failure to assume the excavator lease.
(3) Writ of Seizure and Sale
31As for the Writ in the amount of $383,409.79, the trial judge waived the requirements under r. 60.07(18) of the Rules of Civil Procedure, R.R.O. 1990, O. Reg. 194, which provides that no sale of real property may proceed until six months after the writ has been filed with the sheriff.
(4) Costs
32The trial judge ordered $137,812.65 in costs against the appellants on a joint and several basis.
D. Issues on Appeal
33The appellants appeal the dismissal of the counterclaim on the notice issue. In the alternative, they submit that the trial judge erred in finding Mr. Priest personally liable for failing to assume the excavator lease. Finally, they appeal the decision to waive the six-month waiting period under the Writ of Seizure and Sale.
34The respondents appeal the trial judge’s calculation of damages, urging this court to substitute the order of Mulligan J.
E. Analysis
(1) Notice Was Required
35In my view, the appellants were entitled to notice prior to the seizure of the collateral, at common law and pursuant to the APA.
36The APA, promissory note, and GSA all include provisions relevant to an event of default.
37The APA provides that, if 173 Ltd. Defaults on any payments under the Agreement, the respondents must give 173 Ltd. 15 days’ notice before seizing the purchased assets. The leased equipment is excluded from this provision.
38The promissory note includes an acceleration clause in the event of default, such that the entire unpaid balance and accrued interest becomes payable immediately. It contains no notice requirement.
39Similarly, the GSA makes any outstanding obligations – including those under the promissory note and equipment leases – immediately payable in full upon default. It also specifies the remedies available to the respondents, including the right to enter any premises where the purchased assets or leased equipment are located, and to repossess and sell those items. Like the promissory note, the GSA stipulates no notice requirement.
(a) The PPSA
40In my respectful view, the trial judge erred in finding that the PPSA relieved the respondents of the obligation to give the appellants notice of its intention to seize the secured assets.
41Part V of the PPSA provides rights and remedies to a creditor upon default of a debtor. More specifically, s. 62 gives the creditor the right to take possession of the secured goods, unless otherwise agreed, or if the secured goods are equipment, the right to render the equipment unusable, but without removing it from the debtor’s premises. Section 63 then grants the creditor the right to dispose of the secured goods, provided the creditor gives the debtor at least 15 days’ advance notice, in writing: s. 63(4). However, pursuant to s. 63(7)I, no notice is required under s. 63(4) where the goods are “of a type customarily sold on a recognized market.”
42Relying on Lloyds Bank Canada v. Transfirst Inc., 71 O.R. (2d) 481 (Ont. H.C.) and AJM Leasing v. Brown, 6 P.P.S.A.C. (3d) 58 (Ont. S.C.), the trial judge was satisfied the seized assets fell within the exception under s. 63(7) of the PPSA; therefore Mr. Donkers had no obligation to give Mr. Priest notice.
43In my view, s. 63(7)I of the PPSA had no application in the circumstances; it could not relieve the respondents of its common law obligation to provide notice to the appellants, and its contractual obligation under the APA.
44Looking at the scheme of the PPSA as a whole, s. 62 (“Possession Upon Default”) addresses the rights of creditors in terms of seizing secured assets, whereas s. 63 (“Disposal of Collateral”) speaks to disposition. In Jacob S. Ziegel, David L. Denomme & Anthony Duggan, The Ontario Personal Property Security Act – Commentary and Analysis, 3rd ed. (Toronto: LexisNexis, 2020), the authors describe the operation of s. 63, at p. 486: “Once the secured party has repossessed the collateral it will typically proceed with its disposition either directly or through a receiver. Section 63 is concerned with all aspects of the disposal process.”
45Although the trial judge may have been correct in finding that the seized equipment was fungible for the purposes of s. 63(7)I, the provision has no application at the pre-seizure stage. The respondents were required to give notice at common law, and according to the terms of the APA.
(b) Common Law Duty
The Principle in Lister v. Dunlop
46The trial judge did not consider the position advanced by the appellants on the common law obligation to give notice to a debtor before seizing secured assets. This principle was adopted in Canada in R.E. Lister Ltd. v. Dunlop Canada Ltd., [1982] 1 S.C.R. 726. Writing for the Court, Estey J. said, at p. 746:
The rule has long been that enunciated in Massey v. Sladen (1868), L.R. 4 Ex. 13 at 19, 38 L.J. Ex. 34: the debtor must be given “some notice on which he might reasonably expect to be able to act”. The application of this simple proposition will depend upon all the facts and circumstances in each case. Failure to give such reasonable notice places the debtor under economic, but nonetheless real duress, often as real as physical duress to the person, and no doubt explains the eagerness of the courts to construe debt-evidencing or creating documents as including in all cases the requirement of reasonable notice for payment.
47See also Royal Bank of Canada v. W. Got & Associates Electric Ltd., [1999] 3 S.C.R. 408, at p. 417, where it is applied in a debt collection action that shares some similarities with this case.
48In Kavcar Investments Ltd. v. Aetna Financial Services Ltd. (1989), 70 O.R. (2d) 225 (C.A.), this court applied and clarified the Lister principle. McKinlay J.A. wrote that it applies, “regardless of the wording of the security document” (at p. 228) and that “[r]easonable time must be given by the creditor, whether or not asked for by the debtor” (at p. 235). See also Waldron v. Royal Bank (1991), 53 B.C.L.R. (2d) 294 (B.C.C.A.), at p. 7, per Lambert J.A.
49In Kavcar and Got Electric, both courts considered what constitutes reasonable notice in the circumstances. However, it is not necessary to address that issue in this case because, as discussed below, no notice was given at all.
50The Lister principle has been embedded in Canadian debtor-creditor law for decades. This reality is important when considering the reach and effect of the PPSA. The respondents submit that it has been ousted by the PPSA. Even if I were to accept the respondents’ interpretation of s. 63(7) of that Act, there is no basis to conclude that the Legislature intended to extinguish the Lister v. Dunlop line of authority: Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp., 2020 SCC 29, 41 B.C.L.R. (6th) 1, at para. 39; Parry Sound (District) Social Services Administration Board v. O.P.S.E.U., Local 324, 2003 SCC 42, [2003] 2 S.C.R. 157, at para. 39. In Goodyear Tire & Rubber Co. of Canada Ltd. v. T. Eaton Co. Ltd., [1956] S.C.R. 610, at p. 614, Fauteux J. (as he then was) wrote, “a Legislature is not presumed to depart from the general system of the law without expressing its intentions to do so with irresistible clearness, failing which the law remains undisturbed.”
51In my view, the Lister v. Dunlop line of cases remains undisturbed by the PPSA.
Application to this Case
52Despite their assertion that they were under no duty to give the appellants notice, the respondents submit that they did give reasonable notice to the appellants. In their Factum, they assert, “The Trial Judge found as a fact that there was a demand for payment and notice of default given by the Respondents to the Appellants on April 20, 2012.”
53This is a distortion of the trial judge’s reasons. She found that the seizure of the equipment was not based on the April 2012 Notice. The trial judge found that the respondents did not take any steps on that notice and, “[m]atters continued on much as they had for the previous two years” (at para. 33).
54The trial judge rejected Mr. Donkers’ evidence that he had always intended to seize the equipment on the strength of the earlier notice. He testified that he waited until after the summer because he did not want to harm the appellants’ business. The trial judge rejected this evidence, holding that it did not “ring true”, especially since the respondents were forced to pay more than $100,000 in relation to the excavator lease.
55The trial judge concluded her analysis of this aspect of the facts in the following way: “Given the deficiencies contained in the 2012 Notice, had Mr. Donkers relied upon it to seize equipment, he would have been on tenuous ground. Fortunately for Mr. Donkers, and unfortunately for Mr. Priest, however, a second breach intervened” (at para. 55). In relation to the second default, the trial judge made the following finding, at para. 63:
Mr. Donkers seized the defendant’s assets over the weekend of December 8, 2012. Priest was not given notice of the seizure, nor was he given an opportunity to cure the default or redeem the equipment before seizure. [Emphasis added.]
56Consequently, the question of reasonable notice was tethered to the November 2012 default on the promissory note, not the April 2012 default concerning the excavator lease. Indeed, the trial judge found that Mr. Donkers “acted out of spite when he did not tell Mr. Priest he was treating the missed payment as a default” (at para. 96).
57The trial judge erred in dismissing the counterclaim. As the Supreme Court held in Got Electric at paras. 20-21, the seizure of assets without notice amounts to a breach of contract. The same set of circumstances may also support an action for the tort of conversion. In that case, the Court decided that it was unnecessary to consider whether conversion was made out because the quantum of damages would not differ, whether liability sounded in contract or in tort (at pp. 418-419). Here too, having found that the respondents’ conduct amounted to a breach of contract, it is not necessary to address the tort claim.
(c) Notice Requirement in the APA
58In addition to the common law doctrine discussed above, the appellants rely upon the APA, which also provides a duty to give notice in the event of default. Para. 3.03 of the APA provides:
3.03 That upon default of any payment owing hereunder the Vendor shall forthwith provide notice of such default to the Purchaser or its solicitor by fax or by electronic communication at fax numbers or email addresses to be designated by the Purchaser. Upon such default existing for a period of fifteen (15) days following receipt notification of such default, the Vendor shall thereafter be entitled to forthwith have all licences and certificates howsoever related to the assets included hereunder reverted back to name of the Vendor or as it might direct which to such reversion of said licences and certifications the Purchaser does hereby consent and agree. Further in the event of such default, the Vendor shall have the right to seize all chattels and assets included hereunder pursuant to its security documentation however to mitigate its losses and without interference from the Purchaser. [Emphasis added.]
59The trial judge did not address this provision in her reasons. The appellants submit that the trial judge erred in failing to give effect to this provision in relation to the default on the promissory note. The respondents submit that the notice provision in Article 3.03 is inapplicable because it “merged” on closing.
60I would reject the respondents’ submissions. The notice provision in Article 3.03 remained operative. It did not “merge” upon closing.
61Although the doctrine of merger has some application to real property transactions (see Fraser-Reid v. Droumtsekas, [1980] 1 S.C.R. 720, at pp. 734-738), “[t]he doctrine has never applied to transactions involving personal property, such as goods”: G.H.L. Fridman, The Law of Contract in Canada, 6th ed. (Toronto: Thomson Reuters Canada Limited, 2011), at p. 566. Moreover, even when applicable, merger is not automatic; it is the intentions of the parties that must prevail: Fraser-Reid, at p. 738. This is a fact-specific inquiry.
62In this case, the inclusion of Article 3.03 would make no sense if it were to “merge” upon closing. The entire transaction, for both purchased and leased equipment, was structured on installment payments to satisfy outstanding debt. It provided that, in the event of default “of any payment owing hereunder”, the respondents would have certain remedies, and the appellants would be entitled to notice.
63The respondents breached this term of the APA.
(d) Conclusion
64For the foregoing reasons, the trial judge erred in finding that the respondents had no duty to give the appellants notice upon the default on the promissory note.
65The failure to provide notice was not an academic exercise or a mere formality in this case. The record before the trial judge established that, in October 2012, the appellants applied to their bank for financing to retire the balance on the promissory note, which was roughly $120,645 at the time. Just days after the illegal seizure, on December 12, 2012, the bank approved the advance of $122,000.
66Given my conclusion that the appellants were entitled to notice at common law and according to the terms of the APA, it is not necessary to address the appellants’ alternative argument that the duty of good faith in the performance of contracts required the respondents to give notice of its intention to seize the appellants’ assets. The application of this duty would be especially difficult in this case given the trial judge’s apt finding, at para. 95: “To be frank, both parties acted dishonourably.”
67I would set aside the trial judge’s order dismissing the counterclaim, allow the counterclaim, and remit the matter to the Superior Court for an assessment of damages. During her submissions at the hearing, appellants’ counsel advised us that the matter could be addressed in writing because the trial judge heard all of the evidence relevant to this issue. While that may well be the case, the matter of how to proceed is best determined by that court.
(2) Personal Liability and the Excavator Lease
68The trial judge found that both 173 Ltd. And Mr. Priest were liable for failing to properly assume the excavator lease. At para. 48 of her reasons, the trial judge found, “[b]ased on the evidence before me, I am satisfied that Mr. Priest failed to assume the Excavator lease pursuant to the Agreement.” She awarded damages against both 173 Ltd. And Priest. This finding may well have been inadvertent, a simple result of failing to distinguish between Priest and his company.
69Nonetheless, I agree with the appellants that the trial judge erred in awarding damages against Mr. Priest personally. Mr. Priest was not a party to the APA. Although he was personally liable on the promissory note, the note only applied to purchased assets, not leased equipment. In the absence of findings that would support a decision to pierce the corporate veil, and there were none, this part of the trial judge’s order cannot stand.
(3) Damages
70The respondents appeal the trial judge’s calculation of damages. As noted above, at para. 29, the trial judge made adjustments to Mulligan J.’s calculations. She did so because she had the benefit of a more robust record, including input from both sides. The trial judge’s assessment of damages must be accorded significant deference unless tainted by an error in principle, or is unreasonably high or low: Awan v. Levant, 2016 ONCA 970, 133 O.R. (3d) 401, at paras. 100-101 and Whitefish Lake Band of Indians v. Canada (Attorney General), 2007 ONCA 744, 87 O.R. (3d) 321, at para. 28. The respondents have failed to identify any such error.
Promissory Note and Excavator
71The trial judge accepted Mulligan J.’s calculations and only adjusted the amount to reflect interest to date.
Loader
72Although Mulligan J. did not address the loader in his endorsement, the trial judge determined the loader was sold for $15,000 less than it was worth. Mr. Donkers commissioned three appraisals for the loader, which averaged out at $49,000. However, the loader was only sold for $34,000. The trial judge also noted the fact the loader was sold to the owner of Call Service rendered the sale “questionable”. She granted Mr. Priest a $15,000 credit for the sale of the loader.
73In my view, it was in the trial judge’s purview to make this finding.
Truck and Trailer
74Mulligan J. awarded $50,814.84 in damages for the outstanding payments on the truck and trailer lease, plus interest. The trial judge rejected this award and removed the amount from her consideration of damages. She noted that there was $33,661.33 outstanding on the lease between the seizure and sale of the truck and trailer. General Electric repossessed the truck and trailer from Mr. Donkers and consigned them to a third party, which sold the equipment at auction for $101,500. The third party paid General Electric the outstanding $33,661.33 and remitted the remaining $65,538.67 to Mr. Donkers. That amount was then properly credited to Mr. Priest. Since Mr. Donkers was never required to make any payments to General Electric for the truck and trailer, there was no basis upon which to award him $50,814.84 in damages.
75I agree with the trial judge’s assessment of this issue.
Storage Costs
76Mulligan J. approved the respondents’ expenses at $236,082.65, which included $160,200 for the 178 days the seized assets were stored at Call Service. However, the trial judge found the $900 per day storage fee was excessive. Mr. Donkers had eight months (from April 2012, when the appellants received the 2012 Notice, to December 2012, when the respondents seized 173 Ltd.’s assets) to find a suitable facility at a reasonable rate, yet there was no evidence he made any effort to look elsewhere than Call Service. Considering the rate Mr. Donkers was paying to store his own equipment with Call Service, the trial judge concluded $10,000 was a reasonable monthly fee, for a total of $60,000 for the roughly six months the seized assets spent in storage. Accordingly, she gave Mr. Priest a $100,200 credit, representing the excessive storage fees.
77It was unclear whether interest applied to the Call Service storage costs that Mr. Donkers personally guaranteed. Accordingly, the trial judge held that if Mr. Donkers satisfied Mr. Priest’s counsel that interest applied, it would be calculated at the rate set out in s. 127 of the Courts of Justice Act, R.S.O. 1990, c. C-43.
78Again, I see no error in the trial judge’s approach.
(4) The Writ of Seizure and Sale
79Given that this case must be returned to the Superior Court for an assessment of damages on the counterclaim, the writ is set aside altogether. It is not necessary to consider the issue of waiver.
F. Conclusion
80I would allow the appellants’ appeal against the dismissal of its counterclaim and remit the case to the Superior Court for an assessment of the appellants’ damages. I would dismiss the cross-appeal against the trial judge’s award of damages in the main action.
81Both parties agreed that the successful party is entitled to costs of the appeal in the amount of $20,000, plus disbursements and HST. Costs are awarded to the appellants in this amount.
82As for the costs awarded at trial, the parties are content that they be addressed in the Superior Court in conjunction with the assessment of damages on the counterclaim.
Released: “MLB” August 30, 2021
“Gary Trotter J.A.” “I agree. M.L. Benotto J.A.” “I agree. B.W. Miller J.A.”
Erratum
Correction made September 22, 2021: The phrase “inclusive of disbursements and HST” in paragraph 81 was replaced with “plus disbursements and HST”.
1Note that the bailiff in this case used the wrong form. This notice was under the Repair and Storage Liens Act, R.S.O. 1990, c. R.25. Where creditors seek to secure payment of a debt by taking a security interest in property of the debtor, they must issue a “Notice of Intent to Enforce Security” pursuant to the PPSA.
