COURT FILE NO.: 719/03
DATE: 20031208
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
THEN, EPSTEIN and C. CAMPBELL JJ.
B E T W E E N:
941807 ONTARIO LIMITED
Plaintiff (Appellant)
- and -
LENNOX DRUM LIMITED
Defendant (Respondent)
R. Steven Baldwin, for the Appellant
David Himelfarb, for the Respondent
HEARD: December 8, 2003
BY THE COURT:
[1] The plaintiff appeals the judgment of Hurley J. dated April 15, 2002, in which the trial judge awarded the plaintiff $2,890.84 plus pre-judgment interest and the defendant $12,600 for contractual damages and $5,000 for punitive damages. The trial judge also ordered the plaintiff to pay the defendant’s costs. He fixed those costs in the amount of $75,970.
[2] The action arose out of a business relationship between the parties that involved the plaintiff’s lease to the defendant of truck trailers. The relationship was governed by a master lease dated March 4, 1997, as well as individual leases for each of the forty trailers involved. The relationship was virtually problem free for the first two years. Then in the spring of 1999 difficulties arose mainly having to do with the maintenance of the trailers. Over a period of time the defendant returned a number of the trailers to the plaintiff. The trial proceeded over 21 days. The trial judge reserved judgment after which he gave 48 pages of reasons in which he made findings of fact, many of which turned on his specific credibility findings.
[3] The principle issue in the action was the maintenance of the trailers. In this respect the plaintiff maintained that there was no evidence to support the trial judge’s conclusion that it breached its maintenance obligations set out in the master lease. We disagree.
[4] The trial judge found that while some maintenance was done in furtherance of the yearly certification procedure, the plaintiff fell short of its obligation under the master lease agreement. In the result, the trial judge found that the defendant was entitled to set off the amount summarized in Exhibit 52 representing third party maintenance expenses incurred by the defendant. There is no palpable or overriding error that affected his assessment of the facts relevant to this pivotal issue that would warrant our interference. See Stein v. The Ship “Kathy K”, 62 D.L.R. (3d) 1 (S.C.C.) at p. 5.
[5] The plaintiff submits that he was unfairly precluded from challenging the set-off amounts contained in Exhibit 52. In our view, the plaintiff’s counsel had a full opportunity at various stages during the trial to explore the legitimacy of the set-off amounts and failed to do so. The record contains ample evidence to support the trial judge’s conclusion with respect to the plaintiff’s breach of the maintenance obligations and the consequences of that breach. We would not interfere.
[6] The right of the defendant to return the trailers prior to the end of the four year lease was also an issue. In our view, the trial judge’s interpretation of the contract with respect to the return of the trailers was a reasonable one. Given that conclusion, the trial judge’s failure to award the plaintiff damages for trailers returned prior to the four year term was also reasonable.
[7] The plaintiff submits that the trial judge gave no credit for the stolen trailer #54862 on the basis that there was no evidence that the plaintiff was asked to sign the proof of loss. This issue was raised by plaintiff’s counsel during the cross-examination of the defendant who maintained that the proof of loss had been sent to the plaintiff with no response. In his evidence, given three months prior to this cross-examination, Mr. Hasiuk, the plaintiff’s directing mind gave no evidence to the contrary. We see no merit in this ground of appeal.
[8] While the trial judge did not have the benefit of the judgment of the Supreme Court of Canada in Whiten v. Pilot Insurance 2002 SCC 18, [2002] 1 S.C.R. 595, we are not satisfied that his decision on the punitive damages is in error.
[9] The appellant’s position is that before such an award may be granted there must be an actionable wrong that has for its foundation demonstrable damage. In Whiten, Binnie J. at p. 639 confirmed what the Supreme Court of Canada had said in a 1999 case, namely, that “punitive damages can be awarded in the absence of an accompanying tort” where there is a “breach of a distinct and separate contractual provision or other duty such as fiduciary obligation” (p. 640).
[10] At p. 645 Binnie J. set out eleven factors to be considered in awarding punitive damages including number (5):
“Punitive damages are generally given only where the misconduct would otherwise be unpunished or where other penalties are or are likely to be inadequate to achieve the objectives of retribution, deterrence and denunciation”.
[11] In light of the above comment, we are not persuaded that specific damages need be proven in respect of a breach of contract before punitive damages can be awarded.
[12] The plaintiff seeks leave to appeal from the award of costs essentially on the basis that the award is disproportionate to the amount awarded given the counterclaim of the defendant for $300,000 in damages.
[13] The defendant submits that leave should not be granted in the face of the fraud that was found which would normally carry with it an award of substantial indemnity costs.
[14] While we might not have exercised discretion in the same manner as the trial judge, we are not persuaded that there was any error sufficient to warrant the granting of leave on the issue of costs.
[15] The appeal book is endorsed as follows: “This appeal is dismissed for oral reasons by the Court. Costs of the appeal to the respondent on a partial indemnity basis are fixed in the amount of $10,000, all inclusive”.
THEN J.
EPSTEIN J.
C. CAMPBELL J.
Date of Reasons for Judgment: December 8, 2003
Date of Release: December 17, 2003
COURT FILE NO.: 719/03
DATE: 20031208
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
THEN, EPSTEIN and C. CAMPBELL JJ.
B E T W E E N:
941807 ONTARIO LIMITED
Plaintiff (Appellant)
- and -
LENNOX DRUM LIMITED
Defendant (Respondent)
ORAL REASONS FOR JUDGMENT
THEN J.
Date of Reasons for Judgment: December 8, 2003
Date of Release: December 17, 2003