COURT FILE NO.: DC-04-002480-00

DATE: 20050120

SUPERIOR COURT OF JUSTICE - ONTARIO

(Divisional Court)

RE: Ursula CHALLENOR c.o.b. as LAWTECH, Appellant

and

NUCLEUS FINANCIAL NETWORK INC, and TRICASTER HOLDINGS INC, also known as TRICASTER CAPITAL CORPORATION, Respondents

BEFORE: Lane, Molloy and Donohue JJ.

HEARD: At Brampton, January 18, 2005

COUNSEL: Robert N. Kostyniuk, Q.C., for the Appellant

Michael Kealy, for the Respondents

ENDORSEMENT

[1] This is an appeal from the judgment of Mr. Justice MacKenzie after trial dismissing the appellant’s claim against the defendant, Tricaster, and awarding costs of $15,339.44 to the respondents.

[2] The appellant’s claim was for services provided under contract to the co-defendant, Nucleus. While the services were being provided, Nucleus ceased paying for them. Tricaster is the shareholding company of Nucleus. Accordingly, the appellant brought suit against both respondents, on the basis of their inter-connection. The balance owing to the appellant was $10,339.39.

[3] Default judgment was obtained against Nucleus. The appellant was unable to collect this judgment, because Tricaster had seized all of Nucleus’ assets under a General Security Agreement.

[4] The appellant’s statement of claim against Tricaster was limited to two sentences, and could be interpreted to allege alternatively that Tricaster exercised complete control over Nucleus for a fraudulent or improper purpose, or accepted the appellant’s services on the basis of an implied partnership with Nucleus, and thus was liable on either basis for the obligation to the appellant.

[5] The trial judge found against the appellant on both propositions.

[6] The question on appeal is whether the trial judge was clearly wrong. Did he act on a wrong principle, or disregard or misinterpret material evidence?

[7] We have considered the transcript of evidence at trial, and the trial judge’s reasons for judgment.

[8] The relevant factual findings are found in par’s 5, 6, 11, 13, 16, 17 and 21 of the reasons.

[9] At par. 17, the trial judge held that the appellant failed to lead sufficient evidence so as to discharge his burden of proof that Tricaster exercised complete control over Nucleus. At par. 17, the trial judge found that the appellant had not led sufficient evidence to raise an adverse inference as to control, requiring the respondents to lead evidence. We find no error in this evidentiary finding.

[10] There was no evidence before the trial judge that Tricaster controlled Nucleus for a fraudulent or improper purpose, as was submitted by the appellant’s counsel. Accordingly, there was properly no adverse finding in this regard.

[11] At par. 22, the trial judge found that the evidence did not disclose a basis on which to imply a partnership or joint venture between Nucleus and Tricaster.

[12] Accordingly, on each basis for liability, complete control or partnership, the trial judge found that there was insufficient evidence. Our own review of the evidence reveals no palpable and overriding error. The appellant has not established that the trial judge was clearly wrong.

[13] On the basis of the trial judge’s evidentiary findings, he was right to dismiss the claim. There was no error in law.

[14] As no quantum meruit claim was pleaded or argued, the court cannot determine an appeal on that basis.

[15] The appellant also appeals the costs order against her of $15,339.44. We note there is a charge for attendance on a judgment debtor examination concerning the other defendant, Nucleus. This $2,520 must be discounted from the Bill of Costs. This amount would appear to be substantiated by the respondents’ dockets. However, the principle recently developed in the case of Zesta Engineering Ltd. and Cloutier 2002 25577 (ON CA), [2002] O.J. No. 4495 (C.A.) must be kept in mind. After the arithmetic is done, the ultimate question is: What would be reasonable for an unsuccessful party to pay in all the circumstances?

[16] The relevant circumstances include the unchallenged fact that the appellant provided services which were enjoyed by the respondents, and those benefits continue to be enjoyed by Tricaster. She has received no compensation for providing these services. Both respondents in their corporate and commercial arrangements, and in defending the appellant’s suit, have been ably represented by the same firm of solicitors. Tricaster would have been aware of the financial position of Nucleus while the appellant was doing the work for which Tricaster would be benefitting indirectly. The action, although not successful, was a natural reaction to these facts, and was not without a possibility of success. In our view, in the light of the modest amount involved, and the circumstances described above, the costs award was disproportionately high. It is important that counsel in these small cases avoid building up costs exceeding what is at stake. A fair figure to expect the unsuccessful plaintiff to pay to Tricaster is $7,500 all-inclusive, and the costs award is reduced to that sum.

[17] As success has been divided on the appeal, we exercise our discretion to order no costs.

Lane J.

Molloy J.

Donohue J.

Dated: January 20, 2005