COURT FILE NO.: 328/06

DATE: 20070314

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

lane, carnwath and swinton jj.

B E T W E E N:

1007522 ONTARIO LIMITED c.o.b. as G.T.I., 960660 ONTARIO LIMITED c.o.b. as CANUN, ALAN FRENCH, PETER CIRELLI, 1255229 ONTARIO LIMITED and 1255230 ONTARIO LIMITED

Plaintiffs (Respondents)

• and -

PETER SCOTTI, VINCENT GAGLIARDI, MARIA SCOTTI, BRUNA GAGLIARDI, 1086343 ONTARIO LIMITED, 1087154 ONTARIO LIMITED, G.R.P. MACHINE TOOLS INC., G.R.G. PRECISION PARTS INC., 1233474 ONTARIO LTD., 1066297 ONTARIO LIMITED and JROBERTS MANUFACTURING INC.

Defendants (Appellants)

AND BETWEEN:

G.R.P. MACHINE TOOLS INC., 1086343 ONTARIO LIMITED, 1087154 ONTARIO LIMITED, 1233474 ONTARIO LIMITED, 1066297 ONTARIO LIMITED, PETER SCOTTI and VINCENT GAGLIARDI

Plaintiffs by Counterclaim

(Appellants)

• and -

ALAN FRENCH, PETER CIRELLI, 1255229 ONTARIO LIMITED and 1255230 ONTARIO LIMITED

Defendants by Counterclaim (Respondents)

Robert A. Spence, for the Respondents

Peter Griffin and

Thomas S. Kent, for the Appellants

HEARD at Toronto: March 14, 2007

carnwath J.: (Orally)

1The motion to admit fresh evidence is dismissed. We reject any suggestion that failure to exchange an affidavit of documents relieves the obligation to conduct a diligent search if a motion for fresh evidence is to succeed. By the appellant’s own evidence, Mr. Gagliardi was not the sort of person one would expect to make a diligent search, nor as far as we are able to tell, is there any evidence he made such a search at the applicable time.

2Moreover, we are not persuaded the document would likely be conclusive of the issue in appeal. It is but another example of the informal, if not casual, business relationship between the parties.

3The memorandum of February 21, 1996, is at best ambiguous and can be read to support the conclusion that G.R.P. would leave “this business” before getting paid for the machinery.

4The appeal is dismissed.

5The sole issue we find in the appeal is whether Lederman J. erred in finding that Messrs. French and Cirelli did not know that G.R.P. was operating on its own and selling to customers who are not those of G.T.I. and that they did not know about G.R.P.’s customers or suppliers.

6The standard of review for findings of fact made by a trial judge is such that the findings are not to be reversed unless it can be established that the trial judge made a palpable and overriding error. See Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235.

7When considering alleged errors, appeal courts must consider the reasons of the trial judge but they must not place an impossible burden on the trial judge. The party is entitled to adequate reasons, not perfect reasons. The trial judge is not required to write about all aspects of the evidence nor to give reasons for every point raised, a functional approach is required.

8The trial judge should give reasons that explain the result. The trial judge’s reasons are found at paragraphs 46 and 47 of the judgment. He begins by accepting the evidence of Messrs. French and Cirelli that they did not know that G.R.P. was operating on its own, selling to customers who were not those of G.T.I. He then referred to the testimony of witnesses Wall, Denman, Szukalo and Wheeldon and found that that evidence did not amount to attributing knowledge to Messrs. French and Cirelli. He did so because they could not relate a definite event when the nature of the operations were clearly brought home to French and Cirelli. He then referred his view that for French and Cirelli, it was logical for them to believe on their irregular visits to 135 Millwick that the non-mining activity taking place all related to G.T.I.’s business. He explained that the nature of the relationship between the four men was one of trust.

9In paragraph 47 Lederman J. notes:

“The defendants emphasize that everything was conducted in the open and it was plain for French and Cirelli to see the nature of the independent business being carried on by G.R.P.”

10Lederman J. considered that, but then found that the infrequency of their visits, the level of trust that existed among the four partners, the fact which he found that none of this was clearly disclosed to Messrs. French and Cirelli, compelled him to find that what French and Cirelli did observe was business they believed to belong to G.T.I.

11We reject the submission that because Lederman J. did not specifically reject the evidence of Messrs. Scotti and Gagliardi, that the appeal must succeed. We do so for two reasons. First, it is implicit in his reasons that Lederman J. accepted the evidence of Messrs. Cirelli and French and explained why he did so in paragraphs 46 and 47. Second, he may well have accepted their evidence on the basis of their honest belief that Cirelli and French knew the state of affairs which Gagliardi and Scotti believed to exist.

12It was not Lederman J.’s task to construe the evidence of Messrs. Gagliardi and Scotti as to what the arrangement was between the parties other than to weigh it in ruling on the state of knowledge of the respondents. We find no palpable or overriding error in Lederman J.’s reasons.

LANE J.

13The motion is dismissed for reasons delivered orally by Carnwath J. Costs included in the award on the appeal. I have endorsed the appeal book, “The appeal is dismissed for reasons

delivered orally by Carnwath J. Costs of the motion and the appeal together are fixed at $10,000.00, all inclusive.”

CARNWATH J.

LANE J.

SWINTON J.

Date of Reasons for Judgment: March 14, 2007

Date of Release: March 21, 2007

COURT FILE NO.: 328/06

DATE: 20070314

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

lane, carnwath and swinton jj.

B E T W E E N:

1007522 ONTARIO LIMITED c.o.b. as G.T.I., 960660 ONTARIO LIMITED c.o.b. as CANUN, ALAN FRENCH, PETER CIRELLI, 1255229 ONTARIO LIMITED and 1255230 ONTARIO LIMITED

Plaintiffs (Respondents)

• and -

PETER SCOTTI, VINCENT GAGLIARDI, MARIA SCOTTI, BRUNA GAGLIARDI, 1086343 ONTARIO LIMITED, 1087154 ONTARIO LIMITED, G.R.P. MACHINE TOOLS INC., G.R.G. PRECISION PARTS INC., 1233474 ONTARIO LTD., 1066297 ONTARIO LIMITED and JROBERTS MANUFACTURING INC.

Defendants (Appellants)