ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Jennings, Ferrier and Perkins JJ.
B E T W E E N:
DUNCAN CEILING & WALL SYSTEMS OF OSHAWA LIMITED
Plaintiff
(Appellant)
- and -
VIN-BON RETAIL SYSTEMS LTD. and ANGELO LOCILENTO
Defendants
(Respondents)
Donald E. Short, for the Plaintiff (Appellant)
A. Edward Tonello, for the Defendants (Respondents)
HEARD at Toronto: February 2, 2007
PERKINS J.: (Orally)
1The plaintiff appeals from the dismissal of the claim at trial against the individual defendant, Locilento, to impose liability on him for the breach by the corporate defendant of the trust imposed by s. 8 of the Construction Lien Act.
2The appellant relies on the provisions of s. 13(1) of the Act, which provides:
- (1) In addition to the persons who are otherwise liable in an action for breach of trust under this Part,
(a) every director or officer of a corporation; and
(b) any person, including an employee or agent of the corporation, who has effective control of a corporation or its relevant activities,
who assents to or acquiesces in, conduct that he or she knows or reasonably ought to know amounts to breach of trust by the corporation is liable for the breach of trust.
3The trial judge found at paragraph 11 of his reasons:
Indeed, apart from the admission that he was the president of the corporation, Locilento’s name is never mentioned in the trial evidence. The contract in question was signed on behalf of the defendant corporation by one Vecchiarelli. Accordingly, there is no evidence, either direct or circumstantial, from which it can reasonably be concluded that Locilento had effective control of the corporation or its relevant activities.
It was not argued before us that this statement respecting the lack of evidence was in error.
4The appellant submits that the admission in the statement of defence that: “The defendant, Angelo Locilento … at all material times was the president, director and officer of [the corporate defendant],” as pleaded in paragraph 4 of the statement of claim, establishes that Locilento was the sole director and officer of the corporate defendant, and as such must be taken to have acquiesced in the conduct that constituted the admitted breach of trust.
5The appellant’s position is that where there is a sole director, officer and shareholder of a corporation, the onus shifts to that individual to disprove acquiescence. The pleading is somewhat ambiguous in that it does not allege that the individual defendant was the sole officer, director and shareholder. However, we are prepared to proceed on the assumption that he was.
6On the question of onus, we note that the Court of Appeal in Zurich Indemnity Co. of Canada v. Matthews (2005), 2005 ONCA 14130, 44 C.L.R. (3d) 18, at paragraph 26, said:
Section 13 does not declare the directors and officers to be trustees nor does it deem them to be such. It does not make the directors and officers trustees. It imposes liability on directors and officers for breaches of trust committed by the corporation only if it is found that the directors and officers assented to, or acquiesced in, conduct by the corporation that they reasonably ought to have known amounted to breach of trust.
7There is nothing in s. 13(1) that refers to a shifting of onus or a burden on the individual defendant. While there is reference in the section to constructive knowledge of the conduct of the defendant corporation that amounts to a breach of trust, there must be a factual finding of actual acquiescence.
8We are not persuaded that even in the case of a sole shareholder and directing mind, proof of that alone shifts the onus to that person to prove that he or she did not acquiesce.
9As found by the trial judge, there was no evidence on the issue, let alone evidence from which an inference could be drawn. In all of the cases referred to by Mr. Short in his able and helpful argument, there were findings of active participation by the individual sought to be made liable, and no such finding could be made here.
10Accordingly, the appeal is dismissed.
JENNINGS J.
11I endorse the record as follows: “For oral reasons delivered today, these appeals are dismissed. Costs as agreed by counsel in the sum of $6,000.00, payable to the respondent.”
PERKINS J.
JENNINGS J.
FERRIER J.
Date of Reasons for Judgment: February 2, 2007
Date of Release: February 9, 2007
COURT FILE NO.: 52/07 and 53/07
DATE: 20070202
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Jennings, Ferrier and Perkins JJ.
B E T W E E N:
DUNCAN CEILING & WALL SYSTEMS OF OSHAWA LIMITED
Plaintiff
(Appellant)
- and -
VIN-BON RETAIL SYSTEMS LTD. and ANGELO LOCILENTO
Defendants
(Respondents)
ORAL REASONS FOR JUDGMENT
PERKINS J.
Date of Reasons for Judgment: February 2, 2007
Date of Release: February 9, 2007