4438591 Canada Inc. v. Vaillant, 2011 ONSC 3676
DIVISIONAL COURT FILE NO.: DC-09-00001562
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT - OTTAWA
CUNNINGHAM A.C.J., VALIN and ARRELL JJ.
BETWEEN:
4438591 CANADA INC. and PAUL BORG Appellants
– and –
MAUREEN VAILLANT and MALCOLM SCOTT BAYNE Respondents
Russell MacCrimmon, for the Appellants
Ronald S. Peterson, for the Respondent Vaillant
Steven J. Greenberg for the Respondent Bayne
HEARD: June 13, 2011
REASONS FOR JUDGMENT
1This is an appeal from the judgment of Manton J. delivered on October 14, 2009 in which he awarded judgment against the appellants and costs. For the reasons that follow, the appeal is dismissed.
2The respondent Vaillant owned a business known as Bunsmaster Bakery which she operated in leased premises located at 2447B Kaladar Avenue in Ottawa. She sold the bakery and its equipment in 2007. The purchaser declared bankruptcy early in 2008. Under the terms of a security agreement, Vaillant repossessed the bakery equipment.
3On February 8, 2008, Vaillant appointed the respondent Bayne as her executive agent to act as liquidator and to sell the equipment. Under the terms of their agreement, Vaillant was to receive $35,000.00 from sale proceeds. Bayne was to retain any monies recovered on the sale in excess of that amount as his commission.
4The appellant Borg is an officer and director of the appellant 4438591 Canada Inc. Borg approached Bayne to enquire about the inventory of bakery equipment for sale. They had a number of meetings. Bayne gave Borg a key so that Borg could have the equipment inspected by an independent firm.
5Following discussions and negotiations with Borg, Bayne prepared an offer to purchase the bakery equipment on March 27, 2008. The purchase agreement stated that the appellant corporation was purchasing the equipment on behalf of Borg for the price of $55,000.00. The agreement provided for the immediate payment of a deposit in the amount of $10,000.00, with the remaining balance to be paid in the amount of $45,000.00.
6Bayne signed the agreement on behalf of Vaillant. Borg signed the agreement as the purchaser.
7The agreement was conditional upon the purchaser obtaining a new five year lease with the landlord at $3,500.00 net for the space described as approximately 4,800 square feet plus GST, including snow removal, two months free rent, and two optional five year term renewals with increases not to exceed the Canadian cost of living inflation rate.
8The agreement also contained a clause that stated: “The landlord warrants a bakery may continue to operate within the building and is in compliance with the City”. The landlord was not a party to the offer to purchase.
9On May 12, 2008, the appellant corporation signed a lease with the landlord. Contrary to the conditions contained in the offer to purchase, the lease provided for a rented area of 5,841 square feet at a monthly payment of $4,312.61.
10Subsequent to the execution of the lease, the appellants requested the landlord to make certain renovations. A dispute arose between them as to the cost of the requested renovations. Shortly after July 3, 2008, the appellants chose to abandon the premises and refused to pay Vaillant the balance owing under the agreement.
11Vaillant commenced an action against the appellants claiming the sum of $45,000.00 for breach of contract, a declaration that Bayne held the sum of $10,000.00 in trust for her, and the sum of $10,000.00 from Bayne for breach of contract. Bayne filed a statement of defence and cross-claim in which he claimed payment of the sum of $10,000.00 from the appellants.
12Prior to trial, Vaillant sold most of the bakery equipment that was to have been sold to the appellants for the sum of $20,084.10. That was the amount she recovered net of her expenses in completing the sale.
13The trial judge awarded judgment in favour of Vaillant in the amount of $14,915.90, representing the difference between the amount of $35,000.00 owed to her less the amount she received on the subsequent sale of most of the equipment. The trial judge also awarded judgment in favour of Bayne in the amount of $10,000.00, representing the balance of commission owed to him.
14The trial judge awarded costs to Vaillant in the amount of $10,000.00 and to Bayne in the amount of $7,000.00. He ordered that Borg was personally liable for the payment of the judgment and costs.
15The appellants raised the following issues on appeal:
(1) What is the appropriate appellate standard of review?
(2) Did the trial judge err in finding that the terms of the offer to purchase were clear and certain?
(3) Did the trial judge err in finding that the conditions to the offer to purchase were waived and/or satisfied?
(4) Did the trial judge err in finding that the respondents did not repudiate the contract?
(5) Did the trial judge err in finding that Borg was personally liable?
(6) Did the trial judge err in finding that the respondents reasonably mitigated their losses?
(7) Did the trial judge err in awarding costs to the respondents that were disproportionate to the amounts awarded?
16This case involves the interpretation of a contract in light of the evidence, the conduct of the parties and the inferences drawn. It involves questions of mixed fact and law. In Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, the Supreme Court of Canada held that:
(a) the standard of review on a question of law is that of correctness;
(b) the standard of review for findings of fact is that such findings are not to be reversed unless it can be established that the trial judge made a palpable and overriding error; and
(c) questions of mixed fact and law are subject to the palpable and overriding error standard of review unless it is clear that the trial judge made some error of law or principle that can be identified independent of the judge’s application of the law to the facts of the case.
17We are of the view that the trial judge did not make any error of law that should be reviewed on a standard of correctness. He considered the issues raised by the appellants and the evidence relating to those issues. He made findings of fact and drew inferences from those findings.
18The trial judge concluded that: (i) the terms of the offer to purchase were clear; (ii) the appellants waived the conditions in the offer with respect to the lease as a result of signing same; (iii) the respondents did not repudiate the offer; (iv) Borg was personally liable for payment of the damages awarded to the respondents; and (v) Vaillant had made reasonable efforts to mitigate her loss.
19With respect to the issue of personal liability, Borg signed the agreement without indicating he was signing on behalf of a corporate entity. There was evidence that Borg was an experienced business person. He had operated a Bunsmaster Bakery franchise in Québec. The evidence disclosed that he made utility agreements and signed the lease in the name of the appellant corporation. Bayne testified that the letters “O/B” beside Borg’s name in the agreement indicated “on behalf of”. Bayne also testified that, when he prepared the agreement, he was not sure whether the appellant corporation in fact existed and that he was relying on Borg as a party to the agreement. The evidence revealed that the telephone number recited in the agreement below Borg’s name was his personal telephone number and not the telephone number of the appellant corporation. In those circumstances, we are satisfied that there was ample evidence for the trial judge to conclude that Borg personally and was therefore liable personally for the amounts he awarded.
20The decision in Housen, supra, and subsequent jurisprudence speaks clearly to the principle that, in the circumstances of this case, the trial judge is owed a considerable amount of deference with respect to findings of fact. There was evidence to support the findings of fact he made. The inferences he drew from his findings of fact were reasonable. We are therefore of the view that the trial judge made no palpable or overriding errors in arriving at those conclusions.
21The last issue raised on the appeal was that the awards of costs the trial judge made in the aggregate amount of $17,000.00 were disproportionate to the amount recovered in his judgment in the amount of $24,915.90. An award of costs lies within the discretion of a trial judge. An award of costs will only be interfered with on appeal in the event the reviewing court is satisfied that the trial judge did not exercise his discretion judicially.
22We understand this was a two day trial with evidence during the first day, submissions during the morning of the second day, followed by the trial judge’s decision during the afternoon of the second day. Counsel for Vaillant requested a costs award in the amount of $13,223.70 on a partial indemnity basis, and counsel for Bayne requested the sum of $9,700.00. Counsel for the respondents submitted to the trial judge that the appropriate range of costs was $7,500.00 to $10,000.00.
23The trial judge took those submissions into account. He was alive to the issue of proportionality. Although his costs awards are at the high end of the range for a case like this, they are, in our view, nevertheless within the range. We are unable to conclude in those circumstances that the trial judge failed to exercise his discretion judicially.
24The appeal is therefore dismissed.
25The respondents are entitled to their costs of the appeal which we hereby fix in the amount of $7,500.00 for Vaillant and $5,000.00 for Bayne, both amounts inclusive of disbursements and HST. Those costs are payable by the appellants.
Cunningham A.C.J.
Valin J.
Arrell J.
Released: June 14, 2011
CITATION: 4438591 Canada Inc. v. Vaillant, 2011 ONSC 3676
DIVISIONAL COURT FILE NO.: DC-09-00001562
DATE: 2011-06-14
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
CUNNINGHAM A.C.J., VALIN and ARRELL JJ.
BETWEEN:
4438591 CANADA INC. and PAUL BORG Appellants
– and –
MAUREEN VAILLANT and MALCOLM SCOTT BAYNE Respondents
REASONS FOR JUDGMENT
Released: June 14, 2011