CITATION: 1742018 Ontario Inc. v. Rooflifters Inc., 2015 ONSC 5783
DIVISIONAL COURT FILE NO.: 74/15
SMALL CLAIMS COURT FILE NO.: SC-13-252204-00
DATE: 20150918
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
1742018 ONTARIO INC. o/a CHRISCON ENTERPRISES Plaintiff (Respondent)
– and –
ROOFLIFTERS INC. and MARTY SHIFF Defendants (Appellants)
Vince Cosentino, agent for the Plaintiff
Mario E. Delgado, for the Defendants (Appellants)
HEARD: September 15, 2015
PERELL, J.
REASONS FOR DECISION
A. INTRODUCTION
[1] The Defendants, Rooflifters Inc. and Marty Shiff, appeal from the Judgment of Deputy Judge Godfrey in a Small Claims Court action. The Deputy Judge granted the Plaintiff, 1742018 Ontario Inc. ("Chriscon Enterprises"), judgment against both Defendants for $25,000 plus costs of $175 and prejudgment interest.
[2] For the reasons that follow, I dismiss the appeal.
B. FACTUAL AND PROCEDURAL BACKGROUND
[3] Rooflifters Inc., whose principal is Mr. Shiff, was a contractor for work performed at 95 Washburn Drive in Toronto. Rooflifters retained Chriscon Enterprises, whose principal is Vince Cosentino, as a subcontractor. When Rooflifters Inc. did not pay for Chriscon Enterprises' improvements, Chriscon Enterprises commenced construction lien actions for an amount in excess of $143,000.
[4] In the lien actions, the Vetting Committee initially decided that Chriscon Enterprises was entitled to $51,000 from the owner's holdback.
[5] On June 21, 2011, in the lien actions, Chriscon Enterprises, Rooflifters, and Mr. Shiff entered into Minutes of Settlement. The Minutes of Settlement stated:
Minutes of Settlement
The Plaintiff 1742018 Ontario Inc. c.o.b. as Chriscon Enterprises and the Defendants Rooflifters Inc. and Marty Shiff agree to settle the above actions on the following terms:
The Defendant Rooflifters Inc. shall consent to the immediate return of the holdback (approximately $51,000) currently held by the Vetting Committee in this action … in favour of the Plaintiff to be paid to the Plaintiff's counsel in trust;
In addition to the above payment as described in paragraph 1, Rooflifters shall pay the further costs of $25,000 to the Plaintiff.
The Defendant Rooflifters shall pay the costs referred to in paragraph 2 in 24 equal payments commencing July 30, 2011.
The Defendant Rooflifters shall issue post-dated cheques and payable to the Plaintiff delivered to the Plaintiff's Solicitors' office.
The Defendant Rooflifters shall consent to judgment for $143,736.60 plus interest and costs to be agreed upon.
The Defendant Marty Shiff shall consent to judgment in the amount of $75,000.
Plaintiff's counsel shall hold said judgments and shall not act upon them unless the Defendants default upon their obligations.
[6] Chriscon Enterprises' lawyer was Salvatore Mannella, and as appears from the Minutes of Settlement, the structure of the settlement was that: (1) Mr. Mannella would receive the owner's holdback - anticipated to be $51,000 - in trust for Chriscon Enterprises; and (2) Chriscon Enterprises would also receive $25,000 in postdated cheques payable for costs.
[7] After the Minutes of Settlement were signed, the Vetting Committee actually sent Mr. Mannella $64,500 from the owner's holdback, from which Mr. Mannella deducted and kept $13,500. He remitted $51,000 to Chriscon Enterprises. Chriscon Enterprises also received the first 12 of the cheques from Rooflifters Inc., i.e. $12,500.
[8] Mr. Cosentino did not discover the $64,500 payment made by the Vetting Committee until after Rooflifters Inc. failed to remit the remaining 12 cheques and after Chriscon Enterprises had dismissed Mr. Mannella as counsel. Having discovered what had occurred, Chriscon Enterprises sued in Small Claims Court for $25,000.
[9] After a trial, at which Mr. Mannella was summonsed but did not testify, Deputy Judge Godfrey granted Chriscon Enterprises judgment for $25,000. In his Reasons for Decision, the Deputy Judge stated:
Counsel for the Defendants argued that the Plaintiff should be looking to Mr. Mannella for the extra $13,500 received by his solicitor in trust. I disagree with the position taken by counsel for the Defendants for the following reasons. The Minutes required payment of the 24 cheques in the Plaintiff's personal name, and not to Mr. Mannella in trust. The Plaintiff received only the first 12 of those cheques. The position of the Defendants that an extra $13,500 was in fact paid to the Plaintiff's solicitor for the benefit of the Plaintiff is somewhat misleading. That $13,500 payment was not paid by the Plaintiff personally contrary to the Minutes. It ended up in Mr. Mannella's trust account and was not paid to the Plaintiff. The evidence before me does not establish the basis on which Mr. Mannella retained this amount. There is no evidence that the Plaintiff assented to the retention of this money by Mr. Mannella, nor is there evidence that Mr. Mannella even invoiced the Plaintiff for this amount, and that the Plaintiff failed to dispute the invoice. Mr. Mannella should not have had an opportunity to receive and keep this $13,500 in trust pursuant to the Minutes, nor should the Plaintiff be put into a position to look to Mr. Mannella for this money when the funds were to have come directly to the Plaintiff from Rooflifters pursuant to the Minutes. The Defendants were in breach of the Minutes by having additional moneys paid to Mr. Mannella in trust via the Vetting Committee to satisfy the Minutes of Settlement.
This payment allowed Mr. Mannella to have control over an additional $13,500 in his trust account contrary to the express terms of the Minutes, and in violation of the Plaintiff's rights. I can only conclude that the Plaintiff did not receive the full amount from the Minutes due to the failure of the Defendants to honour the payment schedule of the Minutes. Had I been satisfied on the evidence that Mr. Mannella had properly received the $13,500 as being the amount owing by the Plaintiff for legal fees, I would have found that the Minutes were substantially complied with. However, this evidence was never tendered despite Mr. Mannella being summonsed as a witness.
The effect of the breach unfortunately for the Defendants triggers more than just making up the shortfall of the last 12 cheques. Paragraphs 5 and 6 of the Minutes provide for a consent judgment against Rooflifters for $143,736.60 plus costs and interest to be agreed upon or assessed, and a consent judgment against Marty Shiff for $75,000. Paragraph 7 states that the Plaintiff's counsel shall hold the judgments and shall not act upon them unless the Defendants default on their obligations. Having found that the Defendants did not default, I find that the default provisions become activated. The default provisions appear to be unambiguous, and did not provide that the amount of the Default Judgment should be reduced by any amounts paid to the Plaintiff. I infer from the fact that the Plaintiff has commenced his action in the Small Claims Court that he is waiving any excess over the $25,000 provided in the consent judgments.
As such, there will be a judgment against both Defendants for $25,000 plus court costs of $175.00 and prejudgment interest at court rate from January 1, 2013 being the mid-point of the last 12 cheques.
C. DISCUSSION AND ANALYSIS
[10] In my opinion, the Deputy Judge's reasons are incorrect as a matter of legal analysis. Nevertheless and notwithstanding his wrong legal analysis, he came to the right judgment, and the appeal, therefore, should be dismissed. An appeal is from the judgment, not the reasons for judgment.
[11] The Deputy Judge made no error in his finding of facts, which were incontrovertible, but he made errors in his legal analysis and in his interpretation of the Minutes of Settlement, and he erred in concluding that the payment of an extra $13,500 by the Vetting Committee, which money was kept by Mr. Mannella, was a breach of the Minutes of Settlement.
[12] The payment of $64,500 by the Vetting Committee was not a breach of the Minutes of Settlement, and it certainly was not a breach by the Defendants. The Minutes of Settlement provided that the owner's holdback would be paid to Chriscon Enterprises' counsel and that was done. In the Minutes of Settlement, the amount of the holdback was estimated to be $51,000, but that was just an estimate, and the risk or benefit of the holdback being more or less than $51,000 was a risk or benefit that belonged to Chriscon Enterprises.
[13] The obligations of the Defendants under the Minutes of Settlement were essentially twofold. First, to direct the owner's holdback to Chriscon Enterprises' counsel and second, to pay $25,000 in cheques payable to Chriscon Enterprises. The Defendants performed the first obligation, but they failed to complete performance of the second.
[14] The Deputy Judge was right in concluding that the Defendants breached the Minutes of Settlement but the breach had nothing to do with the owner's holdback funds. How those holdback funds were treated between Mr. Mannella and Chriscon Enterprises was not a matter about which the Defendants had any interest or concern.
[15] Put somewhat differently, at the time of the signing of the Minutes of Settlement, the parties anticipated that Chriscon Enterprises would receive $76,000 gross. Of that anticipated sum, part was designated to reimburse Chriscon Enterprises for what it would have to pay Mr. Mannella for his legal services. However, as a matter of interpreting the Minutes of Settlement, the parties' anticipation of how the Minutes of Settlement would be performed is different from how the Minutes of Settlement should be performed.
[16] It appears that the Defendants and the Deputy Judge viewed the Minutes of Settlement as being a $76,000 payment to settle a $143,736.60 claim. That is an incorrect interpretation of the Minutes of Settlement. The correct interpretation is that the Minutes of Settlement consisted of the payment of the owner's holdback (whatever it was) plus $25,000 to be paid by the Defendants. The Defendants breached the settlement agreement by paying only $12,500 of the $25,000.
[17] The Defendants submitted that during the trial, Mr. Cosentino admitted that the settlement was for $76,000 and based on that admission they argued that since Chriscon Enterprises received $64,500 from the owner's holdback and $12,500 from the Defendants, which equals $77,000, there was an overpayment and not a breach of the settlement agreement.
[18] That argument, however, does not work for three reasons.
[19] First, Mr. Cosentino (for Chriscon Enterprises) did not make the admission as alleged. Rather, he testified about his expectation of what he anticipated the performance of the Minutes of Settlement would yield. I have already explained above that the anticipation of performance was different than the terms of performance.
[20] Second, the Deputy Judge found as a fact that: "the Plaintiff was self represented and clearly could not verbalize the basis of his legal position", which is to say that the Deputy Judge did not give any weight to Mr. Cosentino's interpretation of the Minutes of Settlement.
[21] Third, and this is the most significant point, to give any weight to the evidence of the parties' subjective intentions about what the Minutes of Settlement meant would have violated the parol evidence rule. In Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Justice Rothstein stated at para. 59:
- … The parol evidence rule precludes admission of evidence outside the words of the written contract that would add to, subtract from, vary, or contradict a contract that has been wholly reduced to writing …. To this end, the rule precludes, among other things, evidence of the subjective intentions of the parties ….
[22] I, therefore, conclude that the correct finding is that the Defendants breached the Minutes of Settlement. In the event of default by the Defendants, the Minutes of Settlement provided that Chriscon Enterprises could enforce its $143,736.60 judgment against Rooflifters Inc. and its $75,000 judgment against Mr. Shiff.
[23] Chriscon Enterprises sued to enforce the Minutes of Settlement in Small Claims Court. It is helpful to note that had it sued in the Superior Court, then it would have had to give credit for the $76,000 received from the Vetting Committee and the $12,500 paid by Rooflifters Inc. In other words, the measure of damages would have been $55,236.60 [$143,736.60 – ($76,000 + $12,500)]. With respect to this measure of damages of $55,236.60, by suing in the Small Claims Court, Chriscon Enterprises waived the excess above $25,000.
[24] Thus, for the wrong reasons, the Deputy Judge came to the correct result of awarding Chriscon Enterprises a judgment against both Defendants for $25,000 plus costs of $175 and prejudgment interest.
D. CONCLUSION
[25] For the above reasons, the appeal is dismissed with costs, which I fix at $500 all inclusive.
Perell, J.
Released: September 18, 2015
CITATION: 1742018 Ontario Inc. v. Rooflifters Inc., 2015 ONSC 5783
DIVISIONAL COURT FILE NO.: 74/15
SMALL CLAIMS COURT FILE NO.: SC-13-252204-00
DATE: 20150918
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
1742018 ONTARIO INC. o/a CHRISCON ENTERPRISES Plaintiff (Respondent)
– and –
ROOFLIFTERS INC. and MARTY SHIFF Defendants (Appellants)
REASONS FOR DECISION
PERELL J.
Released: September 18, 2015