2341321 Ontario Inc., 2018 ONSC 6703,
COURT FILE NO.: DC-16-0075-ML
DATE: 2018 11 08
ONTARIO
SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
B E T W E E N:
Alliance Door Products Canada Inc.
Ted Evangelidis and Dina Milivojevic, for the Plaintiff (Respondent)
Plaintiff (Respondent)
- and -
2341321 Ontario Inc. O/A Spectra Forest Wood Products
Alok Kumar, for the Defendant (Appellant)
Defendant (Appellant)
HEARD: March 9, 2018
ENDORSEMENT
BARNES J.
INTRODUCTION
[1] The Appellant (Spectra Forest Wood) appeals the decision of Deputy Judge Kaler, dated June 9, 2016, awarding $23,251.25 to the Respondent (Alliance Doors) plus $3,487.69 in costs. The appeal is dismissed.
BACKGROUND FACTS
[2] Alliance Doors and Spectra Forest Wood entered into an agreement in September of 2012. Alliance Doors was to sell doors to Spectra Forest Wood. Mr. Dondale represented Alliance Doors. Spectra Forest Wood was represented by Mr. Kilfoyle. In September or October of 2012, Mr. Dondale told Mr. Kilfoyle that Alliance Doors will be around [in Ontario] “for the long run”. In November 2012, one of Alliance Doors’ suppliers was sold. This increased the price of the doors. In December 2012 or January 2013, Spectra Forest Wood ordered doors from Alliance Doors. The doors were delivered. In March 2013, Mr. Dondale informed Mr. Kilfoyle that Alliance Doors would shut down its business operations in Ontario.
[3] Spectra Forest Wood did not pay Alliance Doors $23,251.25 owing for the doors. Spectra Forest Wood takes no issue with the quality of the doors delivered. At trial, Alliance Doors sought judgment for the amount owing.
DISCUSSION
[4] Spectra Forest Wood’s position at trial, was that Alliance Doors’ statement that it was “in for the long run” was a representation which formed an essential term of the contract. Spectra Forest Wood said it relied on this representation to enter into the contract and to order doors from Alliance Doors. Spectra Forest Wood submits this was a fraudulent misrepresentation which frustrated the contract.
[5] According to Spectra Forest Wood, as a result of Alliance Doors’ actions it has been unable mitigate its losses because the doors will not sell and storage costs exceed the price of the doors. Spectra Forest Wood sought a set off against the balance owed for the doors. Spectra Forest Wood makes the same argument on appeal in addition to these new two issues not raised at trial: 1) Negligent misrepresentation and 2) Incompetence of the paralegal at trial. Alliance Doors is opposed to the introduction of these new issues.
[6] Alliance Doors submits that it made no misrepresentations to Spectra Forest Wood. Mr. Dondale’s statement that Alliance Doors would be in [Ontario] for the long run was not a term of the contract. Alliance Doors took no action to frustrate the contract. According to Alliance Doors, Spectra Forest Wood has failed to substantiate claims of loss and attempts to mitigate and should pay the money owed.
NEW ISSUES
[7] Rule 61.08(2) of the Rules of Civil Procedure states:
No grounds other than those stated in the Notice of Appeal or cross-appeal or supplementary notice may be relied on at the hearing, except with leave of the court hearing the appeal.
[8] In its Notice of Appeal, Spectra Forest Wood alleges errors in fact and law by the Deputy judge as follows:
Failure to appreciate that “after sales service” was an integral part of the agreement which induced the Spectra Forest Wood to enter into the contract;
Failure to appreciate that Alliance doors’ agent failed to disclose that Alliance doors’ exit from the Province of Ontario was pending, despite knowledge that the special order for the doors required “after sale service” by Alliance doors to Spectra Forest Wood.
Failure to appreciate that when Alliance doors ceased to operate in Ontario the 400 doors, as a consequence, ceased to have a market in Ontario because Alliance doors could no longer provide “after sale service”. Efforts by the Spectra Forest Wood to find a market for the doors were unsuccessful.
Failure to recognize that Alliance doors’ agent’s attempts to assist Spectra Forest Wood in finding a market for the doors was fruitless.
Failure to appreciate that costs for storing the doors far exceeded the price for the doors and every effort by Spectra Forest Wood to mitigate was unsuccessful.
Failure to recognize that the contract between the parties had been frustrated by action of Alliance doors and therefore Alliance doors should be unable to recover any monies from the Spectra Forrest Wood.
[9] The Notice of Appeal did not include the new issues raised. Spectra Forest Wood did not seek leave to raise these issues as required by Rule 61.08(2) of the Ontario Rules of Civil Procedure. Therefore, in the face of Alliance Doors’ objection, I will not consider the new issues raised on appeal. This is subject to further comment in these reasons.
FINDINGS OF FACT
[10] At page 4 of his reasons for decision, the trial judge made certain findings of fact which were determinative as follows:
There was no “misrepresentations” or “fraud” on the part of the plaintiff. A statement that turns out to be untrue after an unforeseen event triggers a change in circumstances is not a misrepresentation at the time it was made, let alone a fraudulent one.
Further, there is no dispute that the defendant ordered doors from the plaintiff.
There was no breach of warranty by the plaintiff in this case; and
The discontinuance of the doors was not an “essential element of the contract”. As clear from the evidence, the same representations were made to other consumers as well.
I find that the decision to shut down operations in Ontario was not a decision made by Mr. Dondale. I also find that there was no evidence that when Mr. Dondale advised the defendant that the plaintiff was “in for the long run” he was “aware” that the plaintiff will be shutting down in the time to come.
I find that the defendant has not met the onus of proving on a “balance of probabilities” that there was “misrepresentation” or “fraud”.
I deny any set off, as sought by the defendant as there was no evidence to substantiate the claim made by the defendant.
[11] The trial judge applied the correct four part legal test for fraudulent misrepresentation as follows: 1) A false representation or statement is made; 2) which is knowingly false; 3) which is made with intention to deceive the plaintiff; and 4) which materially induced the plaintiff to act, causing him or her damage: TWT Enterprises Ltd. v. Westgreen Developments Ltd. 1992 ABCA 211.
[12] Spectra Forest Wood’s issues on appeal, stem from findings of fact made by the trial judge. These findings led to legal remedies favouring Alliance Doors. Spectra Forest Wood invites this court to overturn these findings of fact.
[13] An appeal court is bound to show great deference to findings of fact made by the lower court. The appeal court may allow an appeal based on a factual finding only where the lower court has made a “palpable and overriding error”. Housen v. Nikolaisen 2002 SCC 33, [2002] 2 S.C.R. 235 at para. 10 (S.C.C.). Thus an appeal court cannot interfere simply because it takes a different view of the evidence than the trial judge. Where a finding of fact by the trial judge is one, which from the evidence is open for the trial judge to make, the finding is entitled to deference unless it constitutes a palpable and overriding error. Examples of palpable and overriding errors are: 1) findings made in the absence of evidence (can also be error of law); 2) findings made which are not consistent with accepted evidence; 3) findings based on a misapprehension of the evidence; 4) findings drawn from speculation rather than inference; 5) findings drawn from evidence with no evidentiary value because they have been rejected by the trier of fact: Waxman v. Waxman, 44 BLR (3d) 165 at paras. 296, 306, 335 and 349; Morden and Perell - The Law of Civil Procedure in Ontario, 2nd edition at p. 973.
[14] At pages 1 to 2, of the reasons for decision, the trial judge summarizes the evidence of the witnesses: Mr. Graeme Dondale for Alliance Doors and Mr. Kilfoyle for Spectra Forest Wood. At page 3, the trial judge states: “After hearing the testimony of both the witnesses I believe the evidence of Mr. Dondale over that of Mr. Kilfoyle.”
[15] It would have been preferable for the trial judge to have articulated, more explicitly, his reasons for preferring the evidence of Mr. Dondale. In effect, the trial judge found Mr. Dondale more credible than Mr. Kilfoyle. It is apparent that his findings that there was no misrepresentation and the other related conclusions, outlined in trial reasons for decision at page 4, flows from this conclusion.
[16] An examination of the entire reason for decision reveals that the trial judge viewed Mr. Kilfoyle’s inability to substantiate aspects of his claim in a manner adverse to Mr. Kilfoyle’s credibility. For example, at page 2 of the reasons for decision, the trial judge concluded: Mr. Kilfoyle did not know money was owed in February 2013; he did not know when invoices were paid; he did not know when the credit limit [as set out in the credit agreement] was reached; “he could not produce any documents to substantiate that Mr. Dondale knew when he made the representations that the plaintiff will not be in Ontario for the long haul”. The trial judge denied the set off sought by Mr. Kilfoyle, on behalf of Spectra Forest Wood, “as there was no evidence to substantiate the claim [for set off] made by the defendant [Spectra Wood]”: Reasons for decision, page 4.
[17] The trial judge’s findings of fact flow from this crucial credibility finding. These findings are were available to him from the evidence at trial. While there may have been alternate findings available to the trial judge, as urged by Spectra Forest Wood, this does not satisfy the “palpable and overriding” test. The trial judge applied the correct legal test to the facts he found.
[18] I return to the new issues raised by Spectra Forest Woods. I declined to address those issues because Spectra Forest Wood did not seek leave to argue the new issues. The test for granting leave to argue a new issue on appeal is whether “the other party will be disadvantaged if leave to argue the new issue is granted: See Canadian Towers Ltd. Fawcett et al, 21 O.R. (2d) 545 (Ont. C.A.). Had Spectra Forest Wood sought leave to raise the issue of incompetence of the trial paralegal, I am unlikely to have granted leave because no evidence was put forth in support of this issue and Alliance Doors would have inadequate time to respond and thus be at a disadvantage.
[19] Had leave been sought to argue the new issue of negligent misrepresentation leave would have been granted. I am satisfied that the record at trial and the attendant legal issues are such that Alliance Doors would not have been at a disadvantage. After concluding that the trial judge made no palpable and overriding error and applied the applicable law correctly, the trial judge’s finding that there were no “misrepresentations” made by Alliance Doors is determinative and Spectra Forest Wood’s argument that there was negligent misrepresentation will consequently fail.
CONCLUSION
[20] The appeal is dismissed and the order at trial restored. Should the parties be unable to agree on costs a 2 page cost outline shall be submitted within 20 days.
Barnes J.
Released: November 8, 2018
2341321 Ontario Inc., 2018 ONSC 6703,
COURT FILE NO.: DC-16-0075-ML
DATE: 2018 11 08
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
B E T W E E N:
Alliance Door Products Canada Inc.
Plaintiff (Respondent)
- and -
2341321 Ontario Inc. O/A Spectra Forest Wood Products
Defendant (Appellant)
ENDORSEMENT
Barnes J.
Released: November 8, 2018