CITATION: TotalUp Inc. v. Chung, 2022 ONSC 2042

DIVISIONAL COURT FILE NO.: 699/19

DATE: 20220413

ONTARIO

SUPERIOR COURT OF JUSTICE

(DIVISIONAL COURT)

B E T W E E N:

TOTALUP INC.

Raphael Mourad for the Plaintiff (Appellant)

Plaintiff (Appellant)

• and -

JIM CHUNG and VINCE DE MARINIS

Mr. De Marinis, self-represented

Defendants (Respondents)

AND BETWEEN:

VINCE DE MARINIS

Mr. De Marinis, self-represented

Plaintiff by Defendant’s Claim (Respondent)

• and -

TOTALUP INC.

Raphael Mourad, for TotalUp Inc.

Defendant by Defendant’s Claim (Appellant)

Heard at Toronto by videoconference October 28, 2021

Kristjanson, J.

Overview

1This appeal arises from a dispute about amounts owing under a contract to supply gaming tables and supplies to a casino.

2In a Small Claims Court decision dated December 10, 2019, Deputy Judge Clemenhagen dismissed the Plaintiff’s Claim brought by TotalUp Inc. and awarded the respondent Mr. De Marinis costs in the amount of $1,000 on the Plaintiff’s Claim. The Deputy Judge also entered judgment on the Defendant’s Claim in favour of Mr. De Marinis in the amount of $9,413.82 with interest, and costs in the amount of $1,000. The plaintiff TotalUp appeals from both decisions.

3The respondent Mr. De Marinis operated a party business, Hitmen Entertainment Services (“Hitmen”), and, as part of his business, supplied gaming tables. Mr. Jim Chung had a connection with a casino. Mr. De Marinis and Mr. Chung wanted to lease or supply gaming tables to the casino. The appellant TotalUp Inc. had a license from the Alcohol and Gaming Commission of Ontario, which was of assistance in the deal to supply gaming tables. In addition, TotalUp Inc. manufactured gaming tables. Mr. De Marinis, Mr. Chung, and TotalUp (through Mr. Raphael Mourad, who testified at trial) contracted to lease or supply gaming tables tables to the casino. A gaming table and some gaming supplies were eventually sold to the casino.

4Mr. De Marinis and Mr. Chung were in charge of supplying and transporting materials and installation. TotalUp was in charge of invoicing and collecting money. The dispute at trial was over how the money would be divided. Mr. De Marinis maintained that the agreement was that the appellant would be paid 30% of net profits (revenue minus expenses), and Mr. Chung and Mr. De Marinis would share the remaining 70%.

5TotalUp sued for what it said was its 70% share of net profits. TotalUp sought $15,000 in general damages, $5,000 in special damages, and $5,000 in punitive damages. In the Plaintiff’s Claim, TotalUp alleged that the expenses claimed by Mr. De Marinis and Mr. Chung were “grossly exaggerated”, “fictitious” and “fraudulent,” and claimed fraudulent misrepresentation. The action was dismissed as against Mr. Chung because of his bankruptcy. Mr. De Marinis brought a defendant’s claim seeking a shortfall on a US currency conversion, $1,742.47 owing on casino tables, and damages for breach of contract, defamation, libel and slander.

6The Deputy Judge found that TotalUp was entitled to 30% of net profits and awarded damages accordingly. In so doing, the Deputy Judge failed to consider amounts that TotalUp had already paid to Mr. De Marinis. The respondent conceded the appeal on this point.

7The Deputy Judge found that the expenses claimed by Mr. De Marinis were “reasonable, appropriate and are a part of the original business deal,” and the reasonable business expenses were to be deducted from the contract.

8The Deputy Judge found that Mr. Chung had kept two of TotalUp’s used tables as security because he felt he had not been paid enough. He directed Mr. Chung to return the two tables to the appellant, although the direction was not binding given that Mr. Chung was not a party to the proceeding.

9The appellant raises three main issues:

(1) Did the Deputy Judge err in finding that the contract was to pay 30% of net profits to the appellant, rather than 70% of net profits, or 70% of gross profits?

(2) Did the Deputy Judge err in failing to consider moneys already paid to Mr. De Marinis?

(3) Did the Deputy Judge err in failing to award the appellant the value of new replacement gaming tables?

Jurisdiction

Jurisdiction

10An appeal from a final order of the Small Claims Court lies to a single judge of the Divisional Court where the amount is in excess of $2,500. This court has jurisdiction because the judgment is a final decision, and the amount of the claim exceeds $2,500: s. 31 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (CJA).

Standard of Review

Standard of Review

11The Supreme Court of Canada set out the standard of review applicable to appeals from judges’ orders in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235. On questions of law, the standard is correctness. On questions of fact, the standard is palpable and overriding error. On questions of mixed fact and law including the application of correct legal principles to the evidence, the standard is palpable and overriding error, and correctness for extricable legal principles.

Issue #1: Percentage of Profit

Issue #1: Percentage of Profit

12TotalUp’s position as set out in the Plaintiff’s Claim was that it was entitled to 70% of the net profit (para. 5 of Claim). At trial it advanced a claim for 30% of the gross sales. The respondent’s position throughout was that the appellant was entitled to 30% of the net profits. After assessing the evidence in the case, and particularly the credibility of the parties, the Deputy Judge found that, under the contract, the appellant was entitled to 30% of the net profits.

13The Deputy Judge found that the appellant’s position – that he was entitled to 30% of the gross revenue without considering the expenses – was “beyond comprehension”, did not accord with common sense nor common business practice, and would mean that the defendants would lose money on every deal. The Deputy Judge held: “I find that the plaintiff is not believable in what he says. I think he exaggerated all this and made it up as he went along” and “I’m satisfied that he completely made up that aspect of the contract.” He decided, on the totality of the evidence, that the appellant was entitled to 30% of net profits.

14This court owes deference to the credibility assessments made by the Deputy Judge. Findings of fact grounded in credibility assessments are very difficult to overturn on appeal. As set out by Daley, J. in Muise v Mark Wilson's Better Used Cars Limited, 2021 ONSC 151 at para. 14:

As to the duty of a deputy judge to identify and deal with credibility concerns and to assess both the credibility and reliability of a witness' evidence, there is a high level of deference owed to a Deputy Judge with respect to findings of credibility. In his decision in Palac v. Coppola, 2011 ONSC 623 (Ont. S.C.J.) at para 11, McDermot J. noted:

It is even higher standard when it comes to findings of credibility by the Deputy Judge: Although the "palpable and overriding" standard of review applies to all factual findings, the findings of fact grounded in credibility assessments are particularly difficult to disturb on appeal. Credibility assessments are inherently partly subjective and reflect the life experience of individual judges and their own perception of how the world works. Credibility assessments are also grounded in numerous, often unstated considerations which only the Deputy Judge can appreciate and calibrate.

15The Deputy Judge’s findings that the appellant was entitled to 30% of net profit was open to him on the evidence. His findings on credibility were clear and supported by the evidence. There was no palpable and overriding error in this finding.

Issue #2: Calculation Error

Issue #2: Calculation Error

16In his factum, Mr. De Marinis conceded that the Deputy Judge made a calculation error in failing to consider payments already made to Mr. De Marinis. He conceded that the appeal should be allowed to the extent that the appellant should be awarded $398.40.

17Subsection 134(1) of the CJA sets out the powers of a court hearing an appeal. Generally, unless otherwise provided, the court can make any order or decision that ought to or could have been made by the court or tribunal appealed from, order a new trial, or make any other order or decision considered just. A new trial should be ordered only if some substantial wrong or miscarriage of justice has occurred (ss. 134(6) and (7)). I am satisfied that this is a calculation error which this court may correct, and no new trial is necessary.

18This type of error is one which could have been the subject of a consent. Fixing this issue did not require the delay and expense of an appeal to the Divisional Court.

19The total amount of revenue received by the appellant was $24,363.11. Of this amount, the Deputy Judge found expenses in the amount of $10,914.79 and net profit of $13,448.32. The Deputy Judge determined that the profit should be divided as follows: 30% (or $4,034.50) to the appellant TotalUp and 70% (or $9,413.82) to Mr. De Marinis. The respondent was entitled to $9,413.82 for his share of the profit and $10,914.79 for expenses – $20,328.61.

20But the Deputy Judge erred in disregarding the amount that the appellant had paid to Mr. De Marinis. It is not disputed from the evidence that the appellant paid three cheques to Mr. De Marinis in the amounts of: $4,520 on November 28, 2017, $7,580.39 on January 12, 2018, and $8,626.62 on February 6, 2018 – a total of $20,727.01.

21The Deputy Judge therefore made an overriding and palpable error in awarding Mr. De Marinis $9,413.82 without accounting for payments already made. The Deputy Judge should have awarded the appellant $398.40 in damages on the Plaintiff’s Claim. This court sets aside the decision of the Deputy Judge and substitutes a decision awarding the appellant $398.40.

Issue #3: The Missing Tables

Issue #3: The Missing Tables

22The Deputy Judge found that the missing tables were in the possession of Jim Chung and directed him to return these tables to the Plaintiff, even though the action was dismissed as against Mr. Chung because of his bankruptcy. Although not entitled to appear on this appeal, nor subject to any order of this Court, Mr. Chung attended. After the court questioned Mr. Chung, he gave the court an undertaking that he would return the two tables to the appellant. The Deputy Judge made no finding that the tables were in the possession of Mr. De Marinis, nor did he order Mr. De Marinis to pay for the tables. There is no palpable and overriding error in the Deputy Judge’s disposition.

23The appellant, though, seeks to have Mr. De Marinis pay for the cost of the missing tables on this appeal. There is simply no basis on which this court should make such an award, given the Deputy Judge’s findings. Although the appellant identified that Mr. Chung had possession of two used tables, the appellant seeks to have Mr. De Marinis pay the full cost of four new custom-made tables. The appellant was repeatedly asked by the Deputy Judge the value of the two used tables in Mr. Chung’s possession, and he refused to answer that question. As the appellant failed to provide evidence as to the value of those tables, the court on appeal cannot assess the quantum of damages.

Costs

Costs

24I must address both costs of this appeal and costs of the trial below.

25Under s. 29 of the CJA, an award of costs in the Small Claims Court, other than disbursements, “shall not exceed 15 per cent of the amount claimed or the value of the property sought to be recovered unless the court considers it necessary in the interests of justice to penalize a party or a party’s representative for unreasonable behaviour in the proceeding.” I have discretion in making the award of costs. I find it necessary in the interests of justice to penalize TotalUp for unreasonable behaviour in making completely unsubstantiated allegations of fraud against Mr. De Marinis. In the Plaintiff’s Claim, TotalUp alleged fraudulent misrepresentation, pleading that Mr. De Marinis and Mr. Chung submitted expenses that were “grossly exaggerated”, “fictitious” and “fraudulent.” The Deputy Judge rejected these allegations, finding that the expenses were reasonable, supported by receipts, and indeed TotalUp had accepted the expenses in making its first two payments.

26Courts take very seriously the issue of unsupported allegations of fraud when made without a reasonable basis or recklessly as they were here. I also consider that the baseless allegations of fraud were made by a corporation, not a self-represented individual, which heightens my concern. In Hamilton v Open Window Bakery Ltd, 2004 SCC 9, the Supreme Court found at para 26 that “allegations of fraud and dishonesty are serious and potentially very damaging to those accused of deception,” and the concern is heightened when a party makes allegations “with access to information sufficient to conclude that the other party was merely negligent and neither dishonest nor fraudulent.” Here, the Deputy Judge found no issues with the reasonable business expenses claimed. In the circumstances – where a $25,000 claim founded in part on unfounded allegations of fraud results in an award of $398.40, I decline to award trial costs to the appellant.

27The appellant succeeded on this appeal in achieving judgment of $398.40. That said, I am not prepared to award costs of this appeal, and award costs to Mr. De Marinis of this appeal.

28Mr. De Marinis conceded the appeal varying the judgment to award the appellant $398.40. If the appellant had sought solely that remedy, Mr. De Marinis might not have responded to the appeal. He might have consented. The appellant, however, did not seek to resolve the issue of the Deputy Judge’s mathematical error. The respondent conceded the mathematical error in his factum and succeeded on all other grounds of appeal.

29This is like the disposition by the Court of Appeal in Singha v. Singh, 2007 ONCA 195 at para. 4 regarding a straightforward mathematical adjustment, although this case is even more compelling since the respondent conceded the issue in his factum:

The only issue on which the appellant was successful on this appeal was raised by him for the first time during oral argument. That issue involved a straightforward mathematical adjustment of the retroactive spousal support award, the necessity of which was readily and properly conceded by the respondent. In all other respects, the appellant was wholly unsuccessful. We also note that he made no effort to resolve the retroactive spousal support adjustment with the respondent prior to the appeal, necessitating extensive preparation by the respondent in respect of the meritless grounds of appeal. In these circumstances, the respondent is entitled to her costs of the appeal, fixed in the total amount of $5,000, inclusive of disbursements and G.S.T.

30The respondent here conceded the mathematical error and the appropriate remedy and was forced to respond to meritless grounds of appeal. The respondent retained a lawyer to provided unbundled legal services, including drafting the factum. The appellant is to pay the respondent costs in the amount of $1,000.00, inclusive.

ORDER

Order

31This Court orders that:

1. The appeal by the Plaintiff in Small Claims Court File No. SC-18-0006339-0000 is allowed and the order of the Deputy Judge is set aside. Judgment is to be entered in favour of the Plaintiff TotalUp Inc. on the Plaintiff’s Claim in the amount of $394.40.

2. The order of the Deputy Judge in Small Claims Court File No. SC-18-0006339-00D1 is set aside.

3. The appellant TotalUp Inc. is to pay the respondent Mr. De Marinis his costs of the appeal in the amount of $1,000.00.

4. The judgment on the Plaintiff’s Claim may be set off against costs owing to Mr. De Marinis, such that the appellant TotalUp Inc. must pay Mr. De Marinis $605.60 in costs within 30 days.