CITATION: Giannopoulos v. 1781994 Ontario Inc., 2023 ONSC 2590
DIVISIONAL COURT FILE NO.: 1371/18 DATE: 20230428
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
Fregeau, Varpio, & Nishikawa JJ.
BETWEEN:
PANAYIOTES GIANNOPOULOS and SAM SOTIRIOS GIANNOPOULOS Appellants
– and –
1781994 ONTARIO INC., 1830443 Ontario Inc., PERRY Sempecos, peter sempecos and Ben Giancola Respondents
Michael Polvere and Natalie Kuehn, for the Appellants Michael Lerner and Andrea Levstik, for the Respondents
HEARD at London: April 27, 2023 (by videoconference)
REASONS FOR DECISION
Varpio J. (Orally):
[1] This is an appeal of Gorman J.’s interlocutory order of March 14, 2022 wherein the motions judge ordered that the parties continue to jointly retain an accountant to assist them with their litigation. She also ordered production of documents in order to assist the accountant.
[2] Leave to appeal was granted with respect to the following two questions:
- Whether or not the motion judge erred in ordering that the joint retainer of the accountant continue?
- Whether or not the motion judge erred in ordering the production of documents under the retainer agreement?
Giannopoulos v. 1781994 Ontario Inc., 2022 ONSC 4699 (Div. Ct.)
[3] For the following reasons, I find that the motion judge erred in ordering the continued joint retainer. The order for production is therefore founded upon erroneous logic.
FACTS
[4] This action flows from a financial transaction wherein the plaintiffs were involved with the defendants as officers/directors. The plaintiffs advanced the defendants funds in order to build an office building. The building was completed and sold, and a dispute has arisen regarding the nature of the funds advanced and entitlement to payment.
[5] On or about December 1, 2020 the parties retained the services of an accountant on a voluntary and non-determinative basis. The parties agreed that the accountant’s findings would be non-binding. The retainer agreement states:
- The parties shall retain Hoare Dalton, to (conduct an) accounting;
- Any of the parties shall be at liberty to conduct a second accounting, at their own expense, and neither party shall be bound by the results of this accounting. However, either party may put forward into evidence this accounting pursuant to the laws of evidence and the Rules of Civil Procedure;
- The cost of the accounting shall be shared equally between the plaintiffs and the defendants;
- Counsel shall agree to a discovery plan as soon as possible after the accounting results are released;
- The process and scope of the accounting will be to determine the following: (a) the amount of money advanced by loan or investments by the plaintiffs to the defendants in relation to the construction of 267 Fanshawe Park Road; (b) the amount owing, if any, by the defendants to the plaintiffs advanced by loan or investment in relation to the subsequent sale of the property; (c) the amount of carrying costs, expenses, and other liabilities, if any, owed by Peter Giannopoulos with respect to the construction and ongoing maintenance of and by 1781994 Ontario Inc. and 267 Fanshawe Park Road; (d) an accounting for any profit, or losses, realized upon the sale of 267 Fanshawe Park Road.
- The parties, within one week of executing this agreement, shall send a joint retaining letter to Hoare Dalton confirming the purpose and scope of the accounting;
- The parties, within 60 days of executing this agreement, shall produce to Hoare Dalton all records from 2009 to present or any other document that the accountant may request, that are currently in the parties’ possession with respect to the issues outlined in paragraph 5;
- Nothing in this agreement is determinative of any legal issue in this litigation;
- The parties agree that this agreement may be executed in counterparts, each of which shall be deemed to be an original and that such separate counterparts taken together shall constitute one fully executed copy of the agreement, notwithstanding their date of actual execution;
- The parties agree to the delivery of an executed counterpart of this agreement by facsimile or email.
[6] During the course of the retainer, it seems that the accountant communicated with the defendants without copying the plaintiffs, because, the defendants submit, the plaintiffs refused to produce documents to the accountant.
[7] The plaintiffs claim they lost confidence in the accountant as a result of said communication and other alleged concerns. On December 13, 2021 the appellants asked the accountant to recuse himself of the matter based upon alleged concerns of bias. The plaintiffs paid their share of the accountant’s bill and purported to terminate the professional relationship.
[8] The respondents brought a motion seeking, inter alia, an order requiring the continued retainer of the accountant and certain documentary production in order to allow the accountant to finish the job. I note that there is an issue regarding whether the defendants withdrew their motion to have a joint retainer continue on that hearing date.
[9] The motion judge ordered that the joint retainer shall remain in force and also ordered certain documentary production in order to assist the accountant. The plaintiffs appeal that order.
Analysis
[10] The parties argue this appeal on the basis that the motions judge effectively granted an injunction. While this is potentially one way of viewing the motion, the effect of the order is that the motions judge ordered specific performance of the retainer agreement. Specific performance of the contract is generally a secondary remedy imposed by the courts: see Co-operative Insurance Society Ltd. v. Argyll Stores (Holdings) Ltd., [1998] A.C. 1 (H.L.(E.)). In The Law of Contracts, (seventh edition) S.M. Waddams quoted Flint v. Brandon (1803), 8 Ves. Jun. 159, 32 E.R. 314 and stated that:
“[t]he general principle was that specific performance was available whenever the legal remedy was insufficient to satisfy the needs of justice” (p.477).
[11] In the case before the court a number of items stand out:
- the accountant’s retainer is not subject to any mandatory provision contained within the Rules of Civil Procedure;
- the retainer agreement does not contain any mandatory language requiring the parties to continue with the retainer until the accountant completes the task;
- the retainer agreement does not contain any provisions for the termination of the retainer;
- the accountant communicated with the respondents without copying the appellants; and
- the appellants have lost faith in the accountant’s independence and impartiality.
[12] The appellate standards of review, as set out in Housen v. Nikolaisen, 2002 SCC 33, apply. Neither party addressed the standard of review applicable to the motion judge’s decision. In my view, the decision cannot meet the most deferential standard of review. In ordering the appellants to continue to employ the accountant and to pay for professional services, the motions judge committed a palpable and overriding error.
[13] The motions judgment enforced specific performance of a professional relationship where the client has lost confidence in the professional providing services. As noted above, specific performance is an unusual remedy and generally requires that monetary damages are incapable of remedying a breach of contract. That is certainly not the case in this instance in so far as there is nothing unique about the provision of services that would require specific performance. Requiring specific performance on a voluntary accountant-client relationship does not meet the legal threshold necessary for ordering specific performance.
[14] Put another way the motions judge did not have a basis in law to order that the joint retainer continue until the accountant completes the task assigned.
[15] Given that the order requiring that the joint retainer of the accountant continue cannot stand, the order for production of documents under the joint retainer must also fail.
[16] Accordingly, the appeal is granted, and Justice Gorman’s March 14, 2022 order is hereby quashed in its’ entirety.
[17] Further to the parties’ agreement, the Respondents shall pay the sum of $10,000 inclusive of HST to the Appellants within 180 days of today’s date. The amount includes all costs of the motion, the motion for leave to appeal, and the appeal.
“Varpio J.”
I agree “Fregeau J.”
I agree “Nishikawa J.”
Date of Reasons for Judgment: April 27, 2023
Date of Release: April 28, 2023
CITATION: Giannopoulos v. 1781994 Ontario Inc., 2023 ONSC 2590
DIVISIONAL COURT FILE NO.: 1371/18
DATE: 20230428
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Fregeau, Varpio, & Nishikawa JJ.
BETWEEN:
PANAYIOTES GIANNOPOULOS and 1781994 ONTARIO INC.
ORAL REASONS FOR DECISION
Varpio J.
Date of Reasons for Judgment: April 27, 2023
Date of Release: April 28, 2023