DATE: 20001101

DOCKET: C31737

COURT OF APPEAL FOR ONTARIO

RE: HAMILTON DISCOUNT CORPORATION LTD. (Plaintiff (Respondent)) v. JIMMY J. SMITH, J.J.S. HOLDING CORPORATION, and the GREAT-WEST LIFE ASSURANCE COMPANY (Defendant (Respondent)) and DAVID WITCHELL (Defendant (Appellant)) v. THE BANK OF NOVA SCOTIA, ROBERT LAW, CHRISTINE CROUCHER and PAUL WALKER (Third Parties (Respondents))

BEFORE: AUSTIN, LASKIN AND SIMMONS JJ.A.

COUNSEL: John D. Strung

For the appellant David Witchell

Paul McCallen

For the respondent Great-West Life Assurance Company

Alan Lenczner Q.C.

For the respondent Hamilton Discount Corporation Ltd.

HEARD: October 10, 2000

On appeal from the order of Justice Edward G. McNeeley, without a jury, dated February 24, 1999.

E N D O R S E M E N T

[1] Hamilton Discount and Great-West Life were the victims of a scam or sting perpetrated by the defendant, Smith. In this action, Hamilton Discount attempted to recover its loss of $450,000 from Great-West Life, the other victim and its agent, David Witchell.

[2] The trial judge gave judgment for two-thirds of that amount as against Witchell and Great-West Life and judgment for the same amount in favour of Great-West Life as against Witchell. Witchell seeks to either set aside or reduce the amount awarded. Great-West Life seeks leave to appeal the cost awards below so as to have Witchell indemnify it respecting costs and to have Hamilton Discount pay Great-West Life’s costs of that part of Hamilton Discount’s action against Great-West Life which was not successful.

[3] Smith dealt with Walker on behalf of Hamilton Discount and with Witchell on behalf of Great-West Life. The trial consisted largely of the evidence of those two individuals and the trial judge accepted the evidence of Walker over that of Witchell where they were in conflict. It is not entirely clear that the trial judge fully understood and appreciated the significance of the chronology of the steps in the transaction and the impact that that may have had on his findings of credibility.

[4] Notwithstanding that, in view of the findings respecting Witchell’s knowledge of Smith’s failures to meet his obligations and Witchell’s failure to communicate such knowledge to Walker, we do not think that the trial judge could have come to any other conclusion but that Witchell was, at least in part, responsible for the loss suffered by Hamilton Discount.

[5] It was argued that the trial judge’s findings of reasonable reliance by Walker and of contributory negligence on his part cannot live together. Having regard to the particular facts as found by the trial judge, we are not prepared to accept that argument. Moreover, it was open to the trial judge to find that Walker was reasonably entitled to rely on the oral assurances of Witchell as found by the trial judge. We see no basis for interfering with his assessment of contributory negligence.

[6] The trial judge gave no reasons or endorsement in disposing of costs as between Witchell and Great-West Life. In view of the concession on behalf of Witchell that Great-West Life was entitled to recover the damages assessed against it as Witchell’s principal, we see no reason why Great-West Life should not also be entitled to recover from Witchell its costs of defending the main action and of its cross-claim, on a party-and-party basis.

[7] In addition to its claim arising out of Witchell’s failure to warn Walker, Hamilton Discount made a claim against Great-West Life alleging negligence in issuing annuities without first making sure that they were paid for. This claim was rejected by the trial judge. Great-West Life seeks an order for costs against Hamilton Discount for this part of the action. This claim took up a relatively brief time at trial and, in our view, provides no basis for an award apportioning costs.

[8] Witchell’s appeal against Hamilton Discount is dismissed with costs.

[9] Great-West Life is granted leave to appeal costs and its appeal is granted to the extent of an order that Witchell pay to Great-West Life its costs of the main action and of the cross-claim on a party-and-party basis. Great-West Life is entitled to its costs of that part of its motion and appeal as against Witchell. Although Great-West Life is granted leave to appeal costs as against Hamilton Discounts, that appeal is dismissed with costs.

[10] Relief was also asked with respect to the third party proceedings. In view of the trial judge’s division of negligence, we see no basis to alter the disposition below.

(signed) “A.M. Austin J.A.”

(signed) “J.I. Laksin J.A.”

(signed) “J.M. Simmons J.A.”