DATE: 20020614 DOCKET: C33996

COURT OF APPEAL FOR ONTARIO

RE:

ANTONIO MONTEMARANO, 554048 ONTARIO LTD. and ANTREX CORPORATION (Plaintiffs/Respondents) -and- TRI-LAKE CARPENTRY LIMITED, R.T.S. CARPENTRY INC., ROCCO MONTEMARANO AND SAVERIO MONTEMARANO (Defendants/Appellant) - and - GENEST MURRAY DESBRISAY LAMEK (Intervenor/Respondent)

BEFORE:

ABELLA, MOLDAVER AND MACPHERSON JJ.A.

COUNSEL:

Jeffrey P. Hoffman

for the appellant

Gregory Roberts

for the respondents

Paul Pape

for the respondent

Genest Murray Desbrisay Lamek

HEARD:

June 12, 2002

On appeal from the judgment of Justice Romain W. Pitt dated March 1, 2000.

E N D O R S E M E N T

[1] [1] The appeal and two cross-appeals are from the judgment of Justice Romain Pitt dated March 1, 2000, ordering the appellant and two related companies to pay the sum of $229,080 plus costs fixed at $81,277.27 to the respondents.

[1] [2] The dispute involves the interpretation of an agreement entered into for the purpose of terminating a family business relationship. The appellant, Rocco Montemarano (“Rocco”), appeals on the basis that the entire claim was statute barred because the action was commenced after the expiry of the relevant limitation period. The respondents, Antonio Montemarano (“Antonio”), and his related companies cross-appeal on the basis that the total amount of the award was improperly reduced by $174,944 and that the trial judge erred by refusing to award pre-judgment interest. The intervenor, the law firm Genest Murray Desbrisay Lamek (“the law firm”), cross-appeals on the basis that one payment of $80,000 from Rocco to Antonio required under the agreement should not have been found by the trial judge to be statute barred.

A. Rocco’s Appeal

[2] [3] There is no merit to the appellant’s contention that the entire claim was statute barred. The action was commenced on June 2, 1995. The trial judge found as a fact that the parties were still trying to reach “mutual arrangements” as late as June 22, 1989 based on a letter from Antonio to Rocco. Moreover, the parties met to discuss the matter after Rocco received the letter. We can see no basis on which to interfere with the trial judge’s conclusion that Antonio would not have known that a cause of action had arisen before June 22, 1989 because the parties were still complying with the “mutual arrangements” language of the agreement on that date. It follows that a cause of action arising on or after that date would not be statute barred because a statement of claim issued on June 2, 1995 was within the 6 year period in the Statute of Limitations.

B. B. Antonio’s cross-appeal

(1) (1) The Saverio issue

[3] [4] Saverio is Rocco’s son. By the terms of the agreement, he was required to pay the family business $126,942 (which Antonio sought to increase to $174,944 on the cross-appeal). The trial judge accepted the quantum proposed by Antonio. However, he concluded that the claim against Saverio should be dismissed for reasons of “the Statute of Limitations, the doctrine of laches and the clear intention of the parties”.

[4] [5] Antonio does not appeal from this component of the trial judge’s decision. However, he does contend that the trial judge erred by not finding that Rocco still owed this amount to Antonio as part of the total purchase price for the company.

[5] [6] In our view, the agreement between the parties, on its face, was for a total amount to be payable in three stages: $150,000 immediately, $80,000 by March 31, 1989 and the balance by mutual arrangement. There is no indication that the payment of any part of this amount was conditional on the repayment by Saverio of his debts. Indeed, after the execution of the agreement, the collection of Saverio’s debts due to RTS and Tri-Lake (in accordance with Saverio’s personal obligation to do so) was beyond the control of Antonio. If Rocco chose not to collect Saverio’s debts, that was a matter between father and son. It could not reduce the price which Rocco expressly agreed to pay Antonio to buy out his interest. Accordingly, the trial judge erred by reducing the damages by $174,944.

(2) (2) The pre-judgment interest issue

[6] [7] It is true that as a general rule a party entitled to an order for the payment of money is entitled to an award of pre-judgment interest: s. 128(1) of the Courts of Justice Act. However, there are exceptions to this general rule, including “where interest is payable by a right other than under this section”: s. 128(4)(g). The agreement expressly provided that no interest would be payable on the balance of the money owing to Antonio which was subject to “mutual arrangements” and, obviously, contemplated payments over a period of time. In our view, in light of this term of the agreement, it was open to the trial judge to conclude that no pre-judgment interest was payable. In short, the trial judge decided to track the agreement of the parties when he came to the question of pre-judgment interest. While we may have come to a different conclusion as to whether pre-judgment interest should have been awarded after the issuance of the statement of claim, we think it was open to the trial judge to exercise his discretion as he did. Accordingly, we would not interfere.

C. C. The law firm’s cross-appeal

[7] [8] The law firm contends that the trial judge erred by concluding that the payment of $80,000 by Rocco to Antonio scheduled for March 31, 1989 was statute barred. It submits that the unpaid $80,000 became part of the “outstanding balances” in the payment provision of the agreement and became actionable along with the rest of the unpaid monies - i.e. on June 22, 1989 or later.

[8] [9] Although the intervenor’s interpretation of the agreement is a possible one, in the end we think that the trial judge’s separation of the $80,000 payment with its specific payment date (March 31, 1989) from the “balance” and “outstanding balances” payments (with no specific repayment date) was the correct interpretation. Accordingly, the trial judge was correct to conclude that the claim relating to it fell outside the Statute of Limitations.

Disposition

[9] [10] Rocco’s appeal is dismissed. Antonio’s cross-appeal relating to the Saverio component of the debt is allowed and the award of damages is increased to $404,024. Antonio’s cross-appeal relating to pre-judgment interest is dismissed. The law firm’s cross-appeal is dismissed.

[10] [11] Antonio is entitled to costs of the appeal fixed at $15,000 inclusive of disbursements and GST. There will be no costs with respect to Antonio’s cross-appeal since success is divided. Rocco is entitled to costs of the cross-appeal brought by the law firm fixed at $3000. On consent, Antonio will pay Saverio costs of the abandoned cross-appeal against him fixed at $2500.

“R. S. Abella J.A.”

“M. J. Moldaver J.A.”

“J. C. MacPherson J.A.”