DATE: 2002-02-06 DOCKET: C34818

COURT OF APPEAL FOR ONTARIO

RE: HOGG FUEL & SUPPLY LIMITED (Plaintiff/Appellant) -and- ERIC MOHR and GERTRUDE MOHR (Defendants/Respondents)

BEFORE: ABELLA, CHARRON and CRONK JJ.A.

COUNSEL: Greg Murdoch, for the appellant Stephen P. Haller, for the respondent(s)

HEARD: January 24, 2002

On appeal from the Judgment of Justice J.C. Kent dated July 14, 2000.

ENDORSEMENT

[1] The appellant, Hogg Fuel & Supply Limited, commenced an action seeking foreclosure pursuant to a mortgage given by the respondents, Eric Mohr and Gertrude Mohr. The appellant also claimed the sum of $48,736.43 plus interest owing under the mortgage. The respondents, in defence of the action, alleged that the mortgage, given as security for a guarantee with respect to the debts of a company operated by their son, was subject to certain collateral assurances made by the appellant. They further contended that these assurances gave rise to a fiduciary duty, that the appellant had breached this duty, and that they had suffered damages as a result. The respondents counterclaimed for damages for breach of fiduciary duty.

[2] The trial judge held that none of the terms of the guarantee assisted the respondents, and that the evidence of collateral assurances was inadmissible to contradict the express written terms of the guarantee. Consequently, the trial judge did not give effect to the respondents' defence to the claim and granted judgment to the appellant for the full amount owing under the mortgage. The trial judge held, however, that the evidence of collateral assurances was admissible in support of the respondents' claim for damages for breach of a fiduciary duty. He held that the relationship between the parties gave rise to a fiduciary duty, that the appellant had breached this fiduciary duty in its handling of the debtor company's affairs, and that the respondents were entitled to a set off in the amount of $25,278.8 plus interest on their counterclaim. In the circumstances, he awarded no costs of the action or the counterclaim. The appellant appeals from the judgment granted on the counterclaim and from the costs disposition.

[3] In our view, the trial judge was correct in finding that the guarantee in this case was valid, that the evidence of alleged collateral assurances was inadmissible to contradict its terms, and that, consequently, the defence raised to the action on the mortgage failed. However, the trial judge erred in finding that those same alleged collateral assurances could support a finding that there was fiduciary relationship between the parties. In our view, there was no basis whatsoever, on the facts or at law, to support this finding. The relationship between the parties had none of the characteristics giving rise to a fiduciary duty: see Hodgkinson v. Simms, [1994] 3 S.C.R. 377, 117 D.L.R. (4th) 161 (S.C.C.)

[4] The appeal is allowed and the judgment, except for paragraph 1, is set aside. The appellant is entitled to its costs of the trial and the appeal. We are not satisfied that the appellant's claim for costs on a solicitor and client basis was substantiated on the record. Consequently, the costs award is on a party and party basis.

Signed by: "Abella J.A." "Charron J.A." "Cronk J.A."