DATE: 20060612

DOCKET: C42839

COURT OF APPEAL FOR ONTARIO

RE:

1475735 ONTARIO INC. (Plaintiffs/Respondent) – and – WILLIAM VAN RAVENSWAAY(Defendant/Appellant) – and between – JOHN W. KUMMER (Plaintiff by Counterclaim) – and – KUMMER HOLDINGS INC. and IDLEWOOD TRUCKING CO. LIMITED and 1475735 ONTARIO INC. and WILLIAM VAN RAVENSWAAY (Defendants by Counterclaim)

BEFORE:

DOHERTY, BLAIR and LAFORME JJ.A.

COUNSEL:

James D. Higginson for the appellant

Michael J. Valente for the respondent

HEARD & RELEASED ORALLY:

June 7, 2006

On appeal from the judgment of Justice C. Raymond Harris of the Superior Court of Justice dated November 24, 2004.

E N D O R S E M E N T

[1] Mr. VanRavenswaay’s corporation purchased the shares of two of Mr. Kummer’s companies. The Kummer companies were in the trucking business.

[2] A lawsuit arose concerning (a) the amount owing on the remaining balance of a promissory note given on closing, (b) the liability for an accounting debt of one of the purchased companies, and (c) liability in relation to land contamination arising from a 300 gallon bottomless waste oil tank that was later discovered submerged on the property. Justice Harris found that a sum of $31,000 paid to Mr. Kummer was a payment on account of the outstanding promissory note and not a payment with respect to a side-deal consulting agreement; that the cost of the accounting fees should be split between Mr. VanRavenswaay and Mr. Kummer equally, in the amount of $5,885 each; and that Mr. Kummer was liable to the purchasers for damages in the amount of $35,000 for remediation costs necessary to clean up the contamination.

[3] At the conclusion of argument, we indicated to counsel that the appeal would be allowed with respect to the accounting fees, but that it would otherwise be dismissed.

[4] The trial judge’s finding that the payments of $31,000 were on account of the outstanding purchase price, secured by the promissory note, as opposed to payments to Mr. Kummer for his consulting arrangement, was supported by the evidence and there is no basis for interfering with it. Mr. Higginson in effect conceded this at the outset of his argument.

[5] Nor can we find any basis for interfering with the trial judge’s finding that the defendant misrepresented the existence of the submerged waste oil tank and that the Plaintiff was misled in respect of a material contractual matter. The remedy of damages for remediation followed, and there is no issue as to the amount claimed.

[6] However, we are not able to understand the legal basis upon which the trial judge ordered the defendants to pay one-half of the accounting fees incurred by the purchased corporation in relation to the accounting services necessary for the deemed year end following the share purchase. Mr. Valente concedes there was no contractual basis for such a claim and even Mr. VanRavenswaay’s own accountants advised that they could think of no statutory or legal basis for it. While sharing the fees may have been a fair way for the parties to absorb such fees – arising as they did from the transaction – there was no such agreement between the parties, and the fees remain the obligation of the purchased corporation.

[7] Accordingly, we allow the appeal in this latter respect. The judgment of Harris J. is varied by deleting paragraph 2(b) thereof. In all other respects, the appeal is dismissed. As the respondents were substantially successful on the appeal, they are entitled to their costs of the appeal, which we fix in the amount of $9,000 all inclusive.

“D.H. Doherty J.A.”

“R.A. Blair J.A.”

“H.S. LaForme J.A.”