COURT OF APPEAL FOR ONTARIO

CITATION: Leu v. Amodio, 2007 ONCA 186

DATE: 20070316

DOCKET: C43788

RE: HEIDY MAUREEN LEU and 2957744 CANADA INC. (Plaintiffs (Respondents)) – and – JOSEPH AMODIO and AMCORP HOLDINGS LTD. (Defendants (Appellants))

BEFORE: FELDMAN, SHARPE and SIMMONS JJ.A.

COUNSEL: Melvyn L. Solmon for the appellant Garth D. Walkden for the respondents

HEARD: March 14, 2007

On appeal from the judgment of Justice Nancy M. Mossip of the Superior Court of Justice dated June 6, 2005 and the order made by Justice Mossip dated August 5, 2005.

E N D O R S E M E N T

[1] The appellant raises two grounds of appeal. The first is that the trial judge erred because having found that the parties were partners in the Muskoka business, she failed to find that the Partnership Act applies and that on dissolution of the partnership, the appellant is entitled to a half interest in the entire property. We do not accept this submission. The trial judge found that the parties were partners but that their partnership relationship was governed wholly by the Acknowledgment document that they executed when the property was purchased by the numbered company. The respondent provided all of the funds for the purchase and agreed to hold 50 percent of the shares on the basis that the appellant had an exclusive option to purchase for three years. As he did not purchase within that time or ever, he lost that option. The fact that he made a contribution to the partnership by working does not change the result. He received a share of the profits of the business while he worked there. Under the express terms of the Acknowledgement, the appellant acquired no right to the shares in the numbered company unless he made the required payments. He did not make those payments and it follows that the shares never became “partnership property” within the meaning of the Partnership Act.

[2] We agree that the appellant’s contribution of $50,000 at the time the property was refinanced should be characterized as a partial payment on the option and not as a loan. However, because the appellant did not comply with the condition of the option by contributing his full 50 percent share, he lost that opportunity. The trial judge made no error in holding that his remedy is a return of the $50,000 with interest. To the extent that paragraph 3 of the Judgment may not reflect that outcome, it may be amended.

[3] The second ground of appeal is that the trial judge erred by failing to allow the appellant to amend his defence after judgment in order to rely on the failure of the respondent to give notice under the PPSA before appropriating the appellant’s 50 percent of the shares. We also reject this submission. We agree with the conclusion reached by the trial judge on the motion to re-open the case and amend the statement of defence that the arrangement between the parties did not constitute a security interest in the shares, but was in essence a conditional option to purchase. Consequently, the PPSA is not applicable.

[4] We would therefore dismiss the appeal with costs, fixed at $10,000.

Signed: “K. Feldman J.A.” “Robert J. Sharpe J.A.” “Janet Simmons J.A.”