Court of Appeal for Ontario

Citation: Perfect Auto Lease & Sales Inc. v. Gagnier Trucking (Fingal) Limited, 2008 ONCA 61

Date: 2008-01-28

Docket: C46633

Before: Sharpe, Cronk and Gillese JJ.A.

Between:

Perfect Auto Lease & Sales Inc. c.o.b. as PALS Auto Wholesale

Plaintiff (Appellant)

and

Gagnier Trucking (Fingal) Limited c.o.b. as Beaudry Bros.

Defendant (Respondent)

Counsel:

David J. Medcalf, for the appellant

Sandra L. Monger, for the respondent

Heard and released orally: January 23, 2008

On appeal from the judgment of Justice W. Tausendfreund of the Superior Court of Justice dated January 10, 2007.

ENDORSEMENT

[1] There is no dispute between the parties that money paid by mistake of fact – as here – can give rise to a prima facie case of unjust enrichment. Nor is there any controversy that a change in position may be a defence to a claim for restitution in respect of money paid by mistake of fact. The sole issue in this case is whether the circumstances surrounding the payment in question were sufficiently out of the ordinary as to put the respondent on a duty of inquiry concerning the legitimacy of the payment.

[2] The appellant says that the circumstances were sufficiently unusual as to trigger such a legal duty. It argues that the following circumstances, in combination, triggered such a duty.

[3] First, the respondent received a sizeable wire transfer to its bank account from a company that owed it no debt and with whom it then had no business dealings.

[4] Second, the respondent was no longer in the car wholesale business at the time of the payment, yet a sizeable deposit was made to its bank account from the appellant, an American car dealer.

[5] Third, although the deposit was allegedly a repayment of a loan made by the respondent to Mr. O’Donnell on April 14, 2004, the money received exceeded the amount of the loan.

[6] Finally, the manner of the alleged loan repayment, ostensibly made by the appellant on Mr. O’Donnell’s behalf, was not in accord with the past procedure followed by the respondent and Mr. O’Donnell for the repayment of loans.

[7] Of these factors, the appellant particularly emphasizes the fact that the respondent received a sizeable transfer of funds to its bank account from the appellant when it knew that no debt was owed to it by the appellant.

[8] While it may have been prudent for the respondent to verify the legitimacy of the payment by contacting the appellant, for two reasons we are not satisfied, on this record, that the circumstances were sufficiently unusual to trigger a legal duty to inquire.

[9] First, approximately one week before the payment in question, a similar trans-action involving the same parties took place without incident. In that sense, the challenged transaction was not unprecedented. Second, the debtor advanced a plausible explanation for the payment to the respondent at the time that the payment was made. Importantly, when this explanation was offered, the respondent had no reason to suspect dishonesty or fraud on the part of the debtor.

[10] Finally, in our view, there is no basis to interfere with the trial judge’s factual inference that the respondent relied to its detriment on the payment received from the appellant, and changed its position, by making the additional loan to Mr. O’Donnell.

[11] The facts of this case are unfortunate. It appears that both parties were the innocent dupes of Mr. O’Donnell, an unscrupulous fraudster. However, for the reasons given, we are obliged to dismiss the appeal.

[12] The appeal is dismissed. The respondent is entitled to its costs of the appeal, fixed in the amount of $5,056.70, inclusive of disbursements and GST.

“Robert Sharpe J.A.”

“E.A. Cronk J.A.”

“E.E. Gillese J.A.”