Pacitti v. 1439200 Ontario Inc., 2008 ONCA 736
CITATION: Pacitti v. 1439200 Ontario Inc., 2008 ONCA 736
DATE: 20081027
DOCKET: C47386
COURT OF APPEAL FOR ONTARIO
MacPHERSON, CRONK and ROULEAU JJ.A.
BETWEEN
Luigi Pacitti also known as Lou Pacitti
Respondent (Plaintiff)
and
1439200 Ontario Inc. carrying on business under the firm name and style of Serenity Homes and Robert Lutczyk
Appellants (Defendants)
and
Domenic Pacitti
Respondent (Third Party)
David P. Lees, for the appellants
Joel S. Kuchar, for the respondents
Heard and released orally: October 23, 2008
On appeal from the judgment of Justice J.B. Shaughnessy of the Superior Court of Justice dated June 7, 2007.
ENDORSEMENT
[1] The appellants’ appeal against the judgment of Shaughnessy J. of the Superior Court of Justice dated June 7, 2007 whereby: (i) they were held jointly and severely liable to the respondent Luigi Pacitti in the aggregate sum of $49,424.58 and to the respondent Domenic Pacitti in the aggregate sum of $34,119.37; and (ii) it was declared that they hold the sum of $46,447.97 in trust for the benefit of Luigi Pacitti.
[2] During oral argument, the appellants advanced three main grounds of appeal. They argue that the trial judge: (i) erred in his calculation of the amounts owing to the respondents; (ii) erred by imposing personal liability on the individual appellant for the sums in issue; and (iii) erred by imposing a constructive trust in respect of part of the funds owed to Luigi Pacitti.
[3] We reject the first two grounds of appeal.
(1) Sums Owed to the Respondents
[4] Although the appellants argue that the trial judge misapprehended the evidence concerning the debts in question and the sums allegedly owing to the appellants by the respondents, the trial judge’s findings are firmly grounded in the evidence of the respondents at trial. The trial judge, as he was entitled to do, expressly rejected Robert Lutczyk’s evidence to the contrary. He did so on two bases: (i) his adverse assessment of Mr. Lutczyk’s credibility; and (ii) his conclusion that the appellants’ claims of amounts allegedly owing to them and of the projected costs of completing the Lake Simcoe project were inadequately supported on the evidence.
[5] We see no palpable and overriding error in the trial judge’s assessment of the amounts owing to the respondents, nor in his factual findings of the quantum of the debts in question.
(2) Personal Liability of the Individual Appellant
[6] Nor do we accede to the appellants’ argument that the trial judge erred by imposing personal liability on Mr. Lutczyk for the amounts owed to the respondents.
[7] The trial judge held that Mr. Lutczyk did not take reasonable steps to ensure that he was not holding himself out as an individual or as an agent of the corporate appellant or to make it known to the respondents that they were dealing with a numbered company.
[8] Without accepting all of the trial judge’s reasoning on this issue, we agree with his observation that neither of the contracts in issue nor any other relevant business document mentioned the numbered company – the corporate appellant – although they did refer to Serenity Homes. The respondents testified that they did not learn of the existence of the numbered company until after the appellants had unilaterally terminated both construction projects. There was also evidence that the respondents had not heard of any company operating as “Serenity Homes” until after the termination of the contracts. Further, it was Domenic Pacitti’s evidence that he believed that he was contracting directly with Mr. Lutczyk in respect of the construction of his cottage and, based on that business relationship, introduced Mr. Lutczyk to his son with respect to his son’s proposed plan to build a home.
[9] This evidence, which was accepted by the trial judge, established that at no time during the currency of the contracts were the parties ad idem as to the involvement of a corporate contractor.
(3) Imposition of a Constructive Trust
[10] Finally, while we are sympathetic to the objective sought to be served by the trial judge in imposing a constructive trust on certain of the monies owed by the appellants to Luigi Pacitti, in the circumstances of this case we agree with the appellants that a constructive trust should not have been imposed.
[11] A constructive trust remedy was sought by the respondents to protect against the possible bankruptcy of one or both of the appellants. On the record before the trial judge, there was no evidence of a pending or even an intended bankruptcy of either appellant. To the contrary, the prospect of a bankruptcy was entirely speculative. Without deciding whether the fact of an impending bankruptcy would have justified the imposition of a construction trust, on this record it could not be said that the trial judge’s award of damages in favour of the respondents was an insufficient remedy for the appellants’ breach of contract. Accordingly, the finding of the constructive trust cannot stand.
[12] The appeal is allowed in part by setting aside paragraph 3 of the trial judgment. In all other respects, the appeal is dismissed and the trial judgment remains in full force and effect.
[13] The respondents are entitled to their costs of the appeal, fixed in the amount of $6,000, inclusive of disbursements and GST.
“J.C. MacPherson J.A.”
“E.A. Cronk J.A.”
“Paul Rouleau J.A.”