Court File and Parties

CITATION: Garofalo v. Papadopoulos, 2009 ONCA 120

DATE: 20090206

DOCKET: C49235

COURT OF APPEAL FOR ONTARIO

Rosenberg, MacPherson and Rouleau JJ.A.

BETWEEN:

Arthur Garofalo

Plaintiff (Respondent)

and

All Type Financial Services Ltd. and Demetre Papadopoulos

Defendants (Appellant)

Counsel:

Alfred Schorr, for the appellant

Benjamin Sim-Tzung Lee, for the respondent

Heard: February 5, 2009

On appeal from the judgment of Justice Maurice Cullity of the Superior Court of Justice dated July 7, 2008.

APPEAL BOOK ENDORSEMENT

[1] The appellant appeals from the judgment of Cullity J. dated 7 July 2008, in which he declared that the claims of the respondent were not released as against the appellant by reason of s. 178(1)(b) – in particular, defalcation – of the Bankruptcy and Insolvency Act.

[2] The appellant’s essential argument is that his conduct in a relatively simple and common commercial relationship did not rise to the level of ‘moral turpitude’ that the case law says anchors the concept of defalcation: see Simone v. Daley (1999), 1999 CanLII 3208 (ON CA), 43 O.R. (3d) 511 (Ont. C.A.).

[3] We disagree. The motion judge was entitled to accept the facts in the Statement of Claim as true given that the appellant did not file a Statement of Defence and was noted in default without challenge from him. Those facts establish both a fiduciary relationship between the parties and a level of serious misconduct on the part of the appellant – not investing all of the respondent’s money, investing it in something different from what the parties had agreed, not trying to recover the money, and not accounting for the money including indicating who actually received it. Taken together, these activities and omissions bring this case within the test in Simone v. Daley.

[4] The appeal is dismissed. Costs to the respondent fixed at $5000 inclusive of disbursements and GST.