Court of Appeal for Ontario

CITATION: Mian v. Girdhar, 2009 ONCA 356

DATE: 20090504

DOCKET: C48836

BEFORE: Winkler C.J.O, MacPherson and MacFarland JJ.A.

BETWEEN:

Liaquat Mian

Plaintiff (Respondent)

and

Surendra Girdhar, Sam Cho, Bhupender Walia, Jaspal Walia, and ICP Developments Inc.

Defendants (Appellants)

COUNSEL:

Lorne S. Silver, for the appellants

Ronald Flom, for the respondent

Heard and released orally: April 28, 2009

On appeal from the judgment of Justice Randall S. Echlin, dated April 22, 2008 and reported at 2008 CanLII 17570 (ON S.C.).

ENDORSEMENT

[1] The appellants entered into a Memorandum of Understanding (the “MOU”) with the respondent in respect of a property, referred to as the Ironstone property, which the parties planned to purchase jointly. Although the parties had contemplated entering into a more formal Joint Venture Agreement (the “JVA”), no agreement could be reached. At a shareholder meeting called by the parties in respect of their jointly held company incorporated for the purposes of completing this transaction, ICP Developments Inc., the appellants passed a motion declaring the MOU to be invalid. In consequence, this litigation ensued.

[2] The trial judge found that the MOU constituted a binding contract between the parties. He further held that the appellants’ actions in declaring the MOU invalid were a breach of the contract amounting to repudiation, and that the respondent had accepted this repudiation. The trial judge thus ordered that the respondent return the contributions made by the appellants toward the Ironstone property, and that the appellants transfer to the respondent their respective shares in ICP Developments Inc. The appellants appeal that judgment.

[3] For the reasons that follow, the appeal is dismissed.

[4] The appellants raise several grounds of appeal. They contend that the trial judge erred in finding that the MOU was a binding contract. In the alternative, they argue that the respondent breached the MOU by presenting a draft of the JVA that was substantially different from what had been contemplated by the parties, and by incurring expenses in relation to the Ironstone property without approval from the appellants. The trial judge carefully reviewed the evidence, made the necessary findings of fact and construed the necessary documents in arriving at his decision that the MOU was a binding contract and that it had been repudiated by the appellants. We find no palpable and overriding errors with respect to his consideration of the evidence. Nor do we find any errors of law in the trial judge’s reasons in respect of these grounds of appeal.

[5] The central issue on this appeal is whether the trial judge erred in finding that the respondent’s unsuccessful attempt to gain a secret commission from the purchase of the Ironstone property did not amount to a breach of fiduciary duty. The appellants argue that the mere fact that the respondent attempted to make a secret profit is sufficient to ground a breach of fiduciary duty. They submit that, by considering the fact that the respondent’s plans were ultimately unsuccessful, the trial judge applied the wrong legal test.

[6] We would not give effect to this ground of appeal. In coming to his conclusion, the trial judge considered all of the evidence, including the fact that the respondent’s request for a secret commission from the real estate broker was rejected and that no payment was ever made. It is implicit in his reasons that, despite their knowledge in March of 2006 that the respondent had attempted to obtain a secret commission, the appellants did not claim a breach of fiduciary duty until day five of the trial when they sought leave to amend their pleadings to include this allegation. It is clear that the trial judge’s decision that there was no breach of fiduciary duty turned on the fact that the request for the secret commission went nowhere from the outset, as well as on the fact that the appellants did not raise this issue in the proceedings until late in the trial. We see no reason for interfering with the conclusion of the trial judge that there was no breach of fiduciary duty in these circumstances.

[7] The appellants further argue that the trial judge erred in granting rescission as a remedy. The trial judge stated that the appellants conceded during argument that rescission was the appropriate remedy if he held that there was a binding contract. In the face of this concession, we find no error in the granting of rescission. Quite apart from the concession during argument, we are of the view that there was no error in granting rescission in these circumstances.

[8] The appeal is dismissed.

[9] The appellants shall pay to the respondent costs in the amount of $30,000 inclusive of disbursements and GST, as well as $5,000 for costs awarded to the respondent on the motion before Lang J.A.

“Winkler C.J.O.”

“J.C. MacPherson J.A.”

“J. MacFarland J.A.”