COURT OF APPEAL FOR ONTARIO
CITATION: 1720608 Ontario Inc. v. Rempel Maximum Ice Services Inc., 2012 ONCA 306
DATE: 20120514
DOCKET: C52755
MacPherson, Gillese and MacFarland JJ.A.
BETWEEN
1720608 Ontario Inc.
Plaintiff (Respondent)
and
Rempel Maximum Ice Services Inc. and Peter Thomas Rempel
Defendant (Appellants)
Steven Nagy, for the appellant
Joseph Gottli, for the respondent
Heard: May 8, 2012
On appeal from the order/judgment of Justice Linda M. Walters of the Superior Court of Justice, dated August 19, 2010.
ENDORSEMENT
[1] On February 1, 2007, pursuant to a written asset purchase agreement, the defendant Rempel Maximum Ice Services Inc. (“Rempel”) sold its refrigeration services and repair business to the respondent for $155,000, comprised of $55,000 for tangible assets and $100,000 for goodwill. The agreement required that Peter Rempel enter into a five year employment agreement as general manager of the business at an annual salary of $50,000 plus potential performance bonuses. The agreement also required that Rempel not compete with the respondent and change its name within 60 days. The agreement also included a customary indemnification clause.
[2] Peter Rempel quit his employment with the respondent on October 26, 2007.
[3] On January 28, 2008, the respondent brought an action for damages and injunctive relief against the appellants. On September 30, 2009, the respondent obtained summary judgment against the appellants, including a finding, reflected in paragraph 2 of the Judgment, that the defendants “are in breach of and have made false, misleading and fraudulent misrepresentations to the plaintiff to induce the plaintiff to enter into the asset purchase agreement”.
[4] The motion judge, Walters J., directed a reference to assess damages. In a judgment dated August 19, 2010, Walters J. assessed damages at $110,000, allocated as follows: $5,000 on consent for disgorged profits; $75,000 repayment of goodwill; and $30,000 in general damages.
[5] On September 21, 2010, the motion judge awarded costs to the respondent fixed at $60,000 on a partial indemnity basis.
[6] The appellants appeal and the respondent cross-appeals from various aspects of the motion judge’s damages award.
The appeal
[7] The appellants contend that there was no basis for an award of loss of goodwill. We disagree. The appellants’ counsel on the reference conceded that some repayment (he suggested $25,000) for loss of goodwill was in order. We can see no basis, especially given Peter Rempel’s serious misconduct and his early exit from the respondent (only nine months into a five year employment contract) for quarrelling with the quantum set by the motion judge, namely, $75,000.
[8] The appellants submit that no award for general damages should have been made. Again, this is directly contrary to the position taken by their counsel on the reference, which was that a general damages award “on the lower side” of the $25,000 – $50,000 range sought by the respondent was appropriate. The $30,000 award fits comfortably within this submission. In any event, we see no basis for interfering with the quantum set by the motion judge.
[9] The appellants have not sought leave to appeal the costs order. However, in their factum they submit that it should be reduced to $15,000. We see no basis for this submission.
The cross-appeal
[10] The respondent points out that Mr. Rempel was paid a salary of $37,500 during his nine months of employment. The respondent says that he did not devote his full time and attention to the business and that often he could not be located. Accordingly, the respondent submits that the motion judge erred by not ordering a repayment, which the respondent suggests should be 50 per cent, of Mr. Rempel’s received salary.
[11] We do not accept this submission. Although Mr. Rempel behaved badly and even dishonestly, we do not think that the motion judge made a palpable and overriding error in concluding that “[t]he plaintiff’s evidence on this point is not sufficient to satisfy the court that Mr. Rempel failed in his duties as general manager during the period of time he received compensation.”
[12] The motion judge awarded no damages for loss of future profits resulting from breaches of the agreement. The respondent says that she erred in reaching this conclusion, especially in light of the appellants’ “false, misleading and fraudulent misrepresentations” to the respondent.
[13] We disagree. In our view, it was not a palpable and overriding error for the motion judge to conclude that there was insufficient evidence to show that Mr. Rempel’s poor job performance, early resignation and fraudulent misrepresentations resulted in lost profits, especially a loss of future profits. As the motion judge pointed out, the business was losing money when the respondent purchased it.
[14] The respondent contends that the motion judge erred by not awarding punitive damages. In light of the categories and quantums of damages awarded by the motion judge, and recognizing that this is an area in which motion and trial judges deserve a wide strike zone, we would not interfere with the motion judge’s decision on this issue.
[15] Finally, the respondent seeks leave to appeal the costs award of $60,000 on a partial indemnity basis. It seeks either a costs award of $95,000 on a full indemnity basis, pursuant to the terms of the agreement, or $90,000 on a substantial indemnity basis because its damages award was higher than its valid offer to settle.
[16] We see no basis for interfering with the trial judge’s exercise of discretion in awarding costs of $60,000 to the respondent.
Disposition
[17] The appeal and cross-appeal are dismissed. Each party shall bear its own costs of the appeal.
“J.C. MacPherson J.A.”
“E.E. Gillese J.A.”
“J. MacFarland J.A.”