Court of Appeal for Ontario
Citation: Belmont Concrete Finishing Co. Limited v. Marshall, 2012 ONCA 585
Date: 2012-09-10
Docket: C55093
Before: Goudge, Gillese and Armstrong JJ.A.
Between:
Belmont Concrete Finishing Co. Limited and Gage Metal Cladding Limited Plaintiffs (Appellants)
and
Marvin Marshall, Dian Hooks, Michael Brodigan a.k.a. Michael Brodigan Junior, Thomas Leverty, Robert M. Wheler and Internorth Construction Company Defendants (Respondent)
Counsel: Dan J. Leduc, for the appellants Ronald Chapman, for the respondent
Heard: August 22, 2012
On appeal from the order of the Divisional Court (Ferrier, Swinton and Wilton-Siegel JJ.), dated June 30, 2011, with reasons by Wilton-Siegel J. and reported at 2011 ONSC 1560, 338 D.L.R. (4th) 144.
Reasons for Decision
Goudge J.A.:
[1] In this litigation the appellants, who were suppliers of building materials to the general contractor on several projects, sued the respondent under s. 13(1) of the Construction Lien Act, R.S.O. 1990, c. C.30 (the Act). They claimed that the respondent was liable for breaches of trust by the general contractor of which he was an officer and director.
[2] The appellants succeeded at trial. The Divisional Court reversed that finding and dismissed their action against the respondent. This is their appeal from the Divisional Court.
[3] Section 13(1) of the Act reads as follows:
Liability for breach of trust
By corporation
- (1) In addition to the persons who are otherwise liable in an action for breach of trust under this Part,
(a) every director or officer of a corporation; and
(b) any person, including an employee or agent of the corporation, who has effective control of a corporation or its relevant activities,
who assents to, or acquiesces in, conduct that he or she knows or reasonably ought to know amounts to breach of trust by the corporation is liable for the breach of trust.
[4] The Divisional Court correctly interpreted that section to say that a person can be held liable for a breach of trust by a corporation only where: (1) there is conduct by the corporation that amounts to a breach of trust; (2) the person is a director or officer of the corporation, or in effective control of it; and (3) the person knows or ought reasonably to know that the conduct amounts to a breach of trust and assents to or acquiesces in that conduct.
[5] Neither the appellants nor the respondent contest the finding by the trial judge that only from the end of May 2002 was the respondent in a position with the general contractor such that he would have known or reasonably should have known about and would have assented to or acquiesced in any breach of trust by the general contractor that took place after that date.
[6] The question is whether there were any such breaches after that date.
[7] In finding the respondent liable, the trial judge relied on the summary judgments against the general contractor in this same action. These judgments establish that during the period from 2001 to 2003 the general contractor received funds for several projects (that therefore became trust funds under the Act) and dispersed them in breach of trust, leaving the appellants unpaid.
[8] However, for the respondent to be liable for these breaches of trust under s. 13(1), the breaches had to occur after the end of May 2002 when he took control of the general contractor sufficiently for s. 13 purposes.
[9] The Divisional Court found that not only did the trial judge make no finding as to when these breaches took place, before or after May 2002, but that there was no evidence that would support any such finding. I agree. It is simply unknown whether the breaches of trust established by the summary judgments occurred on the respondent’s watch.
[10] The appellants argue that the onus is on the respondent to fill this evidentiary void. I do not agree. Unlike s. 8 of the Act, s. 13 is not about liability as a trustee. It is about an individual’s liability for breach of trust by the corporation. The onus for the elements required by s. 13(1) is on the party seeking to attach liability to the individual: see Duncan Ceiling & Wall Systems of Oshawa Ltd. v. Vin-Bon Retail Systems Ltd. (2007), 67 C.L.R. (3d) 17 (Ont. Div. Ct.).
[11] Since there was no evidence that any of the breaches of trust by the general contractor encompassed by the summary judgments took place after the end of May 2002, there was no basis to find that the respondent could be held liable for them under [s. 13](https://www.canlii.org/en/on/laws/stat/rso-1990-c-c30/latest/rso-1990-