COURT OF APPEAL FOR ONTARIO

CITATION: 1468025 Ontario Limited v. 998614 Ontario Inc., 2016 ONCA 504

DATE: 20160624

DOCKET: C61479

Rouleau, van Rensburg and Benotto JJ.A.

BETWEEN

1468025 Ontario Limited

Plaintiff (Respondent)

and

998614 Ontario Inc. and Gabriel Menei

Defendants (Appellants)

T. Michael Harris, for the appellants

Daniel Matson, for the respondent

Heard: June 21, 2016

On appeal from the judgment of Justice John S. Fregeau of the Superior Court of Justice, dated November 20, 2015, with reasons reported at 2015 ONSC 7216, 62 R.P.R. (5th) 130.

ENDORSEMENT

[1] At the conclusion of the hearing, we dismissed the appeal with reasons to follow. These are those reasons.

Background

[2] The appellants appeal the trial judge’s award of $184,211.58 and a declaration of an equitable mortgage on the properties subject to the litigation.

[3] The claim was for repayment of various sums owed by the appellants, Gabriel Menei (“Gabriel”) and his corporation 998614 Ontario Inc. (“998”), to the respondent corporation, whose president and operating mind was Gabriel’s son, Dario Menei (“Dario”).

[4] In 2001, 998 was experiencing serious financial difficulties. From 2001 to 2007, the respondent corporation advanced funds to the appellants to cover Gabriel’s personal expenses and 998’s operating expenses.

[5] In 2002, the parties entered into an agreement respecting these advances. That agreement was to be secured by mortgages on the appellants’ properties. However, those mortgages were never registered on title.

[6] At trial, the appellants maintained that the advances could not be proven as the documentation purporting to support them was inadequate. An adverse inference ought to be drawn, they submitted, from the failure to present corroborating evidence. Further, the appellants argued that because of discrepancies within the documents and between the documents and Dario’s testimony, Dario’s evidence should be rejected as being not credible.

[7] The appellants also advanced a non est factum defence (“it is not my deed”), arguing that the 2002 agreement was void because Gabriel, who signed it, had only a grade one education and did not understand what he was signing.

[8] Finally, the appellants argued that they ought not to be jointly and severally liable.

[9] In his decision, the trial judge refused to draw an adverse inference from the limited documentation available in support of the various advances. Finding Dario generally credible, he accepted his explanation for the state of the record. The trial judge went on to allow most of the claims, but disallowed those without sufficient corroborating evidence.

[10] The trial judge also rejected Gabriel’s non est factum defence, finding that Gabriel was not as unsophisticated as he alleged: he had been in business for many years, had entered into all manner of agreements during those years, and, in the trial judge’s estimation, understood what he was signing in 2002.

[11] Finally, given the nature of the relationship and of the reasons for the various advances, the trial judge found that the appellants were jointly and severally liable. In any event, the 2002 agreement provided that all of the advances, whether to Gabriel or 998, were secured by the mortgages. As a result, recourse against the security was available for the entire debt.

[12] The appellants now appeal on substantially the same grounds as were argued at trial. They simply frame these grounds as errors by the trial judge in his application of the law. They also argue that one aspect of the judgment, an award of $7,787.50 for damages to a piece of equipment, which equipment was returned to the respondent after the claim was issued, ought not to have been made as the claim was not properly pleaded.

[13] In oral submissions, the appellants, relying on the Supreme Court of Canada’s decision in Lévesque v. Comeau, 1970 CanLII 4 (SCC), [1970] S.C.R. 1010, placed particular emphasis on the trial judge’s failure to draw the requested adverse inference.

Analysis

[14] We see no merit in the appeal. For the most part, the appellants simply disagree with the trial judge’s findings of fact. These findings were made after a careful review of the documentation filed at trial and an assessment of Dario’s and Gabriel’s credibility. The trial judge is in the best position to make such findings, and is entitled to deference. We see no reason to interfere. Other than arguing that some facts were not taken into account or were given inadequate weight, the appellants cannot point to any error or misapprehension of fact in the trial judge’s reasons supporting those findings.

[15] We reject the submission that the trial judge erred in failing to draw an adverse inference from the respondent’s failure to produce documentation supporting some of its claims and from its failure to call as witnesses at trial the accountants who prepared some summaries of the claims advanced. The trial judge considered the issue and, based on Dario’s evidence and the extensive documentation filed, determined that no adverse inference should be drawn. Significantly, the trial judge’s reasons demonstrate that he carefully weighed the evidence. He disallowed those claims that lacked documentary support, allowing only those claims that were established by the evidence.

[16] The Lévesque decision does not assist the appellants. It does not stand for the proposition that a trial judge must draw an adverse inference in circumstances such as were presented in this case, which included the trial judge’s finding that Dario had not intentionally withheld any relevant documents from the appellants. The trial judge fully explained why no adverse inference should be drawn. We see no basis to interfere.

[17] As to the trial judge’s conclusions on the issues of joint and several liability and the appellants’ non est factum defence, we also see no basis to interfere. The trial judge correctly identified the governing legal principles and his conclusions are well supported on the record.

[18] Finally, we see no error in the trial judge’s award of $7,787.50 for damage done to equipment. The return of the equipment was a subject of the claim. Although it was returned after the claim was issued, the appellants remained liable for the damage done to it prior to its return.

Disposition

[19] For these reasons, we dismissed the appeal.

[20] As agreed by the parties, the respondent, being the successful party on the appeal, is awarded indemnity costs, fixed in the amount of $7,500, inclusive of disbursements and applicable taxes.

“Paul Rouleau J.A.”

“K. van Rensburg J.A.”

“M.L. Benotto J.A.”