COURT OF APPEAL FOR ONTARIO
CITATION: Hollowcore Incorporated v. Visocchi, 2016 ONCA 600
DATE: 20160729
DOCKET: C59540 and C59541
Weiler, Cronk and Benotto JJ.A.
BETWEEN
Hollowcore Incorporated and Prestressed Systems Inc.
Plaintiffs (Respondents/
Respondents by way of cross-appeal)
and
Michael Visocchi and Visco Engineering Inc.
Defendants (Appellants/
Respondents by way of cross-appeal)
and
The Royal Insurance Company of Canada, Continental Casualty Company and Certain Underwriters at Lloyd’s Under Contract No. ENC5-98
Third Parties (Respondents/
Appellants by way of cross-appeal)
Alan J. Lenczner, Q.C., and Ren Bucholz, for the appellants/respondents by way of cross-appeal, Michael Visocchi and Visco Engineering Inc.
Peter W. Kryworuk, Jasmine T. Akbarali and D. Stephen Jovanovic, for the respondents/respondents by way of cross-appeal, Hollowcore Incorporated and Prestressed Systems Inc.
Morris A. Chochla and Mark A.D. Coleman, for the respondents/appellants by way of cross-appeal, The Royal Insurance Company of Canada, Continental Casualty Company and Certain Underwriters at Lloyd’s Under Contract No. ENC5-98
Heard: April 13 and 14, 2016
On appeal from the judgment of Justice Mary Jo M. Nolan of the Superior Court of Justice, dated November 4, 2014, with reasons reported at 2014 ONSC 6802, 40 C.C.L.I. (5th) 17.
Benotto J.A.:
A. Overview
[1] Michael Visocchi and Visco Engineering Inc. (“Visco”) are the two appellants in this appeal. Visocchi is a professional engineer and the principal of Visco, a corporation based outside of Windsor. They were retained to prepare engineering drawings for an addition to a commercial parking garage in the United States by Prestressed Systems Inc. (“PSI”) and Hollowcore Incorporated (“Hollowcore”). PSI is in the business of designing, manufacturing, and installing precast concrete, and Hollowcore is its wholly owned subsidiary and sales arm in the United States. The drawings had to be corrected and resubmitted multiple times, which delayed the completion of the project. Ultimately, the appellants simply withdrew from the project without completing their work.
[2] PSI and Hollowcore brought an action against the appellants for damages for breach of contract, negligent performance of a service and negligent misrepresentation. The appellants added their insurers as third parties to the action. The group of insurance companies (the “Insurers”) had provided errors and omissions insurance to the appellants at the material time. They are the remaining respondents and appellants by cross-appeal. The trial judge found Visco liable for breach of contract and both appellants liable in negligence, assessed the damages, and apportioned liability for the damages between the appellants and the Insurers.
[3] The appellants appeal, among other things, the apportionment of liability for the damages. The Insurers cross-appeal the assessment of damages and the exchange rate used by the trial judge to convert damages denominated in U.S. dollars.
B. Facts
[4] Hollowcore was awarded a subcontract by Rudolph Libbe Inc. (“Libbe”) in January 1999. The subcontract was for the design, supply, and installation of the precast concrete components of a five-storey addition to an existing parking garage in Toledo, Ohio.
[5] Under the subcontract, Hollowcore was to start on site by October 4, 1999, and be completed by November 17, 1999. The timeline was critical, as Libbe and the owners wanted to minimize interference with the profitable use of the existing parking structure. The subcontract specified that time was of the essence.
[6] On March 15, 1999, Visocchi, through Visco, submitted a bid to Hollowcore to provide, among other things, engineering drawings for the project. In the bid Visco committed to provide approximately 600 drawings and acknowledged that all drawings and calculations would have to be sealed by a licensed professional engineer registered in the state of Ohio. The total price for Visco’s work was CDN$67,500 plus GST.
[7] Four days after submitting the bid, on March 19, 1999, Visocchi wrote to Hollowcore saying:
I have not have [sic] a chance to put together a formal schedule for this project, however I have some people available to start erection drawings on April 1, 1999. By the middle of April I will have all of my people available to work on the project. I am sure I can meet your scheduling requirements.
I would really like this job for PSI and will do whatever it takes to get the drawings completed on your timetable.
[8] On April 12, 1999, PSI issued a purchase order to Visco, and the appellants commenced their work on the project.
[9] There were numerous and persistent problems with the work submitted by the appellants. Drawings were submitted late, they were replete with errors, and revised drawings did not address many of the errors found in earlier versions. Over the summer and fall of 1999, many discussions and meetings took place and many demands were made of the appellants.
[10] On September 2, 1999, Donald Little, then Vice President and General Manager of PSI and Hollowcore, wrote to the appellants to confirm the various agreements reached at his recent meeting with Visocchi and Loris Collavino, President of Hollowcore and PSI at the time. The letter confirmed a timetable: all inverted tee drawings and all of the “L” beam and spandrel drawings were to be delivered on September 1, 1999; working drawings for the columns and lite walls were to be available for pick up on September 2, 1999; and the drawings for the lite walls, columns, stairs, elevators, crossover beams, and shear walls were to be submitted by September 7, 1999. The letter also confirmed that, on September 1, 1999, Visocchi was to meet with an engineer from Hanna Ghobrial and Spencer Ltd. ("Ghobrial"), another engineering firm in Windsor, to provide details with respect to the elevator shaft drawings.
[11] The letter continued as follows:
As discussed at the meeting, we have no intention of creating a bad relationship with yourself, nor do we have any intention of back charging your account. The recent meeting with [Libbe] went very well and it appears that we can still satisfy their schedule. However, you must meet the above noted deadlines in order for us to keep this project on track and avoid any possible future charges against ourselves from the owner or [Libbe].
[12] On September 9, 1999, PSI wrote to the appellants advising that if Hollowcore could not meet the project’s schedule then Libbe would start charging the Hollowcore account.
[13] On September 17, 1999, Collavino met with Visocchi. Following the meeting, Collavino prepared an interoffice memo setting out the discussions wherein Visocchi admitted that he was “drastically behind” with the drawings.
[14] On September 30, 1999, Libbe wrote to Hollowcore complaining about the quality of the work and the delay in its delivery. Libbe demanded that the drawings and calculations be finalized and submitted immediately.
[15] The appellants repeatedly gave assurances that their work would be completed on time. However, on October 20, 1999, Visocchi told the Hollowcore project manager that he could not proceed and that Hollowcore should get someone else to complete the drawings.
[16] In the end, the erection of the pre-cast concrete was not completed until late January 2000.
[17] On October 25, 1999, PSI wrote a letter to the appellants putting them on notice that Hollowcore would be seeking full indemnity from them for any costs and expenses incurred by Hollowcore, as well as any possible damage claims brought against Hollowcore, as a result of their failure to meet the drawings submittal deadlines. The letter also advised that PSI would withhold any further payments until PSI had determined the costs, expenses, and possible damage claims resulting from the appellants’ delays.
[18] On October 27, 1999, PSI retained Ghobrial to assume responsibility for the engineering and shop drawings.
[19] PSI continued to write to the appellants to advise them of problems encountered on the job relating to errors and omissions in the drawings. PSI also asked the appellants to contact their insurer.
[20] Libbe back charged significant amounts to Hollowcore because the errors and delays in the drawings delayed the project and increased its costs. PSI and Hollowcore incurred additional costs as well in order to deliver and install the product as required under their subcontract with Libbe.
[21] Hollowcore and PSI issued their statement of claim on May 12, 2000. The appellants filed a statement of defence and counterclaim on July 12, 2000.
[22] Ten years later, on May 4, 2010, the appellants, with leave of the court, issued a third party claim against the Insurers for contribution and indemnity for all sums for which the appellants might become liable to the plaintiffs and for which there was coverage under their insurance policy. The Insurers defended the claim, relying on an exclusion clause for damage resulting from the appellants’ failure to complete their work on time. They also filed a defence in the main action.
C. The Trial Judge’s Decision
[23] At trial, Hollowcore and PSI alleged that both appellants were liable for breach of contract, negligent performance of a service, and negligent misrepresentation.
[24] The trial judge found Visco liable in contract to PSI and Hollowcore. Visco had an express contract with PSI and an implied contract with Hollowcore. Both the express and the implied contracts required Visco to provide accurate and timely engineering drawings for the parking garage project. Based on what she described as “overwhelming evidence”, the trial judge found that Visco breached its contracts.
[25] Although she found that Visocchi was not liable in contract, the trial judge concluded that both appellants were liable in negligence. They both owed a duty of care to Hollowcore and PSI. They made untrue, inaccurate, or misleading representations which were relied upon. The representations about when the work would be completed were made by Visco and by Visocchi personally. Visocchi gave his personal assurances to PSI and Hollowcore that the work would be done correctly and on time. In view of their history with the appellants – they had worked together before – it was reasonable for PSI and Hollowcore to rely on the assurances.
[26] The trial judge also found ample evidence of negligent performance of a service by both appellants. She relied on the oral evidence of those involved, supported by the exhibits, the numerous revisions of numerous drawings, and a number of photographs submitted by the parties, when finding that much of the work was performed negligently. In fact, Visocchi admitted that his work on this project did not meet his own professional standards.
[27] The trial judge then assessed the damages. Some of the heads of damages claimed were denominated in U.S. dollars, while the rest were in Canadian dollars. The trial judge awarded damages as follows:
Libbe back charges for winter costs
US$86,879.00
Libbe back charges for errors in drawings
US$50,607.00
Libbe back charges for the Assemblers
US$13,000.00
Libbe back charges for labour costs
US$150,000.00[^1]
Brint Electric costs
US$11,000.69
Costs related to column covers
US$29,200.69
Extra payment to Assemblers
US$83,325.00
Additional labour and repair costs
US$28,055.00
Supplier costs
US$21,000.00
“As built” drawings
US$4,770.00
Total for damages denominated in U.S. dollars
US$477,837.38
Cost of production and shipping of column covers
CDN$11,048.48
PSI “Inefficiencies”
CDN$35,000.00
Total for damages denominated in Canadian dollars
CDN$46,048.48
[28] After quantifying the damages, the trial judge turned to the Insurers’ liability to indemnify the appellants. Under the relevant contract of insurance, the Insurers were liable for any damages arising from the appellants’ negligence but not for any damages arising out of delay.
[29] The trial judge concluded that the Insurers were liable for all the damages for (1) Libbe back charges for errors in drawings, in the amount of US$50,607; (2) costs associated with column covers, in the amount of US$29,480.69; and (3) the production and shipping of column covers, in the amount of CDN$11,048.48.
[30] With respect to the balance of the damages, however, the trial judge found that it was almost impossible to determine with absolute accuracy the damages related to negligence as opposed to delay. She concluded that the Insurers were to indemnify the appellants for 55 percent of the damages. The remaining 45 percent would be paid by the appellants on a joint and several basis.
[31] Finally, the trial judge determined the exchange rate for converting the damages denominated in U.S. dollars into Canadian ones. She exercised her discretion pursuant to s. 121(3) of the Courts of Justice Act, R.S.O. 1990, c. C-43, to use the exchange rate as on May 15, 2000, instead of the exchange rate on the date of her judgment.
D. Issues on Appeal and Cross-Appeal
[32] The several issues raised by the appellants were simplified in oral submissions.
[33] As their first ground of appeal, the appellants submit that the trial judge erred in apportioning the damages between them and the Insurers because her findings made it clear that all the delay was caused by negligence and therefore covered under their insurance policy. If the court accepts this submission, the appellants submit that it is unnecessary to address the remaining issues raised by them in their appeal.
[34] Hollowcore and PSI do not take issue with this ground, although the Insurers do. The Insurers also submit that the trial judge erred in apportioning the damages between them and the appellants on a 45/55 percent split, in her assessment of damages, and by choosing the wrong date for determining the exchange rate.
[35] As will become evident in my analysis, I accept the appellants’ first submission. The issues therefore are the following:
Did the trial judge err in allocating responsibility for the damages between the appellants and the Insurers?
Did the trial judge err in her assessment of damages?
Did the trial judge err in her decision as to the date for the exchange rate?
E. Analysis
(1) Did the Trial Judge Err in Allocating Responsibility for the Damages Between the Appellants and the Insurers?
[36] The appellants submit that all the damages awarded against them are covered under their insurance policy because the damages resulted from their negligence in the performance of their professional services. The policy of insurance provides:
THE INSURER will pay on YOUR behalf all sums which YOU become liable to pay as DAMAGES arising out of a CLAIM providing YOUR liability is the result of an error, omission or negligent act in the performance of professional services for others.
[37] The Insurers acknowledge their obligation to indemnify the appellants against losses resulting from negligence. They submit, however, that a portion of the damages arise out of the appellants’ failure to complete the drawings on time and that the failure to provide professional services in a timely manner is not covered by the policy. They rely on the following exclusion in the policy:
THE INSURER will not cover YOU, pay DAMAGES, provide YOU with a defence or make supplementary payments for CLAIMS arising out of YOUR failure to complete drawings, plans, specifications, reports, or schedules on time or YOUR failure to act upon shop drawings on time, unless such failure is the result of an error or inaccuracy in the preparation of these documents.
[38] The Insurers also submit that the trial judge erred in apportioning responsibility for the damages between them and the appellants on a 45/55 percent split.
[39] The appellants submit that all the delay was caused by their negligence because the delay resulted from the need to correct and re-correct their work.
[40] In Cabell v. Personal Insurance Co., 2011 ONCA 105, 104 O.R. (3d) 709, at para. 11, this court reiterated the well-established principle that:
The general principles of interpretation that apply to insurance policies are well established. A clause in the policy providing coverage will be broadly interpreted in favour of the insured. An exclusion clause limiting coverage will be strictly interpreted.
[41] The fundamental obligation of the Insurers is to pay damages arising from a breach of contract or from negligence in the performance of professional services. This is the reason for the policy and should be broadly interpreted in favour of the insured. The Insurers had the onus of establishing, on a balance of probabilities, that the damages arose out of a lack of timeliness and not from delay caused by the appellants having to correct errors or omissions in the drawings: Strategic Associates Incorporated v. Export Development Corporation, 2007 ONCA 140, 221 O.A.C. 195, at para. 6.
[42] I have concluded that the Insurers have not discharged their burden. A fair reading of the trial judge’s findings of fact confirms that there are no damages caused by pure delay; rather, on her findings, all the delay (and the resulting damages) was caused by the appellants’ negligence.
[43] The trial judge found that the drawings had to be resubmitted multiple times, that this caused delay, and that the number of corrections needed in this case was not acceptable practice. In particular, she made the following findings:
• the contract between Visco and Hollowcore and the implied contract between Visco and PSI required that Visco provide accurate and timely engineering documents. The evidence is overwhelming that Visco breached its contracts with both PSI and Hollowcore (see para. 87);
• the number of times that drawings had to be revised and corrected in this case was not in line with accepted practice (see para. 88);
• a number of drawings clearly show repeated errors, many of which were not properly corrected on the first or even the second time they were returned by the engineer of record for revision (see para. 89);
• Visocchi admitted that the drawings done by him and others under his supervision were replete with errors that needed numerous revisions which delayed the project (see para. 92); and
• although revisions were routine, drawings that were returned repeatedly do not fall under the delay exclusion (see para. 243).
[44] The trial judge approached damages for all causes of action – breach of contract, negligent misrepresentation, and negligent performance of a service – together. She clearly concluded that the delay, which gave rise to the damages awarded, was caused by negligence on the part of the appellants. Given that, the Insurers are liable for all the damages.
[45] I have some sympathy for the trial judge. The argument put forth by the appellants on appeal does not appear to have been made to her, perhaps because her findings on negligence were not known at the time. That said, now that her findings are clear, so too is their effect on insurance coverage. It would be inconsistent, in light of her findings, to conclude that the delay at issue was not caused by negligence.
[46] Therefore, I agree with the appellants that the Insurers are liable for all the damages awarded by the trial judge.
(2) Did the Trial Judge Err in her Assessment of Damages?
[47] The Insurers submit that the trial judge erred in her assessment of damages by resorting to “guesswork”. They submit that she erred in her methodology and in fixing the quantum for certain heads of damages.
[48] I have concluded that her methodology followed the jurisprudence of this court and her determination of quantum was firmly grounded in the evidence. I would, therefore, reject this ground of appeal.
(a) The Trial Judge’s Methodology
[49] The trial judge’s assessment of damages is entitled to deference. In TMS Lighting Ltd. v. KJS Transport Inc., 2014 ONCA 1, 314 O.A.C. 133, at para. 60, this court said:
A trial judge’s assessment of damages attracts considerable deference from a reviewing court. Appellate interference with a damages award at trial, particularly an award made by a trial judge sitting alone, is justified only where the trial judge made an error in principle, misapprehended the evidence, failed to consider relevant factors, considered irrelevant factors, made an award without any evidentiary foundation, or otherwise made a wholly erroneous assessment of damages. [Citations omitted.]
[50] Hollowcore and PSI led significant evidence of damages. The trial judge issued lengthy reasons wherein she reviewed in detail the evidence she heard over 21 days of trial. Her damages analysis spans 24 pages and 113 paragraphs.
[51] The trial judge directed herself to the governing principles on the assessment of damages. She noted that situations where the damages assessment is difficult because of the nature of the damages proved must be distinguished from situations where the assessment is difficult due to the absence of evidence of loss. She found that this case fell into the first category because Hollowcore and PSI had submitted numerous documents and invoices to demonstrate loss, and led oral evidence to explain the circumstances under which the invoices were sent, received and paid. This was not a situation where the difficulty of assessing damages was because there was an absence of evidence. As a result, and in accordance with the jurisprudence, she concluded that her duty was to assess damages even if the assessment was imprecise.
[52] The trial judge dealt at length with the admissibility of business records, and in particular, the invoices that supported the damages claimed. She admitted the invoices into evidence but noted it was still necessary for her to determine whether the individual costs incurred could be linked to the breaches of contract by Visco or the negligence of Visocchi and Visco.
[53] The approach adopted by the trial judge is consistent with the decisions of this court. In Martin v. Goldfarb (1998), 1998 4150 (ON CA), 112 O.A.C. 138 (C.A.), Finlayson J.A. explained, at para. 75,
[I]t is a well-established principle that where damages in a particular case are by their inherent nature difficult to assess, the court must do the best it can in the circumstances. That is not to say, however, that a litigant is relieved of his or her duty to prove the facts upon which the damages are estimated. The distinction drawn in the various authorities, as I see it, is that where the assessment is difficult because of the nature of the damage proved, the difficulty of assessment is no ground for refusing substantial damages even to the point of resorting to guess work.
[54] These principles were recently reaffirmed in TMS Lighting Inc., where the court, at para. 61, explained:
It is also beyond controversy that a plaintiff bears the onus of proving his or her claimed loss and the quantum of associated damages on a reasonable preponderance of credible evidence. Further, as the trial judge recognized in this case, a trial judge is obliged to do his or her best to assess the damages suffered by a plaintiff on the available evidence even where difficulties in the quantification of damages render a precise mathematical calculation of a plaintiff’s loss uncertain or impossible. Mathematical exactitude in the calculation of damages is neither necessary nor realistic in many cases.
[55] Consequently, the trial judge’s approach to the assessment of damages was correct.
[56] The Insurers did not call evidence on the issue of damages. On the evidence before her, the trial judge found that the engineering drawings were replete with errors. The time spent correcting the errors led to delay in the preparation of other required drawings, thus delaying the overall project. The imprecision in calculating damages here flows from the nature of the losses suffered and from the good faith efforts of these respondents to mitigate their losses.
[57] The trial judge’s assessment of damages was necessarily imprecise because of the nature of the damages suffered. However, as the difficulties in quantifying damages resulted from the nature of the loss proven rather than the absence of evidence of any loss, the trial judge rightly did her best to assess the damages.
(b) The Trial Judge’s Determination of Quantum of Damages
[58] The Insurers submit that there was no evidence to support the following damages awarded by the trial judge:
US$13,000 awarded for Libbe back charges for Assemblers;
US$83,325 awarded for the extra payments to Assemblers;
US$8,000 of the total of $28,055 awarded for additional labour and repair costs; and
US$4,770 awarded for “as built” drawings.
[59] I will deal with each item in turn.
(i) The Back Charges for Assemblers
[60] Hollowcore subcontracted with Assemblers to install precast concrete in the garage. Hollowcore and PSI claimed US$26,000 in respect of work that Libbe did that was included in the Assemblers’ contract. The trial judge reduced the award to US$13,000. The Insurers submit that there was no evidence relating the back charges to the appellants’ delay or negligence. However, the evidence of Little and Collavino, accepted by the trial judge, was that the costs were incurred as a result of the delay and were part of Hollowcore’s attempt to mitigate its damages. The trial judge also accepted the evidence of Gary Haas, the chief project manager of Libbe, that his employees did work that should have been done by Assemblers. Therefore, it was open to her to award damages in the amount of US$13,000.
(ii) The Extra Payment to Assemblers
[61] Assemblers sought an additional US$280,000 pursuant to a series of additional work orders they deemed necessary to complete the project. Hollowcore and PSI settled the claim for US$125,000. Little gave evidence that the work orders related to the delays caused by having to repair the product on site because some components had been manufactured from erroneous drawings. Frank Sample, a principal of Assemblers, confirmed that the extra work was necessary because of the erroneous drawings. The trial judge concluded as follows at para. 224:
Given the numerous corrections that were required of the drawings as shown in Exhibit 14, the nature of the extra work required to be done by Assemblers, and the detailed evidence of Mr. Collavino over almost eight days with respect to the numerous drawing errors, I conclude that two-thirds of the extra work reasonably related to drawing errors and the resulting delay. I, therefore, fix the damages for the extra payment to Assemblers at $83,325USD.
[62] I see no error in this determination.
(iii) Additional Labour and Repair Costs
[63] The Insurers say that the trial judge erred in awarding US$8,000 for costs incurred by Hollowcore for repairing various installations. In fixing these damages, at para. 227, the trial judge said the following:
From January 25, 2000 until July 3, 2000, Hollowcore employees spent 268 hours at $35 per hour repairing various installations such as double tees, patching, cutting rustification groves, and repairing walls. In addition to the hourly wages which totalled $9,380, Hollowcore incurred room and board costs of $2,690 for a total of $12,070. The third parties argued that few of the entries except for $280 which related to the column covers could be proven to be the result of problems arising from the drawings. Some of the repairs related to production error which was the result of premature production. The necessity for some of the repairs could not be explained. As a result, I fix damages for repairs at $8,000 USD.
[64] This conclusion was available on the evidence.
(iv) Damages for “As Built” Drawings
[65] The Insurers submit that the appellants should not be responsible for US$4770 relating to the owner’s request for “as built” drawings. Little testified that the replacement engineer, Ghobrial, had to go back to the drawings submitted by the appellants and update them to an “as built” condition. The trial judge accepted a purchase order as evidence for this claim when setting the quantum of these damages at US$4,770. It was open to her to do so.
[66] In summary, the trial judge’s assessment of damages in each of these categories was based on the evidence and there is no basis for appellate intervention.
(3) Did the Trial Judge Err in her Decision as to the Date for the Exchange Rate?
[67] Some of the damages awarded had been denominated in U.S. currency. The trial judge therefore had to determine the exchange rate for converting those damages. She concluded that the exchange rate should be fixed as of May 15, 2000 (the claim was issued on May 12, 2000). The Insurers submit that the trial judge erred and that the date should have been September 30, 2014, when judgment was delivered.
[68] The exchange rate on May 15, 2000, was $0.67. The exchange rate on September 30, 2014, was $0.89. This represents a 25% appreciation in the value of the Canadian dollar in the interim period.
[69] Section 121(1) of the Courts of Justice Act provides that, generally, the exchange rate will be determined as at the date of judgment:
Subject to subsections (3) and (4), where a person obtains an order to enforce an obligation in a foreign currency, the order shall require payment of an amount in Canadian currency sufficient to purchase the amount of the obligation in the foreign currency at a bank in Ontario listed in Schedule I to the Bank Act (Canada) at the close of business on the first day on which the bank quotes a Canadian dollar rate for purchase of the foreign currency before the day payment of the obligation is received by the creditor.
[70] However, s. 121(3) provides an exception to that general rule:
Subject to subsection (4), where, in a proceeding to enforce an obligation in a foreign currency, the court is satisfied that conversion of the amount of the obligation to Canadian currency as provided in subsection (1) would be inequitable to any party, the order may require payment of an amount in Canadian currency sufficient to purchase the amount of the obligation in the foreign currency at a bank in Ontario on such other day as the court considers equitable in the circumstances.
[71] The Insurers submit that the trial judge erred in departing from the general rule that the applicable exchange rate should be the rate in effect as at the date of recovery. They submit that the trial judge erred because she made no finding of inequity and there were no exceptional circumstances or compelling reasons to depart from the general rule.
[72] The decision to depart from the general rule and apply s. 121(3) of the Courts of Justice Act is discretionary. In Zucchetti Rubinetteria S.p.A. v. Natphil Inc., 2011 ONSC 3845, at para. 9, Perell J. noted that the court “has the discretion to order the conversion to be effected on other dates if conversion on the date of payment would be inequitable to any party”. This is consistent with the language of the section.
[73] The trial judge recognized that the onus was on Hollowcore and PSI to justify a departure from the general rule. She was aware that a change in exchange rates alone could not create an inequity. She also recognized that an award of prejudgment interest would compensate Hollowcore and PSI for the fact that they did not have access to these funds and, therefore, that lack of access was not a reason to depart from the general rule.
[74] However, in the circumstances before her, the trial judge decided to depart from the general rule. In doing so, she adopted the reasoning of Stinson J. in Zesta Engineering v. Cloutier, 2010 ONSC 5810, 86 C.C.E.L. (3d) 1, at para. 296, varied on other grounds, 2014 ONCA 762, 20 C.C.E.L. (4th) 168:
Since the sales to Husky Buffalo were in the US dollars, it is necessary to convert that currency to Canadian dollars for purposes of valuing the loss suffered by Zesta. Although s. 121 of the Courts of Justice Act provides a mechanism for converting a foreign money obligation for purposes of an Ontario judgment, s. 121(3) also permits the court to depart from that standard approach where the court considers it equitable. In the present case, there has been a dramatic shift in the respective values of the Canadian and US dollars over the past decade. To place the innocent party, Zesta, in the position it would have been in but for the wrong committed by Cloutier, I direct that the conversion of the US$132,209.88 (or the lesser sum, if the restitution order has been compiled with) to Canadian dollars be made at the Bank of Canada closing rate as at November 30, 1999. This will more properly reflect the loss to Zesta at the time the wrong was committed.
[75] The trial judge found that to place the respondents in the position they would have been in but for the wrong committed by the appellants, the damages should be converted using the conversion rate as at May 15, 2000. This was her call to make. The loss actually suffered by the respondents was a relevant consideration. I see no basis for appellate interference with her discretionary ruling on this issue.
F. Disposition
[76] For the reasons given, I would allow the appeal of Visco and Visocchi against the Insurers and hold that the Insurers are responsible for all the damages payable to Hollowcore and PSI under the trial judgment.
[77] I would also dismiss the Insurers’ cross-appeal with respect to the reduction of damages sought and the conversion rate for U.S. funds.
[78] If the parties do not agree on the costs of these proceedings, the appellants’ costs submissions shall be delivered to the Registrar of this court within two weeks from the date of release of these reasons. The remaining parties’ costs submissions shall be delivered to the Registrar within two weeks thereafter.
Released: July 29, 2016
“M.L. Benotto J.A.”
“I agree K.M. Weiler J.A.”
“I agree E.A. Cronk J.A.”
[^1]: The trial judge mentions two different numbers for this head of damages. In her summary of the damages awarded, at para. 235, she says that she is awarding US$163,000 for back charges for labour costs; however, at para. 219 she states that she was awarding US$150,000.The parties have not raised this discrepancy as an issue before us.