Court of Appeal for Ontario

Docket: C66073

Judges: Feldman, Paciocco and Fairburn JJ.A.

Parties

Between

Distributions Katrina Inc. Plaintiff (Respondent)

and

Enroute Imports Inc. and Vincent P. Pileggi, also known as Vincent Pileggi Defendants (Appellants)

And Between

Enroute Imports Inc. and Vincent P. Pileggi, also known as Vincent Pileggi Plaintiffs by Counterclaim (Appellants)

and

Distributions Katrina Inc. and Robert Geoffrey Defendants to the Counterclaim (Respondents)

Counsel

Damien Buntsma and Elyse Calvi, for the appellants

Robert Malen, for the respondents

Hearing and Decision

Heard and released orally: May 17, 2019

On appeal from: The judgment of Justice Douglas K. Gray of the Superior Court of Justice, dated September 25, 2018, with reasons reported at 2018 ONSC 5644.

Reasons for Decision

[1] This is an appeal from summary judgment on the respondent's claim without set-off or a stay pending the counterclaim. The appellants say that the motion judge erred in three broad respects.

[2] First, the appellants argue that the motion judge failed to apply the appropriate test on summary judgment by failing to appreciate the true nature of the arrangement between the parties, particularly as it related to the defence of equitable set-off. The appellants suggest that the motion judge failed to appreciate that the claim and counterclaim are inextricably linked. We do not agree.

[3] The motion judge specifically addressed that legal issue and accurately summarized the law. The appellants do not suggest otherwise. Although the motion judge determined that the counterclaim requires a trial because there was at least a "thin" case underlying the counterclaim, he decided that there was no reason to deny the respondent judgment in the interim. He concluded that there was no equitable ground on which to protect the appellants from the respondent's claim before the counterclaim proceeded.

[4] The motion judge understood the law on the defence of equitable set-off and applied it properly to the facts. We agree with his reasoning on this point. The two claims as pled and as amplified by the factual record are not so closely connected that it would be manifestly unjust to allow the respondent to enforce payment. As found by the motion judge, the counterclaim does not go to the root of the respondent's claim.

[5] Second, the appellants argue that the motion judge erred in granting what is described as partial summary judgment in this case. We do not agree with that characterization. The normal concerns that arise in relation to granting partial summary judgment do not arise here. No potential for inconsistency has been demonstrated. We decline to interfere with the motion judge's decision to grant judgment on the claim and to decline to stay that judgment.

[6] Finally, the appellants argue that the motion judge erred when he pierced the corporate veil and made the individual appellant liable. Although there is a lack of reasoning on this issue, the circumstances of this case support the motion judge's conclusion regarding personal liability, including:

a. the individual respondent is the president of the corporate appellant company;

b. he acknowledges that the company is owned by a holding company, Vincent Pileggi Family Trust, of which he and his wife are trustees;

c. he acknowledges he is the decision-maker insofar as the corporate appellant is concerned; and

d. he acknowledges that he personally gave the direction to stop payment on three cheques to the respondent after having received the subject product and continuing to sell that product, all while additional orders were being placed.

[7] The appeal is dismissed with costs fixed at $15,000 to the respondent inclusive of disbursements and HST.

"K. Feldman J.A." "David M. Paciocco J.A." "Fairburn J.A."