Court of Appeal for Ontario

Date: November 7, 2019 Docket: C66571

Judges: Simmons, Pardu and Nordheimer JJ.A.

Between

CBM Ready Mix Division a division of St. Marys Cement Inc. (Canada) and St. Marys Cement Inc. (Canada) doing business as Canada Building Materials Company

Plaintiffs (Appellants)

and

8377278 Canada Inc. operating as Concept Contracting and Chris Mace

Defendants (Respondent)

Counsel

Jonathan Frustaglio and Nicole Abergil, for the appellants

Kelli Preston, for the respondent

Heard and released orally: November 5, 2019

On appeal from: the order of Justice Jill M. Copeland of the Superior Court of Justice, dated January 7, 2019.

Reasons for Decision

[1] The appellants appeal from the order granted by the motion judge that dismissed the appellants' motion seeking a declaration that a default judgment previously entered against the respondent, Chris Mace, survived his bankruptcy under ss. 178(1)(d) and 178(1)(h) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 ("BIA").

[2] We agree with the conclusion reached by the motion judge. The appellants obtained a default judgment. Under r. 19.04 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, a default judgment may only be signed by the Registrar if the claim is for "a debt or liquidated demand in money". Rather than asking the Registrar to sign a default judgment, a plaintiff can move for default judgment under r. 19.05, in which case broader relief may be granted: Batista v. Mason's Masonry Supply Ltd., 2014 ONSC 3955, 15 C.B.R. (6th) 157, at para. 10. However, that is not what the appellants did in this case.

[3] The result of the process that the appellants utilized is that there is no finding that the default judgment involves a claim arising out of "fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity" such that it would be covered by s. 178(1)(d) as there were no allegations in the statement of claim that could have provided support for any such finding. We note that s. 178(1)(h) simply covers a claim for interest respecting a claim that is otherwise covered by s. 178(1) so it does not provide a separate basis for exemption under s. 178(1).

[4] The appellants essentially assert that any misapplication of deemed trust funds, or failure to account, constitutes a defalcation under s. 178(1)(d). That proposition is directly contrary to the decision of this court in Simone v. Daley (1999), 43 O.R. (3d) 511 (C.A.). Further, the generic pleadings in the statement of claim were found by the motion judge to be insufficient to provide the basis to find the type of misconduct required for the exemption under s. 178(1)(d). We agree. It was not the job of the motion judge to go beyond the pleadings and the judgment obtained to make fresh findings of fact: Lawyers Professional Indemnity Company v. Rodriguez, 2018 ONCA 171.

Fresh Evidence

[5] The appellants sought to introduce fresh evidence consisting of an earlier order made by the Superior Court of Justice on behalf of another creditor of the respondents. In that case, the order exempted the default judgment from the bankruptcy discharge of the respondent Mace.

[6] We would not admit the fresh evidence. It does not satisfy the requirements for the admission of fresh evidence set out in R. v. Palmer, [1980] 1 S.C.R. 759, especially the requirement that the fresh evidence could not, by due diligence, have been adduced at the original hearing. The order sought to be introduced was granted on September 19, 2016, well before the motion in this case was heard. The mere fact that counsel only became aware of it recently, does not satisfy the due diligence requirement.

Conclusion

[7] We do not see any error in the conclusions reached by the motion judge. The appeal is dismissed. Costs are awarded to the respondent, on a partial indemnity scale, fixed in the amount of $4,500 inclusive of disbursements and HST.

"Janet Simmons J.A."

"G. Pardu J.A."

"I.V.B. Nordheimer J.A."