Court of Appeal for Ontario

Date: 2025-07-30
Docket: COA-25-CV-0003
Panel: S. Gomery, D.A. Wilson, M. Rahman JJ.A.

Between

1461043 Ontario Limited c.o.b. as Nuvo Iron
Plaintiff (Appellant)

and

Soldan Fence & Metals (2009) Ltd. and Tony Vetro
Defendants (Respondents)

Appearances:
Michael A. Katzman, for the appellant
No one appearing for the respondent Soldan Fence & Metals (2009) Ltd.
James P.E. Hardy and Michael Ng, for the respondent Tony Vetro

Heard: June 26, 2025

On appeal from the order of Justice Colin Stevenson of the Superior Court of Justice, dated December 6, 2024, with reasons at 2024 ONSC 6684, and the costs order, dated December 30, 2024.

Reasons for Decision

A. Overview

[1] The appellant obtained default judgment against the respondents on May 22, 2019. The default judgment, issued by Pollak J., awarded the appellant $150,235.34 in damages plus interest and costs. In its statement of claim, the appellant sought declarations of an intentional breach of trust and a related declaration under s. 178(1)(d) of the Bankruptcy and Insolvency Act, RSC 1985, c B-3 (“BIA”), that the judgment survived the respondents’ discharge from bankruptcy. The default judgment did not contain either of these declarations. In July 2019, the appellant registered the default judgment in Alberta where Mr. Vetro lived. After the appellant obtained default judgment, the respondents made assignments into bankruptcy. That led the appellant to bring the motion that is the subject of this appeal.

B. Decision Below

[2] The appellant brought a motion to vary the judgment to add the declarations that it had sought in its statement of claim, but which had not been included in the judgment. The motion judge dismissed the motion. He rejected the appellant’s submission that it was Pollak J.’s “manifest intention” to have granted default judgment based on a finding of an intentional breach of trust. The motion judge concluded that neither the deemed admissions, nor the new evidence filed on the motion, supported the declarations sought by the appellant.

[3] Relying on this court’s decision in Yanic Dufresne Excavation Inc. v. Saint Joseph Developments Ltd., 2022 ONCA 556, para 33, the motion judge observed that neither a negligent nor incompetent breach of trust can support an order under s. 178(1)(d) of the BIA. He found that there was no basis in the record to find the kind of wrongdoing or improper conduct that would support a declaration that the respondents’ debt survived bankruptcy. Accepting the appellant’s arguments would allow the appellant to circumvent the bankruptcy process and would derogate from the finality of the default judgment.

C. Analysis

[4] We see no error in the motion judge’s reasons.

[5] At the outset, we observe that the appellant waited four years after obtaining the default judgment to have it varied. We do not have the record that was before Pollak J. It is unclear whether the default judgment was dealt with entirely in writing or in open court. Therefore, we have no way of knowing if, in the context of the motion for a default judgment, Pollak J. was asked to make the breach of trust declaration that the appellant now seeks to add to the original judgment.

[6] The appellant’s counsel acknowledged during submissions that his office would have submitted the draft judgment that the court ultimately issued. The appellant provided no explanation why, if Pollak J. must have implicitly made findings that would support a breach of trust declaration as the appellant contends, no such declaration was included in the draft judgment the appellant provided for her to sign.

[7] We also note that Pollak J. made handwritten changes to the draft judgment that the appellant submitted to vary the amount of interest that the appellant was seeking. These changes indicate that Pollak J. turned her mind to the relief being requested, but chose not to make the declaratory order or findings alleged in the appellant’s statement of claim.

[8] In any event, we do not agree with the appellant that the facts giving rise to the default judgment are necessarily consistent with a finding that the respondents committed an intentional breach of trust amounting to fraud. As this court clarified in Yanic, at para. 33, “a mere breach of trust, or even a negligent or an incompetent breach of trust, is insufficient to enable an order to be made that the debt survives bankruptcy pursuant to s. 178(1)(d) of the BIA.” We agree with the motion judge’s conclusion that, on the record, there was no basis to establish the type of wrongdoing or improper conduct required to support a declaration that the respondents’ debt survive bankruptcy.

D. Disposition

[9] The appeal is dismissed. The respondents are entitled to their costs of the appeal in the amount of $10,000, all-inclusive, as agreed to by the parties.

“S. Gomery J.A.”
“D.A. Wilson J.A.”
“M. Rahman J.A.”