Dimma v. Ford, 2021 ONSC 7643

CITATION: Dimma v. Ford, 2021 ONSC 7643

DIVISIONAL COURT FILE NO.:: 015/21

DATE: 2021-11-22

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Sachs, Newton, Ryan Bell JJ.

BETWEEN:

Fraser Dimma and 934091 Ontario Inc.

Plaintiffs/Appellants

– and –

John A. Ford & Associates and John A. Ford

Defendants/Respondents and Cross-Appellants in Appeal

COUNSEL:

A. Assuras and B. Klotz, for the Plaintiffs/ Appellants

J. Macdonald and B. Gasse for the Defendants/Respondents

HEARD via Videoconference at Sudbury: October 15, 2021

Overview

[1] In 2003, Dimma entered into an associate agreement with Ford and Associates, operating as Training Services, to provide occupational health and safety training and consulting services to clients of Training Services in the manufacturing and automotive sector.

[2] By 2007, Dimma was dissatisfied with the agreement with Training Services and, after a failed attempt by Dimma to purchase Training Services, the parties parted company. They entered into a Settlement and Release Agreement (SRA) which terminated the associate agreement and provided that Dimma was to pay $97,500 to Training Services to be released from the restrictive covenant provisions of the associate agreement.

[3] The SRA acknowledged that each would continue to pursue contracts from the same client base and that they “shall not in any way disparage or impugn the work, services offered or reputation of the other” or “take any action that would be harmful to any of the other parties or their reputation or goodwill.”

[4] The SRA also stated that Ford would pay Dimma for past accounts receivables as collected with Ford agreeing to “take all reasonable collection efforts.”

[5] Dimma sued Ford claiming termination of the SRA, return of the restrictive covenant release payment and damages for breach of the SRA, defamation, and wrongful interference with economic relations. Dimma also sued Ford & Associates and Mr. Ford personally under the Business Corporations Act, R. S.O. 1990, c. B.16 (OBCA), claiming that Mr. Ford used his power as the sole officer and director to carry on the company’s financial affairs in a matter that was oppressive and unfair to Dimma as a creditor.

[6] Ford counterclaimed for damages for breach of the SRA and for breach of an alleged agreement to keep their financial statements confidential.

[7] After a trial heard over 33 days, the trial judge dismissed all of Dimma’s claims except for payment of monies owing of $12,349.12. Ford’s counterclaims were also dismissed. Mr. Ford and Ford & Associates were each awarded costs of $70,000 “all-inclusive” payable by Dimma.

Issues on Appeal

[8] Dimma raises the following issues:

(i) Whether the trial judge erred in finding that Ford did not breach their obligations under the SRA;

(ii) Whether the trial judge erred in failing to find that a letter sent by Ford on July 23, 2009 was defamatory;

(iii) Whether the trial judge erred in failing to find that the presentation at a Camslide seminar was defamatory;

(iv) Whether the trial judge erred in finding that there was an insufficient evidentiary foundation for Dimma’s claim for lost business as a result of Ford’s actions; and

(v) Whether the trial judge erred in finding (a) that the oppression claim was

statute-barred and (b) that Dimma had not established a case for oppression.

[9] Ford submits that Dimma has not raised any palpable and overriding error in the trial judge’s reasoning on these issues. Ford cross-appeals arguing that the trial judge erred in failing to find an “accord and satisfaction” with respect to the $12,349.12 found owing.

[10] Dimma also appeals the trial judge’s failure to award him prejudgment interest for the period prior to the issuance of the Statement of Claim and Dimma and Ford appeal the trial judge’s award of costs.

(i) Whether the trial judge erred in finding that Ford did not breach their obligations under the SRA

[11] Dimma argues that the trial judge erred in not finding the following to be breaches of the SRA:

a. Failure to pay the “paid invoices”;

b. Failure to collect from customers;

c. The July 23, 2020 letter, allegedly misrepresenting Dimma’s relationship with Training Services;

d. Failure to convey important customer communications to Dimma; and

e. Alleged defamatory statement at Camslide Seminar.

[12] The trial judge’s reasons addressed each of these issues:

a. Failure to pay the “paid invoices”

[13] At the time that the SRA was signed, the parties were unable to agree on the balance of compensation owing to Dimma as of that date. As of the date of the trial there were sixteen invoices for which Dimma claimed compensation – eight invoices totalling $12,349.00 for which Ford had received payment from the customers (the “paid invoices”) and eight invoices totalling $16, 189.51 for which Ford had not received payment from the customers (the “unpaid invoices”). At the trial Ford did not dispute that they owed Dimma for the paid invoices and the trial judge awarded Dimma judgment for the total amount owing for those invoices. Dimma argued that the failure to pay monies owing to him for the paid invoices constituted a breach of the SRA.

[14] In February of 2010 Ford and Dimma had a meeting during which there was no dispute that Ford handed Dimma a cheque for the amount of the paid invoices, which Dimma returned. According to Dimma’s testimony at trial, he did so saying “We’ll look at this later”.

[15] After reviewing the evidence, the trial judge noted and concluded:

[72] However, I do not accept, as claimed by the plaintiffs, that the fact that payment of these eight invoices remains outstanding constitutes a breach of the defendants’ obligation, pursuant to clause 4(a) of the SRA, to “pay to the Dimma Group, from time to time the balance of compensation payable to the Dimma Group pursuant to and in accordance with the terms of the Associate Agreement.”

[73] Mr. Ford handed a cheque to Mr. Dimma, which, I accept, Mr. Dimma returned, leaving discussion of payment of those eight Associate invoices for a later date. Mr. Dimma’s failure to then request the cheque or seek payment of the eight invoices until more than a year later, in or around the time of the issuance of the statement of claim, cannot place the defendants in breach of clause 4(a).

[16] In other words, the trial judge found that Dimma could not claim a breach of Clause 4(a) of the SRA for non-payment of the paid invoices in a situation where he had returned a cheque for payment of the invoices stating that the parties would discuss the issue at a later date. The trial judge committed no error of law in coming to this conclusion and her findings regarding what occurred at the meeting in question were supported by Mr. Dimma’s evidence on that point.

b. Failure to collect from customers

[17] Dimma claimed that Ford breached the SRA by failing to make good faith and reasonable efforts to collect the unpaid invoices. The trial judge noted that as of the date of the SRA those invoices were at least a year old.

[18] After reviewing the evidence, the trial judge noted and concluded:

[78] In any event, I am not persuaded that the plaintiff has established that Training Services failed to take all reasonable collection efforts or acted unreasonably in its pursuit of the collection of its invoices. The evidence tendered by the defendants demonstrates that the corresponding Training Service accounts, which, if collected, would also have generated revenue for Training Services, were uncollectible, or that Training Services acted reasonably in its attempts to collect payment from its customers.

[79] In the circumstances, I am not satisfied that the plaintiffs have demonstrated that Training Services inability to collect payment of its invoices to these customers, and pay the plaintiffs’ eight corresponding Associate Invoices, constitutes a breach of clause 4(c) of the SRA.

[19] These findings disclose no error of law and no palpable and overriding error of fact. In the end the trial judge found that Dimma had failed to meet his burden of establishing that Ford had failed to take all reasonable steps or had acted in bad faith in failing to collect the unpaid invoices. Given the evidence before her, which included the fact that these invoices were dated, and the fact that Ford would also have benefited if the invoices had been collected, the conclusion that the trial judge drew from the evidence and lack of evidence was a reasonable one.

c. The July 23, 2020 letter, allegedly misrepresenting Dimma’s relationship with Training Services

[20] In the July 23, 2020 letter, Training Services advised customers that Dimma was no longer an associate with Training Services and further stated:

Although we expect to have an ongoing relationship with him, we do have other associates, including myself, who are committed to continue providing you with high quality and cost-effective services that have been the foundation of our business for the past 20 years.

[21] Dimma argued that the statement “we expect to have an ongoing relationship with him” breached Ford’s obligation under the SRA not to “in any way disparage or impugn the work, services offered or reputation of the other.”

[22] The trial judge noted Dimma did not raise any concern or complaint when he learned of the letter and that there was no clear evidence that any of the customers were misled by the letter resulting in lost business to Dimma. The trial judge also found that it was undisputed that after the completion of the SRA the parties expected that Dimma was to complete ongoing work for Ford and there was evidence in the form of invoices from Dimma to Ford that he did in fact do so.

[23] The trial judge concluded:

[117] For all the reasons set out above, I am not satisfied that the plaintiffs have established, on a balance of probabilities, that any statement in the letter could be construed as a breach of Training Services obligation, “when pursuing contracts or engagements from the same prospective client base not to in any way disparage or impugn the work, services offered or reputation of the other”, contrary to clause 4(a). Nor, can any statement in the letter be construed as “harmful to any of the other parties or their reputation or goodwill.”

[24] This conclusion is amply supported by the evidence, including the evidence as to the fact that after the SRA was executed the parties did continue to have a relationship.

d. Failure to convey important customer communications to Dimma

[25] Dimma alleged that Ford intentionally failed to forward emails and telephone messages to Dimma in violation of the SRA. After carefully reviewing the evidence (paras. 121- 138), the trial judge noted and concluded:

[139] There is no direct evidence that Training Services diverted work from Mr. Dimma by use of an email sent to fdimma@cybertrain.ca. As I have already found in respect of the letter, it seems that any difficulty in communication with customers resulted as much, if not more, from Mr. Dimma’s decision not to discuss the issue of the handling of fdimma@cybertrain.ca directly with Training Services or his lawyers at the time of the SRA, or to send emails and/or letters to all customers with whom Dimma had ongoing work, or hoped to obtain work, to advise the customers of his contact information.

[140] I reach the same conclusion with respect to telephone calls. The SRA expressly allowed for the parties to compete for the same prospective customers. There was no obligation, if a customer contacted Training Services, asking for Mr. Dimma, that Training Services ensure the customer reached Mr. Dimma, or that Training Services could not take on the work. Mr. Dimma had to be aware that customers would call Training Services until they had his new contact information.

[141] In all the circumstances, I am not satisfied that the plaintiff has established that the defendants’ actions in respect of emails received by Training Services, or phone calls for Mr. Dimma, rose to the level of a breach of Training Services obligation not to take any “action harmful to any of the other parties or their reputation or goodwill”.

[26] These conclusions are conclusions that the trial judge was entitled to make on the evidence and they disclose no error of law.

e. Alleged defamatory statement at Camslide Seminar

[27] Ford conducted a seminar at Camside West Manufacturing and one witness alleged that Ford said that Dimma had not done a prior report properly. That evidence was contradicted by Ford who said that the seminar was about new guidelines for report preparation and the reference to a prior report by Dimma was that the prior report did not meet the new guidelines. The trial judge noted “concerns” about the reliability of the witness’s testimony and “reservations” about Ford’s testimony.

[28] The trial judge noted and concluded:

[154] The plaintiff has failed to call sufficiently reliable evidence as to the statement made by Mr. Ford at the seminar, some eight years before the trial. In the absence of reliable evidence as to the words that were used by Mr. Ford, the report to which he referred, and any context, for example, at what point in the seminar the words were spoken, and their context, it is not possible to determine whether the statement was one which disparaged or impugned the work, services offered or reputation of Mr. Dimma or to assess whether his statements were false.

[155] The plaintiffs do not claim that any statements made by Mr. Ford at the seminar caused harm to Mr. Dimma. In fact, Mr. Dimma did not lose business from Camslide; to the contrary, Camslide remained a successful customer for Mr. Dimma. That Camslide continued to hire Mr. Dimma after the SRA and after the seminar, despite Mr. Ford’s longstanding relationship with Camslide, supports the conclusion that, whatever words were used by Mr. Ford, the statements were sufficiently benign as to not cause a diminishment of Mr. Dimma’s reputation or goodwill with Camslide.

[156] The elements required to prove defamation are set out in the plaintiffs’ written submissions, at paragraphs 296-302, and are not disputed. In general, a defamatory statement is a false statement which has a tendency to injure or lower the reputation of the person to whom it refers in the eyes of a reasonable person.

[157] For the reasons stated, the evidence does not establish, on a balance of probabilities, that Mr. Ford’s statements at the seminar were defamatory.

[158] Similarly, the evidence falls short of establishing that Mr. Ford’s words constituted a breach of his obligations under clauses 3 and 7 of the SRA.

[29] None of these conclusions demonstrate an error of law and we find no palpable and overriding error in the trial judge’s assessment of the evidence.

(ii) Whether the trial judge erred in failing to find that the July 23, 2009 letter was defamatory

[30] As noted, the trial judge concluded that the statements in the letter did not “disparage or impugn” and were not “harmful” to Dimma’s “reputation or goodwill” and, therefore, were not in contravention of the SRA.

[31] With respect to defamation and the other claims, the trial judge noted and concluded:

[118] The elements of the torts of defamation, injurious falsehood and wrongful interference are set out in the plaintiffs’ written submissions.

[119] For the same reasons as I found that the plaintiffs had not established breach of contract, I am satisfied that the plaintiffs have not established that the statements made in the letter were false or defamatory.

[120] As I have found that there was no falsehood, the plaintiffs have not established liability for injurious falsehood. As I have found no unlawful act, or misconduct on the part of the defendants in respect of statements made in the letter, the plaintiffs have not established wrongful interference with economic relations.

[32] No error in law is demonstrated by this conclusion nor do we find a palpable and overriding error in the trial judge’s assessment of the evidence.

(iii) Whether the trial judge erred in failing to find that the Camslide seminar was defamatory

[33] Similarly, as the trial judge found that the evidence did not support a finding that any comments at the seminar breached the SRA, the evidence did not establish that the statements made at the seminar were defamatory. No error in law is demonstrated by this conclusion nor do we find a palpable and overriding error in the trial judge’s assessment of the evidence.

(iv) Whether the trial judge erred in finding that there was an insufficient evidentiary foundation for Dimma’s claim for lost business as a result of Ford’s actions

[34] Although Dimma called expert evidence that calculated his economic damages at over $250,000, the trial judge found there was an “insufficient evidentiary foundation” to support the claim that those clients were lost because of Ford’s actions. The trial judge noted and concluded:

[163] As I have already found, the plaintiffs have not established that the defendants took actions that constitute a breach of the SRA, or other misconduct which led to a loss of business from these customers. Indeed, the plaintiffs have not called any evidence as to why the business from these customers did not reach the level expected by Mr. Dimma as quickly or fully as he had hoped, based on the revenues generated by his work for these customers in earlier years as an independent contractor for Training Services.

[164] There are many possible reasons why the plaintiffs’ level of business was less than expected by the plaintiffs. The plaintiffs have not satisfied me that the defendants’ conduct was the cause of the lower volume of business than expected by the plaintiffs from these customers.

[35] No error in law is demonstrated by this conclusion nor do we find a palpable and overriding error in the trial judge’s assessment of the evidence related to lost business. Further, in view of the trial judge’s dismissal of all the plaintiffs’ claims against the defendants (except for the claim for paid invoices), there was no basis for an award of damages beyond the damages awarded.

(v) Whether the trial judge erred in finding (a) that the oppression claim was statute-barred (b) that Dimma had not established a case for oppression

[36] Dimma argued that Ford stripped Training Services of assets by issuing dividends to a shareholder company of Training Services controlled by Ford and then having that shareholder company loan the dividend amount back to Training Services. This was in exchange for a promissory note secured by a general security agreement. Dimma argued that these actions rendered Training Services unable to pay its creditors including any judgment that he or other creditors might obtain against Training Services. Dimma knew of these actions in 2007 when he had access to the financial statements of Training Services because he was considering purchasing the business.

[37] Although the trial judge stated that the claim was statute-barred, a consideration of whether the claim was statute-barred was not at the core of her decision. Rather, the trial judge concluded that there was no basis for relief. She stated:

[191] Even assuming the payment of dividends was made when Training Services was not solvent within the meaning of the relevant provisions of the OBCA, the plaintiffs have not identified how Mr. Ford’s actions, in directing the payment of dividends since 2007, has been carried on in a manner that is oppressive, unfairly prejudicial to, or unfairly disregards the interests of the plaintiffs. As I have already stated, the evidence at trial established that the defendants have paid all debts owed to the plaintiffs when due.

[192] While acknowledging that the granting of relief under subsection 248 is remedial in nature, the plaintiffs do not seek a remedy which rectifies any identified prejudice or unfairness but seek an award of damages of an unspecified amount, from both defendants.

[193] In light of the agreement reached in the SRA, and the fact that the plaintiffs are not creditors, other than in respect of the “paid invoices” in the amount of $12,349.12, I am not

satisfied that it is necessary that the plaintiffs seek, or that the plaintiffs have established a basis for relief under s. 248 of the OBCA.

[194] For these reasons, the claim for relief under s. 248 of the OBCA is dismissed.

[38] No error in law is demonstrated by this conclusion nor do we find a palpable and overriding error in the trial judge’s assessment of the evidence.

Other Issues

Failure to Comment on Evidence

[39] In oral argument, counsel for Dimma raised, several times, the failure of the trial judge to comment on the conduct of Ford while being cross-examined about a document that he brought with him to the witness stand. Dimma argues that this shows that Ford is not trustworthy. In her reasons, the trial judge assessed the credibility of Ford, Dimma and other witnesses. It is trite law that a trial judge is not required to refer to all the evidence in reasons: Wurster v. Universal Environmental Services Inc., 167 DLR (4th) 166, at para. 2. We find no palpable and overriding error in the failure of the trial judge to refer to this conduct in her reasons.

Prejudgment Interest

[40] Dimma sought prejudgment interest on its award for the paid invoices. The trial judge awarded the plaintiff interest on this award at the statutory rate from the date of the issuance of the Statement of Claim. Dimma argues that trial judge gave no reasons for this decision. Section 130(1) of the CJA gives a trial judge the discretion to allow prejudgment interest for a period other than the period between the time the cause of action arose and the time of the order. The trial judge’s decision to award prejudgment interest from the date of the issuance of the Statement of Claim is consistent with her findings that Dimma had returned the cheque for the paid invoices, had said that the matter would be discussed later, and that no further demand was made for payment of the paid invoices until close to the time that the Statement of Claim was issued. Thus, the trial judge’s exercise of her discretion with respect to prejudgment interest discloses no error in principle nor was it clearly wrong.

Issues on Cross Appeal

Settlement of the Un-invoiced Work – Accord and Satisfaction

[41] Ford & Associates argued that the trial judge erred in law in not finding that an accord and satisfaction was reached on the accounts receivables claim because she relied upon the subjective thoughts of the parties rather than applying the test of the reasonable objective observer.

[42] The trial judge noted and observed:

[71] There was no written agreement, no endorsement of the cheque back to Training Services, and as acknowledged by Mr. Ford, no expressed verbal agreement at the time of the meeting. In the context of the contentious nature of the issues of payment of balance of compensation and allegations of un-invoiced work, I am not persuaded that silence and the passage of time can be construed as acceptance of Mr. Ford’s proposal by Mr. Dimma. I do not find, in the circumstances, that Mr. Dimma agreed to relinquish the $12,349.12 in compensation owed to him.

Thus, it is clear that the trial judge was applying the standard of the reasonable objective observer. The indicia she relied upon were objective indicia (e.g. the lack of an express verbal or written agreement, the lack of endorsement of the cheque) assessed in the context of the contentious nature of the dispute.

Costs

[43] On a partial indemnity basis, Dimma sought costs of just over $300,000, Ford & Associates sought about $230,000, and Mr. Ford sought about $177,000. The trial judge declined to award Dimma any costs and substantially reduced the costs sought by Ford. Dimma seeks leave to appeal the costs award and asserts that the trial judge erred in a number of ways: in failing to award him any costs since he was successful in obtaining a judgment for $12,349.12, in dismissing the counterclaim of the defendants, and in ordering two sets of costs.

[44] Mr. Ford and Ford & Associates also seek leave to appeal the costs award submitting that the trial judge erred in reducing the amount of costs that she awarded to both of them.

[45] In declining costs to Dimma and substantially reducing the costs sought by Mr. Ford and Ford & Assoicates, the trial judge considered the factors set out in Rule 57.01 of the Rules of Civil Procedure. She considered the claims and counterclaims made by each of the parties and the court time required to pursue those claims and counterclaims. Having done so, she found that, overall, Ford “had a significantly greater degree of success at trial.” Thus, they were entitled to their costs. However, she reduced that entitlement to take into account Dimma’s success in obtaining judgment for the paid invoices and Ford’s unsuccessful counterclaims. The trial judge found that Dimma had made claims against Mr. Ford personally, which she found necessitated separate counsel. Since none of those claims were successful, she awarded Mr. Ford costs, but reduced the amount of costs awarded to take into account duplication. In coming to her conclusions as to costs the trial judge committed no error in principle nor was her award clearly wrong. Although we grant leave to the parties to appeal the costs award, we see no reason to interfere with her order as to costs. The appeals with respect to costs are dismissed.

Conclusion

[46] For these reasons, the appeals and cross-appeals are dismissed.

[47] Cost of the appeal payable by Dimma fixed in the amount of $10,000, inclusive of HST and disbursements, to Ford & Associates and $5,000, inclusive of HST and disbursements, to Mr. Ford.

Newton J.

I agree _______________________________

Sachs J.