CITATION: Sinopoli v. French, 2022 ONSC 4439
DIVISIONAL COURT FILE NO.: 659/21
DATE: 20220805
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
SALVATORE SINOPOLI
Alvin Meisels, for the Respondent
Plaintiff/Respondent
– and –
DECLAN FRENCH
Colin C.G. Pye, for the Appellant
Defendant/Appellant
Heard at Toronto by ZOOM: Mar. 22, 2022
REASONS FOR DECISION[^1]
D.L. Corbett J.
[1] The court confirms the appeal from the trial decision of Deputy Judge Garrow of the Small Claims Court. The trial judge found for the plaintiff, Mr Sinopoli, and awarded judgment of $25,000, plus interest and costs, against the respondent, Mr French.
[2] Mr French appeals to this court on the basis that the trial judge erred in finding he induced Mr Sinopoli to purchase shares by fraudulent misrepresentation, and on the basis that Mr Sinopoli's claims are barred by the Limitations Act.
[3] The critical factual findings are set out in paragraphs 52 and 53 of the judgment, which state as follows:
[52] I find that at the time French signed the subscription agreements and the memoranda agreements on behalf of MDRM for the sale of the restricted shares to Sinopoli, that he knew the company's SEC filings were not up to date, and could not be brought up to date, because the company was not in possession of audited financial statements necessary to comply with the SEC filing requirements, and that Vstock's accounts had not been paid, and therefore it was not possible for MDRM to lift the restrictions on Sinopoli' s shares and issue him free trading shares. French did not disclose these material facts to Sinopoli. I also find that at all material times French knew the company was struggling financially and did not have sufficient funds to pay its auditors and other creditors. None of these material facts were disclosed to Sinopoli.
[53] I find that it was French's duty as a member of MDRM's board of directors and as an officer of the company, to disclose all of these material facts to Sinopoli when the shares were offered to him for purchase. Furthermore, I find that if Sinopoli had been informed of these material facts he would not have purchased the shares being offered for sale. French described Sinopoli as being a sophisticated investor and a "qualified investor" in the context of paragraph 3.5 of SA1. I do not accept French's opinion, based on Sinopoli's evidence of his experience as an investor, nor would that relieve him of the duty to disclose the material facts about MDRM's financial status, the status of its SEC filings and its inability to issue free trading shares in the circumstances.
[4] The appellant argued that many of the things said by the appellant to the respondent were honestly believed to be true by the appellant at the time the statements were made. The issue is not in respect to these other statements, but rather the key factual findings made by the trial judge. Counsel was unable to point to any palpable and overriding error in the trial judge's findings of fact set out in paras. 52 and 53, which were the bases of the trial judge's decision.
[5] The trial judge then applied the law of fraudulent misrepresentation to the facts as found above and concluded that the test for fraudulent misrepresentation had been met. In paragraph 57 of the judgment, the trial judge concluded that the fraudulent misrepresentations induced Mr Sinopoli to buy the shares. In paragraph 56 the trial judge explained why, in law, the appellant's status as a director and officer of the company did not shield him from personal liability for his own tortious conduct. I see no error of law in any of this analysis.
[6] In respect to the limitations issue, the trial judge found as a fact that the "date of discoverability" was in about September or October 2016, when the respondent was told that the shares were worthless. This finding is entitled to deference, and discloses no palpable and overriding error. The theory of discoverability advanced by the appellant would require the promise to use reasonable best efforts to provide Mr Sinopoli with free-trading shares within 90 days be read as a firm commitment to bring that about. That is not a reasonable position and the trial judge was fairly dismissive of it as an argument "without merit". I see no error in this conclusion or characterization.
[7] The trial judge provided thoughtful, thorough reasons, exemplary in the context of the high-volume of work done in the Small Claims Court. The judgment below is sound in both fact and law; the appeal is dismissed, with costs payable by the appellant to the respondent fixed at $10,000, payable within thirty days.
[8] This decision is effective from the time it is sent by email to the parties. The court reserves the discretion to release this decision again as a formal set of reasons for use on legal databases.
___________________________ D.L. Corbett J.
Email Decision Released: March 23, 2022
Written Endorsement Released: August 5, 2022
CITATION: Sinopoli v. French, 2022 ONSC 4439
DIVISIONAL COURT FILE NO.: 659/21
DATE: 20220805
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
D.L. Corbett J.
BETWEEN:
SINOPOLI
Appellant
– and –
FRENCH
Respondent
REASONS FOR DECISION
D.L. Corbett J.
Email Decision Released: March 23, 2022
Written Endorsement Released: August 3, 2022
[^1]: This decision was provided to the parties by emails on March 23, 2022, and was effective as of that date. The reasons have been edited without changing the substance of the decision.