COURT FILE NO.: CV-07-2183-00
DATE: 2012-04-30
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ELAINE MELITO and KEVIN MELITO, Estate Trustees of the ESTATE OF JOHN ROY MELITO, deceased
- AND -
MELVIN JOSEPH MELANSON, ROSE MARY MELANSON and LOUIS LAU
BEFORE: Justice D. Fitzpatrick
COUNSEL: W. Ross Milliken, for the Plaintiffs
Christopher M. Scott, for the Defendants
E N D O R S E M E N T
[1] The plaintiff, Elaine Melito, is the spouse of the late John Roy Melito. The plaintiff Kevin Melito is the son of John Roy Melito. Elaine Melito and Kevin Melito are together the Estate Trustees of the Estate of John Roy Melito.
[2] This action arises from the purchase and related ownership interest claims for a yacht “Until-Sundown” formerly named “Marianna”.
[3] The defendants, Melvin Joseph Melanson and Rose Mary Melanson are spouses of one another and the registered owners of the subject yacht.
[4] The defendant, Louis Lau, did not file any defence or otherwise participate in this action and trial. I am advised by both counsel that Louis Lau (who is also now deceased) and/or any representative on his behalf take no position in this action, seek no compensation or other relief related to the yacht and simply seek that no costs be ordered against him or his estate. None of the remaining parties sought costs against Louis Lau or his estate.
[5] Accordingly, the claim as against Louis Lau shall be dismissed without costs. Unless otherwise stated, any reference to the defendants in the balance of this judgment shall refer only to Melvin and Rose Melanson.
[6] The plaintiffs sought the following relief in their amended claim (amended December 1, 2008):
a) A declaration that Melvin Melanson and Rose Melanson hold a one-third interest in the yacht in trust for the estate;
b) “Payment of $88,000.00”;
c) Damages for “out of pocket” expenses of $25,000.00; and,
d) Punitive damages of $100,000.00.
[7] Pursuant to the pleadings in this matter, the parties admitted that:
a) The estate was a one-third owner of the yacht (i.e. the estate has one-third; Louis Lau has one-third; and Melvin and Rose Melanson together have the other one-third);
b) The yacht would be sold on consent; and
c) That the plaintiffs/estate would receive “$88,000.00 for their interest in the vessel”.
[8] The defendants also admit in their defence that Melvin Melanson listed the yacht for sale with Angus Yachts of Toronto Ltd. (“Angus Yachts”).
[9] The seminal issue at this trial was whether the defendants, particularly Melvin Melanson, were trustees for the benefit of the Estate with regard to the yacht. Counsel for the defendants conceded that the defendants, particularly Melvin Melanson, were trustees respecting the yacht. However, defendants’ counsel argued that the trustee relationship terminated once Angus Yachts took receipt of the yacht sale proceeds. I will return to this position later in this judgment.
[10] The second issue in this action is the determination of the settlement negotiated between the parties, more specifically, the source for the payment to the Estate of the agreed upon $88,000.00 for their share of the yacht. The Plaintiffs argue that the payment was to be made by the defendants without reference to any particular source for the proceeds. The defendants argue that the agreement specifically was for the Estate to receive its $88,000.00 from the proceeds of sale held by Angus Yacht.
The Plaintiffs’ Case
[11] The plaintiffs called three witnesses during the trial, namely Kevin Melito, Elaine Melito and the prior counsel for the Estate, Michael Walsh.
[12] The evidence of Kevin Melito was very brief given his limited knowledge and involvement regarding the yacht. Kevin Melito testified that the yacht was the last item to be addressed for the Estate, that he was not involved in the sale listing of the yacht or sale process and that he had no contact with Angus Yachts. Kevin Melito further testified that he was aware counsel on behalf of the Estate contacted Angus Yachts to direct that no sale proceeds were to be released without the Estate’s consent and that is why the sale proceeds remained with Angus Yachts.
[13] The second witness called by the Estate was Elaine Melito. Elaine Melito also had limited knowledge and involvement respecting the yacht. Elaine Melito testified that, following her husband’s death, she contacted the defendants to confirm the yacht was for sale. Elaine Melito gave evidence that the defendants did not ask her to take any role, that she was not involved in the sale of the yacht, that she left all dealings with the yacht sale to Melvin Melanson and that she had no contact with Angus Yachts. Ms. Melito also testified the yacht was the last item of the Estate and, not surprisingly, that the Estate was eager to have it dealt with.
[14] Elaine Melito testified she had initial concerns about the yacht having been relocated and renamed without any notice to the Estate. Elaine Melito gave evidence that she learned from a third party that the boat had been relocated. Ms. Melito did not then contact the defendants for an explanation but instead she herself then attended to the suggested new location to investigate. She located the yacht at the new location and then became aware that the yacht’s name had been changed. The Estate then retained counsel and commenced this litigation.
[15] Ms. Melito, in testimony, confirmed that during this litigation explanation had been provided by the defendants for both the relocation and name change. Ms. Melito confirmed she was satisfied with those explanations. She also testified that she could have contacted the defendants to obtain answers with respect to the relocation and change of name for the yacht but chose to commence this action. Ms. Melito’s complaint, therefore, is that the defendants did not take the initiative to advise the Estate of the yacht relocation and name change.
[16] Finally, the Estate called its third witness, former counsel, Michael Walsh. Mr. Walsh issued the claim brought on behalf of the plaintiffs July 6, 2007. Mr. Walsh testified that counsel for the defendants, by letter dated July 24, 2007, agreed that the estate had a one-third interest in the yacht. By his responding letter, dated July 27, 2007, Mr. Walsh suggested the yacht be listed with a broker for sale. Mr. Walsh testified he had contacted a broker(s) and it was his belief at that time that a broker was needed but the defendants were resisting. Further to that perceived reluctance, Michael Walsh wrote to the defendants’ counsel by letter, dated September 20, 2007 stating his clients would pursue a “court ordered sale by a broker to be agreed upon or if there was no agreement, by auction”.
[17] Mr. Walsh testified that, by letter from the defendants’ counsel, dated February 29, 2008, he was provided with an offer to purchase the yacht signed by the purchaser and the defendants. Paragraph 6 of that offer provided that the “balance due on completion shall be in the form of a bank draft or certified cheque payable to Angus Yachts of Toronto in Trust”. The Offer to Purchase noted a closing/completion date of May 18, 2008.
[18] Mr. Walsh testified that the first that he/his clients heard of Angus Yachts was upon receiving the Offer to Purchase (initially unsigned) from the defendants. Mr. Walsh’s evidence was that he then went to the Angus Yachts website and thereby satisfied himself that Angus Yachts was a substantial business.
[19] In response to the offer, Mr. Walsh, by letter dated March 12, 2008, stated “my clients are satisfied with the terms of the sale of the yacht”. In the same letter, Mr. Walsh requested the defendants sign a Direction previously provided whereby the sale proceeds would be paid in the name of all five parties together. Failing this, Mr. Walsh stated he would “advise the broker that he should hold the funds pending a further court order or direction of all parties”. A signed copy of this direction was never returned.
[20] By letter dated March 27, 2008, Mr. Walsh wrote directly to Angus Yachts seeking written confirmation that the yacht sale proceeds would not be released to the defendants without the Estate’s written approval.
[21] By letter dated April 23, 2008, Mr. Walsh requested the defendants sign a new Direction whereby the sale proceeds would be paid in the name of both counsel jointly. A signed copy of this direction was never returned by the defendants.
[22] Mr. Walsh next emailed Angus Yachts on May 2, 2008 confirming a telephone conversation whereby Angus Yachts was directed by Mr. Walsh to hold the funds and seeking written confirmation the funds would not be released without Mr. Walsh’s authorization. Mr. Walsh conceded that, as the result of his direct communications, the sale proceeds remained with Angus Yachts thereafter and could not, in his view, be accessed by the defendants until an agreement was reached between the parties.
[23] Finally, by letter dated June 9, 2008, Mr. Walsh threatened but never did bring a motion to have the sale proceeds paid into court. Mr. Walsh testified that his/the plaintiffs’ concern was not to allow the defendants to control the sale proceeds and to secure some control for themselves over the proceeds.
[24] Mr. Walsh testified that, ultimately, he/his clients decided to pursue settlement negotiations with the defendants and to leave the sale proceeds with Angus Yachts despite never having received any confirmation from Angus Yachts respecting the proceeds as requested.
[25] Mr. Walsh testified that the settlement negotiations between the parties carried on from May/June 2008 to November 2008. These negotiations culminated in the letter to Mr. Walsh from defendants’ counsel, dated October 27, 2008. The critical portion of that letter states:
I have been instructed to provide you with a one-time settlement offer in the amount of $88,000.00, all in. In other words, if your clients accept the sum of $88,000.00 as their total entitlement of the proceeds of sale, with no other payments to be made in any respect, this matter is settled.
[26] Mr. Walsh responded by letter dated November 5, 2008 stating:
The Estate Trustees accept the offer of $88,000.00.
[27] His letter goes on to request that defendants’ counsel:
Forward the funds by your trust cheque, or if from another source by certified cheque or bank draft, payable to the Estate of John Roy Melito.
[28] In evidence, Mr. Walsh stated at the time of his November 5, 2008 letter he expected a cheque primarily from Melrose Auto Sales (the defendants’ company) or Angus Yachts. Mr. Walsh candidly testified he then had no reason to believe Angus Yachts was not in possession of the sale proceeds and that he otherwise did not then have any concerns respecting Angus Yachts.
The Defendants’ Case
[29] The defendants’ first witness was Peter Solty. This witness’ testimony was brief. Mr. Solty at all material times was employed by Angus Yachts and the salesman for the yacht. Mr. Solty advised the yacht sold for top market price. He testified that it was the normal course to have sale proceeds paid to Angus Yachts In Trust who would in turn remit the net proceeds (i.e. after deducting commissions and sale costs) to registered owners.
[30] Mr. Solty gave evidence that he recalled seeing a letter from the plaintiffs’ counsel advising not to release the sale proceeds. He confirmed that Angus Yachts did have a trust account, although it was ultimately learned monies were wrongly taken from that trust account.
[31] Mr. Solty testified that he met Melvin Melanson three to five times and had no contact with the plaintiffs.
[32] Mr. Solty advised that Angus Yachts remained in the brokerage business six to eight months following the sale of the subject yacht and then entered into bankruptcy/receivership.
[33] The second witness called by the defendants was Melvin Melanson. Mr. Melanson gave evidence about his long term friendship and business dealings with the late John Melito, including alleged loans for cottage renovations and land purchases totalling approximately $70,000.00 (all without any documentation). Although initially claimed, the defendants were not pursuing credit/compensation for these monies at trial.
[34] Melvin Melanson advised how he, Louis Lau and John Melito each came to be one-third owners of the yacht. He also gave evidence explaining why the yacht was relocated to a new slip/harbor and as to why the yacht had been renamed. Mr. Melanson acknowledged he did not advise the plaintiffs of either the relocation or name change. As stated above, these explanations once tendered were acceptable to the plaintiffs.
[35] Mr. Melanson testified that he was referred to Peter Solty by a business associate. Mr. Melanson telephoned Mr. Solty who advised he had a potential buyer for the yacht if Melanson would list. Melvin Melanson stated he felt pressured by the plaintiffs to sell the boat. Given this pressure and Mr. Solty representing he had a potential buyer, Mr. Melanson attended the next day following his conversation with Mr. Solty and listed with Angus Yachts.
[36] Respecting Angus Yachts, Melvin Melanson testified that:
• He knew Angus Yachts was in business for a long time;
• That Angus Yachts was then merging with another yacht broker, Clift’s Marine and this had been confirmed to him by Mr. Solty;
• That Angus Yachts then had $30 - $40 million dollars in inventory;
• That he attended at the Angus Yachts office/yard to sign the listing where he observed 10-15 offices each with people working.
[37] Mr. Melanson confirmed that Peter Solty’s potential buyer did, in fact, buy the yacht within a few weeks of listing.
[38] Mr. Melanson testified that, when he became aware that sale proceeds were to be paid to Angus Yachts in trust, he contacted his lawyer who confirmed a payment into a trust account was acceptable.
[39] Melvin Melanson confirmed that he did nothing to check that Angus Yachts had possession of the sale proceeds between May 1, 2008 and November 1, 2008 and that he had no reason to believe Angus Yachts did not retain those funds.
[40] Melvin Melanson gave evidence that he received a cheque for the defendants’ share of the yacht sale proceeds from Angus Yacht through his counsel. Mr. Melanson testified he was, shortly thereafter, contacted by Peter Solty to advise the cheque could not be cashed. Mr. Melanson testified he immediately attended at the Angus Yacht office to meet with its representative where he demanded payment and received $110,000.00 certified funds payable to the defendant and two boats, which subsequently sold for $4,628.80. As such, the total monies received by the defendants was $114,628.80.
[41] Mr. Melanson testified that he attended each of the next following days without success in obtaining further funds. Within a few days of the initial meeting with Mr. Melanson, Angus Yachts had entered into receivership/bankruptcy.
[42] Melvin Melanson conceded that he did not advise the plaintiffs of his receipt of the $114,628.80 from Angus Yachts until the information came to light during a summary judgment motion heard at September 2009. Mr. Melanson stated his belief that all parties were on their own at the time he received these monies such that he did not owe any explanation. Mr. Melanson confirmed the entire proceeds were deposited to his business account.
[43] The last witness called by the defendants was their former counsel, Douglas Edward.
[44] Mr. Edward testified that he investigated Angus Yachts by searching the internet to see various yacht brokers, including Angus Yachts and that it appeared to be long established with two locations thriving and reputable. Edward agreed that he did nothing to confirm that Angus Yachts had a trust account.
[45] Edward also testified that Melvin Melanson did contact him for advice respecting the funds being paid to “Angus Yachts In Trust” and that Edward advised that was acceptable.
[46] Mr. Edward testified that he believed the letter of Mr. Walsh, dated March 27, 2008 to Angus Yachts confirmed that the sale proceeds would be held by Angus until the plaintiffs gave their approval for release.
[47] Mr. Edward testified that his clients were, similar to the plaintiffs, concerned with having control over the sale proceeds. He also testified to animosity between the parties. Mr. Edward testified to his feeling that the plaintiffs and the defendants had reciprocal control over the sale proceeds.
[48] Mr. Edward gave evidence that at all material times he was aware of the plaintiffs’ interest in the yacht, its sale and proceeds distribution such that he attempted to provide full information and address all issues through the plaintiffs’ counsel.
[49] Mr. Edward reviewed his email, dated May 1, 2008, to plaintiffs’ counsel where he confirmed the yacht was sold with the balance of proceeds payable to “Angus Yachts In Trust”. The email also advised that Angus Yachts had “been requested to place the proceeds into an interest bearing trust account to await direction from you and me as to the disbursement of the proceeds.”
[50] On May 2, 2008, Mr. Edward emailed Angus Yachts (copied to plaintiffs’ counsel) stating his clients “have asked you to hold the proceeds of sale in your trust account until they sort out entitlements to the proceeds with the other parties.” This was followed by Mr. Edward’s email to the plaintiffs’ counsel, dated May 2, 2008 advising “I have written Angus Yachts indicating that the proceeds should be held by them pending receipt by them of approval from all parties of the manner of payment of the proceeds.”
[51] In response, the plaintiffs’ counsel emailed Angus Yachts (copied to Edward) confirming the May 2nd email of Mr. Edward and stating, “Although we spoke on the phone yesterday concerning you holding these funds, I must have confirmation in writing that you will not release them without my authorization.”
[52] Mr. Edward testified that the email of plaintiffs’ counsel at May 2nd confirmed to him the agreement of all parties that the funds would remain with Angus Yachts to be paid out once the parties came to an agreement as to entitlements.
[53] Mr. Edward acknowledged the settlement correspondence sent by him, dated October 27, 2008, and the response received from Mr. Walsh by letter dated November 5, 2008. Mr. Edward, by letter dated November 6, 2008, wrote to Angus Yachts confirming their receipt of Mr. Walsh’s November 5th letter and advising:
that my clients, Mel Melanson and Louis Lau, agree to the payment of the sum of $88,000.00 to the Estate of Jack Melito…The balance should be paid to Mel and Rose Melanson who are the parties whose name the yacht was registered…
This November 6th letter was copied to Mr. Walsh.
[54] Mr. Edward testified that Angus Yachts issued separate cheques to each of the plaintiffs and defendants from the sale proceeds for their respective entitlements pursuant to his November 6th letter.
[55] Mr. Edward testified his expectation that the cheques to the respective parties from Angus Yachts would be certified and that he immediately contacted plaintiffs’ counsel to advise once the cheques were received uncertified. Mr. Edward also advised plaintiffs’ counsel when he learned the Angus Yachts cheques would not be honoured. Mr. Edwards stated he had no further dealings once the Angus Yachts cheques were dishonoured.
[56] Mr. Edward testified as to his view that the settlement amounts/payment was premised on all sale proceeds being available, which did not happen.
[57] Mr. Edward did acknowledge that it would have been better if the sale proceeds were held by the lawyers than Angus Yachts. However, he stated that he had no reason to believe there was any issue with the funds going into/remaining in the Angus Yachts trust account.
[58] Mr. Edward testified he subsequently learned that Melvin Melanson had attended at Angus Yachts demanding payment and received $110,000.00 plus an interest in boats. Similar to his former client, Mr. Edward testified his view was the parties at this point each were acting individually to realize what each could. Mr. Edward opined that the plaintiffs should have attended at Angus Yachts to demand/obtain payment like the defendants had.
ANALYSIS
[59] The plaintiffs seek payment of $88,000.00 from the defendants arguing that by the terms of settlement the defendants agreed to such direct payment. Alternatively, the plaintiffs stated that the defendants breached their duties as trustee with the result that payment of the $88,000.00 is owed by the defendants.
[60] To avoid repetition, I note at the outset that both parties were at all material times represented by very experienced, competent counsel, namely Mr. Walsh for the plaintiffs and Mr. Edward for the defendants.
[61] Respecting the terms of settlement, there was negligible evidence from either party. Both counsel in their submissions at the conclusion of this trial stated that the settlement letters exchanged between counsel (i.e. the Edward letter dated October 27, 2008, and the Walsh response dated November 5, 2008) speak for themselves representing an offer and acceptance. Of course, the parties disagree as to what settlement terms arise from this correspondence.
[62] It is well established that an agreement must be interpreted with the court giving the ordinary meaning to the language and not straining to create an ambiguity that does not exist. (Reference: North Eastern Railway Co. v. Lord Hastings, [1900] A.C. 260 (H.L.); Chilton v. Cooperators General Insurance Co. (1997) 143 D.L.R. (4th) (Ont. C.A.).
[63] The Edward letter offers “$88,000.00 as their total entitlement of the proceeds of sale.” There is no mention of any other source of funds but the sale proceeds. On behalf of the plaintiffs, Mr. Walsh’s letter states simply that the “Estate Trustees accept the offer of $88,000.00.” It is clear, based on the language used, that the plaintiffs accepted payment of $88,000.00 from the sale proceeds as offered. No different or other arrangement was ever agreed between the parties.
[64] While unnecessary to arrive at my decision, at paragraph 63, I note that the conduct of the parties subsequent to Mr. Walsh’s letter of November 5th supports the conclusion that the parties agreed to have payment of the settlement made from the sale proceeds. By letter dated November 6, 2008, Mr. Edward writes to Angus Yachts (c.c. to Mr. Walsh) confirming their receipt of Mr. Walsh’s November 5th letter and stating the agreement that the plaintiffs are to receive $88,000.00 from the sale proceeds then held by Angus Yachts. I have no evidence that Mr. Walsh responded to this November 6th letter advising Mr. Edward and/or Angus Yachts that payment to the plaintiffs was agreed to be made by/from the defendants directly. Accordingly, Angus Yachts issued a cheque payable to the Estate for $88,000.00.
[65] It was only after the Angus Yachts cheque was dishonoured that Mr. Walsh, for the plaintiffs, wrote to Mr. Edward demanding payment of the $88,000.00 directly from the defendants.
[66] The settlement terms did not obligate the defendants to pay $88,000.00 or otherwise create a debt of $88,000.00 owed by them to the plaintiffs.
[67] As stated above, it is conceded that the defendants were trustees of the yacht.
[68] The plaintiffs ask this court to find that the defendants breached their trust obligations by relocating the yacht to a new slip/harbor and/or changing the name of the yacht without notice to the plaintiffs. The defendants acknowledge that no notice of the relocation or name change was given to the plaintiffs. The plaintiffs testified that no explanation was initially sought from the defendants once it was learned the yacht was relocated/renamed. However, the plaintiffs confirmed satisfaction with the explanation once provided by the defendants. As such, I can find no breach of trust from the relocation/renaming of the yacht.
[69] The plaintiffs argue the defendants breached their trust obligation with respect to their dealings with Angus Yachts.
[70] The evidence before me in that regard was that the defendants initially and unilaterally retained Angus Yachts to list and sell the yacht. However, the plaintiffs also testified the management and sale of the yacht was left by them to the defendants. Plaintiffs’ counsel was provided with an initial, unsigned offer and, subsequently, a copy of the signed agreement for sale, as plaintiffs’ counsel requested. Thereafter, the plaintiffs, through their counsel, were in direct ongoing contact with Angus Yachts.
[71] Counsel for both parties did some preliminary investigation of Angus Yachts primarily in the form of internet/Angus Yachts website searches. Both counsel testified to being satisfied with Angus Yachts handling the yacht sale, to the sale proceeds being paid to Angus Yachts In Trust and to the proceeds being held by Angus Yachts while the parties negotiated settlement.
[72] In addition to the investigation of the defendants’ counsel, Melvin Melanson testified as follows with respect to retaining Angus Yachts:
a. That he felt pressured by the plaintiffs to sell the yacht;
b. That he was referred to Mr. Solty/Angus Yachts by a business associate and immediately contacted Mr. Solty who advised of a potential buyer if the defendants listed the yacht for sale with Angus Yachts;
c. That Melvin Melanson met with Mr. Solty the day after their initial contact to formally list the yacht for sale with Angus Yachts. We know from the evidence of Mr. Solty and Melvin Melanson that Mr. Solty’s potential buyer did, in fact, purchase the yacht within weeks of it being listed;
d. That Melvin Melanson met with Mr. Solty on various occasions leading up to the sale of the yacht;
e. That Melvin Melanson learned that Angus Yachts was in business for a long time, then held $30,000,000.00 - $40,000,000.00 in inventory and were in the process of merging with another well established marina, Clift’s Marine. This latter point was confirmed by Mr. Solty; and,
f. That Melvin Melanson attended at the Angus Yachts office premises where he observed 10-15 occupied offices.
[73] Similar to the evidence provided by both counsel, Melvin Melanson testified that he did nothing following the sale of the yacht to the point the parties reached a settlement (i.e. May 2008 – November 2008) to confirm that Angus Yachts retained the sale proceeds. Similar to the evidence provided by both counsel, Mr. Melanson testified that during this period he had no reason to believe that Angus Yachts did not have the proceeds.
[74] In summary, the defendants hired counsel in this matter who did some investigation to satisfy himself with respect to Angus Yachts. Counsel for the plaintiffs undertook his own similar investigation to satisfy himself with Angus Yachts. Melvin Melanson undertook an independent and broader investigation of Angus Yachts than that of either counsel. He retained a broker at the urging of the plaintiffs who wanted the yacht sold. There was no evidence from any witness as to any concerns respecting Angus Yachts brokering the yacht sale. I do not find any breach of trust flowing from the defendants’ retaining Angus Yachts to be the broker for the yacht sale.
[75] The plaintiffs submit that I should find that the defendants breached their trust obligations by having the yacht sale proceeds remain with Angus Yachts. Included in this submission is the suggestion that the defendants breached by not signing/providing the draft directions presented by plaintiffs’ counsel that would have paid the funds jointly to all five parties or later/alternatively jointly to counsel.
[76] The evidence from all parties was clear that there was a significant level of hostility and distrust between the plaintiffs and the defendants resulting in an ongoing wrestle for control of the sale proceeds. This was resolved when it was agreed that the sale proceeds would remain with Angus Yachts pending negotiations and settlement between the parties.
[77] Counsel for the plaintiffs forthrightly conceded it was a strategic decision to have the funds remain with Angus Yachts while the parties negotiated settlement versus following through with a stated threat to bring a motion to have the funds paid into court.
[78] Plaintiffs’ counsel also forthrightly conceded that the funds remained with Angus Yachts specifically because he directed them to retain those monies pending agreement of the parties or court order.
[79] Both counsel also testified that each had no concerns with the monies remaining with Angus Yachts while the negotiations continued over the course of the six months from May 2008 to November 2008.
[80] In these circumstances, I do not find any breach by the defendants in their trust obligations arising from the sale proceeds being paid to and remaining with Angus Yachts. This is particularly so where the plaintiffs through their counsel consented to and, in fact, directed the funds to remain with Angus Yachts (reference Royal Bank of Canada v. Fogler, Rubinoff, 1991 CanLII 7071 (ON CA), [1991] 5 O.R. (3d) 734 (Ont.C.A.).
[81] Given all of the above, I do not find any breach by the defendants in their trust obligations arising from Angus Yachts having effectively taken the yacht sale proceeds for its own use and thereby depriving the parties of the full sale proceeds. Stated another way, I find that the defendants conducted themselves in the same way an ordinary prudent business person would have in the particular circumstances of this case. The defendants were entitled to hire an agent to sell the yacht and they adequately chose and supervised Angus Yachts for that purpose (Reference: Law of Trust in Canada, 2nd Ed., Chapters 10 and 18 by D.W.M. Waters; Low v. Gemley (1890), 1890 CanLII 43 (SCC), 18 S.C.R. 685; Wagner v. Van Cleef, 1991 CanLII 7168 (ON SC), [1991] O.J. No. 1777; Speight v. Gaunt (1883), 22 Ch. D. 727, affirmed 9 App. Cas. 1 (H.L.)). In so doing the defendants are relieved from any responsibility for the defaults of Angus Yachts.
[82] The plaintiffs submit that the defendants breached their trust obligations with respect to conduct following Angus Yachts dishonouring the initial settlement cheques issued respectively to the parties. More specifically, the plaintiffs argue that Melvin Melanson remained a trustee with respect to the yacht and related proceeds of sale at all material times. As such, when Melvin Melanson attended at the Angus Yachts office following the initial cheques being dishonoured and then received certified funds in the amount of $110,000.00 plus boats later liquidated for additional proceeds of $4,628.80 he did so in his ongoing capacity as trustee.
[83] The defendants argue that their role/duties as trustee ended when Angus Yachts came into possession of the yacht sale proceeds. I do not accept the defendants’ argument in that regard.
[84] The defendants at all times remained trustees with respect to the yacht and the related sale proceeds. The mere fact that Angus Yachts received and retained the sale proceeds did not relieve the defendants of their role/duties as trustees. Accordingly, the $114,628.80 proceeds obtained by the defendants from Angus Yachts were received on behalf of and must be shared with all beneficiaries, including the plaintiffs.
[85] Melvin Melanson testified the entire proceeds he obtained from Angus Yachts, namely $114,628.80 were deposited to his business account and retained. Given that the defendants remained trustees throughout, these monies were impressed with a trust.
[86] It was unchallenged at trial that Louis Lau was a one-third owner of the yacht. However, I am advised by counsel for both parties that Louis Lau (and now his estate) is seeking no compensation or other relief in this matter.
[87] Removing Louis Lau from the ownership equation effectively leaves two parties with an ownership interest, namely the plaintiffs as to one share and the defendants, Melvin and Rose Melanson, as to the other ownership share. Accordingly, the plaintiffs are entitled to one-half of the $114,628.80 sale proceeds received by the defendants as trustees, namely $57,314.40. The plaintiffs shall, therefore, have judgment in this matter against the defendants, Melvin and Rose Melanson, jointly and severally in the amount of $57,314.40.
[88] If the plaintiffs and the defendants, Melvin and Rose Melanson, are unable to agree as to costs, then I will accept brief written submission as to costs not to exceed five pages along with any bill of costs and/or offer(s) to settle. The plaintiffs shall file their cost submissions on or before Friday, May 4, 2012. The defendants, Melvin and Rose Melanson, shall file their cost submissions on or before Friday, May 11, 2012.
Justice Dale Fitzpatrick
DATE: April 30, 2012
COURT FILE NO.: CV-07-2183-00
DATE: 2012-04-30
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ELAINE MELITO and KEVIN MELITO, Estate Trustees of the ESTATE OF JOHN ROY MELITO, deceased
- AND -
MELVIN JOSEPH MELANSON, ROSE MARY MELANSON and LOUIS LAU
BEFORE: Justice Dale Fitzpatrick
COUNSEL: Michael Walsh, for the Plaintiffs
Douglas G. Edward, for the Defendants
ENDORSEMENT
Justice Dale Fitzpatrick
DATE: April 30, 2012