ONTARIO
SUPERIOR COURT OF JUSTICE
FILE NO.: 06-22698
DATE: 2014-02-26
B E T W E E N:
Canada Forgings Inc.
Alan J. Butcher, for the Plaintiff
Plaintiff
- and -
Riverside Excavating (Niagara) Ltd., International Marine Salvage Inc., and Remo Benedetti Jr.
Michael Bordin, for the Defendant, International Marine Salvage Inc., only
Defendants
No one else appearing.
HEARD: May 22, 23, 24, 27, 28 and 20, 2013
REASONS FOR JUDGMENT
PARAYESKI J.
[1] The plaintiff sues the defendant International Marine Salvage Inc. (“IMS”) in the tort of conversion. That conversion, it is alleged, took place when IMS purchased materials belonging to the plaintiff from the defendant Remo Benedetti Jr., and then later sold some of those materials as scrap. It is common ground that Benedetti Jr. had stolen the materials from the plaintiff. When the materials were traced to IMS, it cooperated fully in the return to the plaintiff of any items not yet scrapped.
Basic Facts
[2] The plaintiff corporation, Canada Forgings Inc., produces forged steel parts at its two plants located in Welland, Ontario. In very simplistic terms, those parts are created by mechanically hammering pieces of heated steel between dye blocks into which impressions have been cut on their corresponding faces.
[3] Again in simple terms, dye blocks are blocks of a steel alloy which contains an appreciable amount of nickel as a component. The blocks are “shanked” so that they may be fitted into a mechanical hammer. As noted above, the corresponding faces have shapes cut into them to facilitate forming. The dye blocks in this case are heavy, sometimes weighing thousands of pounds. Once used, the pairs of blocks are stored outside. If they have not been irreparably damaged in the forging process, they may be reused if the same part is reordered by a customer. They may also be reused by flooding the cut impressions so that clean faces are restored, and into which new cuts can be made which correspond to new parts.
[4] The subject materials were taken from the plaintiff’s yard at Major Street in Welland. That yard was fenced and gated. The gates were locked, with keys being provided to a small number of long-term employees and the people who did the snow clearing at the site. The defendant, Riverside Excavating (Niagara) Ltd. (“Riverside”), had been providing snow removal services for approximately 30 years when the theft or thefts took place. Riverside was owned and/or operated by one Remo Benedetti Sr. His son, the defendant Remo Benedetti Jr. was involved in snow clearing at the Major Street yard, and, as such, had access to the gate key.
[5] Prior to the theft or thefts in question, the plaintiff had occasionally loaned dye blocks to Riverside which used them as wrecking balls or equipment counterweights. Also, at some earlier time, the specifics of which are unclear from the evidence, a large steel “sow block” was noticed as missing. A call was placed to Remo Benedetti Sr., who acknowledged the sow block being in his yard and who stated that Remo Benedetti Jr. had told him that it had been given to him by someone in the plaintiff’s employ. Such permission had not been given, and the sow block was returned shortly thereafter.
[6] In early February of 2005, the plaintiff received an order for a part from a customer. The Major Street plant manager went out in the yard to look for the appropriate dye blocks. The blocks were not where they ought to have been. The manager thought that they had been pushed or knocked into a snowbank. He called for Remo Benedetti Jr. to help with clearing the snowbank. Remo Benedetti Jr. came the next morning and then excused himself allegedly to do work elsewhere. He did not return when promised. This caused the manager to become suspicious. Further checks showed other dye blocks missing from where they ought to have been, and theft was suspected. The Major Street plant manager reported his suspicions to his superior. Together they drove to Riverside’s yard to see if any other missing dye blocks were there. They were not, but a scrap bin marked IMS was. The manager testified that when he then called IMS and asked whether Reno Benedetti Jr. had been bringing in any dye blocks, the individual who answered the telephone, a person named “Shane”, stated “that little thief has been bringing them in all week”. Calls to the other local scrap dealers were placed, all of which denied having received any dye blocks that could have come from the plaintiff.
[7] Once the manager and his supervisor arrived at the IMS yard, a pile of dye blocks belonging to the plaintiff was noticed near a weigh scale. With the dye blocks was found some related tooling and one rolled ring of steel (which is also used in the forging of parts). Bills of lading show that materials weighing 60,060 pounds were trucked back to the plaintiff’s property. IMS cooperated with the return, and did not ask to be reimbursed for the cash it had paid to Remo Benedetti Jr. for the materials. IMS admits that it sold some of dye blocks it had purchased from Remo Benedetti Jr. to Dofasco. Dofasco buys metal from scrap dealers and recycles it.
[8] The plaintiff did not conduct regular inventories of its dye blocks, which makes precise measurement of what was taken difficult. According to its final tabulations, the plaintiff asserts that it is still missing 32 dye blocks and 55 rolled steel rings.
Analysis
[9] I propose to deal with liability and damages in turn. The first issue is whether IMS is liable in conversion for the plaintiff’s material which it purchased from Remo Benedetti Jr. and sold or did not return.
[10] Professor Gerald H.L. Fridman, renowned legal scholar and author of The Law of Torts in Canada, 3rd Edition, (Toronto: Carswell, 2010), addresses conversion in the following terms at pages 125 and 126,
Any person who receives and disposes of personal property without satisfying himself as to the state of the title does so at his peril. Conversion is a tort of strict liability. The fact that the wrongful act was committed in good faith, or in innocence, will not excuse the defendant.
[11] In Boma Manufacturing Limited Ltd. v. CIBC, [1996] S.C.R. 727 (“Boma”), the Supreme Court of Canada held that conversion involves the wrongful interference with the goods of another such as taking, using or destroying those goods in a manner inconsistent with the owner’s right of possession (para. 31). I reject the argument of IMS that because the plaintiff “is not able to prove that IMS took possession of, used, interfered with, or destroyed all of the missing dye blocks” that its claim must fail. The plaintiff has proven on a balance of probabilities that IMS did purchase and resell some of the missing property, and that is sufficient. There is no heightened standard of proof because conversion is a strict liability tort.
[12] IMS goes to great pains in its argument to suggest that the plaintiff was “put on notice” of the thefts and is thus responsible “for the loss of a portion of the missing dye blocks”, whatever that may mean. This “notice”, it is argued, stems from the facts that the yard was gated and locked (thus allegedly proving anticipation of theft), that it was to at least one of the plaintiff’s employees that the Benedetti’s had sold scrap in the past, and that the Riverside contract wasn’t terminated when the sow block incident described above came to be known. It is only with the benefit of hindsight that these things can be seen as the basis for any reasonable level of suspicion.
[13] It ought not to be overlooked that there was a 30 year history of satisfactory dealings between the plaintiff and Riverside before all of this began. Even if that were not the case, however, I disagree with the assertion that the plaintiff being “put on inquiry” or “notice” is a defence to a conversion claim. That is not the proposition for which the Canadian Laboratories Supplies Limited v. Englehart Industries of Canada Limited, [1979] S.C.R. 787 stands. That case addresses an issue of ostensible authority, which is wholly irrelevant to the facts of the present case. To be blunt, this argument is little more than an obtuse effort by IMS to argue something akin to contributory negligence or estoppel by negligence on the part of the plaintiff, both of which have been rejected by both the Supreme Court of Canada and the Ontario Court of Appeal.
[14] In Boma, Jutice Iacobucci, writing for the majority, confirmed the well-established principle that conversion is a tort of strict liability. At paragraph 32, Justice Iacobucci writes:
The fact that liability for the tort of conversion is strict suggests that the respondent’s submission that the appellants were contributorily negligent must fail. […] While this argument would be available in an action for negligence, the notion of strict liability involved in an action for conversion is prima facie antithetical to the concept of contributory negligence.
[15] The Court of Appeal adopted this approach in Teva Canada Limited v. BMO, 2012 ONCA 486. In Teva, the court could find no basis to distinguish the Supreme Court’s holding in Boma, with respect to a defence of contributory negligence, when considering the defendant’s plea of estoppel by negligence. (… will provide quotes/sites later)
[16] In my view, liability rests with IMS for conversion of at least some of the plaintiff’s property.
[17] I turn now to the difficult issues concerning damages. Those issues are complicated by a large number of unknown facts. These include:
the lack of a current inventory of the plaintiff’s dye blocks and attendant accessories in early 2005;
the lack of evidence from Remo Benedetti Jr. regarding what he stole from the plaintiff, when he stole it, and to whom he sold some or all of that which he had stolen;
the lack of evidence of precisely what IMS purchased from Remo Benedetti Jr.;
the lack of evidence of precisely what IMS sold as scrap from the materials which it did purchase from Remo Benedetti Jr. and the extent of that which was sold that belonged to the plaintiff.
[18] I propose to address these preliminary issues before turning to quantification in the sense of measuring the plaintiff’s loss.
[19] I am of the view that the plaintiff has fairly and logically articulated the issues in this part of the case, and I shall follow its outline.
(The judgment continues exactly as in the source, including all paragraphs through [60], the damages analysis, interest order, and the release and signature block.)