COURT FILE NO.: CV-09-513
DATE: 2014/01/21
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
621316 ONTARIO INC., PAIEMENT DEVELOPMENT CORPORATION and LARRY PAIEMENT
D. Touesnard, for the Plaintiffs,
621316 Ontario Inc., Paiement Development Corporation and Larry Paiement
Plaintiffs
- and -
ALAN KELLAM, CATHERINE MARY CUMMINGS and WARREN CUMMINGS
D. Janzen, for the Defendant, Alan Kellam
Catherine Mary Cummings, in person
Defendants
HEARD: Jan. 6, 7, 8, 2014
The Hon. Mr. Justice R. J. Nightingale
JUDGMENT
[1] The plaintiffs are private lenders who loaned significant funds to the defendants Catherine Mary Cummings and Warren Cummings in March 2006 when Catherine Cummings bought the farm property of the co-defendant Alan Kellam. The plaintiffs obtained a first mortgage on that farm property from the Cummings and were to obtain additional security for that loan by way of a general security agreement (GSA) against the farm equipment of the defendant Catherine Mary Cummings.
[2] In this action, the plaintiffs claim damages against the defendant Alan Kellam for conversion of some of that farm equipment after the plaintiffs had obtained possession of the farm by court order because the Cummings defaulted on their mortgage. Kellam took some of the farm equipment because Cummings had not paid him for it suggesting he still owned it, sold it and retained the proceeds.
[3] The plaintiffs also claim damages against the defendant Catherine Mary Cummings alleging she committed fraud and fraudulently misrepresented to the plaintiffs that she had good title to the farm equipment when she received the mortgage loan.
[4] The defendant Kellam asserts a cross-claim against the defendant Catherine Cummings for any monies that may be found to be owed by him to the plaintiffs as a result of her alleged fraud and false misrepresentation.
[5] The defendant Kellam counterclaims against the plaintiffs for damages for the value of work and services performed by him to maintain the farm property after the plaintiffs took possession and to repair the farm equipment which he eventually sold. He also counterclaims for damages sustained when the plaintiffs wrongfully prevented him from recovering his remaining farm equipment from the farm.
FACTUAL BACKGROUND
[6] Both defendants Cummings declared bankruptcy in 2009 but leave was granted by the Bankruptcy Court allowing the plaintiffs to pursue their claims for fraudulent misrepresentation and fraud against Catherine Mary Cummings and the defendant Kellam to pursue his cross-claim against the same co-defendant.
[7] The action and cross-claim against the defendant Warren Cummings remain stayed by his bankruptcy proceedings.
[8] The parties were able to reach an agreement on some of the relevant facts by way of admissions in response to the plaintiffs’ Request to admit which I have incorporated in this decision.
[9] By agreement of purchase and sale dated November 8, 2005, the defendant Alan Kellam and his spouse Laurie Kellam agreed to sell their farm property in Brantford for $795,000 to the defendants Catherine Cummings and Warren Cummings.
[10] Guy Polillo, on behalf of all three plaintiffs, confirmed that a mortgage broker approached him to loan money by way of a mortgage to Cummings for that farm purchase. Polillo checked the property and was not comfortable with its value stating there was not enough collateral for the mortgage loan. He then asked both Cummings for further collateral security on the farm equipment and said they stated they owned the equipment and agreed it could be used as additional collateral for the loan.
[11] He stated they subsequently gave him a list of the equipment and the values included. However, he was rather vague in this evidence suggesting that while he was on-site initially, he may have seen two or three tractors and a wagon and that his only idea of what specific farm equipment was being used as collateral was a list eventually prepared by the Cummings. He conceded that that list was given not to him personally but rather to his lawyer likely shortly before the original closing date of February 28, 2006. His lawyer told him to go ahead with the deal. He admitted he did not know then if the list was accurate.
[12] The defendants Cummings after the signing of the farm sale agreement ( as confirmed by the evidence of Catherine Cummings from her examination for discovery read in as part of the plaintiff’s case) approached Kellam on their visit to the farm prior to closing to determine if Kellam was interested in selling the farm equipment. Kellam told them he was and Kellam then came up with a list of the farm equipment. Kellam and Catherine Cummings then entered into a written offer to purchase agreement signed on December 15, 2005 for that equipment sale.
[13] In that agreement, Catherine Cummings was to provide Kellam a $20,000 deposit for the equipment and a further $64,000 by certified cheque or money order on the closing of the transaction of February 28th, 2006, the same day as the farm sale closing. Nothing in that offer to purchase suggested that title to the farm equipment would remain with the vendor Kellam until the farm equipment was fully paid for. A list of 18 items of farm equipment including tractors, lawn tractor, cultivators etc. were attached to the agreement but no individual values were provided.
[14] At trial, Catherine Cummings stated that she did not present Kellam with an offer to purchase that equipment and that the document was a fabrication created after her bankruptcy and sale of the farm by the plaintiffs under their mortgage. Supposedly, that was because the offer with her admitted signature on it has a typed date of December 13, 2006 rather than 2005. I find that to be simply a typographical error and nothing more and I do not accept her evidence on that point. She clearly on the evidence at trial came into possession of that equipment on closing and she admitted at trial that every piece of farm equipment in that offer to purchase list was included in the list attached to the GSA she provided to the plaintiffs on closing. Her spouse, the co-defendant Warren Cummings who prepared the offer to purchase according to Kellam, did not testify to confirm her evidence although he was present in court throughout the trial. I conclude by inference that his testimony would not have supported her evidence on that point if he had testified.
[15] What is significant is that there was no evidence at trial as to when the alleged conversation between Polillo and the Cummings took place wherein Cummings stated they owned the equipment i.e., whether it was before or after Catherine Cummings’ signing of the offer to purchase the Kellam equipment of December 15, 2005 and if after, how long before the original closing date February 28, 2006 it was.
[16] The evidence of Polillo was that he would not have given the defendants Cummings the money without the equipment as collateral. He stated that Catherine Cummings failed to tell him she didn’t pay for the equipment, should have told him that and should have also told him if there were any claims against the equipment.
[17] The plaintiffs’ GSA, with an attached schedule of equipment as collateral security which also included additional farm equipment owned by Catherine Cummings from another property, was signed by her on March 3, 2006, after the original closing date of February 28 was extended at the request of the Cummings. This list is attached as Schedule A to these reasons. The Plaintiff at trial suggested that she recalled signing the GSA but had no recollection of an attached schedule of equipment and that she not endorse the schedule of equipment or provide it to Polillo. I do not accept that evidence as the schedule appears to have been faxed from her own business Whispering Pines on February 28, 2006. Also, on her examination for discovery read in by the plaintiffs, she clearly stated she reviewed the GSA with her lawyer on March 3, 2006 before signing it and the 2- page attachment was a list of equipment she told the plaintiffs she owned at the time of signing the GSA with a total value of $93,900. She never attempted to correct that evidence before trial which leads me to find that the list was indeed attached to the GSA when she signed it.
[18] Polillo admitted that as his lawyer “does everything”, he had no familiarity with the contents or wording of that GSA which essentially stated that Catherine Cummings owned the equipment with good and marketable title free and clear of any liens or other encumbrances or rights capable of becoming encumbrances.
[19] The admitted facts, but only between the plaintiffs and Kellam, are that the plaintiffs would not advance the funds on the secured loan to the Cummings but for the representations that the equipment was owned outright by Catherine Cummings and that she had good and free title to pledge same as security.
[20] Kellam’s evidence was that he learned in the afternoon of March 3, 2006 that the Cummings did not have all of the money to finance the closing of the farm property and purchase of his farm equipment. He admitted that he could have chosen to refuse to close the deal, taken possession of his equipment until the Cummings paid for it in full but he chose not do so. Also, he knew that two cheques for the $20,000 deposit on the farm equipment had not been honoured by Cummings’ bank.
[21] His evidence from his examination for discovery read in as part of the plaintiff’s case was that he then personally called the Cummings’ lawyer, pointed out that her clients were short $26,000 for the farm purchase price. Kellam asked her to prepare a promissory note for $26,000 at 20% annual interest relating to that balance. By logical inference, this was so the deal could close.
[22] Kellam also told her that the Cummings had not paid him for his farm equipment and that he wanted a promissory note from them written up for $84,000 which she was also to prepare. Again, by logical inference, this was so the deal could close.
[23] Both Cummings that same day along with their sole proprietorship Whispering Pines provided a signed promissory note for $26,000 for the farm purchase and another promissory note of $76,000 relating to the farm equipment purchase. Kellam said he didn’t know why the different amount on that latter note occurred and no evidence to explain that discrepancy was provided by anyone familiar with the deal including the parties’ lawyers who handled the transaction.
[24] Kellam said he accepted these notes for the farm and equipment and that the purpose of the $76,000 note was so that Cummings had use of the equipment while Kellam could have a “guarantee” of security on the equipment. He said that the equipment sale did not close when the farm sale deal did on March 6, 2006. In my view, it makes little or no sense why the Cummings would agree to sign a promissory note $76,000 for that equipment if they could only use it but not own it on closing and I do not accept Kellam’s evidence on that point.
[25] Apparently, according to Cummings’ evidence at trial, Cummings was trying to sever some lots from another property that had not been completed by this farm’s March 6, 2006 closing date. The inference was that those proceeds would be used to fund the purchase of this farm and equipment. That accounts for the first promissory note of $26,000 being payable within two weeks of the closing date and the second of $76,000 within two months i.e. May 2006, when the parties likely expected those proceeds to be paid to the plaintiffs on those notes for this transaction.
[26] The farm transaction closed the following Monday, March 6, 2006 with $609,875 in funds advanced by the plaintiffs secured by a first mortgage against the farm and by a GSA on the equipment dated February 28, 2006 and signed March 3, 2006 by Catherine Cummings in favour of the plaintiffs.
DID PROPERTY IN THE EQUIPMENT PASS TO THE CUMMINGS ON CLOSING?
[27] Unfortunately, none of the lawyers for any of the parties who acted on the real estate and mortgage transactions testified at trial to explain any discussions that took place when the parties realized the Cummings did not have all the funds necessary to close the farm and equipment deal on March 3, 2006. That evidence could have been helpful to determine what actually happened on closing and the parties’ intentions concerning the transfer of the equipment.
[28] One month later after the closing, the Cummings provided a mortgage in the amount of $102,000 to Kellam on the farmland (but not on the farm equipment) as security for these two promissory notes.
[29] Although Kellam stated at trial that he understood that he still owned the farm equipment until it was paid for by the Cummings and did not believe property in it had passed to them on the closing of March 6, 2006, the intention of the parties having regard to the terms of the contract, their conduct and the circumstances of the case (as noted in S. 18 of the Sale of Goods Act) indicate otherwise .I do not accept Kellam’s evidence in that regard given the following evidence.
[30] There was no evidence at trial that the terms of the original offer to purchase the farm equipment terms prevailed on the closing date. In any event, that offer to purchase did not reserve a lien or ownership interest in favour of the seller Kellam in the farm equipment if it wasn’t paid for. The total purchase price changed from $84,000 to $76,000 and a promissory note of two months duration was provided signed not just by Catherine Cummings but also now by her husband and a sole proprietorship known as Whispering Oaks Heritage Farms under Catherine Cummings signature.
[31] Although Mr. Kellam attended on the farm property after the closing date on several occasions to try and get paid for the promissory notes, he never claimed to the Cummings that he was entitled to the return of the equipment because of that nonpayment and never sought to take possession of it for at least 2 1/2 years even though he lived only a few minutes away. The Cummings not only had immediate possession of the farm equipment as of the closing date but they continued to exclusively use it.
[32] No lease or” use” agreement was signed or other payments for the “use” of the equipment by Cummings were requested by Kellam. There would be no reason for the Cummings to sign a $76,000 promissory note for the use only of the equipment if they did not in fact own the equipment with the obligation to pay that debt.
[33] Significantly, Kellam eventually sued the Cummings and Whispering Oaks when they defaulted on the promissory notes but in that action, he did not seek any relief concerning the farm equipment or even allege an ownership interest in it. He obtained judgment against both Cummings and Whispering Oaks for the outstanding debt and eventually collected significant monies on that judgment pursuant to a garnishment of Catherine Cummings’ wages until she declared bankruptcy in July 2009.
[34] Kellam agreed at trial that in exchange for the farm equipment, he got a promissory note, judgment on that promissory note and that he recovered on the judgment.
[35] Because of the Cummings’ default to the plaintiffs, the plaintiffs commenced action and on July 18, 2008, they obtained judgment against the Cummings for payment of the sum of $726, 750.09 including costs and an Order for vacant possession of the property. The plaintiffs eventually sold the farm property under their mortgage resulting in a significant shortfall and hence their claim against the equipment.
[36] There was no evidence from Kellam that he ever tried to maintain or repair that equipment from March 2006 until the plaintiffs took possession of the farm after July 18, 2008. He saw it on a few occasions while on the property and said he had a neighbour watching the equipment but he called no evidence from this unnamed neighbour to support that allegation.
[37] Although no bill of sale for the equipment was provided at trial, again there was no evidence from the lawyers who closed the transaction as to whether one had been done or not . There may have no need for an actual bill of sale on farm equipment anyway.
[38] At no time did Kellam ask for or receive a security interest on the farm equipment for registration purposes under the Personal Property Security Act (PPSA).
[39] It was also an admitted fact at trial that Kellam instructed his lawyer to prepare and file a proof of claim with the trustee in bankruptcy of Catherine Cummings. In that document, Kellam only alleged he was owed money by Cummings and made no allegation of a secured or special interest in the farm equipment. Nor did Kellam state that he retained a lien or a right to repossess the equipment of which he no longer had possession as of March 6, 2006.
[40] Even if there had been a right to a seller’s lien for the unpaid purchase price, section 41 the Sale of Goods Act makes it clear that Kellam’s right to a seller’s lien expired or terminated when the Cummings obtained possession of the farm equipment.
[41] Lastly, the evidence of Polillo, whose evidence I accept on this point especially where it may conflict with Kellam, was that between the time of his obtaining the GSA on March 3, 2006 until the spring of 2009, long after his taking possession of the property in July 2008, he had no conversations with Kellam wherein Kellam claimed ownership of the farm equipment. About three or four weeks after the plaintiffs took over possession of the farm, Polillo spoke to Kellam who indicated he wanted to help out so that the farm could be sold for more money. This made sense as Kellam had a second mortgage on the farm. Polillo said he told Kellam he would pay him what is owed to him on the sale of the farm if there was a surplus available from the farm proceeds.
[42] Polillo acknowledged that Kellam cut the grass on the farm regularly which he offered to do. Kellam also said he would do some repairs to the equipment for sale purposes in the fall of 2008. Polillo did not offer to pay him for that as Kellam may be paid from surplus proceeds, if any, from the sale of the property and equipment.
[43] Kellam promised Polillo he would bring the equipment back after he had done the repairs and Polillo agreed. Kellam did not then state that he owned the equipment but Polillo was then aware that Kellam had not been paid for the equipment but noted that he had a second mortgage farm property with respect to that debt.
[44] It was not until approximately April 2009, long after Kellam had removed some of the farm equipment based on his assurance to Polillo that he would return it, that Kellam now suggested for the first time that he was still the owner of the equipment and entitled to keep it to the exclusion of the plaintiffs.
[45] Kellam attended at the farm with a view to removing all the equipment and succeeded in removing the majority of the equipment. Polillo immediately called the police to prevent Kellam from removing any further equipment from the farm. Kellam was told by the police not to re-attend and but for their involvement, Kellam would have taken all the remaining equipment.
[46] Kellam indicated that Polillo offered to buy the farm equipment from him on-site which Polillo denied. I do not accept Kellam’s evidence on that point. It makes no common sense why Polillo would offer to buy it given his GSA and the fact that he was potentially going to be suffering a shortfall on the sale of the farm property. Moreover, Polillo never used the farm equipment on the farm after he took possession in July 2008 and obviously had no use for it.
[47] Notwithstanding the assertion of Kellam to the contrary, which I do not accept, I find that on all the evidence, the intention of the parties, their conduct and the circumstances confirm that there was a sale and passing of the property in the farm equipment by him to Catherine Cummings on March 6, 2006 when the farm property deal closed at the same time.
[48] The evidence and the inferences from the evidence confirm that when Kellam realized Cummings could not come up with all of the money required for both the farm transaction and equipment purchase, he simply agreed to accept a promissory note of $26,000 with respect to the balance owing on the farm. He also agreed to accept a $76,000 note payable in two months on the sale of the equipment rather than insist on a certified cheque or money order.
[49] He no longer had possession of the equipment or any other indicators of ownership of the equipment from that time forward. There is no evidence that he maintained insurance coverage on the equipment after March 6, 2006 and did not attempt to retake possession of it when the Cummings defaulted in payment of their debts owing to him on the promissory notes and land mortgage. He never claimed in the litigation against the Cummings he commenced that he was the owner of the farm equipment but rather stated that he was owed an unsecure debt only. These facts clearly distinguish this case from the decision of 9948140 Ontario Inc. v. RSL Canada Ltd. 2006 15893 (ONCA) especially as Kellam never claimed anything other than an unsecured debt against Catherine Cummings in her bankruptcy proceedings.
[50] Furthermore, Kellam did not attempt to preserve or perfect any security interest he allegedly had in the equipment by not properly registering a financing statement of any security agreement under the PPSA.
[51] Kellam was not entitled to a seller’s lien or retention of possession of the equipment under section 38 of the Sale of Goods Act as that terminated once he relinquished possession of the equipment to the Cummings on March 6, 2006 under section 41 of the legislation.
[52] However, if Kellam did not have a valid seller’s lien, which is my finding, there was no dispute at trial that that the plaintiffs’ GSA by reason of attachment would take precedence over any claim of Kellam.
[53] Accordingly, the farm equipment in question belonged to Catherine Cummings over which the plaintiffs had a valid GSA as of March 6, 2006 when the farm property and equipment sale transactions closed. There was no other encumbrance initiated against that equipment and Cummings had good title to it subject to the GSA of the plaintiffs.
[54] Accordingly, the defendant Kellam had no right to retain, refuse to return and dispose of the equipment and by doing so, is liable to the plaintiffs for conversion of those assets.
DAMAGES PAYABLE BY KELLAM
[55] The evidence in this case was not altogether clear regarding the total value equipment taken from the site by Kellam. His evidence from his discovery read into the record by the plaintiffs was that the equipment that he took from the farm in April 2009 had a value of $60,000 if repaired. The evidence at trial was that he arranged to have a few of the major pieces of equipment repaired. Two invoices from Galer Farm Equipment totaling $4608.40 and $2458.23 were provided with respect to those repairs. Kellam stated that he had another account of $3500 for parts but never produced that invoice including at trial and Kellam has not proven that claim for that $3500 repair invoice.
[56] The plaintiffs also suggest that Kellam has not proven his set off claim for these Galer accounts of $4608.40 and $2458.23 as he provided no receipts from or proof of payment to Galer for them. Notwithstanding the lack of these documents, I accept Kellam’s evidence that he not only incurred those expenses for the equipment that he repaired but also eventually paid them. Accordingly, as no doubt the repairs had to be made anyway to obtain the highest sale price, they are both proper set off amounts from the actual proceeds he received from the sale of that equipment.
[57] The uncontradicted evidence was that equipment was all sold at retail prices for $42,620 including through Galer Farm Equipment where Kellam worked. There is no evidence that Kellam sold any of the equipment at unreasonably low prices or that the plaintiffs could have received more for the equipment had they been able to sell it. Accordingly, I accept that the plaintiffs’ damages are calculated based on actual proceeds of sale of $42,620 less the Galer repair invoices of $4608.40 and $2458.23.
[58] Kellam indicated he personally spent significant time himself doing some repairs to some of the equipment pieces he had in his possession suggesting a set-off claim for that labour of $7500. He claimed mechanic’s rates of $50-$70 per hour but provided no details at trial as to how many hours he actually worked or when he did so even though he stated he had placed those details on a calendar which was never produced at trial or otherwise to the parties. I am not prepared to allow anything for that alleged cost of his labour services in those circumstances given the total lack of proof.
[59] Accordingly, the plaintiffs’ damages against the defendant Kellam are assessed in the amount of $35,533. The plaintiffs are also entitled to prejudgment interest on the total amount of their damages pursuant to the Courts of Justice Act from July 15, 2009.
KELLAM COUNTERCLAIM
[60] Given my findings with respect to the property in the equipment passing to Catherine Cummings on March 6, 2006, there is no basis to the Kellam counterclaim against the plaintiffs for wrongfully detaining and refusing to let Kellam remove the balance of the farm equipment including the combine from the farm.
[61] With respect to the balance of his counter-claims, when asked at trial why he brought them, he rather flippantly indicated that he brought the counterclaim against the plaintiffs only because they had brought this action against him saying that’s how things are done in Court matters.
[62] I do not accept his evidence or the inferences from it that he had some kind of agreement with Polillo that Kellam would be paid for his work on the farm and on the equipment by the plaintiffs. He never submitted an invoice at any time including during this litigation or at trial for his alleged worked allegedly performed for the plaintiffs. I find that there was no agreement that he would be paid by the plaintiffs for those services regardless of what was received on the sale of the farm property by the plaintiffs under their mortgage.
[63] Rather, it makes total sense Kellam worked on the property and on the equipment on his own behalf so that the plaintiff could sell the property and farm equipment at a maximum value which was in his own best interests because of his second mortgage amount owing of approximately $100,000.
[64] The counterclaim is accordingly dismissed.
CLAIM AGAINST CATHERINE CUMMINGS
[65] In my view, the plaintiffs have not established on the evidence that they suffered any damages because of the alleged fraud or fraudulent misrepresentation of the defendant Catherine Mary Cummings.
[66] The evidence establishes that that GSA was not signed by Catherine Mary Cummings until March 3, 2006 and provided to Polillo’s lawyer then shortly before the closing of the transaction the following Monday.
[67] At that time, as found above in my reasons, Kellam had agreed that his farm equipment would be transferred to Cummings in exchange for his receiving a promissory note without any encumbrance against Cummings’ good title to the farm equipment. Accordingly, the logical inference is that Catherine Cummings believed that when the deal closed and that equipment was transferred to her, she would have good title to it and that she wouldn’t get or be entitled to the money from the plaintiffs without that being the case.
[68] The evidence of Catherine Cummings at trial, which confirmed her evidence on her examination for discovery read in by the plaintiffs as part of their case, was that at no time after March 6, 2006 did Kellam ever try and take possession of the farm equipment or tell her verbally or in writing that he was the owner of the farm equipment. Kellam never took the position that he was entitled to possession of the equipment and only sued her to pay him the money owing but not to get back possession of the equipment. The equipment was always on the farm in her possession when the Cummings were living there and Kellam never took the position that he still owned the equipment. This evidence supports Cummings’ position that there was no fraud or fraudulent misrepresentation on her part.
[69] Also, the admitted facts are that after Cummings took possession of the farm and equipment when the deal closed in March 2006, Cummings had continuous possession from that date until July 18, 2008 when the plaintiffs took possession of the farm. Kellam made no request for possession or return of the equipment after March 2006 and never told Catherine Cummings she did not own the equipment. Instead he sued her successfully for the money owing to him because of the sale of the equipment. In that action, he did not seek any relief concerning the equipment or allege an ownership interest in it and only alleged in his proof of claim on her bankruptcy that he was owed money and made no allegation of a secured or special interest in the equipment.
[70] Accordingly, the facts appear clear and the logical inference is that Catherine Cummings had no reason to believe that she had anything but good title to this farm equipment in question acquired from Kellam and to the other farm equipment she had in her possession on another farm when this deal closed on March 6, 2006 and she received the loan funds from the plaintiffs. All of that equipment was on the farm when the plaintiffs took possession in July, 2008 and there was no misrepresentation let alone a fraudulent misrepresentation on that issue.
[71] Although she obviously didn’t actually own all the equipment on March 3 when she signed the GSA, it was obviously being signed and held in escrow pending the closing of the deal and transfer of the Kellam equipment to her with good title.
[72] Her read- in evidence from her examination for discovery was that when she signed the GSA on March 3, 2006, she understood that the plaintiffs were relying on her promise that she owned that equipment and she could give good title to it when the plaintiffs decided to advance the $609,000. She admitted at trial that she did not actually own all the equipment that day as the deal had not yet closed but in my view, it was really no different than her signing the land mortgage the same day on March 3, 2006 i.e., she did not then own the land but was getting good title to it when the deal closed as a condition of her being advanced the plaintiffs’ $609,000 in mortgage funds to finance the purchase.
[73] These admitted facts and read in evidence of Cummings confirm Polillo’s own evidence that he would not have loaned the money without the collateral security over the equipment. However, his evidence does not establish that he agreed to advance the loan only if Cummings actually then owned all the equipment when he went to the farm sometime before closing when he spoke to the Cummings. Again, there is no evidence that that conversation took place before December 15, 2005, the date of the accepted offer to purchase the Kellam equipment by Cummings.
[74] The read- in evidence of Catherine Cummings by the plaintiffs was that the only reason to put the equipment on the list attached to the GSA was to tell the plaintiffs exactly what equipment she owned and had good title to. This evidence was also that she was promising the plaintiffs that she had good , clear title to at least all the equipment listed in the attachment “if this was all the equipment coming from St. George” 9 i.e., her other farm. Her read- in evidence was that when she signed the GSA, she understood to the best of her knowledge that the equipment listed in the attachment was owned by her and that nobody else had an interest in it.
[75] Kellam did not have any ownership in or any encumbrance or lien against that farm equipment after March 6, 2006. Catherine Cummings received good title to the equipment on that date and never received any claim or notice from Kellam at any time before this litigation that he was claiming an ownership interest in it.
[76] The evidence is clear that Polillo was prepared to advance the funds to the Cummings if the plaintiffs received a first mortgage on the farm and a first in priority GSA on the farm equipment listed therein that his lawyer was provided on March 3, 2006. Given Cummings’ good title in both and no notice by her of a retained ownership claim by Kellam in that equipment, that is exactly what he in fact received on March 6, 2006.
[77] She did not tell Polillo that she gave a promissory note on closing to Kellam for the equipment purchase expecting if necessary her lawyer do that. However, the evidence from Polillo does not establish that he would not have advanced the mortgage funds to Cummings had he been told that a promissory note was being given for the equipment even though he still had first priority security in the equipment.
[78] Accordingly, the plaintiffs have not established that Catherine Cummings committed fraud or fraudulent misrepresentation even if she and her husband may have told Polillo that she, he or they owned the equipment sometime before March 3, 2006. The plaintiffs have also not proven that they were induced to loan the funds on any alleged fraud or fraudulent misrepresentation of Catherine Cummings.
[79] Accordingly, the plaintiffs’ action against Catherine Mary Cummings is dismissed.
CROSSCLAIM BY KELLAM AGAINST CATHERINE MARY CUMMINGS
[80] Given my findings that there was no fraudulent misrepresentation or fraud by Catherine Mary Cummings vis-à-vis the plaintiffs, which is the basis of the cross claim of Kellam, there is no merit to that cross claim. Moreover, even if there was proof of fraud or fraudulent misrepresentation, it was not related to Kellam and would not have been a cause of any damages payable by him to the plaintiffs that would entitle him to a cross claim against the co-defendant Cummings.
[81] Accordingly, the Crossclaim of the defendant Kellam against Catherine Mary Cummings based on her alleged fraud or fraudulent misrepresentation is dismissed.
COSTS
[82] If the parties cannot agree on the issue of costs, the plaintiffs can make their brief submissions of no more than four pages in length plus their bill of costs and details of any relevant written offers to settle within 15 days from the date of this decision. The defendant Kellam will then have seven days thereafter to similarly respond and the defendant Cummings a further five days after the defendant Kellam’s submissions for her similar response.
Nightingale, J.
Released: January 21, 2014
COURT FILE NO.: CV-09-513
DATE: 2014/01/21
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
621316 ONTARIO INC., PAIEMENT DEVELOPMENT CORPORATION and LARRY PAIEMENT
Plaintiffs
- and -
ALAN KELLAM, CATHERINE MARY CUMMINGS and WARREN CUMMINGS
Defendants
REASONS FOR JUDGMENT
Nightingale, J.
Released: January 21, 2014