CITATION: Amaprop Canada Inc. v. Connon, 2017 ONSC 650
COURT FILE NO.: 06-CV-315018 PD2
DATE: 20170131
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
AMAPROP CANADA INC. and STEPHEN COLVILLE-REEVES
Plaintiffs/Defendants by Counterclaim
– and –
MARK CONNON, 950342 ONTARIO LIMITED operating as QUALITY CLUBS, 1197193 ONTARIO INC. operating as FIT FOR LIFE CAMBRIDGE, 1138375 ONTARIO LIMITED operating as FIT FOR LIFE AIRPORT, 1298852 ONTARIO LIMITED operating as FIT FOR LIFE MISSISSAUGA, 1185444 ONTARIO INC. operating as WOMEN IN MOTION (ERIN MILLS) INC. 1249972 ONTARIO LIMITED operating as FIT FOR LIFE BARRIE, 1008810 ONTARIO LIMITED operating as FIT FOR LIFE PICKERING, 118545 ONTARIO INC. operating as WOMEN IN MOTION (MEADOWVALE) INC., 1257216 ONTARIO LIMITED operating WOMEN IN MOTION MARKHAM, 1257229 ONTARIO LIMITED operating WOMEN IN MOTION BOLTON, 1000712 ONTARIO LIMITED operating as CRYSTALS, 894698 ONTARIO LTD. operating as FIT FOR LIFE EASTVIEW, and 1102091 ONTARIO LIMITED operating as FIT FOR LIFE AGINCOURT
Defendants/Plaintiffs by Counterclaim
Stephen Colville-Reeves, Self Represented Plaintiffs/Defendants by Counterclaim
Mark Connon, Self-Represented
Defendants/Plaintiffs by Counterclaim
HEARD: January 23 and 24, 2017
G. DOW, J.
REASONS FOR DECISION
[1] This matter came before me for trial with the parties acting on their own behalf, both personally and for the corporations with leave previously granted under Rule 15.01(2). The plaintiff, Stephen Colville-Reeves is the active owner of Amaprop Canada Inc. (“Amaprop”) and Mark Connon is the active owner of 950342 Ontario Limited operating as Quality Clubs (“Quality Clubs”).
[2] At the pre-trial conference, the presiding judge directed the matter proceed under Simplified Procedure and that the evidence of the parties in chief be prepared in advance and served in affidavit form.
Motion
[3] In addition, Mark Connon and Quality Clubs sought to amend their counterclaim which required a motion and materials in support of same. The pre-trial conference judge ordered the materials be served in advance and returnable before the trial judge. The endorsement stated:
“ … the trial judge who shall make all necessary directions for the hearing of the counterclaim (based on the outcome of that motion) but the counterclaim will not be heard on January 23, 2017 on the merits but at such later time as the trial judge directs”.
[4] I chose to hear the motion first. Mr. Colville-Reeves acknowledged he had the necessary material before me to defend the proposed amendment within the material he had prepared and served for the trial. As a result, given the parameters of Rule 26.01 that amendments to pleadings “shall” be granted and the absence of any prejudice that could not be compensated for by costs or an adjournment, I allowed the amendment. Further, the proposed amendment reduced the prayer for relief to the Simplified Procedure limit of $100,000.00 and narrowed the issues in dispute to a failure by Amaprop and Stephen Colville-Reeves to contribute to cash shortfalls and an agreement to pay $30,000.00 to Mark Connon which allegedly had not occurred.
[5] However, Mark Connon and Quality Clubs were concerned that his previous efforts and submissions to have the evidence regarding his counterclaim heard at this trial had been rejected and he had not prepared to advance the counterclaim but only to defend the claim being advanced against him and Quality Clubs. As this matter had been litigated for more than the past 10 years, it was, in my view, in the best interest of the parties and the court to have both actions proceed together without further delay. To that end, I permitted Mark Connon and Quality Clubs to adduce additional evidence as may be required and permitted by me with regard to the counterclaim. It should be noted that Mark Connon and Quality Clubs was given overnight to assemble and prepare the material it sought to rely upon and was allowed to tender that evidence viva voce on the second day of the trial which became Exhibits 6 through 16 inclusive. In my view, this was within the ambit of the pre-trial judge’s order to have the counterclaim heard “as the trial judge directs”.
[6] As a result, the draft Amended Statement of Defence and Counterclaim at Tab 7 of Mark Connon’s Motion Record was in effect at the Trial and I considered it to be the applicable pleading as opposed to that contained at Tab 3 of the Trial Record.
Order - Master Glustein
[7] The parties confirmed an Order was made by Master Glustein (as he then was) dated March 27, 2012 that the statements of defence of all defendants except Mark Connon and Quality Clubs be struck. Stephen Colville-Reeves acknowledged he was not seeking to recover from any of those defendants and did not oppose an order that the action be dismissed as against them. As a result, I confirm this order shall be included in this Judgment.
Facts - Main Action
[8] The parties were in the fitness club business and involved in two transactions. The action by Amaprop and Stephen Colville-Reeves against Mark Connon and his company, Quality Clubs arises from the purchase by Amaprop of 50% of Quality Clubs and/or Mark Connon’s ownership in four fitness clubs in the west end of the Greater Toronto Area. These clubs are described as Fit for Life Airport (“Airport”), Fit for Life Mississauga (“Mississauga”), Women in Motion Meadowvale (“Meadowvale”) and Women in Motion Erin Mills (“Erin Mills”). The letter dated January 4, 2000 signed by Stephen Colville-Reeves and Mark Connon (as president) details the intention of the parties and, for my purposes, my finding Amaprop was to pay $150,000.00 for a 50% interest of which $30,000.00 was to be paid directly to Mark Connon. This business relationship, as I find it to be, ended as of July 12, 2001 with a letter on that date signed by both Stephen Colville-Reeves and Mark Connon (again as president) selling back the 50% interest held by Amaprop for $75,000.00 to Mark Connon. The letter sets out terms for payment and the parties agree that five, $5,000.00 cheques were paid between July-December, 2001 leaving an unpaid balance of $50,000.00.
[9] Mark Connon acknowledged in his closing submissions the amount was not paid and remains outstanding. Thus Amaprop is entitled to Judgment in the amount of $50,000.00 against Quality Clubs.
[10] In paragraph 11 of Mark Connon and Quality Clubs’ Amended Statement of Defence and Counterclaim, it is alleged “Mark would purchase the plaintiff’s interest for $75,000.00”, the inference being it was not the entity 950342 Ontario Limited operating as Quality Clubs. While this allegation was disputed in the Reply and Defence to Counterclaim, the only information on the July 12, 2001 letter is the salutation which describes Mark Connon as President, Fit for Life Health and Racket Clubs. As this is not a corporate entity, I find Amaprop entitled to Judgment against both Mark Connon and 950342 Ontario Limited operating as Quality Clubs.
[11] Regarding the issue of Mark Connon’s receipt of $30,000.00 from the $150,000.00 purchase of the 50% interest in the four fitness clubs, Mark Connon testified that this amount was not paid. Stephen Colville-Reeves did not disagree but submitted it should be reduced by 50% to reflect Mark Connon only having a 50% interest in the corporation overseeing the four clubs. That is, Stephen Colville-Reeves acknowledged that Mark Connon is owed $15,000.00. Mark Connon tendered (as Exhibit 16) a list from Stephen Colville-Reeves that included advances by Amaprop on three occasions of $50,000.00 of which only $120,000.00 were designated for the purposes of shares. The remaining $30,000.00 was described as a “shareholder advance” and a “contribution”.
[12] I conclude that the $15,000.00 amount admitted as owed is different than any of the other expenses paid by Mark Connon or Quality Clubs. For example, the $7,105.00 referred to in a June 22, 2001 letter from Mark Connon to Stephen Colville-Reeves (Tab 5, Exhibit 2) which I conclude was part of the reason the repurchase price was only one half of the original price. As a result, Amaprop is entitled to recover from Mark Connon and Quality Clubs ($50,000.00 - $15,000.00 =) $35,000.00.
Facts – Counterclaim
[13] The payments of $5,000.00 per month stopped according to Mark Connon because of difficulties with the other business transaction between the parties. This involved an equal ownership interest in a Fit for Life fitness location built and opened in Cambridge, Ontario in or before 1999 (“Cambridge”).
[14] The shareholder agreement between Amaprop and Quality Clubs is dated August 30, 1996 and included a clause that the parties would contribute equally in cash calls and losses. The Cambridge Fit for Life location began to suffer such losses after 1999 and was closed for the failure to pay rent, likely in 2003 and was declared bankrupt in 2005 to 2006.
[15] In the counterclaim, Mark Connon and Quality Clubs sought to recover amounts it claimed were due to Mark Connon, particularly a fee of 2% of gross revenues for head office administration and bookkeeping being performed by him and Quality Clubs for the benefit of Cambridge.
[16] The plaintiff acknowledged and I rely on the plaintiff’s September 5, 2002 letter that attempted to calculate what amounts were owed to whom (or the “reconciliation”) that head office administration fees of $19,023.23 and $12,000.00 for the period up and until the end of 2001 were outstanding. At this point, the business relationship had broken down. After that time neither Stephen Colville-Reeves nor Amaprop was actively involved in the operation of Cambridge. As a result, I would conclude this amount, totaling $31,023.23 is owed to Mark Connon and Quality Clubs by Amaprop subject to set offs detailed below. Specifically, I reject the claim for 2% of gross revenue for head office administration and bookkeeping after December 31, 2001.
[17] This amount should be offset by the $3,000.00 per month salary in 2000 and the $4,000.00 per month salary in 2001 it was agreed that Stephen Colville-Reeves would receive for his efforts to manage and promote the four clubs described above and Cambridge in which his company held a 50% financial interest. Assuming the effort was distributed equally to each club, this restricts the salary for Stephen Colville-Reeves attributable to Cambridge to one fifth of the full amount, that is, 20% or $600.00 per month for 2000 (or $7,200.00) and $800.00 per month in 2001 (or $9,600.00) for a total of $16,800.00.
[18] Mark Connon tendered evidence that three cheques for $3,000.00 each were paid to Amaprop for this salary in February, March and April, 2000 (page 3 of Schedule 6 of Mark Connon’s affidavit sworn January 11, 2017). However, the evidence of Stephen Colville-Reeves was to the contrary (paragraph 20 of Stephen Colville-Reeves’ affidavit sworn December 21, 2016). I prefer the evidence of Stephen Colville-Reeves on this point.
[19] The net amount owed to Mark Connon and Quality Clubs is thus reduced to ($31,023.23 - $16,800.00 =) $14,223.23.
[20] In addition, Stephen Colville-Reeves acknowledged a number of expenses which ought to have been shared equally but were paid by Mark Connon through Quality Clubs. This included insurance premiums of $3,155.38 and $3,639.67 for 2000 and 2001. Further, there was acceptance of telephone bills totaling $3,859.80 before December 31, 2001 and spinning (stationary) cycles in the amount of $11,398.98.
[21] There was also submitted a February 21, 2002 letter and a personal cheque of Mark Connon on that date for $1611.48 detailing a payment for a telephone bill where the bank apparently forwarded insufficient funds. While there was no evidence as to what time period this account related to, I am prepared to accept it as an expense attributable to before December 31, 2001 and give credit for same to Mark Connon and/or Quality Clubs.
[22] In the reconciliation memorandum drafted by Stephen Colville-Reeves dated September 5, 2002, reference is made to an expense for equipment of $25,172.82 attributable to Cambridge. However, there was also evidence and I conclude it should be reduced for a portion of the equipment that was transferred to a fitness club in Ajax. A one third reduction was indicated and thus $17,315.21 remains to be considered.
[23] I would summarize the cash advances made by Mark Connon through Quality Clubs as follows:
2000 Insurance Premium
$3,155.38
2001 Insurance Premium
$3,639.67
Telephone Bills
$3,859.80
Spinning Cycles
$11,398.98
Fitness Equipment
$17,315.21
Telephone Bill
$1,611.48
SUBTOTAL
$40,980.52
[24] As I understood the evidence, this amount was contributed by Mark Connon through Quality Clubs and 50% of it ought to have been contributed by Amaprop, that is $20,490.26.
[25] When combined with the net amount owed for head office administration and bookkeeping of $14,223.23, the total owed by Amaprop to Mark Connon and/or Quality Clubs is ($14,223.23 + $20,490.26 =) $34,713.49.
Result
[26] With the plaintiff, Amaprop owed $35,000.00 by Mark Connon and Quality Clubs in the main action and Mark Connon and Quality Clubs entitled to recover $34,713.49 from Amaprop in the counterclaim, the difference is $286.51. In accordance with the Rule 27.09(3) this is a proper case to give judgment in favour of the plaintiff, Amaprop against the defendants, Mark Connon and Quality Clubs for this amount, that is $286.51, in the main action and dismiss the counterclaim.
Pre-Judgment Interest
[27] The Statement of Claim was issued on July 13, 2006 when the applicable pre-judgment interest rate was 4.5%. However, interest rates have decreased significantly since that time and, in my view, this is an appropriate case for me to exercise my discretion under Section 130 of the Courts of Justice Act to reduce interest on the amounts awarded to each party to 2.1% per year from July 13, 2006 to the date of these Reasons. That is, Amaprop is entitled to pre-judgment interest from July 13, 2006 until January 31, 2017 on the $286.51 awarded to it and payable by Mark Connon and Quality Clubs, or, an additional $63.49.
Costs
[28] Both parties advised having previously incurred legal expenses but failed to bring or have the material as required by Rule 57.01(6). I was not advised of any Rule 49 settlement offers. It is clear that Stephen Colville-Reeves and Amaprop had counsel for a much longer period of time and that a much great expense was incurred. However, it was not clear to me that all of the time expended related to what eventually proceeded to trial.
[29] Mark Connon acknowledged the legal bill he initially paid was in excess of the services provided and that his counsel was subsequently faced with allegations of professional misconduct including overcharging and criminal prosecution regarding other clients.
[30] Further, Rule 76.13 provides for costs consequences in Simplified Procedure matters including that the plaintiff not recover any costs unless the court is satisfied it is reasonable for the plaintiff to have commenced the action under the ordinary procedure which occurred in this instance. The end result in the matter was within the Small Claims Court monetary limit.
[31] As a result, and in accordance with the discretion permitted to me under Section 131 of the Courts of Justice Act, it is my view the appropriate disposition of costs is that each side bear its own. As a result, neither party is entitled to its costs of this action or counterclaim.
[32] For the assistance of the parties, I would summarize the formal Judgment should read:
THIS COURT ORDERS the defendants, Mark Connon and 950342 Ontario Limited operating as Quality Clubs be permitted to file its Amended Statement of Defence and Counterclaim as contained at Tab 7 of the Motion Record and it replaces the pleading of these defendants in Tab 3 of the Trial Record.
THIS COURT ORDERS this action be and the same is hereby dismissed as against all defendants other than Mark Connon and 950342 Ontario Limited operating as Quality Clubs.
THIS COURT ORDERS that the plaintiff Amaprop Canada Inc. recover from the defendants, Mark Connon and 950342 Ontario Limited operating as Quality Clubs the net amount of $286.51 for damages plus pre-judgment interest of $63.49 for a total of $350.00.
THIS COURT ORDERS that the action of Stephen Colville-Reeves and the counterclaim of Mark Connon and 950342 Ontario Limited operating as Quality Clubs be and the same is hereby dismissed.
THIS COURT ORDERS there be no costs to any of the parties.
Mr. Justice G. Dow
Released: January 31, 2017
CITATION: Amaprop Canada Inc. v. Connon, 2017 ONSC 650
COURT FILE NO.: 06-CV-315018 PD 2
DATE: 20170131
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
AMPROP CANADA INC. and STEPHEN COLVILLE-REEVES
Plaintiffs/Defendants by Counterclaim
– and –
MARK CONNON, 950342 ONTARIO LIMITED operating as QUALITY CLUBS, 1197193 ONTARIO INC. operating as FIT FOR LIFE CAMBRIDGE, 1138375 ONTARIO LIMITED operating as FIT FOR LIFE AIRPORT, 1298852 ONTARIO LIMITED operating as FIT FOR LIFE MISSISSAUGA, 1185444 ONTARIO INC. operating as WOMEN IN MOTION (ERIN MILLS) INC. 1249972 ONTARIO LIMITED operating as FIT FOR LIFE BARRIE, 1008810 ONTARIO LIMITED operating as FIT FOR LIFE PICKERING, 118545 ONTARIO INC. operating as WOMEN IN MOTION (MEADOWVALE) INC., 1257216 ONTARIO LIMITED operating WOMEN IN MOTION MARKHAM, 1257229 ONTARIO LIMITED operating WOMEN IN MOTION BOLTON, 1000712 ONTARIO LIMITED operating as CRYSTALS, 894698 ONTARIO LTD. operating as FIT FOR LIFE EASTVIEW, and 1102091 ONTARIO LIMITED operating as FIT FOR LIFE AGINCOURT
Defendants/Plaintiffs by Counterclaim
REASONS FOR DECISION
Mr. Justice G. Dow
Released: January 31, 2017