Court File and Parties

Citation: 665750 Ontario Inc. v. Atlantic Towing Inc., 2017 ONSC 6699 Court File No.: CV-16-562329 Date: 2017-11-09 Superior Court of Justice - Ontario

Re: 665750 Ontario Inc. carrying on business as Camrob Enterprises And: Atlantic Towing Inc. carrying on business as Chris’s Towing, Chris’s Towing Inc., and Earl Lewis carrying on business as The Recovery Board

Before: Madam Justice J.T. Akbarali

Counsel: Todd Robinson for the applicant David Winer for the respondent Earl Lewis carrying on business as The Recovery Board No one for the respondents Atlantic Towing Inc. carrying on business as Chris’s Towing, and Chris’s Towing Inc.

Heard: Submissions in Writing

Endorsement

[1] On May 28, 2017 I delivered reasons in this application. In it, I found that Chris’s Towing Inc. was liable to the applicant for unjust enrichment and conversion in respect of three vehicles, one of which Chris’s Towing sold, one of which it sold for scrap, and one of which it retained. I found that Chris’s Towing, and Atlantic Towing Inc. carrying on business as Chris’s Towing, were one business and were misdirecting liability amongst themselves. I thus found that Atlantic Towing was jointly and severally liable with Chris’s Towing for the applicant’s loss. Finally, because Earl Lewis carrying on business as the Recovery Board had admitted to being Chris’s Towing’s agent, I found that the applicant was entitled to sue both, Chris’s Towing as principal and Mr. Lewis as agent: General Electric Capital Canada Inc. v. Deloitte & Touche LLP, 2002 20158 (S.C.). I found that liability attached to both.

[2] On June 26, 2017 I released a further endorsement dealing with the question of whether the damages I ordered on May 28, 2017 for conversion in respect of the three vehicles should be increased to account for taxes payable. I found that, because conversion results in a deemed forced sale, the amount awarded had to be increased by 13% to reflect the taxes that would be payable. However, at that time, I dealt only with the issue as it related to Atlantic Towing and Chris’s Towing. Mr. Lewis had advised that he intended to bring a motion under r. 59.06(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, to seek to reopen my decision on the basis of evidence that was not led at the original application. As a result, the parties asked that I defer my decision on whether Mr. Lewis would be responsible for any increase in damages to account for taxes payable until after the hearing of that motion on its merits. I agreed to do so.

[3] Since that time, Mr. Lewis has withdrawn his motion to reopen my decision. The parties have agreed that Mr. Lewis shall pay costs of that abandoned motion to the applicant in the amount of $1,000.00.

[4] The only issue that remains for determination is whether Mr. Lewis is responsible, together with Atlantic Towing and Chris’s Towing, for the 13% increase in the award that I ordered to reflect the taxes payable.

[5] Mr. Lewis argues that liability for the H.S.T. or R.S.T. payment ought to fall to the party that actually sold the vehicle, which in this case (at least with respect to the vehicle that was sold) is Chris’s Towing. Mr. Lewis argues that I did not find that he benefitted from the sale of the vehicle or the retention of two other vehicles. He argues that collection of H.S.T. or R.S.T. should not be a windfall. He argues that the party which pays H.S.T. is entitled to an input tax credit. Since Chris’s Towing sold one vehicle, he argues that Chris’s Towing is the party who ought to pay any H.S.T or R.S.T to the applicant.

[6] In my view, Mr. Lewis misconceives the purpose of the increase in the amount owing to the applicant.

[7] The damages for conversion reflect proceeds from a deemed forced sale of the vehicles by the applicant. The increase in that amount to reflect the H.S.T. or R.S.T. payable reflects the amount payable by the applicant on the deemed forced sale of its vehicles. The applicant will owe 13% in either H.S.T. or R.S.T.[^1] on the deemed forced sale of the vehicles. To be made whole, the amount it is entitled to from respondents must reflect this obligation.

[8] There is no principled basis to separate Mr. Lewis’s liability as agent from that of its principal, Chris’s Towing, in this respect. Accordingly, Mr. Lewis is equally responsible for the full amount owing to the applicant by Chris’s Towing, that is, $120,440.82.

Akbarali, J.

Date: November 09, 2017.

[^1]: I need not decide whether H.S.T. or R.S.T. is payable, as on either measure the taxes owing are 13%.