BARRIE COURT FILE NO.: CV-13-0599-SR DATE: 20190530
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Ronald Albert Ornsby Plaintiff
– and –
Robert A. Monteith Defendant
Counsel: W. Michael Adams, for the Plaintiff Robert A. Monteith, Self-Represented
HEARD: May 14, 2019
REASONS FOR JUDGMENT
DiTOMASO J.
INTRODUCTION
[1] The Plaintiff, Ronald Albert Ornsby (“Mr. Ornsby”), claims the sum of $65,000 from the Defendant, Robert A. Monteith (“Mr. Monteith”), being the outstanding amount owing to him by Mr. Monteith in respect of an agreement between the parties where Mr. Ornsby sold to Mr. Monteith a banquet hall business known as Fendley Hall in Barrie.
[2] By way of counterclaim, Mr. Monteith claims that Mr. Ornsby breached their contract. As a result, Mr. Monteith seeks the remedy of rescission and repayment of the sum of $100,000, which he paid to Mr. Ornsby.
PRELIMINARY MOTION
[3] By way of preliminary motion, Mr. Monteith questioned the jurisdiction of the court and why the matter was proceeding at all when there was a default judgment in his favour, dated April 18, 2019.
[4] No written materials were filed before the Court in respect of the jurisdiction issue. Mr. Monteith submitted that he was entitled to have this trial conducted in a common law court; in a court of record. He submitted that it was incumbent upon the Plaintiff to prove jurisdiction. I ruled that the Superior Court of Justice, a court of record, maintains jurisdiction over this litigation. As well, these proceedings are governed by the Rules of Civil Procedure. I ruled that the matter would proceed to trial and available to the court was the Trial Record.
[5] As for Mr. Monteith claiming that he had obtained default judgment on April 18, 2019, there was no merit to this submission. In fact, I found that Mr. Monteith did not have default judgment as he claimed. Filed as Exhibit 1 on the preliminary motion was a document prepared and signed by Mr. Monteith which purported to be a default judgment, dated April 18, 2019. This was not a document issued by the court but was merely a document prepared by Mr. Monteith purporting to evidence default judgment. I found there was no default judgment in this case favouring Mr. Monteith. The matter proceeded to trial.
OVERVIEW
[6] Mr. Ornsby delivered a Request to Admit, which was marked as Exhibit 1 at trial.
[7] In return, Mr. Monteith delivered a Response to Request to Admit, which was marked as Exhibit 2 at trial.
[8] Mr. Monteith has admitted the truth of facts contained in paragraphs 15, 21, 22 and 23 of the Request to Admit, as follows:
On or about Saturday October 29, 2011, Bob [Monteith] prepared or arranged for the preparation of an agreement which is listed at Tab 7 of the plaintiff’s affidavit of documents and a copy of which is attached as Exhibit “A”. Bob presented the agreement to Ron [Ornsby] or about October 29, 2011 and Ron signed it at about that time.
The cash balance was paid on or about November 1, 2011 and the Cadillac was delivered to Ron about that time.
The agreement called for the balance of $65,000 to be paid out over five years with a minimum of $500 per month and the $35,000 balance to be paid out at the end of five years if it had not been paid out sooner.
Bob made no monthly payments on account of the $65,000 owing.
[9] Mr. Ornsby is a butcher by trade and carried on a meat market business. He and Mr. Monteith were long-time friends. Mr. Monteith was an entrepreneur who had operated banquet halls. Mr. Ornsby owned a banquet hall, known as Fendley Hall, in Barrie.
[10] During or about August 2011, Mr. Ornsby and Mr. Monteith had a conversation about Fendley Hall. Mr. Ornsby was interested in acquiring Mr. Monteith’s advice about running his banquet hall.
[11] On or about October 28, 2011, Mr. Monteith approached Mr. Ornsby about purchasing Fendley Hall. Mr. Ornsby agreed to sell the business to Mr. Monteith. They agreed on the purchase price in the amount of $165,000, with an initial payment of at least $100,000. Mr. Monteith indicated that he would want his 2005 Cadillac to be part of the down payment.
[12] Mr. Ornsby gave Mr. Monteith the keys to Fendley Hall so he could go and inspect the premises further.
[13] On or about October 31, 2011, Mr. Monteith presented Mr. Ornsby with a draft Agreement for the purchase of Fendley Hall, together with all chattels. The Agreement provided for a company to be incorporated by Mr. Monteith, who signed it as president “For a company to be Incorporated.” The parties signed the Agreement, which was marked as Exhibit 3, and which provided for:
(a) A purchase price of $165,000; (b) A deposit of $85,000; (c) A credit to Mr. Monteith of $15,000 for the 2005 Cadillac, which Mr. Monteith gave to Mr. Ornsby; and, (d) The balance owing of $65,000 to be paid over a period of five years at zero interest, with minimum monthly payments of $500 and a lump sum of $35,000 at the end of the five year period.
[14] On November 1, 2011, Mr. Monteith signed an agreement to pay the balance owing of $65,000 to Mr. Ornsby. It also contained a receipt for the $100,000 paid to Mr. Ornsby by Mr. Monteith on November 1, 2011, including the 2005 Cadillac valued at $15,000. In addition, it referenced the outstanding balance owed by Mr. Monteith in the amount of $65,000, to be paid over a five year period. This Receipt was marked as Exhibit 4 at trial.
[15] Mr. Monteith carried on the banquet business at Fendley Hall after November 1, 2011.
[16] In early January 2012, Mr. Monteith met Mr. Ornsby. At that time, he gave Mr. Ornsby a letter and returned the keys to Fendley Hall. Mr. Monteith told Mr. Ornsby that he would be suing him for $25,000.
[17] On the following day, Mr. Ornsby attended Fendley Hall and found that the banquet hall had been stripped of chattels.
[18] Mr. Monteith did not pay the balance owing of $65,000.
POSITIONS OF THE PARTIES
Position of the Plaintiff, Ronald Albert Ornsby
[19] Mr. Ornsby submits that he is entitled to the balance owing from the sale of Fendley Hall to Mr. Monteith. He submits that the amount owing by Mr. Monteith is $65,000 plus interest.
Position of the Defendant, Robert A. Monteith
[20] Mr. Monteith submits that Mr. Ornsby has breached the contract primarily by failing to make full disclosure of all relevant business documents to Mr. Monteith. Mr. Monteith seeks rescission of the contract and the return of the $100,000 that he paid to Mr. Ornsby.
THE ISSUES
[21] The following are the issues to be determined:
(a) Is Mr. Ornsby entitled to the sum of $65,000 plus interest, being the outstanding balance owed by Mr. Monteith on the sale of Fendley Hall? (b) Did Mr. Ornsby breach the contract with Mr. Monteith? (c) By way of counter-claim, is Mr. Monteith entitled to the remedy of rescission and return of the sum of $100,000?
THE EVIDENCE
[22] This was a short trial. Mr. Ornsby and Mr. Monteith testified. The following is a summary of their evidence.
The Evidence of Ronald Albert Ornsby
[23] Mr. Ornsby operates a butcher shop and has known Mr. Monteith for almost 40 years. Mr. Monteith was a customer and friend. Mr. Ornsby also operated a banquet hall in Barrie and, in late summer 2011, he sought Mr. Monteith’s advice regarding the operation of the banquet hall business.
[24] At that time, Mr. Ornsby was running both his butcher shop and the banquet hall. There was a discussion at the time as to whether Mr. Monteith would be interested in buying the banquet hall business.
[25] Mr. Monteith asked if he could see the hall, so Mr. Ornsby gave him the keys to do so. Arrangements were very casual at this point in time and Mr. Ornsby did not know if he and Mr. Monteith discussed a price then.
[26] Mr. Ornsby testified that Mr. Monteith and his wife went to look at Fendley Hall. After the viewing, Mr. Monteith was interested and decided to purchase the business by paying $100,000 down with $65,000 owing, interest-free and repayable over five years.
[27] After Mr. Monteith viewed the property, he became more serious about the purchase. Within a week, he returned with an offer to purchase and draft Agreement.
[28] That Agreement referenced a “company to be incorporated”. However, Mr. Ornsby testified that he never received any notice that a company had been incorporated.
[29] He was taken to his Request to Admit (Exh. 1) and Mr. Monteith’s Response to Request to Admit (Exh. 2). The admissions were referred to in his evidence at paragraphs 15, 21, 22 and 23 of the Request to Admit. In the Response to Request to Admit, Mr. Monteith admitted the truth of the facts set out in those paragraphs of Mr. Ornsby’s Request to Admit.
[30] The Agreement to purchase Fendley Hall (Exh. 3), dated October 29, 2011, was prepared by Mr. Monteith.
[31] The Receipt (Exh. 4), dated November 1, 2011, was signed by both Mr. Ornsby and Mr. Monteith, and acknowledged the $100,000 paid by Mr. Monteith, with credit for $15,000 for the 2005 Cadillac being part of the $100,000 consideration for the purchase of the business. The document also acknowledged that Mr. Monteith owed the outstanding balance of $65,000 to be paid over a five year period. The two documents also referred to Mr. Monteith’s purchase of chattels.
[32] Mr. Ornsby testified that, regarding paragraph 8 of the Agreement (Exh. 3), there were arrangements made regarding the disclosure of relevant business documents to Mr. Monteith. Mr. Ornsby testified that he was only in business for one year and no documentation had been prepared yet. As time was of the essence for Mr. Monteith, Mr. Ornsby told him that Mr. Monteith could obtain full disclosure from Mr. Ornsby’s accountant, Brian Thompson, and that the accountant would be instructed to answer all of Mr. Monteith’s questions.
[33] After the execution of the Receipt (Exh. 4), Mr. Ornsby had no further involvement in respect of the operation of Fendley Hall.
[34] Mr. Ornsby turned over the keys to the premises, the chattels and whatever bookings the business had to Mr. Monteith.
[35] A five-year lease of the premises was left in Mr. Ornsby’s name. There was no issue arising in that regard.
[36] Mr. Monteith asked to use Mr. Ornsby’s business bank account for awhile in order to operate the business. After November 1, 2011, Mr. Ornsby made no further use of that bank account.
[37] Shortly after November 1, 2011, Mr. Ornsby was contacted by his bank regarding overdraft protection. Mr. Ornsby indicated to his bank that he did not want to be responsible for overdraft protection.
[38] After the completion of the transaction, there were some discussions between Mr. Ornsby and Mr. Monteith about chattels and who owned certain kitchen equipment and chairs. A neighbouring caterer had the ownership of some of these items. (See Agreement (Exh. 3) at para. 5).
[39] Mr. Ornsby was asked whether there were any complaints made by Mr. Monteith regarding this transaction. Mr. Ornsby testified that Mr. Monteith told him that a glass washer had been stolen.
[40] He told Mr. Monteith that when the chattels were transferred, the glass washer was owned by the caterer.
[41] Aside from the discussion about chattels and the glass washer, there were no complaints made by Mr. Monteith regarding financial disclosure.
[42] Mr. Ornsby testified that Mr. Monteith was not paying the $500 per month as agreed on. (See Agreement (Exh. 3) at para. 12).
[43] In early January 2012, Mr. Monteith gave Mr. Ornsby a letter and the keys to the premises. Mr. Monteith told Mr. Ornsby that he would not like him very much as he was suing Mr. Ornsby for $25,000.
[44] The next day, Mr. Ornsby attended the banquet hall and found it had been stripped of chattels. He never received any payment in respect of the outstanding sum of $65,000. Mr. Monteith made no claim against Mr. Ornsby in respect of any deposits which Mr. Ornsby had received. Mr. Ornsby testified that Mr. Monteith had not received any consent to dispose of the chattels in the banquet hall. When Mr. Ornsby went to inspect the banquet hall, everything was gone.
[45] Mr. Monteith cross-examined Mr. Ornsby regarding the Agreement (Exh. 3). Mr. Ornsby testified that he understood all of the paragraphs contained in this document and signed the said Agreement. He knew what was in the contract and what the obligations were. The Agreement referred to a company to be incorporated.
[46] He was cross-examined about paragraph 5 and the chattels owned by the caterer. He testified that the caterer had a key to the premises and access to the alarm system. He testified that the caterer did not take anything that did not belong to him.
[47] He was cross-examined about some chairs. He denied that the caterer had taken 100 chairs from the hall. The hall owned about 300 chairs and Mr. Ornsby testified that the caterer did not have 100 chairs.
[48] Mr. Ornsby testified that he may have given a key to a cleaner that used to help in cleaning the hall.
[49] In respect of paragraph 8 of the Agreement, Mr. Ornsby testified that he never gave financial statements to Mr. Monteith, as there was no time to do so. Rather, Mr. Ornsby provided Mr. Monteith with full access to his accountant, Mr. Thompson. Mr. Ornsby and Mr. Monteith went to see the accountant together. Mr. Ornsby instructed Mr. Thompson to tell Mr. Monteith whatever he needed to know.
[50] Mr. Ornsby did not give Mr. Monteith any financial statements.
[51] Rather, Mr. Ornsby testified that by the time he had obtained financial statements, Mr. Monteith had been operating the business for a few months. It would have been eight months before those statements would have been ready and probably would not have been of any use to Mr. Monteith.
[52] As far as Retail Sales Tax was concerned, all the food was sold through the caterer.
[53] Mr. Ornsby sold alcohol.
[54] When they left Mr. Thompson’s office, Mr. Monteith had asked for financial statements. Mr. Thompson advised Mr. Monteith that there was no paperwork in respect of the operation of the hall. Further, if Mr. Ornsby could get that paperwork to Mr. Thompson, he (Mr. Thompson) would provide statements to Mr. Monteith later. That paperwork was not available for six months.
[55] Mr. Ornsby testified that he did not provide financial statements to Mr. Monteith.
[56] However, in respect of statements of accounts and deposits, Mr. Ornsby testified that he believed he showed Mr. Monteith his bank statements before Mr. Monteith gave him any money. He believed he showed Mr. Monteith those documents before Mr. Monteith gave him the sum of $85,000.
[57] Mr. Ornsby testified about the amount of income the banquet hall could generate. He testified that it was about $15,000 per month, which was probably low for that time of year. That amount could be generated on a weekend.
[58] Mr. Monteith be considered what Mr. Ornsby had disclosed as the monthly income of about $15,000.
[59] In terms of the income, Mr. Ornsby received the hall rental, the proceeds from the sale of alcohol and 15% of what the caterer received.
[60] In terms of regulatory agency and corporate records, Mr. Ornsby testified that he did not have these records to give to his lawyer. Instead, he told Mr. Monteith to speak to Mr. Thompson.
[61] Regarding customer’s lists, Mr. Ornsby provided all of the bookings to December 31, 2011 to Mr. Monteith. He provided Mr. Monteith with a list of what he had received by way of deposits. By October/November 2011, Mr. Monteith took over the business.
[62] Mr. Ornsby did not have any contracts with suppliers. However, Mr. Monteith wanted to use Mr. Ornsby’s Bell Canada contract and credit card before he got his own.
[63] In respect of paragraph 10 of the Agreement, Mr. Ornsby did not believe that any sales tax was owing. If any sales tax was owed, he would have paid it.
[64] Mr. Ornsby testified that he felt he had been more than fair with Mr. Montieth so that Mr. Monteith could get underway.
[65] He was cross-examined about a stolen glass washer. Mr. Ornsby did to know anything about that and testified that, in any event, the glass washer belonged to the caterer and was not part of the sale.
[66] By way of re-examination, Mr. Ornsby testified that no lawyer acted for him on the sale. Before the sale, he carried on business as Fendley Hall.
[67] Mr. Ornsby was asked whether, after closing, he provided Mr. Thompson with documents to complete the year-end or financial statements for the business. Mr. Ornsby testified that whatever Mr. Thompson needed, he gave to him. Mr. Thompson never asked Mr. Ornsby anything about the business that Mr. Ornsby did not provide.
Evidence of the Defendant, Robert A. Monteith
[68] Mr. Monteith testified that he had known Mr. Ornsby for about 40 years. They had been neighbours and had good relations. He was quite surprised as to what had occurred in respect of the purchase of Fendley Hall from Mr. Ornsby. Mr. Ornsby did not want to get a lawyer and a contract was prepared between themselves. He testified that Mr. Ornsby knew that he was obliged to Mr. Monteith. Mr. Ornsby was fine with the Agreement. In August, 2013, they reviewed the premises. Mr. Monteith was told of all things that were attached, work that was done and what could be expected from the operation.
[69] He was told by Mr. Ornsby that he was bringing in $15,000 per month and that was a percentage of the gross operation.
[70] According to Mr. Monteith’s own calculations, he testified that Fendley Hall would have been doing $100,000 in gross sales.
[71] Mr. Monteith testified that time was of the essence as Christmas was coming and he wanted the proceeds of the business during the Christmas season.
[72] Regarding the operation of the facility, it was his expectation that he was going to get all the information in the contract that was required.
[73] Mr. Ornsby told Mr. Monteith to go and see his accountant, Mr. Thompson, because he would have had this information. He went to see Mr. Thompson and left with the understanding that Mr. Thompson did not have the information that Mr. Monteith needed. Mr. Monteith was told by Mr. Thompson that as soon as he could get the information regarding the operation of the banquet hall, then he would put the financial statements together. Immediately upon leaving Mr. Thompson’s office, Mr. Monteith testified that Mr. Ornsby said he could move forward with the preparation of the financial documents right away, and this was never done.
[74] Mr. Monteith testified that he never received a list of chattels. He did not know that the caterer had access to the operation at any time he wanted. It was only later that Mr. Monteith learned from Mr. Ornsby that there were certain chattels which were not part of the Agreement.
[75] In 2014, he learned the glass washer was stolen. He testified that it was located beside the bar and it came with the deal. Again, he had asked Mr. Ornsby for a list of chattels so that he could make some operational decisions. This list was never provided.
[76] Mr. Monteith testified that he gave Mr. Ornsby $85,000 in cash and the Cadillac valued at $15,000, for a total of $100,000.
[77] Mr. Monteith felt that he could do better than Mr. Ornsby in operating the business; that he could do better than generating $15,000 income per month. That is why he was asking for all of the information in the Agreement, which was never provided by Mr. Ornsby.
[78] Mr. Monteith testified that he asked for this information on a regular basis, but Mr. Ornsby was not concerned about the disclosure set out in the Agreement.
[79] By way of counter-claim, Mr, Monteith was looking for a rescission of the contract and payment in the amount of $100,000, being $85,000 in cash and the value of the 2005 Cadillac in the amount of $15,000.
[80] In cross-examination, Mr. Monteith testified that there was more than one glass washer – not only the one owned by the caterer, but there was another one.
[81] Mr. Monteith was in error when he testified that the conversation about the glass washer occurred into the second year of operation, namely 2014. He took over the operation in 2011. He agreed that he did not view the premises in August of 2013. Rather, that would have been in 2011.
[82] Mr. Monteith denied that he never complained of not receiving financial statements from Mr. Ornsby. He agreed that he received some information from Mr. Thompson, but later the accountant did not take his calls. The accountant was not at trial to testify.
[83] Mr. Monteith testified that he had prepared two letters asking for disclosure. However, neither one of those letters was produced by way of Mr. Monteith’s disclosure in this action.
[84] When asked whether Mr. Ornsby told him that Mr. Thompson would provide him with any information required, Mr. Monteith could not recall that at all. He had no way of contradicting Mr. Ornsby’s evidence because he had no memory in this regard.
[85] Mr. Monteith then went on to say, that while at Mr. Thompson’s office, Mr. Thompson was told by Mr. Ornsby to give Mr. Monteith any information that he needed.
[86] Mr. Monteith testified that he expected to receive a glass washer, but this unit was stolen from Georgian Bay Manor and it has since remained there.
[87] After providing Mr. Ornsby with the letter which stated that Mr. Monteith would be suing him for $25,000, Mr. Ornsby testified that he went to Fendley Hall and saw that the premises had been stripped. Mr. Monteith was confronted with an accusation that he took those items out of the premises. Mr. Monteith testified that he did take those items and sold them at a number of auctions. He did not tell Mr. Ornsby that he was going to sell the items.
[88] When asked if he had agreed to pay $65,000 and then refused to pay it, Mr. Monteith testified that he had no idea that this had any bearing at trial. Rather, he testified that while the $65,000 had not been paid (see Response to Request to Admit (Exh. 2)), Mr. Monteith testified that he did not have to complete the deal either. He did not know that the caterer had access to the business. He did not change any locks because the lessor needed access to the building at all times. He went on to testify that he did not own the business at that time.
[89] In re-examination, Mr. Monteith testified that Mr. Ornsby was in breach of contract and that Mr. Monteith did not owe the $65,000 until the deal was completed and that involved the incorporation of a company. He testified that this was his understanding and also the understanding of Mr. Ornsby.
[90] Mr. Ornsby was called to give evidence in Reply.
[91] He testified that he was unaware that there was a second glass washer. There was only one glass washer that belonged to the caterer. Previously, there had been a leased glass washer which had been returned to the leasing company.
[92] In respect of requests for information made by Mr. Thompson, Mr. Ornsby testified that Mr. Thompson never asked him for any financial information regarding the banquet hall business in order to satisfy a request by Mr. Monteith.
[93] Lastly, Mr. Ornsby testified that he understood that the deal with Mr. Monteith had been completed.
[94] In cross-examination, Mr. Ornsby testified that he asked Mr. Thompson to give Mr. Monteith all the information that he could. He denied that Mr. Thompson requested paperwork from him.
ANALYSIS - FINDINGS
[95] I find that Mr. Ornsby and Mr. Monteith entered into an Agreement for the sale of the banquet business known as Fendley Hall. This Agreement is evidenced by the Request to Admit (Exh. 1) and the Response to Request to Admit (Exh. 2).
[96] The Agreement is further evidenced by the Terms of Agreement, dated October 29, 2011 (Exh. 3), drafted by Mr. Monteith and executed by himself and Mr. Ornsby.
[97] I find that during or about August 2011, the parties were in conversation about Fendley Hall and Mr. Ornsby was interested in acquiring Mr. Monteith’s advice about running his banquet hall operation.
[98] I further find that on or about October 28, 2011, there were discussions between Mr. Ornsby and Mr. Monteith about the purchase of Fendley Hall. I accept Mr. Ornsby’s evidence of how the parties arrived at a purchase price as evidenced by the Agreement (Exh. 3). The Agreement signed by both parties provided for:
(a) A purchase price of $165,000; (b) A deposit of $85,000; (c) A credit to Mr. Monteith in the amount of $15,000 for his 2005 Cadillac, which he gave to Mr. Ornsby; and, (d) Balance owing of $65,000 to be paid over a period of five years at zero interest, with minimal monthly payments of $500, and a lump sum of $35,000 payable at the end of the five year period.
[99] The Agreement was further acknowledged by the Receipt signed by both parties, dated November 1, 2011. The Receipt evidenced the payment of $100,000 by Mr. Monteith to Mr. Ornsby in respect of the purchase of the business of Fendley Hall. It described the cash payment of $85,000 and the value of $15,000 for the 2005 Cadillac, all of which comprised the down payment of $100,000.
[100] The Receipt further indicated that there would be a purchase of chattels and an agreement that Mr. Monteith was to pay the balance of $65,000 over a five year period: “It is further understood that Monteith has an outstanding balance of $65,000 [Sixty Five thousand] to be paid over a five year period!”
[101] The Receipt also indicated “payment of $100,000 [One-Hundred thousand Dollars] has been paid by Monteith and received by Ornsby at this date of Nov 1 2011”.
[102] I further find that in contravention of the contract, Mr. Monteith has not paid the outstanding balance of $65,000. I find that the amount of $65,000 plus interest is owing to Mr. Ornsby by Mr. Monteith for the reasons that follow.
[103] I accept the evidence of Mr. Ornsby and find that such evidence is credible in respect of how the Agreement came to be created. He had no further involvement in respect of the operation at Fendley Hall after November 1, 2011. The parties agreed that it would be better to operate the business under the lease, which was still in Mr. Ornsby’s name and that no changes were made to the business bank account or credit card. They continued to be used by Mr. Monteith during the time that he ran the business and Mr. Ornsby was quite willing to accommodate Mr. Monteith in this regard.
[104] I find that the Agreement was completed. Mr. Monteith operated the business around November 1, 2011 and thereafter. I accept that Mr. Ornsby provided Mr. Monteith with the keys to the premises and a list of chattels and bookings. I do not accept Mr. Monteith’s evidence that he did not have a list of chattels or bookings. He knew what business he was buying. Mr. Monteith testified that he thought he could do better than Mr. Ornsby by generating more than $15,000 in income per month.
[105] It was Mr. Monteith who felt that time was of the essence because he wanted to take advantage of the Christmas market for this banquet hall business. He wanted to take advantage of the lucrative time of year for seasonal bookings. He was of the belief that he could generate $100,000 in income without receiving the documentation that he complained he never received from Mr. Ornsby.
[106] Mr. Monteith raised an issue in his evidence about the stolen glass washer. I find there was only one glass washer which belonged to the caterer. That glass washer did not form part of this transaction. There was another glass washer which also did not form part of this transaction. That glass washer was under lease and had been taken back by the leasing company.
[107] There is no evidence that the caterer or anyone else had taken any of the 300 chairs used for the hall.
[108] There is no evidence that the caterer took anything that did not belong to him.
[109] As for the financial statements and other documents forming disclosure as set out in paragraph 8 of the Agreement, I accept Mr. Ornsby’s evidence that he had never provided financial statements to Mr. Monteith, as those financial statements did not exist. Rather, he and Mr. Monteith agreed that Mr. Monteith would have full access to Mr. Ornsby’s accountant, Mr. Thompson.
[110] I accept Mr. Ornsby’s evidence that by the time that financial statements would have been prepared for this business which Mr. Ornsby had only operated for one year, those statements would probably not have been of use to Mr. Monteith. Mr. Monteith was eager to start business right away, as evidenced by the Agreement, dated October 29, 2011, and the Receipt, dated November 1, 2011. I accept Mr. Ornsby’s evidence that they went to see Mr. Thompson and Mr. Ornsby advised him to give Mr. Monteith any information that he requested. I accept Mr. Ornsby’s evidence that after closing, Mr. Ornsby gave Mr. Thompson whatever documents he required to complete the year-end or financial statements. He testified that Mr. Thompson never asked for anything regarding the business that Mr. Ornsby did not provide. I accept Mr. Ornsby’s evidence that Mr. Thompson never asked him for any financial information regarding the business to satisfy a request by Mr. Monteith.
[111] I accept Mr. Ornsby’s evidence that Mr. Monteith did not complain about the business. He had been given a list of deposits. They had discussed and determined the chattels that belonged to the business and the chattels that did not belong to the business. (See Agreement (Exh. 3), para. 5).
[112] Apart from discussions surrounding chattels, I accept Mr. Ornsby’s evidence that there were no complaints made by Mr. Monteith to Mr. Ornsby in respect of this transaction.
[113] I do not accept Mr. Monteith’s evidence that he had complained on many occasions that he had not received the disclosure that was provided for in the Agreement. He asked for a list of chattels and other documents so he could make decisions. These documents were never provided. He testified that he had authored two letters in respect of seeking disclosure. Neither of these letters were produced by way of pre-trial disclosure or at trial by Mr. Monteith.
[114] When asked whether Mr. Ornsby told him that Mr. Thompson would give him any information requested, Mr. Monteith had no recollection of that at all. He was not in a position to contradict Mr. Ornsby’s evidence on this point. Then he testified that he thought Mr. Ornsby told Mr. Thompson to give Mr. Monteith any information he required and believed that was done in Mr. Thompson’s office.
[115] I prefer Mr. Ornsby’s evidence to that of Mr. Monteith. Overall, I find Mr. Ornsby to be the more credible of the two witnesses. Mr. Monteith did not inspect the premises in August of 2013. It would have been in August 2011. He would not have learned that the glass washer was stolen in 2014, that it was beside the bar and came with the deal because he was no longer in the premises at that time. He had vacated the premises in early January 2012, after giving Mr. Ornsby a letter stating that Mr. Monteith would be suing Mr. Ornsby for $25,000 and the return of the keys. On the next day, Mr. Ornsby attended the banquet hall, which he found to have been stripped, as it turned out, by Mr. Monteith.
[116] Mr. Monteith acknowledged that he took chattels and sold them at a number of auctions. Mr. Ornsby had no knowledge of this occurring before it happened and certainly did not provide his consent regarding the sale of any of the chattels.
[117] Most incredible was the evidence of Mr. Monteith about agreeing to pay $65,000 but did not pay it. His response was that he had no idea that it had any bearing at the trial. His evidence was that the deal had not been completed.
[118] I reject this evidence in its entirety.
[119] I find the deal had been completed. The Agreement was prepared by Mr. Monteith. He stipulated that time was of the essence. He was the party who wanted to take possession immediately to take advantage of the seasonal banquet hall business. He was the party who thought he could make more money than Mr. Ornsby and, lastly, he was the party that took possession and operated the business knowing that Mr. Ornsby made as much disclosure as he could and made his accountant, Mr. Thompson, entirely available to Mr. Monteith to provide any and all information regarding the business to Mr. Monteith at his request.
[120] I accept that the parties went to see Mr. Thompson and that if Mr. Monteith had any requests for information, Mr. Thompson was available to answer any and all requests. Neither party called Mr. Thompson to give evidence. Despite Mr. Monteith’s oral evidence, there is no documentation to support his complaints about not receiving full disclosure of all relevant business documents.
[121] I reject any suggestion by Mr. Monteith that there was no valid contract as between the parties and, if there was, it was breached by Mr. Ornsby.
[122] Rather, I find Mr. Monteith’s position to be inconsistent with what transpired. He took possession of the business after paying Mr. Ornsby $100,000 and he ran the business until early January 2012, having maximized any income from the Christmas banquet hall business. There was no evidence given by Mr. Monteith as to what the Fendley Hall business generated from the time that he took possession until the time that he returned the keys to Mr. Ornsby. We do not know if the income from the business was less than $15,000 or more than $15,000 per month. All that Mr. Monteith testified was that he had not received the financial documentation in the Agreement, nor had he received a list of chattels. I find that he stripped the premises of whatever chattels were there and, on his own evidence, he sold those chattels at various auctions. Presumably, he kept the proceeds of those sales.
[123] For these reasons, I conclude that Mr. Ornsby is entitled to the sum of $65,000 plus interest.
[124] I further find that Mr. Ornsby is not in breach of contract. I find that Mr. Ornsby provided Mr. Monteith with whatever documentation he could in the very restrictive and unrealistic timelines provided in the Agreement drafted by Mr. Monteith. Mr. Ornsby made his own accountant available to Mr. Monteith to answer any questions or provide any documentation that Mr. Monteith required regarding the business. I accept that whatever documentation and information that Mr. Ornsby had, he provided to his own accountant. That information would have been available to Mr. Monteith, had he asked. I reject Mr. Monteith’s evidence that he had complained and asked for this information repeatedly. There is no documentation supporting any of these demands, notwithstanding that he had referred to at least two letters which he never disclosed or produced prior to trial or at trial.
[125] As I have stated, I find Mr. Ornsby’s evidence more credible than that of Mr. Monteith for the reasons cited. While Mr. Monteith repeatedly complained that Mr. Ornsby had breached the Agreement, I am not persuaded that he did. Rather, I find that if any party had breached the Agreement, it was Mr. Monteith, as he failed to pay Mr. Ornsby the $65,000 that he had agreed to pay, as evidenced by the Agreement (Exh. 3) and the Receipt (Exh. 4).
[126] I also find the evidence of Mr. Monteith to be disingenuous, where he maintains that there was no completed agreement. He took the position that the entire agreement was predicated upon the incorporation of a company by him. As that incorporation had never taken place, he maintained that there was no agreement, notwithstanding the fact that money had changed hands and he operated the business for the time that he did, which included receiving all income and the sale of the chattels by various auctions, to which he testified. I accept the submissions by counsel for Mr. Ornsby that Mr. Monteith, who entered into the contract for a corporation to be incorporated, remains personally liable on the contract until and unless the corporation is incorporated and adopts the contract (See Ontario Business Corporations Act, R.S.O. 1990 c.B. 16, s. 21(1) and (2) (b)).
[127] The exception to this rule is s. 21(4) of the Act which applies where the contract provides that the party entering into the contract on behalf of the corporation is not in any way bound by the contract. I find there was no such provision in the contract in this case. Further, no corporation adopted the contract so the termination of liability in s. 21(4) does not apply.
[128] This rule was favourably applied in Benedetto v. 2453912 Ontario Inc., 2019 ONCA 2492, where s. 21(4) would have been sufficient to allow the real estate purchaser to avoid damages from an aborted real estate transaction, but not the forfeiture of the deposit.
[129] I find, in the result, that the fact that Mr. Monteith was contracting for a corporation to be incorporated does not excuse him from liability because the Agreement, dated October 29, 2011, and the Receipt, dated November 1, 2011, did not excuse him from liability. Those documents did not exclude his personal liability and no corporation adopted the contract.
[130] Mr. Monteith’s position to the contrary is rejected and is entirely inconsistent with what transpired in respect of this transaction.
[131] In respect of Mr. Monteith’s counterclaim, I find that he is not entitled to the remedy of rescission. This transaction closed and Mr. Monteith knew it. He admitted that he owned property by way of the transaction (namely chattels) and he sold those chattels at auction. The remedy of rescission is not available to him. He is not in a position to either return the chattels that he sold. The parties are unable to return to their pre-contract position. Accordingly, the remedy of rescission is unavailable.
[132] Neither is Mr. Monteith entitled to the return of the sum of $100,000 paid by way of down payment regarding the purchase price as confirmed by all of the Exhibits at trial. I have found he breached the contract.
CONCLUSION
[133] For these reasons, the Plaintiff, Ronald Albert Ornsby, is entitled to Judgment against Mr. Monteith. The Defendant, Robert A. Monteith, shall pay to the Plaintiff, Ronald Albert Ornsby, the sum of $65,000 plus interest. I accept the calculations provided to me by Plaintiff’s counsel. Those calculations are identified as the Plaintiff’s pre-judgment interest calculations and marked as Exhibit 5. In addition to the sum of $65,000, the Defendant, Robert A. Monteith, shall pay to the Plaintiff, Ronald Albert Ornsby, pre-judgment interest in the amount of $5,275.
[134] Mr. Ornsby is entitled to post-judgment interest from the date of Judgment, pursuant to the Courts of Justice Act.
COSTS
[135] The parties have agreed that costs will be determined by way of written submissions. Within 10 days of the receipt of these reasons, counsel for Mr. Ornsby shall serve and file with my judicial assistant at Barrie, a concise 2 page summary of position in respect of costs, together with a costs outline and draft bill of costs and any relevant authorities. Mr. Monteith shall thereafter serve and file the same materials within the following 10 days. Thereafter, if required, counsel for Mr. Ornsby will serve and file any reply materials within the next 5 days.
Mr. Justice G.P. DiTomaso