Court File and Parties
COURT FILE NO.: CV-18-77320
DATE: 2019/11/01
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Cash Flow Recoveries Inc., Plaintiff, (Applicant)
-and-
Andrew Clifford Miracle and Andrew Maracle, Defendants, (Respondents)
BEFORE: A.E. London-Weinstein J.
COUNSEL: Andrew D. Ferguson, for the Plaintiff, (Applicant)
Ian McLean, for the Defendant, (Respondent), Andrew Miracle
Andrew Maracle, not appearing
HEARD: August 15, 2019
RULING ON MOTION FOR SUMMARY JUDGMENT
Background
[1] For seven years, MacEwen Petroleum Inc., (“MacEwen”) delivered fuel to Smokin Joe’s, a smoke shop and convenience store located on Old Highway 2 in Shannonville/Deseronto[^1]. From 2011 to 2018, fuel was delivered on a regular basis. Invoices were issued and paid. A debt remains outstanding, which was the subject matter of this motion. MacEwen assigned the debt to Cash Flow Recoveries Inc., (“Cash Flow”)
[2] Smokin Joe’s was operated as a general partnership beginning in 2003. The general partnership included Andrew Miracle and his son Andrew Maracle. The names are spelled differently. For ease of reference, I will refer to Andrew Miracle as “the father”, and Andrew Maracle as “the son.”
[3] In August of 2011, Smokin Joe’s applied for a commercial fuel account with MacEwen. The application form listed the son as owner. The business was described on the application form as a partnership.
[4] The partnership operated for several years with the son running the day-to-day-operations. However, a dispute arose regarding the partnership agreement. The father sued the son, his former daughter in law, and the Canadian Imperial Bank of Commerce on December 20th, 2011.
[5] The parties consented to binding arbitration. The Arbitrator’s decision dated November 24, 2016, indicated that the partnership should be dissolved. The Arbitrator also ordered that the father be paid $11,486,283.00 as his share of the undistributed profits of the jointly owned business known as Smokin Joe’s. The son brought a motion seeking to set aside the decision of the Arbitrator. The matter was heard by Justice Kershman, who declined to set aside the Arbitrator’s order.
[6] Justice Kershman endorsed the dissolution of the partnership on January 30, 2018 and ordered the son to transfer his interest in Smokin Joe’s and the land it operates on to his father for the sum of $1. He also ordered the son to pay an ongoing penalty to his father. The son appealed the decision of Justice Kershman to the Ontario Court of Appeal. Leave to appeal was denied March 23, 2018.
[7] MacEwen’s continued to deliver fuel to Smokin Joe’s. Between March 29, 2018 and April 3, 2018, MacEwen delivered $73,827.89 to Smokin Joe’s. The son continued to occupy the building where Smokin Joe’s operated. The father had no way to access the building, nor any input into fuel purchases on behalf of Smokin Joe’s.
[8] On April 3, 2018 the father was able to gain access to the physical premises of Smokin Joe’s. A second fuel account was started, with a balance of $4,410.52.
[9] The father argues that in light of Justice Kershman’s ruling, his son had no legal right to continue running the business during the time frame when the fuel was delivered. The father claims that his son was passing off the business as his own, in the absence of any legal authority to do so. As a result, the father argues that all invoices up to and including April 3, 2018 were incurred by his son while the son was passing off his right to continue to occupy and operate the business of Smokin Joe’s. The father claims that this passing off by his son resulted in a loss to the father of a daily sum of $5,659.00 commencing January 27, 2017 up until April 3, 2018. (The daily payment of $5,659.00 is the amount ordered by Justice Kershman).
[10] The father also argues that his son’s actions constitute an intentional interference of economic relations. The father argues that when his son chose to remain in occupation after the arbitration award and after the decision of the Ontario Court of Appeal, the son intentionally interfered with the legitimate and recognized economic interest of the father to occupy and manage Smokin Joe’s. The father argues that the son interfered in the economic interest of the business knowing that such occupation would cause foreseeable loss to the father of his legitimate business interest in running the facility. The father’s position is that this occupation was deliberately intended to harm him and was in breach of the son’s legal obligations as confirmed by the Ontario Court of Appeal.
[11] The father seeks dismissal of the motion for summary judgment on a substantial indemnity basis and asks that any liability found by the Court be assessed against the son only. The father cross-claims against the son by way of contribution indemnity for any amounts which the Court may find him liable to the plaintiff.
[12] The son did not attend the motion for summary judgment. However, in the pleadings submitted on his behalf, he denied that the plaintiff was entitled to the relief claimed. He further denied that Smokin Joe’s owed a debt to MacEwen. He also denied that Cash Flow had standing to advance a claim for the debt.
[13] The son also argues that if it is determined that Smokin Joe’s owes a debt to Cash Flow, he should not be liable for that debt, as the partnership was dissolved when the debt was incurred.
[14] The son cross-claims against his father for contribution and indemnity for any amounts for which he may be found liable to Cash Flow in the action.
[15] The son also claims that if he should be found liable to the Plaintiff, that his father has received the benefit of the delivered fuel since he has taken over the business. The son claims unjust enrichment against his father as his father has received the benefit of the delivered fuel, the son has suffered a corresponding loss, and there was no juristic reason for the benefit and the loss.
[16] The plaintiff in this matter argues that reliance was placed on the contract between Smokin Joe’s and MacEwen. Neither the father, nor the son, provided notice of the dissolution of the partnership to MacEwen.
[17] The original application for delivery of fuel described the business as a partnership. The plaintiff argues that the subsequent dissolution of the partnership does not relieve the former partners of their obligations to creditors in the absence of notice. The plaintiff’s position is that the assignment of the debt is valid.
Analysis
[18] Rule 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 indicates that a plaintiff or defendant may after delivery of the statement of defence, move with appropriate affidavit material or other evidence for summary judgment granting all or part of the relief claimed or dismissing all or part of the claim in the statement of claim.
[19] The court is mandated to grant summary judgment if satisfied that there is no genuine issue requiring a trial respecting a claim or defence.
[20] Rule 20.04(2.1) provides that:
In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at trial:
1.Weighing the evidence.
Evaluating the credibility of the deponent.
Drawing any reasonable inference from the evidence.
[21] The Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7 [2014] 1 S.C.R. 87, set out the governing principles to be applied on Rule 20 summary judgment motions. At paras 47, 49-51 and 66, Justice Karakatsanis indicated the following:
[47] Summary judgment motions must be granted whenever there is no genuine issue requiring a trial. (Rule 20.04(2)(a)). In outlining how to determine whether there is such an issue, I focus on the goals and principles that underlie whether to grant motions for summary judgment. Such an approach allows the application of the rule to evolve organically, lest categories of cases be taken as rules or preconditions which may hinder the system’s transformation by discouraging the use of summary judgment.
[49] There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is proportionate, more expeditious and less expensive means to achieve a just result.
[50] These principles are interconnected and all speak to whether summary judgment will provide fair and just adjudication. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely, or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve the dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge the confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.
[51] Often concerns about credibility or clarification of the evidence can be addressed by calling oral evidence on the motion itself. However, there may be cases where, given the nature of the issues and the evidence required, the judge cannot make the necessary findings of fact, or apply the legal principles to reach a just and fair determination.
[66] On a motion for summary judgment under Rule 20.4, the judge should first determine if there is a genuine issue requiring a trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided their use is not against the interests of justice. Their use will not be against the interests of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.
[22] I have considered that summary judgment rules must be interpreted broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims. The issue between the plaintiff and the defendants is whether father and son are jointly and severally liable for the delivery of fuel when the partnership was dissolved, where no one advised MacEwen.
[23] The plaintiff in this case assumed a debt which was created by the reliance of MacEwen on the longstanding business relationship with Smokin Joe’s. The policy rationales underlying a faster and more economic route to a civil judgment appear to be tailor made for this type of claim. It would seem unfair that a creditor should be dragged into a protracted dispute between father and son, when both failed to notify their creditor of the dissolution of the partnership. In the face of this lack of notice, MacEwen continued to provide fuel to Smokin Joe’s, which allowed the business to continue to operate.
[24] Section 36(1) of the Partnerships Act. R.S.O. C.P. 5 s.36(1) states:
Where a person deals with a firm after a change in its constitution, the person is entitled to treat all apparent members of the old firm as still being members of the firm until the person has notice of the change.
[25] The initial application for credit in 2011 described the business as a general partnership. At the time of the application, the partnership between father and son had been in operation for about eight years. The son was listed as owner. The father’s name did not appear on the credit application.
[26] The initial application for credit in this case was executed in 2011, when the partnership was in effect. However, the debt was incurred post-dissolution of the firm. Dissolution is a change in constitution of a partnership.
[27] In my view, it was incumbent on the father to provide notice to MacEwen that he would no longer be bound by the actions of his son. In the absence of direct notice, it was open to the father to lead evidence of some fact or circumstance which would allow the Court to draw an inference that notice had been provided to MacEwen and that he was no longer an “apparent member” of the partnership. No such evidence was provided.
[28] While the father claimed that he gave notice of a change of ownership of Smokin Joe’s on April 3, 2018, the second fuel account was not applied for until April 27, 2018 and not opened by MacEwen until May 9, 2018. This oral notice of a change in ownership is not a substitute for notice under the Partnership Act for two reasons. Firstly, it came too late to be of benefit to MacEwen. Fuel had already been delivered. Secondly, Smokin Joe’s continued to do business with MacEwen and opened a second commercial fuel account. In my view, this would have appeared to MacEwen as an intention to continue the longstanding business relationship it had enjoyed with Smokin Joe’s.
[29] On the affidavit material provided, I am satisfied on a balance of probabilities that the commercial fuel account application executed in August of 2011 was the original contract between Smokin Joe’s and MacEwen. I am satisfied that father and son had been in a partnership for several years at the time this contract was executed with MacEwen.
[30] I am also satisfied that there is a debt in the amount of $73,827.89 for fuel which was delivered between March 29, 2018 and April 3, 2018. In May of 2018, a separate Smokin Joe’s account was opened with MacEwen. Between May 9, 2018 and May 17, 2018 MacEwen delivered fuel to Smokin Joe’s and charged Smokin Joe’s for delivery of fuel through the new account. That account has a credit balance of $4,410.52.
[31] The father claimed he had no privity of contract with MacEwen. Privity of contract, as the term suggests, relates to being a party to, or participant in a contractual relationship. [^2] I find that the doctrine of privity of contract did not apply in this case, given that the father was a party, as a partner, to the original contract between Smokin Joe’s and MacEwen which was executed in 2011. Having failed to notify MacEwen of the dissolution of the partnership, the father cannot now claim immunity from liability in relation to a debt incurred by Smokin Joe’s.
[32] While I agree with the father’s position that he was not the one ordering fuel from March 29, 2018 to April 3, 2018, and that the partnership with his son was dissolved, his failure to notify MacEwen of the dissolution is, in my view, dispositive of the issue of his liability toward the plaintiff for the debt of fuel delivery during this time frame.
[33] The son was operating Smokin Joe’s at the time the fuel was ordered. His name appears on the 2011 application for commercial fuel between Smokin Joe’s and MacEwen. I am satisfied that there is no genuine issue requiring a trial in relation to the liability of both defendants, who in my view, are jointly and severally liable to the plaintiff. I find that the evidence before me on this motion was sufficient to permit me to adjudicate the dispute between the plaintiff and the defendants.
[34] Consequently, summary judgement should be granted against both father and son in the amount of $69,417.37. In arriving at this figure, I have deducted the $4,410.52 which remains a credit, from the $73,827.89 owed for the fuel delivery to Smokin Joe’s.
[35] The validity of the assignment of the debt was not pressed in oral argument by counsel for the father. No one attended for counsel for the son, but the validity of the assignment of the debt was contested in the son’s pleadings.
[36] Written notice of the assignment of the debt from MacEwen to Cash Flow was provided to both defendants on July 24, 2018. All that is necessary as to notice of an assignment is that the debtor should be given to understand by express notice in writing that the debt has been made over by the creditor to a third party.[^3]
[37] Written notice need not be given directly by the creditor (MacEwen) to the debtor (The Defendants), but rather a third party assignee, (Cash Flow) can provide valid written notice.[^4]
[38] I find that the assignment of this debt was valid in law pursuant to the Conveyancing and Law of Property Act, R.S.O. 1990 c.C.34. The defendants in this case also failed to contest the validity of the assignment prior to the beginning of these proceedings. The statutory scheme available appears in s. 53(2) of the Conveyancing and Law of Property Act. In my view, there is no genuine issue requiring a trial in relation to the assignment of the debt.
[39] Given that the defendants have brought cross claims against each other, I suspend execution of my judgment until the cross-claims in this manner have been heard on an expedited basis.
Costs
[40] The parties have exchanged bills of costs and filed them in sealed envelopes which I have not opened.
[41] If the parties cannot agree on the costs of this motion, and the costs of the action, the plaintiff may deliver written costs submissions of no more than three pages in length within 14 days of the date of this decision. The defendants may deliver written submissions in response of no more than three pages in length within 14 days of the date of receipt of the plaintiff’s submissions; and the plaintiff may deliver reply submissions of no more than three pages in length within 7 days of the date of receipt of the submissions of the defendants.
[42] In deciding the issue of costs, I will consider the bills of costs filed by the parties as well as their written costs submissions.
[43] The costs submissions may be filed by sending them to my attention via email to scj.assistants@ontario.ca.
A.E. London-Weinstein J.
Date: November 1, 2019
COURT FILE NO.: CV-18-77320
DATE: 2019/11/01
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Cash Flow Recoveries Inc., Plaintiff, (Applicant)
-and-
Andrew Clifford Miracle and Andrew Maracle Defendants, (Respondents)
BEFORE: A.E. London-Weinstein J.
COUNSEL: Andrew D. Ferguson, for the Plaintiff, (Applicant)
Ian McLean, for the Defendant (Respondent) Andrew Miracle,
Andrew Maracle, not appearing
endorsement
A.E. London-Weinstein J.
Released: November 1, 2019
[^1]: For clarity, I have spelled the business without the apostrophe at the end of the word Smokin, although the business is sometimes spelled with an apostrophe in other documentation. [^2]: The Law of Contract in Canada, Fridman, Sixth Edition, p. 176 to 202. [^3]: Fleet Street Financial Corporation v.Beaton Agencies, 2007 70474 at para 8. [^4]: Clark v. Werden, 2011 ONCA 619