COURT FILE NO.: CV-17-570859

DATE: 20190104

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

2062527 Ontario Inc., o/a Gurkal Transport, 1000728 Ontario Limited o/a Baron Construction, and 1512632 Ontario Inc. o/a Cheema & Sons Transport

Plaintiffs

– and –

Roxanne Grittani

Defendant

COUNSEL:

M. Peters for the Plaintiffs

M. Thind and B. Morris for the Defendant

HEARD: December 4, 5 and 6, 2018

H. MCARTHUR J.:

Introduction

[1] Gurkal Transport (“Gurkal”), Baron Construction (“Baron”), and Cheema & Sons Transport (“Cheema”: collectively, the “plaintiffs”)[^1] bring an action against Roxanne Grittani, claiming that she is personally liable for breach of trust pursuant to s. 13(1) of the Construction Act, R.S.O. 1990, c. C.30[^2]

[2] Ms. Grittani was an officer of Panther Excavating Co. Corp. (“Panther”), a company founded by her husband, Agostino Grittani. Panther provided excavation services to general contractors. In turn, Panther hired the plaintiffs as subcontractors to provide Panther with trucking and debris removal services. The general contractors paid Panther. Panther was obligated to hold those funds in trust until all payments were made to the plaintiff subcontractors. Panther failed to do so.

[3] There is no dispute that both Panther and Mr. Grittani are liable for breach of trust. Both, however, have declared bankruptcy. As a result, the plaintiffs seek to recover damages from Ms. Grittani, claiming that she is personally liable because, as an officer of Panther, she assented to or acquiesced in conduct that she knew or ought to have known amounted to a breach of trust.

[4] For the reasons set out below, I have determined that Ms. Grittani is personally liable for the breach of trust.

[5] I propose to start out with a brief overview of the facts, before turning to my analysis.

Brief Overview of the Facts

(a) Panther is Incorporated

[6] Ms. Grittani testified that when her husband first started Panther in the early 1990s, he ran it as a sole proprietor. In the spring of 1991, Ms. Grittani successfully bid on an incorporation package offered at an auction. She gave the incorporation package to her husband as a gift.

[7] Panther was incorporated on December 16, 1991. Both Ms. Grittani and her husband went to the lawyer’s office on that date to have Panther formally incorporated. The Corporate Profile Report shows that Ms. Grittani was named as a director of Panther. She was also named as an officer and was designated as both the Secretary and Treasurer of Panther.

(b) Ms. Grittani is Removed as a Director of Panther but Not as an Officer

[8] Ms. Grittani testified that when Panther was incorporated, she had no idea that she had been named as a director or an officer. In the summer of 2014, she learned that she was a director when her husband wanted to enter into a lease on behalf of Panther but was told that his wife would have to co-sign because she was a director.

[9] Ms. Grittani emailed her accountant for help in clarifying whether she was, in fact, a director. His clerk looked into the issue for her and emailed Ms. Grittani to let her know that although the minute book did not reflect the appointment, the Corporate Profile Report had her listed as a director. The clerk attached the Corporate Profile Report to the email. This report also listed Ms. Grittani as an officer of Panther, identifying her as both the Secretary and Treasurer of the corporation. Ms. Grittani testified that she had no recollection of reading the report.

[10] Ms. Grittani asked that she be removed as a director. Once that was done, the clerk emailed her the “Notice of Change Form 1” that had been submitted to the Ministry. While this form showed that Ms. Grittani had been removed as a director, it also showed that she was an officer. Ms. Grittani testified, however, that she did not notice that she was listed as an officer on that form.

(c) Ms. Grittani’s Educational and Employment Background before Working at Panther

[11] Ms. Grittani has a three year bachelor’s degree in psychology. After graduating in 1990, she spent a short time doing data entry for a car company. She then joined the human resources department at KPMG, and worked there for approximately three years. In the late 1990s, she started working for Panther.

[12] Ms. Grittani testified that she has no formal training in bookkeeping or accounting.

(d) Ms. Grittani’s Work with Panther

[13] When Ms. Grittani began to work for Panther, she had two young sons. Because Panther’s office was located in the Grittani’s home, she was able to spend a few hours a day helping her husband while also raising their children.

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