Court File and Parties

Court File No.: CV-20-00648358-0000 Date: 2021-03-02 Ontario Superior Court of Justice

Between: Tamarack Lumber Inc., Plaintiff

– and –

ATD Contracting Services Inc., Justin Rubatscher and Joseph Aragona, Defendants

Counsel: Jeffrey Long and Leona Kung, for the Plaintiff Parties noted in default

Read at Toronto: March 1, 2021

Reasons for Judgment

S.F. Dunphy J.

[1] This is a motion for default judgment against two of the three defendants in this action brought by an unpaid trade supplier to a construction contractor. The two defendants – Mr. Rubatscher and ATD Contracting - have been noted in default and are thus deemed to have admitted all of the factual allegations in the Statement of Claim. Despite having been served with the motion for judgment, no application to set aside the noting in default has been made by the two defendants who are the object of this motion. The plaintiff’s motion for judgment includes a factum and an affidavit providing evidence of certain matters claimed in the Statement of Claim.

[2] The moving party plaintiff brought this motion in writing but has not placed before the court evidence which when combined with the facts deemed to be admitted (a concept that is not co-extensive with legal conclusions based on pleaded facts) permits me to dispose of the entire claim. Partial judgment on claims is seldom to be granted given the very strong guidance on that matter from the Court of Appeal. For this reason, I am constrained to the choice of dismissing all parts of the claim that have not been adequately proved or else referring the matter to be dealt with at a short summary trial with such viva voce evidence as is necessary to fill the gaps in the evidence that I highlight below. I consider this latter course to be the fairer and more just of the options before me.

[3] The issues raised by the claim may conveniently be summarized as:

a. How much is owed by the defendant ATD Contracting? b. What portion of that total has been guaranteed by the defendant Mr. Rubatscher? c. What interest rate applies to what portion of the debt claimed? d. What trust remedies if any is the plaintiff entitled to?

[4] The record established with adequate precision the amounts owed by ATD Contracting. Each invoice has been pleaded and particularized by way of affidavit. While the first issue is able to be resolved, none of the remaining three can be except perhaps to dismiss the claims for want of having been proved.

[5] Mr. Rubatscher’s guarantee, on its face, applies only to goods supplied after the date of the guarantee which is dated February 28, 2020 - long after ATD Contracting had fallen into default and after most of the invoices that are being sued upon. One could examine each of the numerous invoices to determine what goods were delivered after the date of the guarantee and which preceded it, but that is not the court’s job and would require the court to determine delivery dates for each which may or may not appear on the face of each invoice. That is the sort of thing that should be sworn to in an affidavit (were one prepared to address the issue) or via evidence at trial.

[6] The interest rate claim is similarly muddled. Four things are needed to calculate interest: the principal amount, the rate, the start date and the end date. Of these four, two are stated in materially different ways by the application for credit (signed by the debtor) and the invoices delivered from time to time (sent to the debtor by the vendor in a form that may or may not reflect the agreement of the parties). The rate in the former is expressed as 2% per month “or 26.82% per annum”, a rate that reflects monthly compounding. The invoice rate is simply stated as 24% per year, a rate which reflects no compounding and is thus lower. The invoices state when payment is due (15th of the month following delivery) while the credit agreement provides for interest to start to run 30 days after it becomes due. In either case an invoice-by-invoice calculation of interest would be required to render judgment which has not been done.

[7] Which rate applies or, in the presence of ambiguity does the Courts of Justice Act, R.S.O. 1990, c. C.43 rate apply instead? Nothing addresses this question in the material.

[8] Finally, the record is entirely inadequate to permit any remedy to be granted in respect of the various trust remedies claimed. In assessing the claimed trust remedies, care must be taken to distinguish between admitted facts and pleaded legal conclusions, the latter being only as valid as the proved or admitted facts upon which they must stand.

[9] It cannot be said from the evidence which amounts were received by the defendant corporation, from which contract, for which goods or services supplied by the plaintiff. A pleading that the plaintiff supplied goods that were used by contractors or owners may be sufficient as a pleading to establish that there was some possible breach of trust somewhere, but it does not begin to establish whether what part of the claim is actually subject to the claimed trust remedies. Did the contractors or owners pay the defendant corporation in full or only in part? What funds from an owner or contractor in respect of which invoice in respect of goods supplied by the plaintiff were actually received by the defendant corporation? This is the foundation of liability under the Construction Act, R.S.O. 1990, c. C.30. There is no evidence from which this foundational analysis might begin.

[10] Finally, the plaintiff is seeking to pursue judgment against some defendants only. Mr. Aragona is subject to bankruptcy proceedings and the plaintiff sought to pursue judgment against the other two defendants first. This course of action raises a significant risk of inconsistent findings, particularly given the very significant gaps in the evidentiary record presented by this motion in writing. The plaintiff has recently received leave to proceed against Mr. Aragona but evidently concluded that it was further advanced against the other two defendants and elected to proceed against them first.

[11] I invited the plaintiff to consider dropping the trust claims and agreeing to claim interest only from the latest date (i.e. 30 days after the due date of the last invoice in the list) if judgment was desired at this time. This the plaintiff declined to do as it was entitled to do. I do not consider that I can fairly render judgment based upon the written record before me. Accordingly, I am directing that this matter to proceed by way of a viva voce hearing where evidence addressing the issues I have raised can be received and considered properly. That course of action will have the added benefit of permitting the case against Mr. Aragona to be heard at the same time. One half-day should suffice.

S.F. Dunphy J. Released: March 2, 2021