COURT FILE NO.: CV-16-3453 and CV-16-5654
DATE: 2021 04 29
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Ernest Groh
Plaintiff
- and -
Doris Steele and Joan F. Wolfe also known as Kitty Wolfe and Gabriella Grohotolski, S.G. Trucking Inc. and S.E.G. Management Inc., the Estate of Siegmund Grohotolski, deceased
Defendants
AND BETWEEN
Ernest Groh
Plaintiff
- and -
Doris Steele and Joan F. Wolfe also known as Kitty Wolfe, 1275921 Ontario Inc., carrying on business as and Motion Endeavours, Tim Quocksister, Silver Arrow Cars Ltd. and Gullwing Motor Cars Inc.
Defendants
COUNSEL: D. Loucks, for the Plaintiff (until October, 2018) P.D. Stern, for the Defendants, Doris Steele and Joan F. Wolfe (not appearing) D. Elliott and E. Mamay, for the Defendant, Gabriella Grohotolski (not appearing) C. Belsito, for the Defendants, Tim Quocksister and Silver Arrow Cars S. Hutchinson and A. Smith, for the Defendants Gullwing Motor Cars (not appearing)
HEARD: March 4th, 2021
REASONS FOR DECISION
LEMAY J
[1] The Plaintiff, Ernest Groh, originally brought a series of claims against the Defendants relating to the property of his mother, Gabriella Grohotolski. One of the key claims was in relation to a yellow 1973 Dino Ferrari. ("the Yellow Ferrari"). Mr. Groh claimed that this car was his and that it had been improperly sold to the Defendants, 1275921 Ontario Inc. O/A Motion Endeavours and Silver Arrow Cars Ltd. The Defendant, Tim Quocksister, is the principal of Silver Arrow Cars Ltd.
[2] Mr. Groh's action against all of the Defendants in respect of the Yellow Ferrari was previously dismissed on October 8th, 2019. My reasons for dismissing Mr. Groh's action are set out at 2019 ONSC 5831.
[3] That dismissal did not end the action, however. Mr. Quocksister and Silver Arrow have a counterclaim that they have brought against Mr. Groh for loss of business reputation and damages flowing from that loss of business reputation, including punitive damages. They now move for summary judgment on this claim.
[4] For the reasons that follow, the counterclaims of the Defendants Quocksister and Silver Arrow are allowed in part. No other counterclaims were pursued by any of the other Defendants. As a result, the claims in these files have been adjudicated.
The Facts
a) Background Facts
[5] The facts in this matter are set out in my October 8th, 2019 decision and I make the same factual findings for the purposes of this decision. However, for convenience, I will set out a summary of the most relevant facts.
[6] Mr. Groh lived at the Halton Motel with his parents Siegmund and Gabriella Grohotolski from 1965 until the Hotel was sold in the fall of 2015. Mr. Groh's father passed away in the fall of 2014, while his mother was in hospital. At the time that Mr. Groh's father passed away, Mr. Groh was the Attorney for Property for his mother.
[7] However, Mr. Groh was not assisting his mother and she determined that she would appoint new Attorneys for Property. She appointed the Defendants Doris Steele and Joan "Kitty" Wolfe as her attorneys for property. She also directed them that she wanted the affairs of the Halton Motel wound up and the assets sold.
[8] One of the assets in question was the Yellow Ferrari. Ms. Grohotolski took the position that the Yellow Ferrari was the property of the Halton Motel and that it was to be sold along with the rest of the Halton Motel's assets. This brings me to the events leading to the sale of the Yellow Ferrari.
b) The Sale of the Yellow Ferrari
[9] In my reasons of October 8th, 2019, I set out, at paragraphs 139 to 184, the reasons for my finding that the Halton Motel owned the Yellow Ferrari. I had previously concluded that the Halton Motel was a partnership between Siegmund and Gabriella Grohotolski. Therefore, Mr. Groh did not beneficially own the Yellow Ferrari even though he had title to it.
[10] In the October 8th, 2019 decision, I also concluded that Motion Endeavours and Silver Arrow were bona fide purchasers without notice of the Yellow Ferrari pursuant to the exceptions in section 22 of the Sale of Goods Act R.S.O. 1990 c. S-1. The reasons for my conclusion in this regard are set out at paragraphs 185 to 197 of my decision.
[11] I would note two additional points:
a) Mr. Groh knew, or ought to have known, that he did not have a beneficial interest in the car. In particular, I note that I made significant adverse findings about Mr. Groh's credibility throughout my reasons of October 8th, 2019.
b) Mr. Groh actually signed the transfer documentation personally. At that point, even if he did have a beneficial interest in the car, he knew or ought to have known that the purchaser would be entitled to assume that title to the Yellow Ferrari had passed to Motion Endeavours and Silver Arrow.
[12] This brings me to the sequence of events that took place after the sale happened in August of 2015. Once Motion Endeavours and Silver Arrow purchased the Yellow Ferrari, they refurbished it. Then, Mr. Quocksister contacted Peter Kumar, the principal of the Defendant Gullwing Motor Cars Inc. in order to sell the car to Gullwing.
[13] Gullwing purchased the car for the sum of $400,000.00 USD and the transfer of funds and of title was completed on September 2nd, 2015. Gullwing then consigned the Yellow Ferrari to Gooding and Company, which is an auction house located in Santa Monica, California.
[14] Gooding and Company took consignment of the Yellow Ferrari on behalf of Gullwing and featured it in its catalogue for a January 2016 auction. Various expenses and import duties were incurred to have the car transferred to Gooding and Company.
c) The Allegedly Defamatory Communications and Their Effect
[15] In January of 2016, Mr. Groh found out that the Yellow Ferrari was being auctioned in California. Mr. Groh's solicitor, Mr. Douglas Loucks then sent the following e-mail to Gooding and Company on January 5th, 2016:
Dear Mr. Gooding,
I act for Ernest Groh, who is the owner of the Ferrari motor vehicle referred to above. I believe that Mr. Groh recently spoke to you concerning this matter. A copy of the ownership registration is attached.
This vehicle was removed from his possession without his consent and was delivered to Gooding & Company for sale without his authorization. If you have any evidence of ownership by anyone other than Mr. Groh, I would appreciate an opportunity to review it. I note that the information provided on your web site does not identify anyone as having purchased the vehicle from Mr. Groh.
Mr. Groh has taken action to have the relevant party criminally charged. A copy of the Notice of Hearing issued by the Ontario Court of Justice with respect to this charge is attached.
I would ask you to confirm that, in the circumstances, this vehicle will be withdrawn from sale in the auction. If you have any questions, please feel free to contact me.
[16] This e-mail was copied to Mr. Groh, and it makes reference to Mr. Groh having previously spoken to Gooding and Company about these issues. From these facts, I infer that Mr. Groh directed Mr. Loucks to send this e-mail to Gooding and Company.
[17] Gooding and Company then contacted Gullwing. Gullwing then contacted Mr. Quocksister and advised that they required a refund and required the Yellow Ferrari to be taken back by Silver Arrow. Gullwing maintained this position in spite of written assurances from Silver Arrow's then counsel that there were no issues with the title to the Yellow Ferrari. The relationship between Gullwing and Silver Arrow has not been the same since this incident.
[18] In addition, an information was laid by Mr. Groh with the Ontario Court of Justice in Halton. That complaint was filed on December 30th, 2015 and alleges that the Yellow Ferrari was Mr. Groh's property and it was fraudulently converted by Ms. Steele and Ms. Wolfe. As I have set out above, these are both statements that Mr. Groh knew or ought to have known were false.
[19] Mr. Groh was also warned that these statements were false by way of a cease and desist letter from Mr. Quocksister's counsel. In this letter, Mr. Groh was also told that there was now stigma attached to the Yellow Ferrari and that Mr. Quocksister would be holding Mr. Groh personally responsible for loss of reputation and any loss of business dealings with both Gooding and Company and Gullwing. This letter was sent on January 15th, 2016. There is no evidence to suggest that Mr. Groh did anything to address these concerns.
[20] Ultimately, Mr. Quocksister was able to find another buyer for the Yellow Ferrari who paid approximately $22,000.00 USD more for it than Gullwing had. On my review of the materials, it appears that this difference in price covers the damages associated with the aborted sale of the Yellow Ferrari to Gullwing.
[21] The remainder of the damages claim comes from Silver Arrow's pre-existing relationship with Gullwing. Silver Arrow regularly purchased rare Mercedes 300SL Roadsters from Gullwing and sold them, often at a considerable profit. Since the problems with the Yellow Ferrari, Gullwing has only sold Silver Arrow one of these Roadsters.
d) The Procedural History
[22] This action is one in a series of actions that I have been case-managing since 2017. A summary judgment motion on all of Mr. Groh's claims was scheduled for June 17th and 18th, 2019. This motion led to the dismissal of all of Mr. Groh's claims by way of my October 8th, 2019 decision. The procedural events leading up to this summary judgment motion are set out at paragraphs 59 to 70 of my October 8th, 2019 reasons.
[23] Since the release of my reasons, additional steps have been taken to manage this matter. The October 8th, 2019 decision was provided by Court staff to Mr. Groh both by e-mail and to his last known address. In addition, I directed the parties to provide their costs submissions to Mr. Groh.
[24] A costs endorsement was released on July 22nd, 2020 (see 2020 ONSC 4093). In that endorsement, I also addressed the issue of the counterclaim. I directed service of Silver Arrow and Mr. Quocksister's summary judgment motion materials on Mr. Groh and provided him with an opportunity to respond to the motion for summary judgment.
[25] The summary judgment motion materials were served on Mr. Groh's last known address and a motion for substituted service was brought. On September 28th, 2021, I determined that the materials on the motion for substituted service were insufficient and dismissed the motion without prejudice for it to be brought back on. Specifically, I required additional details about Mr. Groh's last known address.
[26] On October 16th, 2020, a further motion for substituted service was brought. The Affidavit on that motion indicated that Mr. Groh's last known address as set out in the motion for substituted service was consistent with both his current driver's license and the current registration of a vehicle that he was associated with. Based on that information, I granted the motion for substituted service.
[27] Nothing has been heard from Mr. Groh throughout this time period. The sixty days for him to seek a case conference passed in late November of 2020. At that time, a hearing date for the summary judgment motion was scheduled for March 4th, 2021. This motion proceeded in Mr. Groh's absence.
Issues
[28] There are three issues that flow from the factual summary that I have set out, as follows:
a) Did Mr. Groh engage in tortious conduct against Mr. Quocksister and Silver Arrow?
b) If so, what are the damages?
c) Is this an appropriate case for punitive damages?
[29] I will analyze each issue in turn.
Issue #1 – Did Mr. Groh Engage in Tortious Conduct?
[30] The claim is for damages for loss of business reputation. In his factum, Mr. Belsito expanded upon this concept by explaining that the damages flowed from Mr. Groh's defamatory remarks about the title of the Yellow Ferrari. Having considered the facts of this case, I am of the view that the tort of defamation is made out in this case.
[31] In Grant v. Torstar 2009 SCC 61, McLachlin C.J.C. set out the test for defamation as follows (para. 28):
[28] A plaintiff in a defamation action is required to prove three things to obtain judgment and an award of damages: (1) that the impugned words were defamatory, in the sense that they would tend to lower the plaintiff's reputation in the eyes of a reasonable person; (2) that the words in fact referred to the plaintiff; and (3) that the words were published, meaning that they were communicated to at least one person other than the plaintiff. If these elements are established on a balance of probabilities, falsity and damage are presumed, though this rule has been subject to strong criticism: see, e.g., R.A. Smolla, "Balancing Freedom of Expression and Protection of Reputation Under Canada's Charter of Rights and Freedoms", in D. Schneiderman, ed., Freedom of Expression and the Charter (1991), 272, at p. 282. (The only exception is that slander requires proof of special damages, unless the impugned words were slanderous per se: R. E. Brown, The Law of Defamation in Canada (2nd ed. (loose-leaf)), vol. 3, at pp. 25-2 and 25-3.) The plaintiff is not required to show that the defendant intended to do harm, or even that the defendant was careless. The tort is thus one of strict liability.
[32] In this case, all three parts of the test are met. First, the words are clearly defamatory. The e-mail set out at paragraph 15 essentially advises Gooding and Company that Mr. Quocksister and Silver Arrow have sold a stolen vehicle. This would lower the reputation of both Mr. Quocksister and Silver Arrow in the eyes of whomever received the communication. It is also clear from Mr. Quocksister's Affidavit that this communication came to the attention of Gullwing.
[33] The e-mail does not specifically identify Mr. Quocksister and Silver Arrow. However, the e-mail makes it clear that Mr. Groh had the vehicle removed from his possession without his consent and delivered to Gooding and Company without authorization. Gooding and Company would have known that the vehicle came from Silver Arrow. As a result, they would have taken the e-mail as referring to Silver Arrow.
[34] Finally, the words were published. They were sent in an e-mail by Mr. Groh's counsel. I have already explained at paragraph 16 why I have concluded that Mr. Groh authorized and directed that this e-mail to be sent.
[35] There is then a question as to whether a defence is available to Mr. Groh. The statements contained in the e-mail are facts and not opinions. They are Mr. Groh's assertion that he owned the Yellow Ferrari and that it was taken from him improperly. Generally, where statements of fact are an issue, the only defences that are available are justification and privilege. Grant, supra at para. 35.
[36] Justification would generally be made out if Mr. Groh adduced evidence to show that the statements were substantially true. In this case, the statements were not true. Particularly concerning is the statement that the car had been sold without Mr. Groh's authorization. At paragraphs 166 to 174 and paragraph 192 of my October 8th, 2019 decision, I found that Mr. Groh had knowingly and freely signed the transfer documentation.
[37] This brings me to the possibility of a claim for qualified privilege. Qualified privilege will be available as a defence where the party communicating the information has a "duty" to communicate it and the party receiving the information has a reciprocal "interest" in receiving it. Grant, supra at para. 34.
[38] In Grant, supra. McLachlin C.J.C. also observed (at para 61) that a balanced approach to libel law properly reflects both the interests of the Plaintiff and the Defendant. In this case, that balancing favours a finding that Mr. Groh made defamatory statements without justification. Mr. Groh did not have a duty to communicate this information to Gooding and Company. He wanted to communicate the information to Gooding and Company so that he could interfere in the transaction for his own purposes. Qualified privilege does not apply in this case.
[39] For the foregoing reasons, I conclude that the statements made by Mr. Groh, both through his counsel and in the Information, were demonstrably false and were not covered by any available defence under the law of libel.
Issue #2 – Damages Calculation
[40] In this case, Mr. Quocksister and Silver Arrow were able to re-sell the Yellow Ferrari at a cost that covered the additional expenses associated with the withdrawal of the car from the Gooding and Company auction. As a result, there are no pecuniary damages in this case.
[41] However, both Mr. Quocksister and Silver Arrow claim damages for loss of business reputation. The Courts in Ontario have recognized loss of business reputation as a valid claim for damages. See, for example, International Steel Services Inc. v. Dynatec Madagascar S.A. 2016 ONSC 2810 at para 54 and Soil Engineers Ltd. v. Anthony Upper 2020 ONSC 7495 at para 2.
[42] In Grand Financial Management Inc. v. Solemio Transportation Inc. 2016 ONCA 175, leave ref'd [2016] S.C.C.A. No. 183, R.A., Blair J.A. acknowledged the authority of the Courts to provide damages at large for intentional torts where there had been injury to the corporation's reputation and associated economic loss.
[43] In terms of calculating those damages, Blair J.A. states (at paras 83-85):
[83] Unlike pecuniary damages, such damages are not capable of being precisely measured and are more a matter of impression: Uni-Jet, at para. 72; and Foschia, at para. 37. As Kroft J.A. explained in Uni-Jet, at para. 72:
[D]amages at large are a matter of impression; they must include the consideration of a host of circumstances involving both the particular plaintiff and the particular defendant, and they are likely to be unique in each case.
[84] In Howard v. Madill, 2010 BCSC 525, at para. 89, Bruce J. summarized the principles relating to the assessment of damages at large, as canvassed in Uni-Jet:
An accurate summary of the law with respect to the assessment of damages at large, and the circumstances in which such an award may be made, is contained in Uni-Jet at paras. 66 to 73. I summarize these principles as follows:
Damages other than for pecuniary loss are "damages at large" and generally include compensation for loss of reputation, injured feelings, bad or good conduct by either party, or punishment.
Damages at large are compensatory for loss that can be foreseen but cannot be readily quantified.
Damages at large are a matter of discretion for the trial judge and are more a "matter of impression and not addition."
Where damages at large are imposed for intentional torts, the assessment of damages provides an opportunity to condemn flagrant abuses of the legal process.
[85] I too would adopt this summary.
[44] While these damages are a "matter of impression", Silver Arrow and Mr. Quocksister have provided significant information to assist me in reaching some concrete conclusions. As I noted at paragraph 21, prior to the Yellow Ferrari transaction, Silver Arrow had a profitable business in purchasing rare Mercedes 300SL roadsters from Gullwing and reselling them.
[45] The Affidavit of Mr. Quocksister and the accompanying invoices show that Gullwing and Silver Arrow had a strong business relationship between June of 2012 and January of 2016. In that time, Silver Arrow made more than $1 million in profits from the sale of the cars it purchased from Gullwing and more than fifteen cars changed hands. Between January of 2016 and the swearing of Mr. Quocksister's affidavit in September of 2020, Gullwing has only sold Silver Arrow one car.
[46] Silver Arrow claims damages for loss of business reputation in the sum of $500,000.00. These losses are estimated at $100,000.00 for each year between 2016 and 2020. I view this estimation as a reasonable one. There has been a past history of profitable dealings between the two companies. Those dealings ended abruptly with the fallout from Mr. Groh's accusations. It is therefore open to infer, and I do, that Mr. Groh's accusations significantly curtailed Gullwing's willingness to deal with Silver Arrow and Mr. Quocksister. It is also not difficult to infer, and I do infer, that Gullwing's unwillingness to deal with Silver Arrow and Mr. Quocksister is a direct result of Mr. Groh's defamatory statements about Silver Arrow and Mr. Quocksister.
[47] For the foregoing reasons, I find that business losses in the sum of $500,000.00 are made out and I assess the damages owing by Mr. Groh to Silver Arrow in that amount. These are damages for loss of business reputation and are therefore Silver Arrow's damages.
Issue #3 – Punitive Damages?
[48] Silver Arrow and Mr. Quocksister also claim punitive damages. The test for punitive damages, set out in Whiten v. Pilot Insurance Co. 2002 SCC 18, [2002] 1 S.C.R. 595, is a high one. It requires a demonstration of high-handed, malicious, arbitrary or highly reprehensible conduct.
[49] There are arguments that Mr. Groh's conduct meets the test for punitive damages and this is a case that is close to the line. However, on the records before me, I am not persuaded that Mr. Groh's conduct meets the test. While his conduct was reprehensible and injurious to Silver Arrow and Mr. Quocksister, it is not highly reprehensible.
[50] Mr. Groh was pursuing his issues in respect of the Yellow Ferrari in the context of a larger claim that has been dismissed. In addition, damages for loss of business reputation have been provided to Silver Arrow and that is sufficient to both express the Court's concern with Mr. Groh's conduct and to compensate Silver Arrow.
Conclusion and Costs
[51] For the foregoing reasons, the following orders will issue:
a) A declaration that the email sent to Gooding and Company on behalf of Mr. Groh was libelous.
b) Mr. Groh shall pay damages for loss of business reputation to Silver Arrow in the sum of $500,000.00.
c) The claim for punitive damages is dismissed.
[52] This brings me to the subject of costs. At the time of my last costs endorsement, I found that 20% of the time spent by counsel for Silver Arrow and Mr. Quocksister had been related to the counterclaim. These costs, of $4,000.00 inclusive of HST and disbursements, remain available to be claimed.
[53] If Silver Arrow or Mr. Quocksister wish to claim those costs, or claim additional costs, they may file costs submissions of no more than two (2) single-spaced pages, exclusive of offers to settle, bills of cost and case-law within fourteen (14) calendar days of the release of these reasons.
[54] I have sent a copy of this decision by e-mail to Mr. Groh's last known e-mail address. The costs submissions described in the previous paragraph are to be served on him by e-mail. Mr. Groh will have fourteen (14) calendar days from the receipt of the costs submissions to provide his responding submissions. If I do not receive costs submissions from Mr. Groh in that time period, then I will proceed to make a decision on costs without further notice to him.
[55] Costs submissions are to be filed with the Court office through the online portal with a copy provided to my judicial assistant by e-mail.
LEMAY J
Released: April 29, 2021