COURT FILE NO.: CV-19-616223
DATE: 2022 06 01
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: PYLON PAVING (1996) INC., Plaintiff
- and -
BEAUCON BUILDING SERVICES INC., ALAIN GASTON BEAUCHAMP and JOHN PAUL HOGAN, Defendants
BEFORE: Associate Justice Todd Robinson
COUNSEL: N. Sandhu, for the plaintiff (moving party)
HEARD: February 28, 2022 (by videoconference)
REASONS FOR DECISION
[1] Pylon Paving (1996) Inc. (“Pylon”) brought this motion seeking to strike the statement of defence of Beaucon Building Services Inc. (“Beaucon”) and its principal, Alain Beauchamp, and note them in default. Pylon also seeks judgment on its breach of trust claim against them and a declaration pursuant to s. 178(1)(d) of the Bankruptcy and Insolvency Act, RSC, 1985, c B-3 (the “BIA”) that the judgment against Mr. Beauchamp survives any subsequent assignment into bankruptcy that he may make. Pylon is not pursuing its claim against John Paul Hogan. Neither Beaucon nor Mr. Beauchamp appeared or opposed the motion.
[2] Beaucon was contracted by 651565 Ontario Limited (the “Owner”) to perform renovation work at the Tapscott Commercial Centre in Scarborough. Pylon is an asphalt and concrete subcontractor. Beaucon subcontracted Pylon to supply and install heavy duty asphalt paving and lap joint work for the project. Pylon remains unpaid for its work. Both Beaucon and Pylon, as well as other subcontractors, preserved and perfected liens against the project. Those liens are subject to a reference before me. Pylon also commenced this breach of trust action, seeking relief under the trust provisions of the Construction Act, RSO 1990, c C.30. This action has not been referred for my determination.
[3] At the hearing of the motion, I granted the requested order striking the statement of defence of Beaucon and Mr. Beauchamp and directing the registrar to note them in default, for reasons to follow. I reserved my decision on the balance of relief sought.
[4] Pylon has made out its breach of trust claim against both Beaucon and Alain Beauchamp. Although I cannot grant default judgment, I am satisfied that summary judgment is appropriately granted in this case. There are no genuine issues requiring a trial. However, I lack jurisdiction to make the requested declaration under s. 178(1)(d) of the BIA, so cannot grant that relief.
Analysis
[5] By operation of s. 87.3 of the Construction Act, the provisions of the now-former Construction Lien Act (the “CLA”) remain applicable to this breach of trust claim.
[6] As set out in s. 50(1) of the CLA, the procedures in Part VIII of the CLA apply to lien actions. They do not apply to trust claims under the CLA, which as set out in s. 50(2) cannot be joined with a lien claim. The repeal of that subsection in 2018 does not bear on this case since the CLA continues to apply. Trust claims to which the former CLA applies are advanced in ordinary civil actions, in which the procedure is governed by the Rules of Civil Procedure, RRO 1990, Reg 194 (the “Rules”).
[7] Pylon’s motion raises a myriad of issues, including some important procedural differences between lien and trust actions under the CLA and the jurisdiction of an associate judge. The following issues arise from this motion:
(a) Whether the statement of defence of Beaucon and Alain Beauchamp should be struck for non-compliance with court orders;
(b) Whether the jurisdiction and authority afforded to me under s. 58(4) of the CLA in the lien reference is available to me in this related breach of trust action, which has not been referred to me;
(c) Whether I have jurisdiction to grant default judgment in this breach of trust action;
(d) If I cannot grant default judgment, whether Pylon’s notice of motion supports seeking relief by summary judgment;
(e) If so, whether summary judgment is appropriate in the circumstances, namely:
(i) whether there is any genuine issue requiring a trial that Beacon breached its trust obligations under s. 8 of the CLA; and
(ii) whether there is any genuine issue requiring a trial that Alain Beauchamp assented to or acquiesced in conduct amounting to breach of trust by Beaucon and is thereby liable under s. 13 of the CLA;
(f) If judgment is granted, whether pre-judgment and post-judgment interest should be awarded at the contractual interest rate claimed by Pylon; and
(g) Whether I have jurisdiction to grant relief under s. 178(1)(d) of the BIA and, if so, whether that relief is appropriately granted in this case.
(a) Reasons for striking the defence and noting in default
[8] On March 16, 2020, the last sitting day before regular operations of the Superior Court of Justice were initially suspended due to the COVID-19 pandemic, I made an order removing Beaucon’s and Alain Beauchamp’s lawyers from the record. Consistent with subrules 15.04(6) and 15.04(8), I ordered that, within 30 days of being served with the order, Beaucon appoint a new lawyer or obtain leave to be represented by a non-lawyer and Alain Beauchamp appoint a new lawyer or deliver a notice of intention to act in person.
[9] Beaucon and Mr. Beauchamp were served with my order in early April 2020. Nevertheless, despite nearly two years passing between service of the removal order and this motion being heard, no new lawyer was appointed, no motion for leave for Beaucon to be represented by a non-lawyer was brought, and no notice of intention to act in person was served by Mr. Beauchamp.
[10] Pylon’s motion was argued concurrently with two related motions: a motion by the Owner to discharge Beaucon’s lien and dismiss its lien action and a similar motion by Pylon seeking to strike Beaucon’s defence and award judgment in Pylon’s related lien action. Both motions relied on Beacon’s non-compliance with removal orders as well as breaches of my discovery orders in the lien reference. As the lien reference associate judge, I am aware that my directions and orders made after the removal orders were granted were sent by the court to Mr. Beauchamp’s email address. Neither Mr. Beauchamp nor any other representative of Beaucon attended the two hearings for trial directions that took place in the lien reference after the removal orders. Despite being afforded additional chances to comply with my procedural orders in the lien reference, neither Beaucon nor Mr. Beauchamp complied or communicated with counsel or the court.
[11] Beaucon and Alain Beauchamp both remain unrepresented litigants. Albeit discussing self-represented litigants, the Divisional Court has held that parties who represent themselves are not free to disregard orders of the court and the Rules. Although courtesies will be extended and directions provided at times, there is less tolerance and fewer courtesies where clear court orders are breached: Rock Precast Erectors Ltd. v. Canadian Precast Limited, 2012 ONSC 5924 (Div Ct) at para 14.
[12] In Schindler Elevator Co. v. 1147335 Ont. Inc., my predecessor, Master Albert, endorsed an approach taken by Ferrier J., who stated, “There comes a time when this court is obliged to meet its responsibility for the effective administration of justice through case management by dismissing an action. Such is the case when the plaintiff repeatedly fails to comply with orders of the court whether or not there has been prejudice to the defendants.”: Schindler Elevator Co. v. 1147335 Ont. Inc., 2007 CanLII 41280 (Ont SCJ – Master) at para. 16. In my view, that approach applies equally to a defendant and their defence.
[13] Beaucon has uniformly defaulted on orders and procedural obligations in all actions arising from the Tapscott Commercial Centre project, including in its own lien action. Considering those global circumstances, and notwithstanding that Beaucon and Mr. Beauchamp have only technically breached the requirements of my removal order in this action, I was satisfied that providing a further chance to comply with the removal order was not warranted. It would also have been inconsistent with my decisions in the two lien action motions, in which I was satisfied that similar final relief was appropriately granted without any further chances.
[14] For these reasons, I granted the order striking Beaucon’s and Mr. Beauchamp’s defence in accordance with subrules 15.04(7)(a) and 15.04(9)(a) and I directed the registrar to note them in default.
(b) What is a lien reference associate judge’s authority in a related breach of trust action?
[15] Pylon argues that s. 58(4) of the CLA provides me, as the lien reference associate judge, with authority to grant default judgment against Beaucon and Mr. Beauchamp in this breach of trust action. Pylon submits that the trust action directly relates to and arises in connection with the lien action, and s. 58(4) provides that I must completely dispose of all matters and questions in connection with that action.
[16] I disagree with Pylon’s view of s. 58(4). That subsection does not extend a lien reference associate judge’s jurisdiction and authority to a related breach of trust action that has not been referred for disposition.
[17] Pylon is correct that s. 58(4) provides me, as the lien reference associate judge, with significantly broader jurisdiction and authority than I would otherwise have as an associate judge. It provides me with “all the jurisdiction, powers and authority of the court to try and completely dispose of the action and all matters and questions arising in connection with the action.” However, that expanded authority arises in the context of a reference of a lien action under s. 58(1)(a). It is limited to those liens and lien actions that have been specifically referred to be determined by an associate judge and any other liens and lien actions that become subsumed in the reference by operation of the CLA. It goes no further. Specifically, it cannot be used for other related non-lien actions that have not been referred, including breach of trust claims.
[18] Pylon points to the decision in Unimac-United Management Corp. v. Cobra Power Inc., 2015 ONSC 208, in which Brown J. was satisfied that there were questions of law and fact in common between lien actions that were already subject to a reference before my colleague and a related non-lien action arising from the same project. Brown J. held that they should all be heard by one judicial officer. However, the case does not assist Pylon. The motion before Brown J. was for an order referring the non-lien action to be determined by my colleague, to whom the related lien actions had already been referred, and for trial together with or immediately after those lien actions. Brown J. granted an order “transferring” the action to the construction lien court, but that order was granted under Rule 54 of the Rules, which is the rule governing references.
[19] I agree with Pylon that, broadly speaking, its breach of trust action is related to the referred lien action. Trust obligations under the CLA are expressly for the benefit of those supplying services and materials to a project – i.e., those who would also be entitled to a lien (whether or not their lien rights are exercised). I also agree that both Pylon’s lien and breach of trust actions generally arise out of the same series of transactions, have certain interwoven factual issues, and have overlapping damages.
[20] Nevertheless, Pylon’s lien, contract, and breach of trust remedies are separate and Pylon’s breach of trust action is not subject to a reference before me. It accordingly does not matter if it is “constructive, expeditious, and efficient” for me to deal with the judgment relief sought, as Pylon submits. My role as the lien reference associate judge for the related lien actions is immaterial. The expanded jurisdiction and authority available to me in the lien actions under s. 58(4) of the CLA cannot be used in this breach of trust action.
[21] As a result, I can only grant the judgment sought by Pylon if an associate judge has jurisdiction to do so under the Rules.
(c) What is the jurisdiction of an associate judge to grant default judgment in a non-referred breach of trust action?
[22] Pylon seeks default judgment under Rule 19.05 of the Rules. That rule expressly requires a motion to a judge. I thereby have no jurisdiction to grant default judgment under it outside a lien reference.
[23] An associate judge’s jurisdiction to grant default judgment under the Rules is limited. It is found in subrule 19.04(3.1)(b), which permits a motion for default judgment to be brought to “the court” (i.e., an associate judge), subject to two preconditions. First, the registrar must have declined to grant default judgment. Second, the claim must be one of the claims outlined in subrule 19.04(1), which include a debt or liquidated demand in money, recovery of possession of land, recovery of possession of personal property, and foreclosure, sale or redemption of a mortgage.
[24] In my view, Pylon’s breach of trust claim, as pleaded, does not fall within the types of claims outlined in subrule 19.04(1). Since those claims are the extent of my jurisdiction to grant default judgment under the Rules, I cannot grant default judgment on Pylon’s breach of trust claim.
[25] Beaucon’s liability for breach of trust stems from s. 8 of the CLA. Pursuant to s. 8(1), all amounts owing to or received by Beaucon on account of a contract price for the project constitute a trust fund for the benefit of the persons who supplied services and materials and are owed money by Beaucon. Pursuant to s. 8(2), a contractor is expressly prohibited from appropriating or converting any part of the trust fund until all persons who supplied services and materials and are owed money by Beaucon have been paid. Alain Beauchamp’s liability for breach of trust stems from s. 13 of the CLA, which creates liability for Mr. Beauchamp to the extent of his assent to or acquiescence in conduct amounting to a breach of trust by Beaucon, provided he is also demonstrated to be a director, officer, or person having effective control of Beaucon or its relevant activities.
[26] Beaucon is only liable under s. 8 to the extent of the proven breach of trust. That may be equal to or greater than the unpaid amounts claimed by Pylon, but could also be less than them. Mr. Beauchamp’s personal liability relies on a finding of a breach of trust by Beaucon, so cannot be greater than Beaucon’s own liability.
[27] Pylon’s statement of claim pleads the essential elements of the breach of trust claim, namely that Beaucon has been paid “in full or in part” in respect of its contract (para. 18), that all amounts owing to or received by Beaucon on account of the contract constitute a trust fund under s. 8 of the CLA (para. 19), and that Beaucon appropriated or converted “all or part of the trust funds” to its own use or to a use inconsistent with the trust (para. 20). It also pleads the amount owing to Pylon (para. 13), Beaucon’s failure to pay it (para. 15), and that Pylon claims the amount in breach of trust (para. 25). However, the statement of claim only pleads that Pylon has “suffered damages” as a consequence of Beaucon’s breach of trust. Neither the extent of the trust nor the extent of the alleged breach of trust are pleaded in the statement of claim. For example, Pylon does not plead that Beaucon received and appropriated or converted an amount equal to or greater than the indebtedness to Pylon.
[28] In my view, the extent of any breach of trust by Beaucon is a matter requiring judicial determination. Evidence must be reviewed to confirm the existence of a s. 8 trust in an amount equal to or greater than the amount claimed by Pylon as owing for its work and, further, that Beaucon breached that trust by appropriating or converting an amount at least equal to Pylon’s unpaid claim. Pylon’s breach of trust claim against Beaucon is thereby an unliquidated claim, which is not a claim for which an associate judge has jurisdiction to grant default judgment. Since the claim against Beaucon is unliquidated, it follows that the same is true of the claim against Mr. Beauchamp, which hinges on a finding of breach of trust by Beaucon.
(d) Is summary judgment available?
[29] At the hearing, I provided my view that I likely lacked jurisdiction to grant default judgment. Albeit that summary judgment is not addressed in Pylon’s factum, Ms. Sandhu asked that I consider granting summary judgment on Pylon’s claim if I determined that I lacked jurisdiction to grant default judgment.
[30] I invited submissions on the appropriateness of me considering summary judgment, specifically on whether fair notice of the potential for summary judgment being granted had been given to Beaucon and Mr. Beauchamp in the materials. Ms. Sandhu satisfied me that both Beaucon and Mr. Beauchamp were on notice that judgment was being sought, without specificity on whether it was default judgment or summary judgment and, further, that Pylon’s grounds in its notice of motion support summary judgment under Rule 20 of the Rules.
[31] As a preliminary point, it may seem inconsistent for an associate judge to be precluded from granting default judgment for an unliquidated sum, yet still be entitled to grant summary judgment for that same unliquidated amount on the same record. However, Rule 20 permits summary judgment motions to be brought before an associate judge (with some restrictions on an associate judge’s authority and powers) and contains no similar restriction to that found in subrule 19.04(3.1)(b) on jurisdiction to grant judgment for an unliquidated sum.
[32] Relief sought in Pylon’s notice of motion includes an order for “judgment” for the claim. It also essentially duplicates all of the relief outlined in para. 1 of the statement of claim. There is no specific reference to “default judgment.” However, there is equally no reference to “summary judgment” and Rule 20 is not expressly cited (although I was directed to the fact that Pylon refers generally to relying on the Rules “including” specifically cited rules).
[33] Nevertheless, I accept that there has been fair notice that judgment on the merits of the claim is being sought. That is made clear by Pylon seeking all of the relief claimed in the statement of claim as relief on this motion and identifying grounds focused on the merits of Pylon’s claim rather than solely on the defendants’ defaults. The supporting affidavit also tenders specific evidence on each element of the breach of trust claim.
[34] Rule 1.04(1.1) of the Rules of Civil Procedure provides that, in applying the rules, I must make orders and give directions that are proportionate to the importance and complexity of the issues and to the amount involved in the proceeding. In my view, in these circumstances, it would be disproportionate to require Pylon to bring a further motion specifically citing Rule 20. I accordingly find it appropriate to consider whether summary judgment should be granted on the record before me.
(e) Is this case appropriate for summary judgment?
[35] I have already reviewed the basis of liability for Beaucon and Alain Beauchamp under ss. 8 and 13 of the CLA. Beaucon’s liability to Pylon is to the extent of any proven breach of trust. Judgment against Mr. Beauchamp depends on a finding of breach of trust against Beaucon and requires a finding of assent or acquiescence in conduct amounting to the breach of trust.
[36] I first review the legal framework for summary judgment, including limitations placed on associate judges, then address whether it is appropriate to grant summary judgment against each of Beaucon and Alain Beauchamp.
i. Legal framework for summary judgment
[37] The legal analysis on a summary judgment motion is now well-settled. Subrule 20.02(2) of the Rules directs that summary judgment be granted if the court is satisfied that there is no genuine issue requiring a trial. There will be no genuine issue requiring a trial when the court is able to reach a fair and just determination on the merits. This will be the case when the process allows the court to make the necessary findings of fact, allows the court to apply the law to the facts, and is a proportionate, more expeditious, and less expensive means to achieve a just result: Hryniak v. Mauldin, 2014 SCC 7 at para. 49.
[38] The necessary two-stage assessment for deciding if summary judgment should be granted has been set out by the Supreme Court of Canada in Hryniak at para. 66.
[39] The first stage requires the court to determine if there is a genuine issue requiring trial based only on the evidence in the record. That is done without using the fact-finding powers provided in subrules 20.04(2.1) and (2.2), which provide for evidence to be weighed, credibility to be assessed, inferences to be drawn, and further oral evidence. If the evidence required to fairly and justly adjudicate the dispute is available on the record and summary judgment is a timely, affordable and proportionate procedure, then summary judgment may be granted.
[40] The second stage is triggered if there appears to be a genuine issue requiring a trial. The court should then determine if the need for a trial can be avoided by using the discretionary powers under subrules 20.04(2.1) and (2.2). Those may be used if doing so is not against the interest of justice. Use of the powers will not be against the interest 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.
[41] Since this motion is not brought within a reference governed by s. 58 of the CLA, I do not have access to the fact-finding powers in subrule 20.04(2.1). I also do not have the ability to direct further oral evidence under subrule 20.04(2.2). Both subrules expressly provide that those powers may only be exercised by a judge. As recently confirmed by the Divisional Court, the enhanced powers are not available to an associate judge in ordinary civil litigation: R&V Construction Management Inc. v. Baradaran, 2020 ONSC 3111 (Div Ct) at para. 23. Subrule 20.04(4) also provides that, if the only genuine issue requiring a trial is a question of law, an associate judge may not decide it. Only a judge is entitled to determine the question and grant judgment accordingly. These limitations are why summary judgment motions are not commonly brought before associate judges in ordinary civil litigation.
[42] The practical effect of these limitations on my authority and powers is that if I identify a genuine issue requiring a trial, then I cannot grant summary judgment. That is the case even if using the enhanced powers would fairly resolve the issue in a timely, affordable, and proportionate manner, since I am precluded from exercising them.
[43] In this case, though, I find it appropriate to grant summary judgment, since I need not resort to the enhanced powers. On the record before me, there are no genuine issues requiring a trial.
ii. Is there a genuine issue for trial on Beaucon’s breach of trust?
[44] For Pylon to succeed in this breach of trust action, it must prove that (i) Beaucon was a contractor or subcontractor on the project, (ii) Pylon supplied services and materials to Beaucon, (iii) Pylon has not been paid by Beaucon for those services and materials, and (iv) Beaucon received or was owed amounts on account of its contract price for the project. Establishing those elements will demonstrate the existence of a trust under s. 8(1) of the CLA. The onus then shifts to Beaucon to demonstrate that trust monies have been properly applied: Airex Inc. v. Ben Air System Inc., 2017 ONCA 390 at paras. 16-17; Sunview Doors Limited v. Pappas, 2010 ONCA 198 at paras. 83-84; St. Mary’s Cement Corp. v. Construc Ltd., 1997 CanLII 12114 (ON SC), [1997] OJ No 1318 (Gen Div) at paras. 10-11.
[45] Pylon relies on responses from the Owner and Beaucon to its request for information under s. 39 of the CLA. That provision entitled Pylon to information from each of the Owner and Beaucon, including the names of the parties to the contract, the contract price, and the state of accounts between the Owner and Beaucon. I also agree with Pylon that, by virtue of my order directing the registrar to note Beaucon and Alain Beauchamp in default, subrule 19.02(1)(a) of the Rules is engaged and operates such that both defendants are deemed to admit the truth of allegations in Pylon’s statement of claim.
[46] On the first requirement, there is no question that Beaucon is a “contractor” within the meaning of s. 8 of the CLA. Both responses from the Owner and Beaucon to Pylon’s s. 39 requests for information support that fact and it is also pleaded in Pylon’s statement of claim (para. 6), which is now deemed admitted. Although I struck the statement of defence, I note also that Beaucon and Mr. Beauchamp had pleaded that Beaucon contracted with the Owner as general contractor on the project.
[47] On the second and third requirements, I am satisfied that the record supports no genuine issue requiring a trial that Pylon supplied services and materials to Beaucon on the project and remains unpaid for those services and materials. The affidavit of Darryl Gardner, a senior estimator with Pylon, fully supports Pylon’s supply of services and materials to the project on behalf of Beaucon and the claimed indebtedness of $289,984.17.
[48] Mr. Gardner’s affidavit confirms the quotation provided by Pylon to Beaucon for the project, two purchase orders issued by Beaucon to Pylon for its work, eleven additional purchase orders submitted by Pylon for extras (nine of which were signed by Alain Beauchamp on behalf of Beaucon), invoicing of those eleven extras that was never disputed by Beaucon, a further eight purchase orders issued by Pylon for additional extras (all of which were signed by Mr. Beauchamp), performance of the work by Pylon, and further undisputed and unpaid invoicing by Pylon for its work totalling $289,984.17.
[49] Beaucon has also admitted indebtedness to Pylon for $289,984.17. An email in evidence from Beaucon’s counsel to Pylon’s counsel states, “My client has reviewed the additional backup materials and confirms the quantum of your client’s lien claim in the amount of $289,984.17.”
[50] On the final requirement, I am satisfied that there is no genuine issue requiring a trial that Beaucon received amounts on account of its contract price for the project greater than Pylon’s claim. Pylon relies on the s. 39 responses from the Owner and Beaucon as proving the amounts paid and owing to Beaucon. The Owner’s s. 39 response confirms that a total of $530,156.72 has been paid to Beaucon, with an outstanding and unpaid sum of $189,390.02. Beaucon’s s. 39 response confirms payment of the same $530,156.72, but asserts unpaid amounts under its contract totalling $333,151.52.
[51] I need not address the discrepancy in amounts owing to Beaucon, since there is agreement that $530,156.72 was paid under Beaucon’s contract. That amount is significantly greater than the indebtedness to Pylon. Since Beaucon is a “contractor” under the CLA, there is no genuine issue that those funds were impressed with a trust for the benefit of Beaucon’s subcontractors by operation of s. 8(1).
[52] Since Pylon has established the existence of a trust under the CLA to which it is a beneficiary, Beaucon formally bears the onus of demonstrating that trust funds were properly applied. There have been no discoveries in this action, so Beaucon’s actual use or expenditure of trust funds is not a matter on which Pylon could reasonably give evidence. Neither Beaucon nor Alain Beauchamp opposed Pylon’s motion, so the only evidence on what happened to the trust funds is the s. 39 responses from the Owner and Beaucon.
[53] Both s. 39 responses reflect that $100,000.00, plus either $3,394.14 or $3,398.14 in legal costs, was paid directly by the Owner to another lien claimant, Greyfield Construction Co. (“Greyfield”). Greyfield appears to have been another subcontractor to Beaucon. That payment was arguably made in compliance with s. 10 of the CLA, which permits a trustee to pay a beneficiary of the trust and, in doing so, discharge the trust and the trustee’s obligations and liability to other beneficiaries to the extent of the payment. However, whether or not the payment to Greyfield was a proper use of trust funds need not be determined. There is still $426,762.58 in trust funds (based on Beaucon’s accounting) for which I have no explanation on how it was used, allocated, or spent by Beaucon.
[54] Whether or not Beaucon dealt with the trust funds properly is not information reasonably within the knowledge of Pylon. Since Beaucon and Alain Beauchamp have not opposed the motion, and thereby have tendered no evidence on how the $426,762.58 in trust funds was used, I find no genuine issue requiring a trial that Beaucon breached its trust obligations under s. 8(2) with respect to those funds. Since that amount is well in excess of the admitted indebtedness to Pylon, I also find no genuine issue requiring a trial that Beaucon is liable to Pylon in breach of trust for the amount of $289,984.17.
iii. Is there a genuine issue for trial on Alain Beauchamp’s assent or acquiescence in Beaucon’s breach of trust?
[55] Alain Beauchamp’s liability under s. 13 of the CLA requires Pylon to demonstrate that Mr. Beauchamp is a director, officer, or person having effective control of Beaucon or its relevant activities and that he assented to or acquiesced in conduct that he knew or reasonably ought to know amounts to breach of trust by Beaucon. I find no genuine issue requiring a trial on either of those requirements.
[56] Liability under s. 13 of the CLA does not require proof of actual knowledge, recklessness, or wilful blindness to any actual breach of the trust. Since the trust is statutory, those individuals identified in s. 13(1) are deemed to have knowledge of the existence of the trust. It is only necessary to demonstrate assent or acquiescence to support liability. The threshold of assent to or acquiescence in conduct amounting to breach of trust by the corporation is a lower standard than common law liability imposed on a stranger to a trust: Baltimore Aircoil of Canada Inc. v. ESD Industries Inc., 2002 CanLII 49492 (Ont SCJ) at paras. 39-40.
[57] I am satisfied from the evidence that Alain Beauchamp was a director and person having effective control of Beaucon. The corporate profile report in evidence confirms he was a registered director during the project, Mr. Gardner’s affidavit evidence is that Mr. Beauchamp directed work and approved Pylon’s extra work, Mr. Beauchamp personally signed Pylon’s purchase orders for extras, and various quotes and invoices on the project were submitted by Pylon directly to Mr. Beauchamp by email. I accept Pylon’s argument on the evidence that Mr. Beauchamp was solely responsible for the day-to-day operations of Beaucon on this project.
[58] There is also undisputed evidence supporting that Mr. Beauchamp was directly involved in payment of subcontractors. Mr. Gardner’s affidavit confirms that Mr. Beauchamp was aware that Pylon remained unpaid and was making repeated promises of payment to Jessica Ferrari, Pylon’s controller, notwithstanding the other evidence before me that Beaucon had itself received payments from the Owner totalling $426,762.58. Although hearsay evidence, I am satisfied that Mr. Gardner’s affidavit statements on the information he was provided by Ms. Ferrari about her direct discussions with Mr. Beauchamp complies with the hearsay exemption in subrule 39.01(4) of the Rules.
[59] In addition, Pylon specifically pleads in its statement of claim that Mr. Beauchamp was at all material times a director of Beaucon having effective control of Beaucon or its relevant activities (paras. 4 and 22). It is further alleged in Pylon’s statement of claim that Mr. Beauchamp assented to or acquiesced in conduct that he knew or ought to have reasonably known amount to a breach of trust (para. 22). The truth of those allegations is now deemed admitted.
[60] Mr. Beauchamp was on notice of this motion and did not oppose. I am satisfied that the evidence before me and the deemed admissions support a finding that there is no genuine issue requiring a trial that Alain Beauchamp assented to or acquiesced in conduct that he ought to have known amounted to breach of trust by Beaucon with respect to the $426,762.58 in trust funds. It follows that there is no genuine issue requiring a trial about Mr. Beauchamp’s personal liability for that breach of trust under s. 13 of the CLA.
(f) Should the contractual interest rate apply?
[61] I am not convinced by Pylon’s arguments that the claimed contractual interest rate of 18% per annum should apply to a judgment for breach of trust, calculated from 30 days following each unpaid invoice.
[62] As I have already noted, Pylon joined its breach of contract claim with its lien claim in the lien action, not in this breach of trust action. The basis of liability in this action is statutory, not contractual, stemming from ss. 8 and 13 of the CLA. Absent a clearly worded interest clause that provides extension of contractual interest to non-contractual claims (which is not the case here) or clear case law authority (which Pylon has not provided), I am not prepared to award a contractual interest rate on the judgment for breach of trust. Also, any contractual interest rate expressly or impliedly agreed between Pylon and Beaucon does not apply to Alain Beauchamp. Mr. Beauchamp is the principal of Beaucon, but he is not a party to the subcontract between Pylon and Beaucon. He is thereby not personally bound by its terms. There is no evidence supporting that he agreed to such personal liability.
[63] In any event, since liability stems from the breach of trust, and not non-payment of invoices, interest on the breach of trust judgment is not properly calculated from each unpaid invoice. It ought to be calculated from the date of the breach. However, the evidence before me does not include the dates on which the three draws were paid by the Owner. It only includes the dates of Beaucon’s invoicing. Since I am unable to confirm a date on which the draws were paid and, thereby a when a breach of occurred, it is appropriate that interest be awarded on the judgment in accordance with the Courts of Justice Act, RSO 1990, c C.43 from the date of the claim being issued.
(g) Relief under s. 178(1)(d) of the BIA
[64] When a bankrupt is discharged from bankruptcy, they are generally released from all claims provable in their bankruptcy, including pre-bankruptcy debts and liabilities. There are several exceptions outlined in s. 178(1) of the BIA. Pylon seeks a declaration that judgment against Alain Beauchamp survives any subsequent assignment into bankruptcy that he may make, relying on s. 178(1)(d), which preserves a debt or liability arising out of misappropriation while acting in a fiduciary capacity.
[65] The Superior Court of Justice is invested with jurisdiction to deal with bankruptcy matters by operation of s. 183(1)(a) of the BIA. Pursuant to s. 184, the Chief Justice of the Superior Court of Justice is authorized to appoint and assign registrars, clerks and other officers in bankruptcy to deal with the matters for which power or jurisdiction is given by the BIA. To the extent that requested declaration under s. 178(1)(d) may be made by the court, “court” is a defined term in s. 2 of the BIA. It mean a court referred to in s. 183(1) or (1.1) (i.e., the Superior Court of Justice) or a judge of that court, and includes a registrar when exercising the powers of the court conferred on a registrar under the BIA. There is no mention of other judicial officials.
[66] There is authority in s. 192(1)(a) and (f) of the BIA for a registrar of the court to make bankruptcy orders if not opposed and to hear and determine any unopposed or ex parte application. Those matters may also be addressed by a judge at any time as provided in s. 192(2). However, I am not a judge and only those associate judges who have been appointed by the Chief Justice as registrars in bankruptcy have the authority provided in s. 184 of the BIA.
[67] In my view, since I am neither a judge nor a registrar in bankruptcy, and have not otherwise been authorized by the Chief Justice to exercise any of the powers or jurisdiction conferred to the Ontario Superior Court of Justice by s. 183 of the BIA, I lack jurisdiction or authority to make any declaration under the BIA, including under s. 178(1)(d). Since I cannot make the requested declaration, I need not address whether it is appropriately made. A further motion is required if Pylon wishes to pursue that relief.
Costs
[68] Pylon seeks its partial indemnity costs of the action in the amount of $5,624.69, including HST, plus disbursements. The bill of costs supports reasonable time spent and rates charged for completing pleadings and preparing for and arguing this motion. It also supports an appropriate work allocation between partner, associate, and law clerks on the matter. Pylon’s claimed disbursements of $494.21 are very reasonable (the summary in the bill of costs overlooks the claimed cost for issuing the statement of claim). I take no issue with the overall costs claim, which accords with the factors in Rule 57.01 of the Rules as being a fair and reasonable amount of costs.
Disposition
[69] I have already granted an order striking the statement of defence of Beaucon and Alain Beauchamp and directing that the registrar note those defendants in default, as set out in my endorsement dated February 28, 2022.
[70] With respect to the reserved relief, I order as follows:
(a) Pylon shall have judgment against both Beaucon and Alain Beauchamp, jointly and severally, for breach of trust in the amount of $289,984.17, plus pre-judgment interest from March 14, 2019 at the rate of 2.0% per annum pursuant to the Courts of Justice Act.
(b) Beaucon and Alain Beauchamp shall pay to Pylon its costs of this action and the motion, fixed in the amount of $6,118.90, including HST and disbursements, and payable forthwith.
(c) Pylon’s motion for a declaration pursuant to s. 178(1)(d) of the BIA is hereby dismissed without prejudice to moving again for the same relief before a judge or, if appropriate, a registrar in bankruptcy.
(d) This order is effective without further formality.
ASSOCIATE JUSTICE TODD ROBINSON
DATE: June 1, 2022