Court File and Parties

COURT FILE NO.: CV-23-00001979-0000 DATE: 2024/01/06 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 620369 ONTARIO INC., c.o.b. as HERMAN’S SUPPLY COMPANY, Plaintiff AND: MICHAEL LATIMER c.o.b. as BEYOND THE PEAK and JODI LATIMER, Defendants

BEFORE: Justice I.F. Leach

COUNSEL: John K. Downing, for the Plaintiff No one appearing for the defendants, both of which have been noted in default

HEARD: In writing

Endorsement

[1] Before me is a motion for default judgment, brought in writing by the corporate plaintiff pursuant to Rule 37.12.1 of the Rules of Civil Procedure.

[2] In particular, the defendants were served with the statement of claim herein on September 20 and 26, 2023, respectively, failed to deliver a defence within the time permitted, and were noted in default on October 30, 2023, and pursuant to Rules 19.02(2) and 19.02(3) of the Rules of Civil Procedure, accordingly are not entitled to notice of the motion herein or to participate in the motion, effectively making it unopposed.

[3] Allegations of fact pleaded and relied upon in the plaintiff’s statement of claim, which are deemed to have been admitted by the defendants pursuant to Rule 19.02(1)(a) of the Rules of Civil Procedure, include the following:

a. The plaintiff is a supplier and distributor of building materials for use within the construction, renovation and roofing industry.

b. The defendant Michael Latimer is a sole proprietor, who carries on business under the name “Beyond the Peak”; a business which, amongst other activities, engages in specific and identified construction and roofing improvements in particular for third parties. In that regard:

i. at all material times, the defendant Michael Latimer has been a controlling mind in relation to the “Beyond the Peak” business, managing, directing and being in charge of the affairs of the business, including its finances, accounts payable and bank accounts, including control of all funds paid or payable in trust to the business; and

ii. at all material times, the defendant Jodi Latimer, (the defendant Michael Latimer’s sister), also has been a controlling mind in relation to the “Beyond the Peak” business, managing, directing and being in charge of the affairs of the business, including its finances, accounts payable and bank accounts, including control of all funds paid or payable in trust to the business.

c. At various times dating back to 2008, the plaintiff sold and supplied various roofing materials and products to the defendant Michael Latimer for use by the defendants in the aforesaid sole proprietorship business. Such sales and supplies included materials and products, provided by the plaintiff to the defendants from May to August of 2023, that were construction supplies used by the defendants in their roofing business in various specific and identified construction and roofing improvements constructed by “Beyond the Peak” for third parties; i.e., materials and products used by the defendants and incorporated by the defendants into the construction of those improvements.

d. The plaintiff provided the defendants with corresponding invoices requiring payment for the aforesaid materials and products, payment of which was the direct responsibility not only of the defendant Michael Latimer as sole proprietor of the business, but also the responsibility of the defendant Jodi Latimer pursuant to an agreement executed on February 27, 2008, whereby she agreed to be personally responsible as well for the payment of such invoices and charges, as a condition of the plaintiff effectively supplying such materials and products to the sole proprietorship on credit.

e. Each of the aforesaid invoices included terms specifying that payment for the supplied materials and products was due in full by the 15th day of the month following delivery of the materials and products, failing which interest would be charged at the specified rate of 3 percent per month (or 42.57 percent per annum) on overdue accounts.

f. As at August 31, 2023, the cumulative amount outstanding from the defendants to the plaintiff was $73,359.69, inclusive of interest up to that date, leading to issuance of the statement of claim herein on September 19, 2023, and its service thereafter on the defendants as noted above.

[4] Since service of the statement of claim, the plaintiff and its counsel have received no communications from the defendants.

[5] In my view, the allegations of fact deemed to have been admitted by the defendants entitle the plaintiff to the default judgment it has requested. Without limiting the generality of the foregoing, and for reasons similar to those underlying a similar default judgment I granted to the same corporate plaintiff in 620369 Ontario Inc., c.o.b. as Herman’s Supply Company v. GWH Construction Ltd. et al., London court file no. CV-23-00000058-0000, on July 28, 2023:

a. the alleged facts deemed to have been admitted entitle the plaintiff to judgment vis-à-vis the defendants on the basis of the pleaded contractual agreements;

b. liability of the defendant Michael Latimer to the plaintiff for the demanded amounts nevertheless is reinforced the provisions of the Construction Act, R.S.O. 1990, c.C.30, insofar as:

i. the parties have exchanged “materials” for use in “improvements” made to lands belonging to “owners” benefiting from those improvements, with the defendant and sole proprietor Michael Latimer being a “contractor” or “subcontractor” in that regard, within the broad definition of those terms set forth in subsection 1(1) of the Construction Act, supra;

ii. pursuant to subsection 8(1) of the Construction Act, supra, a statutory trust for the benefit and protection of the plaintiff, (as a supplier of materials owed amounts by the defendant and sole proprietor Michael Latimer as such a “contractor” or “subcontractor”), was imposed on all amounts owed to or received by Michael Latimer in the circumstances; and

iii. although I am not satisfied that the situation is governed by the provisions of section 13 of the Construction Act, supra, which impose joint and several liability on directors, officers, employees and agents of a corporation who assent to or acquiesce in conduct which was known or reasonably ought to have been known to constitute a breach of the statutory trust created by section 8 of that legislation, (as there is no corporate defendant involved in these particular circumstances), in my view both defendants can and should be regarded as having knowingly assisted in breach of the aforesaid statutory trust, within the principles enunciated by the Supreme Court of Canada in Air Canada v. M & L Travel Ltd., [1993] 3 S.C.R. 787, insofar as both are deemed to have admitted their responsibility for and involvement in the relevant financial affairs and accounts payable of the sole proprietorship, including failure to remit the required amounts governed by the statutory trust to the plaintiff; and

c. although the rate of prejudgment and postjudgment interest reflected in the plaintiff’s claim may seem exorbitant to some, (at least in comparison to prime interest rates charged by lending institutions, and the interest rates payable pursuant to the Rules of Civil Procedure in circumstances where interest is not payable pursuant to some other right, the agreed terms respecting interest rates to which the plaintiff would be entitled in default of payment were clear and not in violation of any relevant statutory provision of which I am aware, thereby justifying their enforcement pursuant to authorities such as Bank of America Canada v. Mutual Trust Co. (2001), 2002 SCC 43, 211 D.L.R. (4th) 385 (S.C.C.), and Capital One Bank v. Matovska, [2007] O.J. No. 3368 (Div.Ct.).

[6] As for the costs sought by the moving plaintiff:

a. In exercising my discretion regarding costs pursuant to section 131 of the Courts of Justice Act, R.S.O. 1990, c.C.43, I have regard to all of the factors set forth in Rule 57.01 of the Rules of Civil Procedure, and the need to ensure that costs awards are not merely a simple mechanical or mathematical calculation; e.g., focused merely on details of time spent multiplied by hourly rates, or a tabulation of disbursements actually incurred. Rather, all cost claims are subject to the “overriding principle of reasonableness”, as applied to the factual matrix of the case, pursuant to the ultimate “cross check” required by such authorities as Boucher, Moon and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC (2005), 75 O.R. (3d) 638 (C.A.), and Anderson v. St Jude Medical Inc. (2006), 264 D.L.R. (4th) 557 (Ont.Div.Ct.).

b. However, having regard to the factors, and those overriding considerations, I generally find the costs sought by the plaintiff in their tendered “Costs Outline” to be reasonable in the circumstances. Without limiting the generality of the foregoing, I find the indicated time devoted to the matter, and the hourly rates charged by plaintiff counsel to be appropriate having regard to the nature of the dispute and the amounts claimed, particularly insofar as the bulk of the legal work associated with the action and motion appear to have been delegated to more junior counsel and law clerks where appropriate. The indicated disbursements are also entirely reasonable and appropriate in the circumstances.

c. I nevertheless have awarded costs (and associated taxes thereon) only at the indicated partial indemnity rate, rather than the indicated substantial indemnity rate. In that regard:

i. No settlement offers were drawn to my attention, suggesting any application of Rule 49.10 of the Rules of Civil Procedure.

ii. Our appellate courts repeatedly have emphasized that awards of costs on a partial indemnity basis generally strike the proper balance as to the burden of costs that should be borne by the “winner”, and that elevated cost awards should be reserved for “rare and most exceptional” cases. See, for example, Foulis v. Robinson (1987), 21 O.R. (2d) 769 (C.A.), and Isaacs v. MHG International Ltd., (1984), 45 O.R. (2d) 693 (C.A.).

iii. The sort of conduct meriting elevated cost awards has been described in various ways. For example, in Young v. Young, [1993] 4 S.C.R. 3, at p.134, McLachlin J. indicated that elevated cost awards are warranted “only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties”. Similarly, in Mortimer v. Cameron (1994), 17 O.R. (3d) 1 (C.A.), and McBride Metal Fabricating Corp. v. H&W Sales Co. (2002), 59 O.R. (3d) 97, conduct warranting elevated cost awards was described as “reprehensible”, “egregious”, or “acts that clearly indicated an abuse of process”, justifying enhanced costs as a form of chastisement.

iv. Nothing in the material before me indicates anything in the history of the matter to suggest any conduct on the part of the defendants, in the sense required, to warrant an award of costs on a substantial indemnity basis. Without limiting the generality of the foregoing, mere failure to satisfy a claim voluntarily does not warrant an award of substantial indemnity costs. In particular, our Court of Appeal repeatedly has emphasized that, “under our system, defendants are entitled to put the plaintiff to the proof, and there is no obligation to settle an action”. See Foulis v. Robinson, supra, at p.776, and Davies v. Clarington (2009), 2009 ONCA 722, 100 O.R. (3d) 66 (C.A.), at paragraph 44.

v. To the extent the plaintiffs are entitled to costs, they accordingly should be awarded only on a partial indemnity basis.

[7] For the above reasons, the draft judgment submitted by plaintiff counsel has been reviewed, finalized and signed, with costs fixed in the all-inclusive amount of $3,323.29.

“Justice I.F. Leach” Justice I.F. Leach Date: January 6, 2024