COURT FILE NO.: CV-23-00709112
DATE: 20241001
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
EUGENE ONG and KNIFE INCORPORATED
Plaintiffs
– and –
ANDREW WALSH, RINALDO MARTINDALE, RUDY GALVAN and WALSH BUSINESS & TAX MANAGEMENT LTD.
Defendants
Mingfang (Olivia) Yue and Mina Michael Alexander for the Plaintiffs
READ: October 1, 2024
Papageorgiou J.
Overview
[1] The plaintiffs bring a motion for default judgment against the defendants Andrew Walsh and Walsh Business & Tax Management Ltd. The Statement of Claim claims $188,152.29 in general damages, $9,046.95 in special damages and $50,000 in punitive damages. The plaintiffs seek to discontinue the claim against Rinaldo Martindale and Rudy Galvan.
[2] This is all based upon the plaintiffs having retained the defendants to assist with payroll and account tax filings as well as tax filings with Canada Revenue Services for the years 2010 to 2020.
Decision
[3] For the reasons that follow I grant the plaintiffs judgment as against the defendants in the amount of $197,199.24.
The Issues
[4] The main issues are:
• Issue 1: Do the materials provide a basis for a finding of liability?
• Issue 2: If so, what are the damages to which the plaintiffs are entitled?
Analysis
Issue 1: Do the materials provide a basis for a finding of liability?
Consequences of noting in default
The test on a motion for default judgment
[5] The test on a motion for default judgement was set out in Elekta Ltd. v. Rodkin, 2012 CarswellOnt 2928 (ONSC) as follows: A. What deemed admissions of fact flow from the facts pleaded in the Statement of Claim? B. Do those deemed admissions of fact entitle the plaintiff, as a matter of law, to judgement on the claim? C. If they do not, has the plaintiff adduced admissible evidence which, when combined with the deemed admissions, entitle it to judgement on the pleaded claim?
[6] I am satisfied that the plaintiffs have established liability for fraudulent misrepresentation and conversion based upon the following deemed admissions in the Statement of Claim as well as the affidavit of Mr. Eugene Ong which demonstrate as follows:
• Andrew Walsh is the director and directing mind of Walsh Business and Tax Management Ltd.
• The plaintiffs retained Andrew Walsh and Walsh Business and Tax Management Ltd for the purpose of payroll and HST remittances.
• The defendant Walsh misrepresented himself to be a certified public accountant which was not true.
• The plaintiffs made payments to these defendants to pay GST, Payroll and Corporate taxes. However, these funds were never deposited into the plaintiffs’ GST, Payroll and Corporate accounts.
• The defendants assured the plaintiffs that all tax filings and payments to the CRA were being properly managed, which was false.
• The defendants misrepresented that the funds were being remitted to the CRA.
• The defendants assured the plaintiffs that any outstanding issues with the CRA were based on errors of a clerical nature that could be resolved and that were no fault of theirs.
• The defendants knew or ought to have known that their representations and handling of tax filings and payments were false.
• The defendants intended that the plaintiffs would rely on their false claims by continuing to retain their services and make payments.
• The plaintiffs relied on the representations by making the payments.
• The defendants misappropriated the plaintiffs’ funds.
[7] I am satisfied that the defendants made false representations that they knew were false or that they were reckless as to the truth of the representations, that the defendants made the representations with the intention they would be relied upon, that the plaintiffs did rely and that the plaintiffs suffered damages: Mariani v. Lemstra, 2004 50592 (ON CA), [2004] O.J. No. 4283.
[8] I am also satisfied that Walsh is personally liable as his representations are separately tortious: ScotiaMcLeod v Peoples Jewellers Ltd. (1995), 1995 1301 (ON CA), 26 O.R. (3d) 481.
Issue 2: What are the damages to which the plaintiffs are entitled?
[9] The plaintiffs provided evidence that the defendants misappropriated a total of $188,152.29 and that they incurred $9,046.95 to engage another accountant to bring their CRA accounts into good standing.
[10] I award this amount.
[11] The plaintiffs also seek $50,000 in punitive damages citing Whiten v. Pilot Insurance Co, [2002] I.L.R. at para1-4048. They argue that this is an exceptional case where the defendants’ conduct is sufficiently malicious, oppressive, or high-handed.
[12] Punitive damages should only be awarded when the combination of general and aggravated damages would not sufficiently “achieve the goal of punishment and deterrence”: Hill v. Church of Scientology of Toronto, 1995 59 (SCC), [1995] 2 S.C.R. 1130, at p. 1208. There must be an independent actionable wrong: Hornstein v. Kats et al., 2020 ONSC 870, 24 R.P.R. (6th) 107, at para. 233, rev’d on other grounds 2021 ONCA 293, 30 R.P.R. (6th) 192 at para 6.
[13] Here the conduct cited in support of the punitive damages is the very same conduct that has constituted the torts in question. As such, there is no independently actionable wrong.
[14] Therefore, I award the plaintiffs $197,199.24 in damages with prejudgment interest at the Courts of Justice Act rate from the date the Claim was commenced and post judgment interest at the Courts of Justice Act rate.
Justice Papageorgiou
Released: October 1, 2024