



COURT OF APPEAL FOR ONTARIO

CITATION: Summit Glen Waterloo/2000 Developments Inc. (Re),

2016 ONCA 405

DATE: 20160530

DOCKET: C58356

Cronk, Pepall and Lauwers JJ.A.

In the
    Matter of the Bankruptcy of Summit Glen Waterloo/2000 Developments Inc., of the
    City of Toronto, in the Province of Ontario

Patrick Shea and Brent Arnold, for the
    appellant/respondent by way of cross-appeal, A. Farber & Partners Inc., as
    Trustee in Bankruptcy of Annopol Holdings Ltd. and Summit Glen Group of
    Companies Inc.

Maurice J. Neirinck and Michael McQuade, for the
    respondents Morris Goldfinger and 1830994 Ontario Ltd. and for the appellant by
    way of cross-appeal, 1830994 Ontario Ltd.

Heard: October 14 and 15, 2015

On appeal from the judgment of Justice David M. Brown of
    the Superior Court of Justice, dated February 3, 2014, with reasons reported at
    2014 ONSC 756, 9 C.B.R. (6th) 86.

Pepall J.A.:

Introduction

[1]

This is the third of three companion appeals, the other appeals bearing file
    numbers C57879 and C57898. This courts decisions in the three appeals are
    being released contemporaneously. The background to the three appeals is
    described in detail in this courts reasons in C57879.

[2]

On December 1, 2008, Summit Glen Waterloo/2000 Developments Inc. (SG
    Waterloo) was placed under receivership and on June 28, 2010, it was adjudged
    bankrupt.  A. Farber & Partners Inc. (Farber), in its capacity as Trustee
    in bankruptcy of both Annopol Holdings Ltd. (Annopol) and Summit Glen Group
    of Companies Inc. (SG Group), asserted claims against SG Waterloo, as did Montor
    Business Corporation (Montor), Dr. Morris Goldfinger, and 1830994 Ontario
    Ltd. (183), a company controlled by Goldfinger. These claims were to be heard
    by the Registrar in Bankruptcy but the trial judge decided that they should be
    heard in a hybrid trial, together with the subject matter of Court File Nos.
    C57898 and C57879.  Farber now appeals from the trial judges disallowance of
    certain claims it advanced in SG Waterloos bankruptcy. 183 cross-appeals from
    the trial judges disallowance of its claim in SG Waterloos bankruptcy.

[3]

For the reasons that follow, I would allow Farbers appeal in part and
    would dismiss 183s cross-appeal.

A.

Annopols Claim in SG Waterloos Bankruptcy

(i)

Background

[4]

The first part of this appeal concerns the trial judges partial
    disallowance of certain claims advanced by Farber in its capacity as Annopols Trustee
    in bankruptcy in the SG Waterloo bankruptcy.

[5]

Annopol had lent money to SG Waterloo and filed a proof of claim in SG
    Waterloos bankruptcy proceedings. Accordingly, the trial judge had to
    determine what amount SG Waterloo owed to Annopol as of June 28, 2010, the date
    of SG Waterloos bankruptcy.

[6]

Annopol originally filed its proof of claim for $519,600, which had been
    paid in small instalments from June 2000 to December 2008, rather than in a
    lump sum. Farber was later able to retrieve documents that conclusively
    established that the amount advanced was actually $557,600. It also filed a
    report to that effect. $100,000 of this amount was secured and the remaining $457,600
    was unsecured.

[7]

The trial judge described Annopol as having filed a proof of claim for
    an unsecured amount of $420,000 and a secured amount of $100,000, for a total
    of $520,000. Accordingly, he allowed the unsecured claim in the amount of
    $420,000, rather than $457,600. He also awarded interest calculated at 5% per
    annum from December 4, 2008, which was the date of the final recorded advance
    from Annopol to SG Waterloo.

(ii)

Farbers Submissions on Appeal

[8]

Farber opposes the trial judges decision on two grounds. First, it submits
    that the trial judge erred in awarding Annopol $420,000 instead of $457,600. Farber
    argues that there is no explanation as to why Annopols claim for $457,600 was
    not allowed given the trial judges finding that it had loaned $457,600 to SG
    Waterloo.

[9]

Second, Farber submits that the trial judge erred in ordering interest on
    the entire sum from December 4, 2008  the date of Annopols last proven
    advance. It submits that interest should run from the dates of the individual
    advances. Farber acknowledges that the trial judges decision was
    discretionary, but argues that he had to exercise his discretion with regard to
    the evidence and proper considerations. On this point, Farber asserts that the
    trial judge gave no explanation for his selection of December 4, 2008 as the
    interest commencement date and the only available evidence on the issue of
    interest did not support his decision.

(iii)

Analysis

[10]

The record clearly supports Farbers position that the correct quantum
    of the unsecured debt is $457,600. Moreover, Goldfinger does not seriously
    object to the fact that the $420,000 finding was in error.

[11]

I would therefore allow this portion of Farbers appeal, in its capacity
    as Annopols Trustee in bankruptcy, and vary the February 3, 2014 judgment to
    allow Annopols unsecured claim against SG Waterloo at $457,600.

[12]

Turning to the ground of appeal relating to the calculation of interest
    on the unsecured claim, the evidence on interest payable was limited.  Unlike
    the secured claim, there was no documentary evidence governing the calculation
    of interest with respect to the unsecured claim.  That said, Annopol did make
    multiple advances between 2000 and 2008 to SG Waterloo.

[13]

Interest compensates for the use or retention by one person of a sum of
    money belonging to another which accrues day by day: see
Garland v.
    Consumers Gas Co.
, [1998] 3 S.C.R. 112, at para. 27.  It follows that in
    the absence of evidence to the contrary, interest should accrue from the date
    of each individual advance, not from the date of the last advance.

[14]

I would therefore also allow Farbers appeal with respect to interest
    and vary the February 3, 2014 judgment so that interest is calculated by the
    parties from the date of each advance by Annopol to SG Waterloo.

B.      SG Groups Claims in SG Waterloos Bankruptcy

(i)       Background

[15]

The second part of Farbers appeal is made in its capacity as Trustee in
    bankruptcy of SG Group in the SG Waterloo bankruptcy.  Farber appeals the trial
    judges partial disallowance of certain claims advanced by Farber and his
    interest award.

[16]

SG Waterloo owned development property located at 105 University Avenue
    in Waterloo, Ontario. Farber claimed that SG Group had made payments to a
    number of third parties on behalf of SG Waterloo and that therefore SG Waterloo
    was unjustly enriched to SG Groups detriment.

[17]

First, Farber asserted that SG Group had paid $346,029.13 to Joe Somfay
    Architects on behalf of SG Waterloo and filed a proof of claim including that
    amount. In support of that portion of its claim, Farber simply filed a summary
    of invoices, credit notes and payments that had been prepared by Somfay. In his
    reasons dated October 28, 2013, the trial judge concluded that Farber had filed
    insufficient particulars of these alleged payments. He accordingly provided
    Farber with an opportunity to file additional evidence of payment.

[18]

In his reasons dated February 3, 2014, having received and reviewed Farbers
    additional evidence, the trial judge allowed $236,249 of SG Groups claim, but
    disallowed the remaining $109,780.13 due to inadequate evidence.

[19]

He also rejected the interpretation, urged upon him by Farber, of an
    August 7, 2002 letter from Somfay, allegedly reflecting a payment of $108,531. He
    concluded that the letter did not reflect confirmation of receipt of the amount
    of $108,531. Rather, it represented an offer of a discount in that amount. In
    addition, the trial judge reasoned that if Somfay had received payment of
    $108,531 prior to the August 7, 2002 letter, it was difficult to understand why
    invoices from 2000 would continue to be outstanding at that time. The trial
    judge also observed that Farber had been given more time to file additional
    evidence and that it could have filed an affidavit from Somfay but failed to do
    so.

[20]

Second, Farber asserted that SG Group paid operating expenses of
    $104,855 for SG Waterloos 105 University Avenue property and, as a result, SG
    Waterloo was unjustly enriched to the detriment of SG Group.

[21]

Before the trial judge, Farber successfully established that SG Group
    had paid some of SG Waterloos operating costs. However, while it produced
    invoices totalling $104,855 rendered for work done at 105 University Avenue, it
    could not locate any evidence establishing that these amounts had been paid. Farber
    urged the trial judge to draw an inference that these additional amounts had
    been paid, but the trial judge declined to do so. He was not satisfied with the
    sufficiency of the evidence and explained that SG Waterloo went into bankruptcy
    in part because of its inability to pay all its obligations. In rejecting the
    claim, he acknowledged that Farber found the Summit Glen companies books and
    records in a state of disarray and noted that Farber was not responsible for
    the absence of the required evidence. However he rejected Farbers additional
    claim of $104,855.

[22]

Third, Farber claimed interest on the total amount of $625,368.88, which
    is the sum that the trial judge ordered in SG Groups favour.

[23]

The trial judge held that, because Farbers claim on behalf of SG Group
    sounded in unjust enrichment and was not based on a loan agreement, s. 3 of the
Interest Act
, R.S.C. 1985, c.
    I-15,
did not apply. He therefore awarded interest on the sum of
    $625,368.88 in accordance with the prejudgment interest provisions of the
Courts
    of Justice Act
, R.S.O. 1990, c. C.43
.

[24]

He ordered the interest to be payable from June 28, 2010  the date of SG
    Waterloos bankruptcy. The trial judge reasoned that interest should be
    calculated from the date of bankruptcy, which was the date upon which the
    deprivation underpinning the cause of action for unjust enrichment occurred.

(ii)      Farbers
Submissions on Appeal

[25]

Farber submits that the trial judge erred in law in requiring that it
    establish with certainty that SG Group paid the sum of $109,780.13 to Somfay
    and $104,855 to SG Waterloos other suppliers. It submits that this was too
    high a threshold. It argues that the trial judge ignored concessions made by
    Goldfinger, failed to properly consider the lack of documentary evidence
    available to Farber, including records outside of Farbers control, and failed
    to give proper weight to the evidence. In particular, it submits that the trial
    judge erred by misinterpreting the August 2002 letter from Somfay and by
    concluding that invoices from 2000 continued to be outstanding in 2002.

[26]

Farber also argues that the trial judge erred in calculating interest on
    the basis of the
Courts of Justice Act
, rather than the
Interest
    Act
. However, Farber concedes that the trial judge erred in concluding
    that interest ran from the date of SG Waterloos bankruptcy. Indeed, Farber did
    not seek such interest.  Although it initially submitted that interest should
    be awarded from December 1, 2008 (the date SG Waterloos receiver was appointed)
    to June 28, 2010 (the date of SG Waterloos bankruptcy), in oral argument, Farber
    did not press this point.

(iii)     Analysis

[27]

I do not accept Farbers submissions relating to the Somfay and operating
    cost claims. First, the trial judge did not apply a standard of certainty. Starting
    at para. 35 of his October 28, 2013 reasons, he reviewed the law applicable to
    proof of claims.

[28]

The trial judge cited
South Beach Homes Ltd. (Re)
, 2010 SKQB 182, 357 Sask.R. 82
 the same
    decision Farber relies on as establishing the test to admit a claim. At para.
    46 of
South Beach
, the court expressly noted that certainty is not the
    test. Then, in the trial judges February 3, 2014 reasons, he applied the test
    he had already articulated in his earlier reasons.

[29]

The trial judge applied the correct test, but he was not persuaded that
    it was met either with respect to the sum of $109,780.13 or the sum of
    $104,855. He expressly considered Goldfingers position, the state of the
    documentary record and, in the case of the Somfay payments, the terms of the
    August 2002 letter. His findings of fact, which supported his conclusion, are
    both within the province of a trial judge and, based on the record, reasonable.

[30]

I see no error in the trial judges denial of these two claims advanced
    by SG Group. Accordingly, I would also dismiss this part of Farbers appeal.

[31]

As for Farbers submission that the trial judge erred in concluding that
    the
Interest Act
was inapplicable, I see no basis on which to disturb
    the trial judges conclusion. Farber had advanced a claim for unjust enrichment
    and, in any event, the trial judge rejected its contention that the amount paid
    by SG Group for SG Waterloos benefit constituted a contingent loan. The trial
    judges determination that interest was properly payable under the provisions
    of the
Courts of Justice Act
rather than the
Interest Act
was
    reasonable. I would dismiss this part of the appeal.

[32]

Lastly, I agree with Farbers concession that interest does not run
    after the date of bankruptcy.  As I have already said, Farber did not press the
    argument that interest ran from the date of the receivership.

[33]

In the circumstances, I would therefore allow the appeal in part so as
    to allow interest up to December 1, 2008, the date of SG Waterloos
    receivership.

C.      Cross-Appeal: 183s
    Claim in SG Waterloos Bankruptcy

[34]

In the companion appeal (C57898), I concluded that the release signed in
    2009 was designed to result in finality and to release any future claim
    Goldfinger, and by extension 183, had against SG Waterloo. Accordingly, I further
    concluded that 183 had given up any claim to the proceeds from the sale of 105
    University Avenue. That includes both the principal claim, dealt with in the
    companion appeal, as well as the expenses associated with the principal claim,
    the subject of this cross-appeal.

[35]

Accordingly, I would dismiss the cross-appeal.

Disposition

[36]

In summary, I would:

(1)

allow
    Farbers appeal in its capacity as Trustee in bankruptcy of Annopol and amend paragraph
    1 of the February 3, 2014 judgment to replace the sum of $420,000 with the sum
    of $457,600 with interest calculated from the date of each individual advance;

(2)

dismiss
    Farbers appeal in its capacity as Trustee in bankruptcy of SG Group with
    respect to the $109,780.13 Somfay expense claim and the $104,855 operating
    expense claim;

(3)

allow
    Farbers appeal in its capacity as Trustee in bankruptcy of SG Group and amend
    paragraph 2 of the February 3, 2014 judgment to replace the words from June
    28, 2010 with the words to the date of December 1, 2008; and

(4)

dismiss
    the cross-appeal of 183.

[37]

As agreed by the parties, I would order Farber to pay Goldfinger $3,000
    in respect of the costs of the appeal, and 183 to pay Farber $5,000 in costs
    concerning the cross-appeal, both inclusive of disbursements and applicable
    taxes.

Released:

MAY 30 2016                                    S.E.
    Pepall J.A.

EAC                                                            I
    agree E.A. Cronk J.A.

I
    agree P. Lauwers J.A.


