



COURT OF APPEAL FOR ONTARIO

CITATION: 1468025 Ontario Limited v. 998614 Ontario Inc.,
    2016 ONCA 504

DATE: 20160624

DOCKET: C61479

Rouleau, van Rensburg and Benotto JJ.A.

BETWEEN

1468025 Ontario Limited

Plaintiff (Respondent)

and

998614 Ontario Inc. and Gabriel Menei

Defendants (Appellants)

T. Michael Harris, for the appellants

Daniel Matson, for the respondent

Heard: June 21, 2016

On appeal from the judgment of Justice John S. Fregeau of
    the Superior Court of Justice, dated November 20, 2015, with reasons reported
    at 2015 ONSC 7216, 62 R.P.R. (5th) 130.

ENDORSEMENT

[1]

At the conclusion of the hearing, we dismissed the appeal with reasons
    to follow. These are those reasons.

Background

[2]

The appellants appeal the trial judges award of $184,211.58 and a
    declaration of an equitable mortgage on the properties subject to the
    litigation.

[3]

The claim was for repayment of various sums owed by the appellants,
    Gabriel Menei (Gabriel) and his corporation 998614 Ontario Inc. (998), to
    the respondent corporation, whose president and operating mind was Gabriels
    son, Dario Menei (Dario).

[4]

In 2001, 998 was experiencing serious financial difficulties. From 2001
    to 2007, the respondent corporation advanced funds to the appellants to cover Gabriels
    personal expenses and 998s operating expenses.

[5]

In 2002, the parties entered into an agreement respecting these advances.
    That agreement was to be secured by mortgages on the appellants properties. However,
    those mortgages were never registered on title.

[6]

At trial, the appellants maintained that the advances could not be
    proven as the documentation purporting to support them was inadequate. An
    adverse inference ought to be drawn, they submitted, from the failure to
    present corroborating evidence. Further, the appellants argued that because of
    discrepancies within the documents and between the documents and Darios
    testimony, Darios evidence should be rejected as being not credible.

[7]

The appellants also advanced a
non est factum
defence (it is
    not my deed), arguing that the 2002 agreement was void because Gabriel, who
    signed it, had only a grade one education and did not understand what he was
    signing.

[8]

Finally, the appellants argued that they ought not to be jointly and
    severally liable.

[9]

In his decision, the trial judge refused to draw an adverse inference
    from the limited documentation available in support of the various advances. Finding
    Dario generally credible, he accepted his explanation for the state of the
    record. The trial judge went on to allow most of the claims, but disallowed
    those without sufficient corroborating evidence.

[10]

The
    trial judge also rejected Gabriels
non est factum
defence, finding
    that Gabriel was not as unsophisticated as he alleged: he had been in business
    for many years, had entered into all manner of agreements during those years,
    and, in the trial judges estimation, understood what he was signing in 2002.

[11]

Finally,
    given the nature of the relationship and of the reasons for the various
    advances, the trial judge found that the appellants were jointly and severally
    liable. In any event, the 2002 agreement provided that all of the advances, whether
    to Gabriel or 998, were secured by the mortgages. As a result, recourse against
    the security was available for the entire debt.

[12]

The
    appellants now appeal on substantially the same grounds as were argued at
    trial. They simply frame these grounds as errors by the trial judge in his
    application of the law. They also argue that one aspect of the judgment, an
    award of $7,787.50 for damages to a piece of equipment, which equipment was
    returned to the respondent after the claim was issued, ought not to have been
    made as the claim was not properly pleaded.

[13]

In
    oral submissions, the appellants, relying on the Supreme Court of Canadas decision
    in
Lévesque v. Comeau
, [1970] S.C.R. 1010, placed particular emphasis
    on the trial judges failure to draw the requested adverse inference.

Analysis

[14]

We
    see no merit in the appeal. For the most part, the appellants simply disagree
    with the trial judges findings of fact. These findings were made after a
    careful review of the documentation filed at trial and an assessment of Darios
    and Gabriels credibility. The trial judge is in the best position to make such
    findings, and is entitled to deference. We see no reason to interfere. Other
    than arguing that some facts were not taken into account or were given
    inadequate weight, the appellants cannot point to any error or misapprehension
    of fact in the trial judges reasons supporting those findings.

[15]

We
    reject the submission that the trial judge erred in failing to draw an adverse
    inference from the respondents failure to produce documentation supporting
    some of its claims and from its failure to call as witnesses at trial the
    accountants who prepared some summaries of the claims advanced. The trial judge
    considered the issue and, based on Darios evidence and the extensive
    documentation filed, determined that no adverse inference should be drawn. Significantly,
    the trial judges reasons demonstrate that he carefully weighed the evidence.
    He disallowed those claims that lacked documentary support, allowing only those
    claims that were established by the evidence.

[16]

The
Lévesque
decision does not assist the appellants. It does not stand
    for the proposition that a trial judge must draw an adverse inference in
    circumstances such as were presented in this case, which included the trial
    judges finding that Dario had not intentionally withheld any relevant
    documents from the appellants. The trial judge fully explained why no adverse
    inference should be drawn. We see no basis to interfere.

[17]

As
    to the trial judges conclusions on the issues of joint and several liability
    and the appellants
non est factum
defence, we also see no basis to
    interfere. The trial judge correctly identified the governing legal principles
    and his conclusions are well supported on the record.

[18]

Finally,
    we see no error in the trial judges award of $7,787.50 for damage done to
    equipment. The return of the equipment was a subject of the claim. Although it
    was returned after the claim was issued, the appellants remained liable for the
    damage done to it prior to its return.

Disposition

[19]

For
    these reasons, we dismissed the appeal.

[20]

As
    agreed by the parties, the respondent, being the successful party on the appeal,
    is awarded indemnity costs, fixed in the amount of $7,500, inclusive of
    disbursements and applicable taxes.

Paul Rouleau J.A.

K. van Rensburg J.A.

M.L. Benotto J.A.


