


COURT OF APPEAL FOR ONTARIO

CITATION:
1720608 Ontario
    Inc. v. Rempel Maximum Ice Services Inc.,   2012 ONCA 306

DATE: 20120514

DOCKET: C52755

MacPherson, Gillese and MacFarland JJ.A.

BETWEEN

1720608 Ontario Inc.

Plaintiff (Respondent)

and

Rempel Maximum Ice Services Inc. and Peter Thomas
    Rempel

Defendant (Appellants)

Steven Nagy, for the appellant

Joseph Gottli, for the respondent

Heard: May 8, 2012

On appeal from the order/judgment of Justice Linda M. Walters
    of the Superior Court of Justice, dated August 19, 2010.

ENDORSEMENT

[1]

On February 1, 2007, pursuant to a written asset purchase agreement, the
    defendant Rempel Maximum Ice Services Inc. (Rempel) sold its refrigeration
    services and repair business to the respondent for $155,000, comprised of
    $55,000 for tangible assets and $100,000 for goodwill.  The agreement required
    that Peter Rempel enter into a five year employment agreement as general
    manager of the business at an annual salary of $50,000 plus potential
    performance bonuses.  The agreement also required that Rempel not compete with
    the respondent and change its name within 60 days.  The agreement also included
    a customary indemnification clause.

[2]

Peter Rempel quit his employment with the respondent on October 26,
    2007.

[3]

On January 28, 2008, the respondent brought an action for damages and
    injunctive relief against the appellants.  On September 30, 2009, the
    respondent obtained summary judgment against the appellants, including a
    finding, reflected in paragraph 2 of the Judgment, that the defendants are in
    breach of and have made false, misleading and fraudulent misrepresentations to
    the plaintiff to induce the plaintiff to enter into the asset purchase
    agreement.

[4]

The motion judge, Walters J., directed a reference to assess damages. 
    In a judgment dated August 19, 2010, Walters J. assessed damages at $110,000,
    allocated as follows: $5,000 on consent for disgorged profits; $75,000
    repayment of goodwill; and $30,000 in general damages.

[5]

On September 21, 2010, the motion judge awarded costs to the respondent
    fixed at $60,000 on a partial indemnity basis.

[6]

The appellants appeal and the respondent cross-appeals from various
    aspects of the motion judges damages award.

The appeal

[7]

The appellants contend that there was no basis for an award of loss of
    goodwill.  We disagree.  The appellants counsel on the reference conceded that
    some repayment (he suggested $25,000) for loss of goodwill was in order.  We
    can see no basis, especially given Peter Rempels serious misconduct and his
    early exit from the respondent (only nine months into a five year employment
    contract) for quarrelling with the quantum set by the motion judge, namely,
    $75,000.

[8]

The appellants submit that no award for general damages should have been
    made.  Again, this is directly contrary to the position taken by their counsel
    on the reference, which was that a general damages award on the lower side of
    the $25,000  $50,000 range sought by the respondent was appropriate.  The
    $30,000 award fits comfortably within this submission.  In any event, we see no
    basis for interfering with the quantum set by the motion judge.

[9]

The appellants have not sought leave to appeal the costs order. 
    However, in their factum they submit that it should be reduced to $15,000.  We
    see no basis for this submission.

The cross-appeal

[10]

The
    respondent points out that Mr. Rempel was paid a salary of $37,500 during his
    nine months of employment.  The respondent says that he did not devote his full
    time and attention to the business and that often he could not be located. 
    Accordingly, the respondent submits that the motion judge erred by not ordering
    a repayment, which the respondent suggests should be 50 per cent, of Mr.
    Rempels received salary.

[11]

We
    do not accept this submission.  Although Mr. Rempel behaved badly and even
    dishonestly, we do not think that the motion judge made a palpable and
    overriding error in concluding that [t]he plaintiffs evidence on this point
    is not sufficient to satisfy the court that Mr. Rempel failed in his duties as
    general manager during the period of time he received compensation.

[12]

The
    motion judge awarded no damages for loss of future profits resulting from
    breaches of the agreement.  The respondent says that she erred in reaching this
    conclusion, especially in light of the appellants false, misleading and
    fraudulent misrepresentations to the respondent.

[13]

We
    disagree.  In our view, it was not a palpable and overriding error for the
    motion judge to conclude that there was insufficient evidence to show that Mr.
    Rempels poor job performance, early resignation and fraudulent
    misrepresentations resulted in lost profits, especially a loss of future
    profits.  As the motion judge pointed out, the business was losing money when the
    respondent purchased it.

[14]

The
    respondent contends that the motion judge erred by not awarding punitive
    damages.  In light of the categories and quantums of damages awarded by the
    motion judge, and recognizing that this is an area in which motion and trial judges
    deserve a wide strike zone, we would not interfere with the motion judges
    decision on this issue.

[15]

Finally,
    the respondent seeks leave to appeal the costs award of $60,000 on a partial
    indemnity basis.  It seeks either a costs award of $95,000 on a full indemnity
    basis, pursuant to the terms of the agreement, or $90,000 on a substantial
    indemnity basis because its damages award was higher than its valid offer to
    settle.

[16]

We
    see no basis for interfering with the trial judges exercise of discretion in awarding
    costs of $60,000 to the respondent.

Disposition

[17]

The
    appeal and cross-appeal are dismissed.  Each party shall bear its own costs of
    the appeal.

J.C.
    MacPherson J.A.

E.E.
    Gillese J.A.

J.
    MacFarland J.A.


