



COURT OF APPEAL FOR ONTARIO

CITATION: 1162740 Ontario Limited v. Pingue, 2017 ONCA 583

DATE: 20170710

DOCKET: C59933

Hoy A.C.J.O., van Rensburg and Roberts JJ.A.

BETWEEN

1162740 Ontario Limited, Joseph Pingue
and Sabatino Pingue Jr.

Plaintiffs (Respondents)

and

Venanzio Pingue, 2077626 Ontario Inc.
and 912618 Ontario Limited

Defendants (Appellants)

Ryan Wozniak, Eric Sherkin and Kevin Sherkin, for the
    appellants

Hari S. Nesathurai and Glen M. Perinot, for the
    respondents

Heard: June 19, 2017

On appeal from the judgment of Justice Linda M. Walters of
    the Superior Court of Justice, dated December 22, 2014, with reasons reported
    at 2014 ONSC 7418.

REASONS FOR DECISION

[1]

The appellants appeal from the judgment of the trial judge granting a
    constructive trust over their properties, declaring that the appellant,
    Venanzio Pingue, is not a shareholder of the respondent, 1162740 Ontario
    Limited (116), and removing him as an officer and director of 116 in light of
    her finding that he breached his fiduciary duties.

[2]

These proceedings arise out of a failed business venture among two
    brothers  Venanzio Pingue and the respondent, Sabatino Pingue Jr.  and their
    cousin, Joseph Pingue, involving the purchase of an apartment building at 315
    Glendale Avenue in St. Catharines.

[3]

The trial judge made the following findings concerning the agreement
    among the parties with respect to the ownership of 315 Glendale Avenue and the
    shareholdings of 116. Although it was ostensibly set up as a bare trustee, the
    parties treated 116 as the absolute owner of 315 Glendale Avenue. Joseph Pingue
    advanced the monies to purchase 315 Glendale Avenue. In consideration of his providing
    these funds, Sabatino and Venanzio Pingue transferred their respective shares in
    116 to Joseph. The shares of Venanzio and Sabatino Pingue Jr. represented 50%
    of the shares of 116. Venanzio and Sabatino Pingue Jr. had a period of five
    years to reacquire their shares by repaying Joseph Pingue their respective
    portions of the monies, interest free, that he had advanced to purchase 315
    Glendale Avenue and keep the second mortgage in good standing, and also by
    repaying any profits that he had re-invested for capital improvements. Venanzio
    never paid Joseph Pingue for his shares. The relationship foundered when Joseph
    and Sabatino Pingue Jr. discovered that Venanzio had misappropriated $592,671.43
    from 116.

[4]

The trial judge granted judgment for the respondents and imposed a
    constructive trust over three properties owned by the appellants to secure
    repayment of the misappropriated funds. She declared that Venanzio Pingue was
    not a shareholder of 116 because he had not paid for his shares, and removed
    him as an officer and director of 116 because of his breach of his fiduciary
    duties to 116.

[5]

The appellants advance the following main grounds of appeal:

i

The trial judge erred in disregarding the parties written agreements
    and in finding that Venanzio Pingue was under an obligation to repurchase his
    shares, which the appellants submit were held by 116 as a bare trustee for the
    three shareholders.

ii

The
    trial judge erred in failing to admit the forensic accounting report prepared
    by the appellants expert. Leave to file the report was mandatory under r.
    53.08 of the
Rules of Civil Procedure
. Moreover, the trial judges
    refusal to grant leave created trial unfairness to the appellants because it
    left unchallenged the experts report of the respondents on which the trial
    judge principally relied for her findings of misappropriation and breach of
    fiduciary duty.

[6]

For the reasons that follow, we reject these grounds of appeal.

(1)

Did the trial judge err in her interpretation of the parties agreement?

[7]

The appellants submit that the trial judge erred by effectively
    re-writing the parties written agreements, which, they submit, provided in
    clear and unambiguous terms that 116 would hold 315 Glendale Avenue as a bare
    trustee for the three shareholders. As a result, the trial judge erred in
    determining that Venanzio had to pay any monies for his shares. Moreover,
    according to the appellants, the trial judge granted rectification of the written
    agreements when this relief was neither pleaded nor requested by any party.

[8]

We disagree. In their amended statement of claim, their evidence and
    their written submissions at trial, the respondents clearly maintained that the
    parties had never treated 116 as a bare trustee but always as absolute owner of
    315 Glendale Avenue, and that Venanzio had transferred his shares to Joseph
    Pingue but never paid for them.

[9]

The trial judge interpreted the parties written agreements and found
    them to be confusing and incomplete. This was a finding that was open to her on
    the record. As she was entitled to do, the trial judge accepted the
    respondents evidence as to the parties agreement concerning their
    relationship and the structure of their business venture. She determined that
    116 was the absolute owner of 315 Glendale Avenue and that Venanzio and
    Sabatino Pingue Jr. were required to pay for their shares by reimbursing Joseph
    Pingue for his advances within five years. She found that Venanzio Pingue never
    paid for his shares and that Joseph Pingue remained beneficial owner of them. We
    see no basis to interfere with her conclusions.

[10]

While not pressed at the hearing of the appeal because of their position
    that Venanzio Pingue was not obliged to repurchase his shares of 116, the
    appellants submitted in their factum that the trial judge erred in finding that
    Venanzio had not paid for his shares of 116 when there was clear evidence of a
    cheque and a bank deposit in payment of his shares. Given our rejection of the
    appellants first ground of appeal, it becomes necessary to deal with this ground.

[11]

We also reject this ground. The appellants challenge the trial judges
    finding of fact that Venanzio Pingue did not pay for his shares. Giving
    detailed and cogent reasons, the trial judge rejected Venanzios evidence that
    the proffered cheque represented payment for his shares, preferring the
    respondents evidence that the cheque was in reimbursement for unauthorized
    withdrawals by the appellants. This finding was open to the trial judge on the
    evidence before her and, again, is entitled to deference by this court. We see
    no palpable and overriding error in her finding that would justify interference
    with it.

(2)

Did the trial judge err in refusing to admit the appellants expert
    report?

[12]

Granting of leave under r. 53.08 of the
Rules of Civil Procedure
is
    mandatory in that it requires the trial judge to grant leave on just terms,
unless
the court determines that granting leave will
    cause prejudice to the other party or undue delay in the conduct of the trial:
Pavao
    v. Pinarreta
, [1995] O.J. No. 1197, 40 C.P.C. (3d) 84 (C.A.), at para. 11.
    The right to obtain leave under r. 53.08 is therefore not absolute because it
    is subject to the courts exercise of discretion having regard to the questions
    of prejudice and undue delay, and the overarching consideration of trial
    fairness to the parties.

[13]

The trial judges decision to dismiss the appellants motion for leave
    to file their experts report was discretionary and is subject to considerable
    deference by this court. Absent an error of law or palpable and overriding
    error, we cannot intervene. We see no error here. The trial judge carefully and
    thoroughly considered and balanced all relevant factors. She determined,
    correctly in our view, that the admission of the experts report at the end of
    the already lengthy second trial, following the conclusion of all of the
    evidence, would result in non-compensable prejudice to the respondents and
    undue delay.

[14]

There is no basis for the appellants to complain of trial unfairness in
    the circumstances of this case because the appellants are entirely responsible
    for the late service of their experts report. The appellants were aware since
    the pre-trial conference in June 2010 that expert reports were necessary and they
    had the respondents experts report since September 2011. Most significantly,
    the appellants failed, without reasonable excuse, to comply with the October
    19, 2011 order following the first trial that they deliver an expert report by
    January 26, 2012.

[15]

Notwithstanding their clear failure to comply with the court order, the
    appellants did not move before or at the beginning of the second trial in
    October 2013 for leave to file their experts report. Rather, they inexplicably
    waited until after the completion of all of the evidence, including Venanzio
    Pingues testimony, to retain their expert to prepare a report. They then further
    delayed until the 37
th
day of the 40-day trial to serve their motion
    for leave to file her report. The appellants long, unexplained delay
    distinguishes the present case from the cases (such as, for example, in
Pavao
)
    where the parties seeking leave to file their experts reports had sought and
    were granted that relief at or close to the beginning of trial
.

[16]

In these circumstances, we agree with the trial judges determination
    that the admission of the report would have effectively resulted in another trial
    and enormous trial unfairness to the respondents who had prepared for and participated
    in the trial in the absence of any expert report from the appellants.

(3)

Motion to Admit Fresh Evidence

[17]

The appellants seek to admit as fresh evidence a copy of the parcel
    register that shows that 315 Glendale was sold by 116 on January 25, 2017 for
    the amount of $7,200,000. The appellants submit that this evidence demonstrates
    the tremendous importance to Venanzio Pingue of the loss of his shares in 116. This
    evidence is not necessary or relevant to any issue on this appeal, and we
    dismiss the motion.

(4)

Leave to Appeal Costs Order

[18]

Finally, the appellants seek leave to appeal the trial judges order
    that they pay the respondents their substantial indemnity costs in the amount
    of $350,000.00.

[19]

It is well-established that an appellate court is not entitled to
    interfere with a trial judges discretionary assessment of costs absent error
    of law or overriding and palpable error. We see no such error here. The trial
    judge awarded substantial indemnity costs because she found that the judgment
    obtained by the respondents was more favourable than their three offers to
    settle. She further found that Venanzio Pingue had misappropriated thousands of
    dollars, breached his fiduciary obligations, and attempted to deceive the court.
    These findings justified the award at a substantial indemnity rate. We also
    agree that the amount awarded of $350,000 was fair, reasonable and
    proportionate in the circumstances of this second, 40-day trial. There is no
    basis to intervene.

(5)

Disposition

[20]

Accordingly, the appeal from the judgment, the motion to admit fresh
    evidence, and the motion for leave to appeal the costs order are dismissed.

[21]

The respondents, as the successful parties, shall have their partial
    indemnity costs in relation to the appeal and all preliminary appeal motions in
    the amount of $25,000, inclusive of disbursements and HST.

Alexandra
    Hoy A.C.J.O.

K. van Rensburg J.A.

L.B. Roberts J.A.


