



COURT OF APPEAL FOR ONTARIO

CITATION: Net Connect Installation Inc. v. Mobile Zone Inc.,
    2017 ONCA 766

DATE: 20171003

DOCKET: C63190

Hourigan, Roberts and Nordheimer JJ.A.

BETWEEN

Net Connect Installation Inc.

Plaintiff (Respondent)

and

Mobile Zone Inc. and Mohammad Shahzad

and Swati Damle

Defendants (Appellants)

AND BETWEEN

Mobile Zone Inc.,
    Mohammad Shahzad and Swati Damle

Plaintiffs by Counterclaim

(Appellants)

and

Net Connect Installation
    Inc., ICT North Inc., Wayne LaPlante

and Charleen Wunderlich

Defendants to the Counterclaim

(Respondents)

Ralph Swaine, for the appellant

Christopher Salazar, for the respondent

Heard and released orally: September 29, 2017

On appeal from the judgment of Justice Guy P. DiTomaso of
    the Superior Court of Justice, dated November 30, 2016.

REASONS FOR DECISION

[1]

This is an appeal of an order granting summary judgment to the
    respondents for damages and other related relief. The appellants also seek leave
    to appeal the full indemnity costs award made against them in the amount of
    $144,991.

[2]

This case involves an oral agreement between the parties regarding the
    sale and installation of Shaw Cable packages in Ontario. The motion judge found
    that the appellants were in breach of the agreement and had misappropriated
    funds owing to the respondents under the agreement. He further found that the
    appellants owed monies to the respondents pursuant to loans made by the
    respondents.

[3]

On appeal, the appellants submit that the motion judge erred in:

(I)

finding that the agreement was not a joint venture;

(II)

finding that the appellants breached the agreement;

(III)

finding that the agreement was not varied by further agreements made in
    March and November 2013;

(IV)

finding that one of the appellants, Swati Damle, impermissibly
    dissipated her assets; and

(V)

awarding judgment to a non-party.

[4]

The agreement between the parties is not a standard form contract.
    Accordingly, absent an extricable legal error, the motion judges findings are
    entitled to deference from this court. The palpable and overriding error
    standard of review applies:
Heritage Capital Corp. v. Equitable Trust Co.
,
    2016 SCC 19, [2016] 1 S.C.R. 306, at paras. 21-24.

[5]

The motion judge conducted a very thorough review of the evidence
    regarding the contractual arrangements entered into by the parties. With
    respect to issues (i), (ii) and (iii), we see no legal error or palpable and
    overriding error in the motion judges analysis. Specifically, in reaching the
    conclusion that the parties were not engaged in a joint venture, the motion
    judge found that there was no common undertaking, no mutual control, and no
    expectation to share in profits. These findings were available on the record.
    The appellants argument that there had been a breach of the agreement is
    premised on the incorrect notion that the parties were engaged in a joint
    venture. Further, the motion judges finding that there had not been variations
    to the agreement in March and November 2013 was also available to him on the
    record and the appellants have not identified any error he made in making that
    finding.

[6]

With respect to the finding that Ms. Damle impermissibly dissipated her
    assets, the evidence establishes that she sold and encumbered properties during
    the course of these proceedings. In any event, in determining the issues among
    the parties the motion judge did not rely upon that finding other than as one
    ground among many in support of his costs award. For the reasons discussed
    below, we decline to grant leave to appeal costs.

[7]

We are of the view that the motion judge erred in making his damage
    award in favour of all of the respondents, as only the corporate litigants were
    parties to the agreement. Accordingly we order the judgment be varied to remove
    the handwritten amendment in paragraph 3.

[8]

While we would not interfere with the costs award made by the motion
    judge, we would express a cautionary note on this issue. In this case, the
    motion judge awarded costs on a full indemnity basis. There is a significant
    and important distinction between full indemnity costs and substantial
    indemnity costs. An award of costs on an elevated scale is justified in only
    very narrow circumstances  where an offer to settle is engaged or where the
    losing party has engaged in behaviour worthy of sanction:
Davies v.
    Clarington (Municipality)
(2009), 100 O.R. (3d) 66 (C.A.) at para. 28.
    Substantial indemnity costs is the elevated scale of costs normally resorted to
    when the court wishes to express its disapproval of the conduct of a party to
    the litigation. It follows that conduct worthy of sanction would have to be
    especially egregious to justify the highest scale of full indemnity costs.

[9]

In this case, full indemnity costs were warranted given the factual
    findings that the motion judge made regarding the conduct of the appellants,
    especially the movement of funds out of the country in an effort to place them
    out of reach of the respondents and the instances of fabricated evidence. We
    would reiterate, however, that it is only in rare and exceptional cases where
    such a costs award is justified.

[10]

Leave to appeal the costs award is dismissed.

[11]

The appeal is dismissed, other than the amendment to the judgment below.

[12]

Counsel for the respondent sought an order that the funds paid into
    court by order of Justice Cronk on June 23, 2017 be paid out of court to his
    law firm in trust. The appellants counsel does not oppose that order, provided
    that the Mareva injunction currently extant against his clients referenced in
    para. 11 of the judgment appealed from is lifted. The respondents do not oppose
    the lifting of the Mareva injunction. Accordingly, an order will go paying out
    of court the funds ordered into court by Justice Cronk on June 23, 2017 to be
    paid to the respondents law firm in trust. An order will also go lifting the
    Mareva injunction against the appellants, once the payment out of court has
    been made.

[13]

The appellants shall pay costs of the appeal to the respondents in the
    amount of $20,000, inclusive of fees, disbursements and taxes.

C.W. Hourigan J.A.

L.B. Roberts J.A.

I.V.B. Nordheimer J.A.


