962789 Ontario Ltd. v. Newmarket Plaza Ltd., (2014) 319 O.A.C. 147 (DC)

• Judge: Czutrin, S.F.J.S.C., Kiteley and Whitaker, JJ.
• Court: Superior Court of Justice of Ontario (Canada)
• Case Date: April 09, 2014
• Jurisdiction: Ontario
• Citations: (2014), 319 O.A.C. 147 (DC);2014 ONSC 2254

962789 Ont. v. Newmarket Plaza Ltd. (2014), 319 O.A.C. 147 (DC)

MLB headnote and full text

Temp. Cite: [2014] O.A.C. TBEd. AP.038

962789 Ontario Limited (appellant/plaintiff) v. Newmarket Plaza Limited (respondent/defendant)

(DC 13-00533-00; 2014 ONSC 2254)

Indexed As: 962789 Ontario Ltd. v. Newmarket Plaza Ltd.

Court of Ontario

Superior Court of Justice

Divisional Court

Czutrin, S.F.J.S.C., Kiteley and Whitaker, JJ.

April 9, 2014.

Summary:

Serrago was the sole owner and director of the plaintiff company (962). The defendant, 962's landlord, changed 962's locks for non-payment of rent. The plaintiff sued the defendant. The defendant counterclaimed and obtained an order that 962 post $15,000 as security for costs. Serrago personally provided the $15,000 to allow 962 to continue its action. The action and counterclaim were both allowed, with the defendant obtaining a net judgment exceeding $15,000. Each party was ordered to bear their own costs. The defendant obtained a writ of execution and sought payment out of court of the $15,000 under the Creditors' Relief Act. The plaintiff argued that the funds should be returned to Serrago, as he (not 962) owned the funds.

The Ontario Superior Court ordered that the funds be released to the defendant as execution creditor. The plaintiff appealed.

The Ontario Divisional Court allowed the appeal and ordered that the funds be returned to Serrago, who had retained ownership of the funds throughout.

Execution - Topic 1153

Writ of execution - Seizure - What property is affected - Money belonging to debtor - Serrago was the sole owner and director of the plaintiff company (962) - The defendant, 962's landlord, changed 962's locks for non-payment of rent - The plaintiff sued the defendant - The defendant counterclaimed and obtained an order that 962 post $15,000 as security for costs - Serrago personally provided the $15,000 on 962's behalf - The action and counterclaim were both allowed, with the defendant obtaining a net judgment exceeding $15,000 - Each party was ordered to bear their own costs, so the monies posted as security were not needed - The defendant obtained a writ of execution and sought payment out of court of the $15,000 under the Creditors' Relief Act - The plaintiff argued that the funds should be returned to Serrago, as he (not 962) owned the funds - The trial judge ordered that the funds be released to the defendant as execution creditor, as the $15,000 paid in court was owned by 962 - The Ontario Divisional Court allowed the plaintiff's appeal and ordered that the funds be returned to Serrago - The $15,000 was paid into court by Serrago in trust for a specific purpose (Quistclose trust) - When the funds were not needed for that purpose, the funds had to be returned to the owner (Serrago) - The court stated that "Serrago was the lender and 962 became a debtor. He advanced the money intending to fulfill a legal obligation of 962 in order that 962 could pursue its claim for damages. The fact of paying money into court on account of an order for security for costs did not change ownership. As between Mr. Serrago and 962, the three certainties exist: intention, subject-matter and objects. We are satisfied that Mr. Serrago never lost ownership of the funds. ... Section 23 requires that the funds belong to the execution debtor before they become available for distribution to its creditors. We find that the funds belonged throughout to Mr. Serrago and never belonged to the execution debtor ".

Trusts - Topic 375

Creation of trust - Purpose or object - "Quistclose" trust - [See Execution - Topic 1153 ].

Cases Noticed:

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1, refd to. [para. 14, footnote 1].

Stewart v. Hoch, [1999] O.A.C. Uned. 73; 1999 CarswellOnt 681 (Div. Ct.), refd to. [para. 16, footnote 2].

Assaf Estate, Re, [2008] O.T.C. Uned. H34; 2008 CarswellOnt 4976 (Sup. Ct.), refd to. [para. 18, footnote 3].

Ristimaki v. Cooper, [2004] O.T.C. 547; 2004 CarswellOnt 2613 (Sup. Ct.), revd. (2006), 210 O.A.C. 11; 2006 CarswellOnt 2373 (C.A.), refd to. [para. 20, footnotes 4, 5].

Barclays Bank Ltd. v. Quistclose Investments Ltd., [1970] A.C. 567, refd to. [para. 25, footnote 6].

Del Grande v. McCleery et al. (1998), 70 O.T.C. 127 (Gen. Div.), affd. (2000), 127 O.A.C. 394; 31 E.T.R.(2d) 50; 2000 CarswellOnt 57 (C.A.), refd to. [paras. 26, 29, footnotes 7, 8].

Ontario (Minister of Training, Colleges and Universities) v. Two Feathers Forest Products LP et al. (2013), 311 O.A.C. 147; 2013 ONCA 598, refd to. [para. 30, footnote 9].

Twinsectra Ltd. v. Yardley et al., [2002] 2 A.C. 164, refd to. [para. 31, footnote 10].

Statutes Noticed:

Creditors' Relief Act, R.S.O. 1990, c. C-45, sect. 23 [para. 22].

Counsel:

Scott Turton, for the appellant 962789 and the appellant non-party John Serrago;

Robert W. Calderwood, for the respondent.

This appeal was heard on March 6, 2014, before Czutrin, S.F.J.S.C., Kiteley and Whitaker, JJ., of the Ontario Divisional Court.

On April 9, 2014, the following judgment was released by the Court.