Simone v. Daley, (1999) 118 O.A.C. 54 (CA)

• Judge: McKinlay and Weiler, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: March 01, 1999
• Jurisdiction: Ontario
• Citations: (1999), 118 O.A.C. 54 (CA);1999 CanLII 3208 (ON CA);43 OR (3d) 511;170 DLR (4th) 215;8 CBR (4th) 143;[1999] CarswellOnt 551;[1999] OJ No 571 (QL);118 OAC 54;24 RPR (3d) 1

Simone v. Daley (1999), 118 O.A.C. 54 (CA)

MLB headnote and full text

Temp. Cite: [1999] O.A.C. TBEd. MR.037

Michael Simone and Sandy Simone (plaintiffs/respondents/appellants on cross-appeal) v. Sean Leo Kevin Daley, Sandra Montanari, Peat Marwick Thorne Inc., trustee for the estate of Sean Leo Kevin Daley, Manulife Bank of Canada, Giuseppina Dinoto and Domenic Dinoto (defendants/appellants/respondents on cross-appeal)

(C24521)

Indexed As: Simone v. Daley et al.

Ontario Court of Appeal

McKinlay and Weiler, JJ.A.

and Blair, J.(ad hoc)

March 1, 1999.

Summary:

The Simones agreed to buy Daley's house, moved in and began renovations. Daley got into financial difficulties and failed to close the transaction. Daley failed to pay the mortgage and declared bankruptcy. The mortgagee sold the house. The Simones sued Daley for damages. The trial judge awarded the Simones damages and declared that Daley's discharge from bankruptcy did not extinguish the debt against him. Daley appealed.

The Ontario Court of Appeal set aside the declaration that the judgment against Daley survived his discharge from bankruptcy.

Bankruptcy - Topic 8983

Discharge of debtor - Liabilities not released by discharge - Act of defalcation in fiduciary capacity - The Simones agreed to buy Daley's house, moved in and began renovations - Daley got into finan­cial difficulties, failed to pay the mortgage and declared bankruptcy - The mortgagee sold the house - The Simones sued Daley for damages - The trial judge awarded the Simones damages and held that Daley's discharge from bankruptcy did not extin­guish the debt against him, because the debt arose from defalcation in a fiduciary capacity (Bankruptcy and Insolvency Act, s. 178(1)(d)) - Daley appealed - The Ontario Court of Appeal held that the debt did not survive Daley's discharge from bankruptcy - The court did not disturb the trial judge's finding of fact that Daley was a fiduciary - However, Daley's conduct did not amount to defalcation where there was no element of wrongdoing and no finding of bad faith - See paragraphs 4 to 55.

Cases Noticed:

Knoch Estate v. Picken (Jon) Ltd. et al. (1991), 49 O.A.C. 321; 4 O.R.(3d) 385 (C.A.), refd to. [para. 10].

Frame v. Smith and Smith, [1987] 2 S.C.R. 99; 78 N.R. 40; 23 O.A.C. 84; 42 D.L.R.(4th) 81; 42 C.C.L.T. 1; 9 R.F.L.(3d) 225, refd to. [para. 11].

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57; 61 D.L.R.(4th) 14; 35 E.T.R. 1; 44 B.L.R. 1, refd to. [para. 11].

Hodgkinson v. Simms et al., [1994] 3 S.C.R. 377; 171 N.R. 245; 49 B.C.A.C. 1; 80 W.A.C. 1; [1994] 9 W.W.R. 609; 117 D.L.R.(4th) 161; 22 C.C.L.T.(2d) 1, refd to. [para. 16].

Newsome, Re (1927), 8 C.B.R. 279 (Ont. S.C.), refd to. [para. 27].

Canadian Bankers' Association v. Saskatchewan (Attorney General) (1955), 35 C.B.R. 135 (S.C.C.), refd to. [para. 27].

Jones (Bankrupt), Re (1986), 74 N.S.R.(2d) 86; 180 A.P.R. 86; 58 C.B.R.(N.S.) 304 (C.A.), refd to. [para. 27].

Cleve's Sporting Goods Ltd. v. Touchie (J.G.) & Associates Ltd. - see Jones (Bankrupt), Re.

Ironwood Investments Joint Venture v. Leggett Estate (Trustee of) (1996), 38 C.B.R.(3d) 256 (Ont. Gen. Div.), refd to. [para. 27].

Jerrard v. Peacock (1985), 61 A.R. 161; 57 C.B.R.(N.S.) 54 (Q.B. Master), refd to. [para. 27].

Smith v. Henderson et al. (1992), 10 B.C.A.C. 249; 21 W.A.C. 249; 10 C.B.R.(3d) 153 (C.A.), refd to. [para. 31].

Abstainers' Insurance Co. v. Pellegrino (1989), 77 C.B.R.(N.S.) 108 (Ont. Dist. Ct.), refd to. [para. 31].

Janco (Huppe) v. Vereecken (1982), 40 B.C.L.R. 106; 44 C.B.R.(N.S.) 211 (C.A.), red to. [para. 35, footnote 3].

Anderson, Re (1986), 64 B.R. 331 (U.S. Bktcy. Ct., N.D. Ill., W. Div.), refd to. [para. 44].

Central Hanover Bank & Trust Co. v. Herbst (1937), 93 F.2d 510 (2nd Cir.), refd to. [para. 45].

Gagliano, Re (1984), 44 B.R. 259 (N.D. Ill. Bktcy.), refd to. [para. 49].

Alvey, Re (1985), 56 B.R. 170 (W.D. Ky. Bktcy.), refd to. [para. 49].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 178(1) [para. 20].

Authors and Works Noticed:

Black's Law Dictionary (5th Ed. 1979) [paras. 41, 42].

Black's Law Dictionary (6th Ed. 1990) [para. 40].

Maddaugh, Peter D., and McCamus, John D., The Law of Restitution, pp. 288 to 291 [para. 58].

Shorter Oxford Dictionary [para. 39].

Counsel:

Victor L. Freidin, Q.C., for the appel­lants/respondents on cross-appeal;

E. Zeppieri and G.F. Ahmadi, for the respondents/appellants on cross-appeal.

This appeal was heard on October 5 and 6, 1998, before McKinlay and Weiler, JJ.A., and Blair, J.(ad hoc), of the Ontario Court of Appeal. On March 1, 1999, Blair, J.(ad hoc), delivered the following judgment for the court.