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FORMATION - Oral contracts

Thursday, August 06, 2020 @ 7:42 AM  


Lexis Advance® Quicklaw®
Appeal by the defendants from the damages judgment against them. The personal appellant purchased a commercial development project in trust for a company yet to be incorporated. The corporate appellant was incorporated for that purpose. In 2003, three principal investors incorporated the respondent after orally agreeing to invest $230,000 in the project. The appellants sold the project in 2006 but did not disclose the sale to the principals. They did not provide the respondent with a portion of the proceeds or reimburse the principals for their original investment. The principals did not discover the sale until six years later. The trial judge found the respondent was owed a fiduciary duty by both appellants. He awarded the respondent damages that included $515,600 in pre-judgment interest and $200,000 in punitive damages.

HELD: Appeal dismissed. The finding of an oral contract turned largely on credibility findings that were open to the trial judge to make. It was open to the trial judge to find the appellants breached the terms of that contract. There was no error in the trial judge's approach to his credibility findings. Based on the record, it was open to the trial judge to reject the personal appellant's evidence. The trial judge applied the law correctly in piercing the corporate veil given the personal appellant used the corporate appellant to direct and cause the misappropriation of the respondent's funds for his own purposes. The trial judge made no error in awarding punitive damages, given the appellant's particularly egregious conduct in lying to the principals for several years.

6071376 Canada Inc. v. 3966305 Canada Inc., [2020] O.J. No. 2910, Ontario Court of Appeal, K.N. Feldman, J.M. Fairburn and I.V.B. Nordheimer JJ.A., June 30, 2020. Digest No. TLD-August32020006