Varcon Construction Co. Ltd. v. 1554098 Ontario Inc. (Mademoiselle Women’s Fitness & Day Spa)

Varcon Construction Co. Ltd. v. 1554098 Ontario Inc. (Mademoiselle Women’s Fitness & Day Spa)

The Court affirmed the trial judge's finding of breach of trust and orders for payment because the settlement agreement, read in context, did not extinguish the primary liability of 155 and PFC Meadowvale; Premier's corporate guarantee demonstrates it acted as surety, and the defendants had not pleaded non‑liability so could not successfully rely on a release defence. Therefore the appeal was dismissed and the cross‑appeal allowed to the extent of correcting the trial judge's finding that the settlement extinguished 155 and PFC Meadowvale's liability.

Citation
2012 ONCA 43
Parties
Plaintiff (respondent/appellant by Way of Cross Appeal): Varcon Construction Co. Ltd.; Defendant (appellant/respondent by Way of Cross Appeal): 1554098 Ontario Inc. (Mademoiselle Women's Fitness & Day Spa); Defendant (appellant/respondent by Way of Cross Appeal): Premier Fitness Clubs (Meadowvale) Inc.; Defendant (appellant/respondent by Way of Cross Appeal): Premier Fitness Clubs Inc.; Defendant (appellant/respondent by Way of Cross Appeal): John Cardillo
Court
Court of Appeal for Ontario
Jurisdiction
Canada
Judgment Date
23 January 2012
Procedural Posture
Civil Appeal and Cross Appeal / Court of Appeal Judgment on Appeal and Cross Appeal From Trial Judgment
Outcome
Appeal dismissed; cross-appeal allowed in part
Legal Topics
Breach of Trust, Construction Lien Act S.713, Settlement Agreement Interpretation, Directors' Liability, Suretyship
Source Language
English
Construction Law Trusts Contract Law Civil Procedure Breach of Trust Construction Lien Act S.713 Settlement Agreement Interpretation Directors' Liability +1 more

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Parties

Varcon Construction Co. Ltd.

Plaintiff (respondent/appellant by Way of Cross Appeal)

1554098 Ontario Inc. (Mademoiselle Women's Fitness & Day Spa)

Defendant (appellant/respondent by Way of Cross Appeal)

Premier Fitness Clubs (Meadowvale) Inc.

Defendant (appellant/respondent by Way of Cross Appeal)

Premier Fitness Clubs Inc.

Defendant (appellant/respondent by Way of Cross Appeal)

John Cardillo

Defendant (appellant/respondent by Way of Cross Appeal)

Procedural Posture

Civil Appeal and Cross Appeal / Court of Appeal Judgment on Appeal and Cross Appeal From Trial Judgment

Legal Issues

  1. 1 Whether the settlement agreement released 1554098 Ontario Inc. and Premier Fitness Clubs (Meadowvale) Inc. from liability to the plaintiff
  2. 2 Whether the defendants and director John Cardillo are liable for breach of trust under s.713 of the Construction Lien Act
  3. 3 Whether Premier Fitness Clubs Inc.'s corporate guarantee operates as suretyship rather than extinguishing primary obligors' liabilities

Ratio Decidendi

The Court affirmed the trial judge's finding of breach of trust and orders for payment because the settlement agreement, read in context, did not extinguish the primary liability of 155 and PFC Meadowvale; Premier's corporate guarantee demonstrates it acted as surety, and the defendants had not pleaded non‑liability so could not successfully rely on a release defence. Therefore the appeal was dismissed and the cross‑appeal allowed to the extent of correcting the trial judge's finding that the settlement extinguished 155 and PFC Meadowvale's liability.

Court Disposition

Appeal dismissed; cross-appeal allowed in part

Orders

  • Affirmed trial judge's judgment awarding Premier Fitness Clubs Inc. to pay Varcon Construction Co. Ltd. $138,510.44 for breach of the settlement agreement and confirming other defendants' obligations to make specified payments for breach of trust
  • Determined that the settlement agreement did not extinguish 1554098 Ontario Inc. and Premier Fitness Clubs (Meadowvale) Inc.'s underlying liabilities