DATE: 2005-12-05

DOCKET: C43533

COURT OF APPEAL FOR ONTARIO

RE:

1465778 ONTARIO INC., and GIUSEPPE CAVALIERI (Appellants (Applicants/Respondents by Counter-Application)) – and – 1122077 Ontario Limited and 1174616 Ontario Incorporated (Respondents on Appeal (Respondents/Applicants by Counter-Application))

BEFORE:

FELDMAN, BLAIR and LAFORME JJ.A.

COUNSEL:

Jonathan Rosenstein

for the appellant

Joseph Dallal

for the respondent

HEARD:

December 1, 2005

On appeal from the orders of Justice Festeryga dated July 3, 2003, of Justice Harris dated July 31, 2003, and Justice Matheson dated January 15, 2004, of the Superior Court of Justice.

APPEAL BOOK ENDORSEMENT

[1] The appellant appeals with leave from three orders made in this litigation: (a) an order denying the corporate plaintiff the ability to be represented by its sole shareholder, Mr. Cavalieri, (2) an order for security for costs against Mr. Cavalieri personally, and (3) an order dismissing the action by Mr. Cavalieri for failing to pay the security.

[2] In our view Festeryga J. erred by failing to allow the sole shareholder to represent the applicant corporation because no further material was filed following the adjournment by Scime J. The criteria for allowing a sole shareholder to represent the corporation appear to be met in this case. If the respondents suffer prejudice, they can bring the appropriate motion.

[3] Harris J. also erred by failing to consider whether Mr. Cavalieri’s explanation was frivolous, as required by rule 56.01(1)(c) when he ordered security for costs. We would set aside that order on the basis of the error. If Mr. Cavalieri continues as a personal plaintiff in the action, the respondent can renew the security for costs motion, if so advised.

[4] In the result, we would set aside the three orders, allow Mr. Cavalieri to represent the corporate plaintiff and set aside the dismissal of the application.

[5] Costs of the motion reserved for further submissions.