Court File and Parties
COURT OF APPEAL FOR ONTARIO
WINKLER C.J.O., DOHERTY and SHARPE JJ.A.
BETWEEN:
FIESTA ENTERTAINMENT CORPORATION
Plaintiff (Respondent)
and
ELENA CAPRILE, EXECUTRIX AND ESTATE TRUSTEE OF THE ESTATE OF DANIEL A. IANNUZZI, DAISONS CORPORATION, JAMES J. WALSH and MULTIMEDIA NOVA CORPORATION
Defendants (Appellant)
Counsel:
H. Richard Bennett for the appellant and agent for Caprile and Daisons Corporation
Jeffrey Larry for the respondent
Heard and orally released: October 25, 2007
On appeal from the order of Justice B.A. Conway of the Superior Court of Justice dated December 28, 2006.
ENDORSEMENT
Endorsement
1We agree with the respondent’s submission that the motion judge acted under the authority of Rule 20.05 which permits the motion judge to decide questions of fact and grant partial summary judgment.
2Section 19 of the Business Corporations Act provides that a corporation cannot rely on its own non-compliance with its articles and by-laws to defeat a claim brought against that corporation unless the corporation can show that the person making the claim, by virtue of his or her position or relationship with the corporation, knew or ought to have known of the non-compliance.
3On the uncontradicted evidence, the president and CEO of the appellant corporation represented that “all was in order” when he purported to pledge the shares as security for the loan advanced by the respondent. This representation was made notwithstanding the notice of restriction on the transfer of the shares apparent on the face of the shares.
4There is nothing in this evidentiary record which could reasonably support the inference that despite the unqualified assurance from the president and CEO, the respondent, by virtue of his position or relationship with the appellant company, knew or ought to know of the continued operation of the restrictions on the transfer of the shares. Section 19 precludes corporate reliance on any failure to comply the articles or by-laws restricting the transfer of the shares. The motion judge was correct in deciding that question for the purposes of the litigation.
Disposition and Costs
5The appeal is dismissed. Costs to the respondent fixed at $10,000, inclusive of G.S.T. and disbursements.
“W. Winkler C.J.O.”
“Doherty J.A.”
“Robert J. Sharpe J.A.”