DATE: 20060327 DOCKET: C42732

COURT OF APPEAL FOR ONTARIO

RE:

FRITTELLI INTERNATIONAL S.P.A. (Plaintiff/Respondent) v. KIRPAL BHATTI, carrying on business under the name “COLUMBIA FURNITURE” and 1364854 ONTARIO LTD. (Defendants/Appellants)

BEFORE:

DOHERTY, MOLDAVER and GILLESE JJ.A.

COUNSEL:

F. Souza and E. Bisceglia

for the defendants/appellants

B.C. North

for the plaintiff/respondent

HEARD: March 22, 2006

RELEASED ORALLY: March 22, 2006

On appeal from the judgment of Justice J.F. McGarry of the Superior Court of Justice dated November 8, 2004.

ENDORSEMENT

[1] The trial judge found on the basis of ample evidence, that the appellant held himself out as the owner of the business with which, as far as the respondent was concerned, it had entered into the contract in issue. He also found, again on ample evidence, that the appellant did not take steps to ensure that the respondent understood that it was contracting with a numbered company and not with the appellant’s personal business. In those circumstances, the appellant cannot be permitted to shield himself from personal liability behind the corporation: see Truster v. Tri-Lux Homes Ltd., [1998] O.J. No. 2001 at paras. 20-22 (O.C.A.).

[2] The appellant also argued that even if the finding of liability against the appellant was otherwise appropriate, the respondent could not obtain judgment against the appellant because the respondent had obtained judgment against the corporation at the outset of the trial. The appellant relies on cases that hold that a plaintiff cannot obtain judgment on the same debt against both the agent and the principal.

[3] Some background is necessary before addressing this ground of appeal. The respondent initially sued only the appellant. In response to the appellant’s defence which pleaded that the company was the contracting party, the respondent amended its claim to seek alternative relief against the company. At the outset of the trial, counsel who represented both the appellant and the company conceded that judgment should go against the company. The trial proceeded against the appellant.

[4] The argument that if the respondent obtained judgment against the company it could not obtain judgment against the appellant personally was not pleaded by the appellant. That argument was also not raised at the time that counsel on behalf of the company consented to judgment against the company. Finally, as far as we can tell from the record, it was not raised in argument at any time before the trial judge.

[5] We do not propose to address the legal merits of the issue raised by the appellant. In our view, the failure to properly plead this defence by the appellant combined with the failure to raise it in a timely fashion at trial precludes reliance on it by the appellant. The respondent is obviously severely prejudiced by the manner in which this issue has been raised. Had it been raised in the pleadings, or had it been raised when the question of judgment against the company was raised, it would have been a simple matter for the respondent to indicate that it would proceed against the appellant. It is common ground that there is no chance to realize anything on the judgment against the company. It strikes this court as very much in the nature of a trap to wait until this point in the proceedings to raise this issue. Consequently, and without deciding whether in a case where the issue is properly pleaded, judgment could be obtained against both the appellant and the company in circumstances like this, we will not give effect to the argument in this case.

[6] The appeal is dismissed. The respondent is entitled to costs on a partial indemnity basis. We fix those costs at $5,700, inclusive of disbursements and GST.

“Doherty J.A.”

“M.J. Moldaver J.A.”

“E.E. Gillese J.A.”