Court File and Parties

Citation: TMD Investments Ltd. v. Fiddlehead's Cafe Inc., 2007 ONCA 428

Date: 2007-06-13

Docket: C45073

Court of Appeal for Ontario

Sharpe, Juriansz JJ.A. and Chapnik J. (Ad hoc)

Between:

TMD Investments Ltd.

Plaintiff (Respondent)

and

Fiddlehead’s Cafe Inc. and Peter Dixon and Irene Wheatley

Defendants (Appellant)

Counsel:

Steven M Fehrle for the appellant

Ryan P. Zigler for the respondent

Heard and endorsed: June 7, 2007

On appeal from the judgment of Justice Horkins of the Superior Court of Justice dated February 9, 2006.

Endorsement

[1] We see no error in the careful and thorough reasons of the trial judge holding the appellant Dixon personally bound by the pre-incorporation of the lease he signed pursuant to Business Corporations Act, s. 21. As the trial judge correctly found Dixon can escape personal liability only if requirements of s. 21(2) have been satisfied. Section 21(2) requires the Corporation within a reasonable time after it comes into existence by some action or conduct to signify its intention to be bound by the pre-incorporation contract. In our view, the only act or conduct capable of signifying Fiddlehead’s Café Inc.’s intention to be bound by the lease and, thereby relieve Dixon of liability pursuant to s. 21(2), were rental payments made from July 1999 to December 1999, almost one year after Fiddlehead’s was incorporated. We see no reason to disagree or interfere with the trial judge’s finding that this conduct was not within a reasonable time after Fiddlehead’s came into existence.

[2] Moreover, as the trial judge noted, other conduct, namely, Fiddlehead’s failure to execute the lease, Dixon’s wish to have a numbered company made party to the lease and rental payments made to the landlord by the numbered company for several months, is inconsistent with the position now taken by Dixon that Fiddlehead’s adopted the pre-incorporation contract within a reasonable time.

[3] For these reasons the appeal is dismissed. Costs to the respondent fixed at $5,000 inclusive of disbursements and GST.

“Robert J. Sharpe J.A.”

“R. Juriansz J.A.”

“Sandra Chapnik J. (ad hoc) »