Court File and Parties

CITATION: Fiesta Entertainment Corporation v. Caprile, 2007 ONCA 748

DATE: 20071105

DOCKET: C46832

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

[1] We 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.

[2] Section 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.

[3] On 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.

[4] There 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.

[5] The 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.”