COURT OF APPEAL FOR ONTARIO

CITATION: Achilles Motors Limited v. 1717222 Ontario Inc., 2014 ONCA 139

DATE: 20140224

DOCKET: C57401

Hoy A.C.J.O., LaForme and Pardu JJ.A.

BETWEEN

Achilles Motors Limited

Appellant

and

1717222 Ontario Inc. and Nucorp Realty Ltd. Brokerage

Respondents

Charles Baker, for the appellant

William C. McDowell and Lindsay N. Beck, for the respondents

Heard: February 13, 2014

On appeal from the order of Justice Fitzpatrick of the Superior Court of Justice, dated July 5, 2013.

ENDORSEMENT

[1] The appellant, Achilles Motors Limited, appeals the dismissal of its application (1) for a declaration that an agreement of purchase and sale entered into after the respondent 1717222 Ontario Inc. (“171”) had been dissolved, and before it had been revived, was void and (2) for the forfeiture and delivery to the appellant of the $100,000 deposit held by the respondent real agent, Nucorp Realty Ltd. Brokerage.

[2] The appellant argues that the application judge erred in concluding that the revival of 171 under s. 241(5) of the Business Corporations Act, R.S.O. 1990, c. B.16 (the “OBCA”) was retroactive in effect, and the agreement of purchase and sale was therefore enforceable.

[3] For the reasons that follow, we agree with the application judge’s conclusion and, accordingly dismiss this appeal.

[4] Briefly, the appellant and 171 entered into an agreement of purchase and sale on November 18, 2010. That agreement was subsequently amended. Unbeknownst to them, on November 16, 2010, 171’s corporate charter had been dissolved by the Ministry of Government Services for failure to file a Notice of Change Form 1. 171 learned of the cancellation by letter dated June 20, 2012 from the appellant’s counsel. 171 immediately filed a Form 1 and received a Certificate of Revival dated September 19, 2012. Until the appellant discovered that 171 had been dissolved, the parties had dealt with each other on the basis that the agreement of purchase and sale was binding on them.

[5] More than 25 years ago, this court established in Zangelo Investments Ltd. v. Glasford State Inc.(1988), 1988 CanLII 4532 (ON CA), 63 O.R. (2d) 542 that the revival provision in Ontario’s then current corporate statute, namely s. 240(4) of the Ontario Business Corporations Act, 1982, S.O. 1982, c. 4, was retroactive in effect. That section provided as follows:

240(4) Where a corporation is dissolved under subsection (3) or any predecessor thereof, the Director on the application of any interested person immediately before the dissolution, made within five years after the date of dissolution, may, in his discretion, on such terms and conditions as he sees fit to impose, revive the corporation and thereupon the corporation, subject to the terms and conditions imposed by the Director and to any rights acquired by any person after its dissolution, is restored to its legal position, including all its property, rights and privileges and franchises, and is subject to all its liabilities, contracts, disabilities and debts, as of the date of its dissolution, in the same manner and to the same extent as if it had not been dissolved. [Emphasis added.]

[6] In doing so, this court upheld the decision of the application judge, Oyen J. In a short endorsement, Blair J.A. wrote that:

We agree with the reasoning and the conclusion of Oyen J. The wording of s. 240(4) of the Ontario Business Corporations Act, 1982, S.O. 1982, c. 4, is such that the only reasonable inference that can be drawn is that a dissolved company that is revived, is revived as of the date of dissolution so as to update all action taken by the company during its time of dissolution.

[7] We reject the appellant’s argument that because this court’s decision in Zangelo was in the form of a short endorsement, it should be disregarded. The court adopted the reasoning and conclusion of the application judge, as it was entitled to do so. The court’s decision was clear.

[8] Section 241(5) of the OBCA is worded slightly differently from s. 240(4). However, the changes - particularly the words “shall be deemed for all purposes to have never been dissolved” - make it even clearer that s. 241(5) is similarly retroactive in effect:

241(5) Where a corporation is dissolved under subsection (4) or any predecessor of it, the Director on the application of any interested person, may, in his or her discretion, on the terms and conditions that the Director sees fit to impose, revive the corporation; upon revival, the corporation, subject to the terms and conditions imposed by the Director and to the rights, if any, acquired by any person during the period of dissolution, shall be deemed for all purposes to have never been dissolved. [Emphasis added.]

[9] Moreover, an interpretation giving retroactive effect is consistent with the curative purpose of s. 241(5) of the OBCA.

[10] As the application judge highlighted, revival of a dissolved corporation under s. 241(5) is in the discretion of the Director, and the Director may impose terms and conditions. Without commenting on whether any such terms and conditions could impact on the otherwise retroactive effect of s. 241(5), we note that none of the terms and conditions set out in 171’s Certificate of Revival purport to interfere with the retroactive nature of 171’s revival.

[11] The appellant relies on Swale Investments Ltd. v. National Bank of Greece (Canada)(1997), 1997 CanLII 12439 (ON SC), 37 B.L.R. (2d) 324 (Ont. S.C.), and decisions that have followed it. In our view, Swale wrongly concluded that s. 241(5) is not retroactive in effect. In coming to that conclusion, the application judge in Swale rejected the reasoning of Oyen J. that had been specifically approved by this court in Zangelo. Moreover, that conclusion was obiter. The result in Swale turned on the fact that no revival had taken place or been attempted. As the application judge in Swale noted, the revival provision was therefore not relevant. We note that the appeal of the respondent in Swale to this court was dismissed, on consent, without a determination on the merits: Swale Investments Ltd. v. National Bank of Greece (Canada), [1998] O.J. No. 5383 (C.A.). This court’s decision in Zangelo that the revival provision in s. 240(4) of the earlier version of the OBCA is retroactive in effect remains the law, and supports the conclusion that s. 241(5) is retroactive in effect.

[12] The appeal is accordingly dismissed. The respondent 171 is entitled to costs in the agreed, all inclusive, amount of $7500.

“Alexandra Hoy A.C.J.O.”

“H.S. LaForme J.A.”

“G. Pardu J.A.”