2066209 Ontario Inc. v. Tannis, 2012 ONSC 6665
CITATION: 2066209 Ontario Inc. v. Tannis, 2012 ONSC 6665
COURT FILE NO.: 10-1660
DATE: 2012/11/23
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
2066209 ONTARIO INC.
Plaintiff/Respondent on Appeal
– and –
RALPH TANNIS, 6681875 CANADA INC., 6384455 CANADA INC., 6270735 CANADA INC., and 2161110 ONTARIO LTD.
Defendant/Appellant on Appeal
Richard Dean MacNeil, as agent for the Plaintiff/Respondent on Appeal
Christopher Hart, as agent for Ernest Tannis, counsel for the Defendant, Ralph Tannis/Appellant on Appeal
HEARD: September 26, 2012
AMENDED REASONS FOR JUDGMENT
(Correction is made in paragraph 35 where 6681875 was incorrectly referred to as 6881875.)
Aitken J.
Nature of Proceedings
[1] This is an appeal from the decision of Deputy Judge Houlahan, sitting as a judge of the Small Claims Court of the Superior Court of Justice released August 26, 2010 in which he found Ralph Tannis (“Tannis”) and Ralph’s Sports Bar (Bank Street) liable to pay to the Plaintiff $10,000 plus costs, including a fee of $1,500 plus all necessary disbursements, in addition to the costs already awarded to the Plaintiff previously in the proceeding. The action was dismissed without costs against 6681875 Canada Inc., 6384455 Canada Inc., 6270735 Canada Inc., and 2161110 Ontario Ltd.
[2] Tannis appeals on the grounds that the trial judge erred in finding that Tannis was personally liable to the Plaintiff. More specifically, Tannis argues that the trial judge erred in the following ways: (1) in deciding that he did not need to pierce the corporate veil when he found Tannis personally liable, and (2) in finding personal liability on Tannis’ part in the absence of evidence that the Plaintiff ever considered Tannis personally liable.
Background Facts
[3] The Plaintiff, 2066209 Ontario Inc., carries on business as Red Hot Poker Tour. It puts on poker tournaments in bars and other venues throughout Canada. Richard Dean MacNeil (“MacNeil”) is the President of the Plaintiff corporation and Nicholas McGowan (“McGowan”) is the Director of Operations. In this capacity, McGowan is responsible for establishing and managing business relationships with the bars and other venues where Red Hot Poker Tour operates. His responsibilities include billing customers and collecting accounts.
[4] Ralph Tannis is the principal of the Defendant, 6681875 Canada Inc. (“Fat Albert’s and Ralph’s”), which through franchises, or other arrangements, has restaurants or bars in Eastern Ontario under the logo of Fat Albert’s or Ralph’s Sports Bars. The Defendant, 6384455 Canada Inc., had the right to use the name Ralph’s Sports Bar at the bar at 1571 Bank Street (“Ralph’s Sports Bar (Bank Street)”), adjacent to a Fat Albert’s restaurant.
[5] On November 10, 2006, McGowan received an email from Leiba Krantzberg (“Krantzberg”) seeking information about starting Red Hot Poker Tour in what she referred to as “our” bars. At the time, she was managing Ralph’s Sports Bar (Bank Street), but was also working on business promotion for Fat Albert’s and Ralph’s, as indicated on her business card. In making the inquiry, she was seeking information about Red Hot Poker Tour not only for Ralph’s Sports Bar (Bank Street) but also for other Ralph’s Sports Bars in the Ottawa area.
[6] On November 11, 2006, McGowan met with Tannis and Krantzberg at 1371 Bank Street, at which time it was agreed that Red Hot Poker Tour would have a poker night at Ralph’s Sports Bar (Bank Street) on Tuesday nights at a cost of $200 per night. Tannis took the lead in negotiating this arrangement.
[7] Red Hot Poker Tour provided its services once a week through to March 2007, at which time, pursuant to Tannis’s request, the service started to be offered twice a week – on Sundays and Tuesdays. As instructed by both Tannis and Krantzberg, McGowan sent monthly invoices for the service to Ralph’s Sports Bar (Bank Street) and noted Krantzberg as the contact person on each invoice. None of the invoices was ever paid, despite McGowan’s frequent requests to and meetings with Krantzberg and Tannis. On a number of occasions, Tannis reassured McGowan that the invoices would be paid. At their final meeting, Tannis advised that, if no arrangement for a reduced payment could be negotiated, McGowan would have to sue him.
[8] The Defendant, 6384455 Canada Inc., went bankrupt. The Defendants, 6270735 Canada Inc. and 2161110 Ontario Inc., were not in existence at the material time. The actions against them were, therefore, dismissed. The trial judge dismissed the action against Fat Albert’s and Ralph’s, finding that it was not, in any way, connected with this action.
Preliminary Matters
Appellant’s Supplementary Factum
[9] At the start of the hearing, Tannis’s counsel sought leave to file and rely upon a supplementary factum served on the Plaintiff on Friday, September 21, 2012. The Plaintiff did not consent to the abridgement of time for service under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Leave was denied for the following reasons.
[10] This appeal was perfected on September 27, 2011 – a year ago. The Plaintiff dutifully responded to the factum served and filed on behalf of Tannis. Tannis’s counsel, Ernest Tannis, chose not to retain Mr. Hart to act as his agent at the appeal hearing until nine days ago. Once Mr. Hart had reviewed the case and the original factum, he believed that there was a need for a supplementary factum. He argued that there was no prejudice to the Plaintiff associated with the supplementary factum being served last Friday, leaving only two business days prior to the hearing of the appeal. I rejected this claim.
[11] Clearly, there would have been prejudice to the Plaintiff if Tannis had been allowed to rely on the supplementary factum in arguing the appeal. The supplementary factum raised a new issue not articulated in the factum and, in doing so, relied on a statute and seven cases not referred to in the factum. None of these cases was new; all could have been referred to in the factum. In order to properly respond to the supplementary factum, the Plaintiff would have required an adjournment and the opportunity to file its own supplementary factum in response. Such an adjournment itself would have been prejudicial, as it would have further delayed the Plaintiff’s ability to recover its judgment against Tannis.
[12] The courts have to manage their own resources in a way that is consistent with the provisions in, and the spirit of, the Rules. Rule 1.04(1) states: “These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.” Rule 1.04(2) states: “In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.” Litigants – especially in matters involving relatively small amounts of money – do not have the right to drag matters on indefinitely.
[13] The events underlying this litigation occurred from November 2006 to July 2007. The amount involved in the action is $10,000. There have already been numerous court appearances relating to this matter. No explanation was offered as to why Tannis, and his legal representatives, could not have put forward all arguments, and supporting legislative and case authorities, prior to the appeal being perfected. As well, since this court was not advised that Tannis would be raising an argument that could lead to an adjournment of the hearing, prior to the hearing, I read the entire transcript from the Small Claims Court trial, as well as the other documents submitted on the appeal. It hardly allows for an efficient use of court resources if tardiness on the part of counsel in preparing for an appeal can result in hours of court time being wasted.
Plaintiff Corporation Represented by Agent
[14] At the start of the hearing, Tannis’s counsel also objected to the Plaintiff not being represented by counsel. Rule 15.01(2) requires a party to a proceeding that is a corporation to be represented by a lawyer, except with leave of the court. For the following reasons, I granted leave for MacNeil to represent the Plaintiff.
[15] MacNeil represented the Plaintiff at trial and did a very credible job examining and cross-examining witnesses, marshalling evidence, and making submissions. For someone who is not a lawyer, he conducted himself at trial in an admirable fashion. During the course of preparation for this appeal, MacNeil served and filed all necessary documents and presented his response in a clear and organized fashion. As has already been mentioned, this appeal involves a judgment for only $10,000. The litigation has been going on since 2007. At no time prior to the commencement of the appeal hearing, did Tannis make any formal objection to MacNeil representing the Plaintiff. MacNeil is president of the Plaintiff corporation and has full authority to act on its behalf. In these circumstances, I was satisfied that it was appropriate for MacNeil to represent the Plaintiff corporation.
Standard of Review
[16] In Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, the Supreme Court of Canada addressed the standard of review on an appeal from a judge’s decision. In summary:
On a pure question of law, the basic rule with respect to the review of a trial judge’s findings is that an appellate Court is free to replace the opinion of the trial judge with its own. Thus the standard of review on a question of law is that of correctness (at para. 8).
The standard of review for findings of fact is that such findings are not to be reversed unless it can be established that the trial judge made a “palpable and overriding error”: Stein v. The Ship "Kathy Krantzberg" (at para. 10).
Questions of mixed fact and law are subject to the “palpable and overriding error” standard unless it is clear that the trial judge made some error of law or principle that can be identified independent of the judge’s application of the law to the facts of the case. In these circumstances, the error of law is extricable from the questions of mixed fact and law in issue and must be separated out and reviewed on a standard of correctness (at paras. 36-37).
[17] The Ontario Court of Appeal elaborated on the definition of a palpable and overriding error in Waxman v. Waxman (2004), 186 O.A.C. 201, [2004] O.J. No. 1765 (C.A.), at paras. 296-297, 300:
The “palpable and overriding” standard addresses both the nature of the factual error and its impact on the result. A “palpable” error is one that is obvious, plain to see or clear: Housen at 246. Examples of “palpable” factual errors include findings made in the complete absence of evidence, findings made in conflict with accepted evidence, findings based on a misapprehension of evidence and findings of fact drawn from primary facts that are the result of speculation rather than inference.
An “overriding” error is an error that is sufficiently significant to vitiate the challenged finding of fact. Where the challenged finding of fact is based on a constellation of findings, the conclusion that one or more of those findings is founded on a “palpable” error does not automatically mean that the error is also “overriding”. The appellant must demonstrate that the error goes to the root of the challenged finding of fact such that the fact cannot safely stand in the face of that error: Schwartz v. Canada, [1996] 1 S.C.R. 254 at 281.
...Housen provides a detailed analysis of the “palpable and overriding” standard of review… First and foremost, … the “palpable and overriding” standard applies to all factual findings whether based on credibility assessments, the weighing of competing evidence, expert evidence, or the drawing of inference from primary facts.
Analysis
Trial Judge’s Assessment of Credibility
[18] The only two witnesses who testified at trial were McGowan on behalf of the Plaintiff and Tannis on behalf of the Defendants. In assessing their evidence, the trial judge made the following comments regarding credibility:
In assessing the evidence of the witnesses, I unhesitatingly accept the evidence of Mr. McGowan and, except as I have indicated above, I reject the whole of Tannis’ evidence as a tissue of falsehood. Tannis is an astute and experienced business person and I found his demeanor on the witness stand unsettling and his evidence contrived to suit his purpose which, in my view, was to take advantage of the Plaintiff’s services and avoid paying for them by hiding behind a corporate fiction, of which the Plaintiff was never made aware.
[19] A review of the transcript from the trial provides illumination as to why the trial judge came to this conclusion. Tannis was evasive in answering questions. The trial judge had the impression that Tannis was playing with everyone in the court room, giving at times incomplete, misleading, or non-responsive answers. In contrast, McGowan provided his evidence in a straight-forward, balanced fashion. There is no reason for this court, on appeal, to question the trial judge’s credibility findings.
Summary of the Evidence Regarding Tannis’s Role and McGowan’s Understanding of his Role
[20] Tannis takes the position that there was no evidence adduced at trial to support his personal liability and, therefore, the trial judge made a palpable error by making such a finding in the absence of any such evidence.
[21] Some of the evidence which could support a finding that Tannis personally entered the contract with the Plaintiff includes the following:
• The initial email which Leiba Krantzberg (“Krantzberg”) sent to McGowan was copied to Rgt555@aol.com, Tannis’ personal email account. The corporate email account he used in regard to Fat Alberts was RGT@Fatalberts.ca.
• The original meeting that was arranged for McGowan to discuss Red Hot Poker Tour at 1571 Bank Street was attended by both Tannis and Krantzberg and Krantzberg advised McGowan that the meeting could not begin until Tannis was in attendance.
• Tannis assumed control of that meeting and discussed such issues as the nature of the services to be delivered by Red Hot Poker Tour, the history of that company in the Ottawa area, the start date of services, and the cost of services.
• Tannis was present at Ralph’s Sports Bar (Bank Street) on most occasions when McGowan dropped in, was present at most meetings McGowan had with Krantzberg, and conducted meetings with McGowan to discuss their business relationship when Krantzberg was not present.
• Tannis, in the absence of Krantzberg, asked McGowan in February 2007 to increase the frequency of the poker nights to two a week. McGowan sent an email to Tannis confirming that two sessions a week would be starting in March. Krantzberg was not copied on that email. Tannis never responded to indicate that anyone, other than himself, needed to be consulted or needed to agree to this new arrangement.
• In February 2007, Tannis assured McGowan that the outstanding balance on the accounts he had been submitting to Ralph’s Sports Bar (Bank Street) would be paid.
• Tannis, as well as Krantzberg, instructed McGowan to send invoices to Ralph’s Sports Bar at 1571 Bank Street. Tannis was aware of the invoices that were sent there, was aware that they were not being paid, and assured McGowan on a number of occasions that they would be paid.
• McGowan stated that he had concluded that Tannis was the person ultimately responsible for Ralph’s Sports Bar (Bank Street) because he made all of the decisions in its regard.
• During McGowan’s last meeting with Krantzberg and Tannis, when he was pressing for payment of the outstanding invoices, Tannis said to McGowan, after making a joke about how many pizzas would have to be sold to pay the invoices: “No seriously, if we can’t come to some arrangement today, you’re going to have to sue me.”
• When Tannis left to tend to other business, Krantzberg went on to say: “We would like to pay 50 cents on the dollar.” McGowan made a counterproposal of 75 cents on the dollar to which Krantzberg replied that she would have to speak to Tannis before responding, but she would provide McGowan with a cheque if Tannis approved.
• Tannis was an officer and director of 6384455 Canada Inc. (c.o.b. as Ralph’s Sports Bar (Bank Street) during the period when the events involved in this litigation occurred. It was like pulling teeth to get Tannis to provide this evidence at trial.
[22] However, almost all of this evidence could also support a finding that Tannis was representing Fat Albert’s and Ralph’s (6681875 Canada Inc.) when he was dealing with McGowan. In fact, despite the conclusion of the trial judge that 6681875 Canada Inc. was not connected to this action, there was significant evidence to the effect that, when Tannis was arranging for the Red Hot Poker Tour to provide services at Ralph’s Sports Bar (Bank Street), he was, in fact, representing Fat Albert’s and Ralph’s (6681875 Canada Inc.):
• Krantzberg’s original email referred to “our bars”, her email address was at fatalberts.ca, her business card referred to her position as “Business Development, Head Office” at Fat Albert’s and Ralph’s, and, under her name on the email she put Fat Albert’s and Ralph’s.
• Krantzberg’s second email to McGowan said “we” look forward to a successful poker tournament and referred McGowan to the Fat Albert’s web site, as well as the unfinished Ralph’s web site.
• Tannis testified that Krantzberg did some work for the head office of Fat Albert’s and Ralph’s before she bought the rights to the bar and, during that time, she was helping with promotions for all franchises and was working out of 1571 Bank Street.
• When Tannis and Krantzberg were initially meeting with McGowan, one of Fat Albert’s and Ralph’s franchisees, Sam Figali (“Figali”), joined the meeting and Tannis made a point of introducing him to McGowan as an independent franchisee of Fat Albert’s and Ralph’s who ran his own business and might, independently, be interested in the services provided by Red Hot Poker Tour. Figali went on to independently arrange with McGowan for such services at his Ralph’s Sports Bar (St. Laurent), and Tannis played no role whatsoever in those negotiations – aside from making the initial introduction. Tannis never explained to McGowan, in the same fashion, that Krantzberg was also an independent franchisee.
• The address where Fat Albert’s and Ralph’s conducted its business was right beside 1571 Bank Street (where Ralph’s Sports Bar (Bank Street) is located) and connected to it by a breezeway.
• Tannis was the decision-maker for Fat Albert’s and Ralph’s.
• Tannis testified that most of the meetings he would have on behalf of Fat Albert’s and Ralph’s were held at 1571 Bank Street. He did not meet people in his home at 80 Presland Avenue, Ottawa, which is the official head office of Fat Albert’s and Ralph’s (6681875 Canada Inc.).
• Tannis acknowledged that it would have been reasonable for McGowan to conclude that Tannis was representing Fat Albert’s and Ralph’s head office during their discussions.
[23] Some additional evidence which is consistent with a finding of liability either on the part of Tannis personally or on the part of Fat Albert’s and Ralph’s (6681875 Canada Inc.) is the following:
• When questioned about his introducing McGowan to Figali, Tannis made the following statement: “I asked Nick [McGowan] to go visit Mr. Figali and I recommended Mr. Figali do it [i.e. have poker] once a week and not on the same night as us.” The only reasonable way to interpret this statement is that Tannis was referring at the time to himself and Krantzberg or to Fat Albert’s and Ralph’s and Krantzberg and the business at Ralph’s Sport’s Bar (Bank Street) that they were both involved in. It is a terminology that differentiates the arrangement Tannis or Fat Albert’s and Ralph’s had with Krantzberg from the arrangement Fat Albert’s and Ralph’s had with Figali.
• Tannis chose not to tender in evidence proof of the existence of any franchise agreement between Fat Albert’s and Ralph’s with Ralph’s Sports Bar (Bank Street).
• Tannis testified that he knew that Krantzberg was “one of the owners” of the Ralph’s Sports Bar (Bank Street) – the owner who was managing the store – but he professed not to know who the other owners were. If, in fact, the corporation that he claimed owned the rights to operate that store, 6384455 Canada Inc., was a franchisee of Fat Albert’s and Ralph’s, Tannis would have made it his business to know who the owners were. As well, he had been an officer and director of that corporation. There was ample reason for the trial judge to doubt Tannis’ evidence in this regard.
[24] The evidence regarding McGowan’s understanding of the role Tannis was playing in regard to Ralph’s Sports Bar (Bank Street) was clear – throughout his interactions with Tannis and Krantzberg, McGowan thought Tannis was representing the head office of Fat Albert’s and Ralph’s and Krantzberg was the person tasked with managing the Ralph’s Sports Bar (Bank Street). That evidence includes the following:
• After receiving Krantzberg’s original email referring to “our bars”, with her email address shown as fatalberts.ca, with her business card referring to her position as “Business Development, Head Office” at Fat Albert’s and Ralph’s, and with “Fat Albert’s and Ralph’s” placed under her name, McGowan understood that Krantzberg was working for Fat Albert’s and Ralph’s head office in the capacity of arranging events.
• That understanding was maintained after receipt of Krantzberg’s second email to McGowan, saying “we” look forward to a successful poker tournament and referring McGowan to the Fat Albert’s web site, as well as the unfinished Ralph’s web site.
• At all times, McGowan thought that he was dealing with the head office of Fat Albert’s and Ralph’s. He understood that the address of the head office of Fat Albert’s and Ralph’s was right beside 1571 Bank Street (where Ralph’s Sports Bar (Bank Street) is located) and to which it is attached. He expected that the head office of Fat Albert’s and Ralph’s would be paying for the invoices he sent because he understood that that was with whom he had contracted.
• McGowan understood that Tannis was the decision-maker for Fat Albert’s and Ralph’s.
• McGowan understood that Ralph’s Sports Bar (Bank Street) was a corporately owned bar, i.e. that Fat Albert’s and Ralph’s owned the bar and Krantzberg managed it on behalf of the Fat Albert’s and Ralph’s.
Partnership Arrangement or Joint Venture
[25] The trial judge concluded on the basis of this evidence that a partnership or joint venture existed between Tannis (personally) and Krantzberg for the operation of Ralph’s Sports Bar (Bank Street). He stated:
In the present case, I do not have to pierce a corporate veil. On the evidence before me, I am prepared to find there existed in the eyes of the Plaintiff, a partnership arrangement, or joint venture between Tannis and Ms. Krantzberg in the operation of Ralph’s Sports Bar at 1571 Bank Street, Ottawa, Ontario. Further, I find that Tannis had many opportunities to dispel this conclusion by the Plaintiff and took no action. In the contrary, he continued to hold himself out at all times as a principal of “Ralph’s Sports Bar”. Since he has been personally sued for the debt, I find he is personally liable to pay it.
[26] With respect to the trial judge, I conclude that his finding that there existed in the eyes of the Plaintiff a partnership arrangement or joint venture between Tannis and Krantzberg for the operation of Ralph’s Sports Bar (Bank Street) is not supported by the evidence which the trial judge accepted; namely, the consistent, uncontroverted, evidence of McGowan that, at all times, he thought Tannis was acting in his capacity as a representative of the head office of Fat Albert’s and Ralph’s, and he thought Krantzberg was acting as an employee of Fat Albert’s and Ralph’s. The trial judge’s finding was a significant underpinning of his decision to hold Tannis personally liable for the debt. It amounted to a palpable and overriding error. Tannis cannot be found personally liable to the Plaintiff on the basis of the existence of a partnership or joint venture of which he personally was a member or held himself out as being a member when, at no time, did the Plaintiff rely on any such partnership or joint venture when dealing with Tannis and Krantzberg and, instead, was relying on another entity altogether – namely, Fat Albert’s and Ralph’s – as being the party responsible for payment of the debt.
[27] Section 15(1) of the Partnership Act, R.S.O. 1990, c. P. 5 states:
Every person, who by words spoken or written or by conduct represents himself or herself or who knowingly suffers himself or herself to be represented as a partner in a particular firm, is liable as a partner to any person who has on the faith of any such representation given credit to the firm, whether the representation has or has not been made or communicated to the persons so giving credit by or with the knowledge of the apparent partner making the representation or suffering it to be made. [Emphasis added.]
[28] In Bet-Mur Investments Ltd. v. Spring, (1994), 20 O.R. (3d) 417 (Gen. Div.), aff’d 1999 2802 (ON CA), 41 O.R. (3d) 799 (C.A.), Roberts J. noted that a plaintiff relying on s. 15(1) of the Partnership Act must prove that he relied on the representation of partnership and that he gave credit to the defendant on the faith of such representation. There is no evidence in this case that can amount to proof of such reliance.
Piercing the Corporate Veil
[29] The trial judge decided that he did not need to pierce the corporate veil in order to find Tannis personally liable for the debt to the Plaintiff. However, without being able to apply partnership principles to establish Tannis’s personal liability, the trial judge would have had to resort to piercing the corporate veil.
[30] To pierce the corporate veil, the actions of the defendant must be said to have been “fraudulent, dishonest and deceitful”. “As the corporate veil cannot be used as a shield for misconduct or fraud, liability may be extended to the principals of a corporation where they have engaged in this type of conduct…” (Performance Industries Ltd. v. Sylvan Lake Golf Club Ltd., 2000 ABCA 116, at para. 23).
[31] The Ontario Court of Appeal in ScotiaMcLeod Inc. v. Peoples Jewellers Ltd. (1995), 26 O.R. (3d) 481(C.A.), at para. 25, provided a useful summary of the circumstances under which the corporate veil can be pierced to render directors and officers of a company liable:
The decided cases in which employees and officers of companies have been found personally liable for actions ostensibly carried out under a corporate name are fact-specific. In the absence of findings of fraud, deceit, dishonesty or want of authority on the part of employees or officers, they are also rare. Those cases in which the corporate veil has been pierced usually involve transactions where the use of the corporate structure was a sham from the outset or was an afterthought to a deal which had gone sour. There is also a considerable body of case-law wherein injured parties to actions for breach of contract have attempted to extend liability to the principals of the company by pleading that the principals were privy to the tort of inducing breach of contract between the company and the plaintiff: see Ontario Store Fixtures Inc. v. Mmmuffins Inc. (1989), 70 O.R. (2d) 42 (H.C.J.), and the cases referred to therein. Additionally there have been attempts by injured parties to attach liability to the principals of failed businesses through insolvency litigation. In every case, however, the facts giving rise to personal liability were specifically pleaded. Absent allegations which fit within the categories described above, officers or employees of limited companies are protected from personal liability unless it can be shown that their actions are themselves tortious or exhibit a separate identity or interest from that of the company so as to make the act or conduct complained of their own. [Emphasis added.]
[32] In the case at bar, the allegations by the Plaintiff, and the findings of the trial judge, do not fit within the categories described in ScotiaMcLeod Inc., of “fraud, deceit, dishonesty or want of authority” to find personal liability on the part of Mr. Tannis. Moreover, the facts giving rise to Mr. Tannis’s personal liability were never specifically pleaded, and Mr. Tannis’s actions were themselves neither “tortious” nor “exhibit[ed] a separate identity or interest from that of the company so as to make the act or conduct complained of [his] own.”
[33] In that piercing the corporate veil was not an option that presented itself through the pleadings and the evidence, it could not form the basis upon which the trial judge could find personal liability on the part of Tannis.
Liability of Fat Albert’s and Ralph’s (6681875 Canada Inc.)
[34] In all fairness, however, the matter cannot be left here. There is a further conclusion of the trial judge that represents a palpable and overriding error because it is a conclusion in conflict with the evidence accepted by the trial judge. That is the trial judge’s conclusion that Fat Albert’s and Ralph’s (6681875 Canada Inc.) was not in any way connected with this action. On the basis of the evidence which the trial judge accepted, that entity was very much connected with this action. First, as summarized above in paragraphs 22 and 23, there was significant evidence that, in their interactions with McGowan (as representative of Red Hot Poker Tour), both Tannis and Krantzberg were representing Fat Albert’s and Ralph’s. It is to be noted that the trial judge rejected Tannis’s evidence that Ralph’s Sports Bar (Bank Street) was an independent franchise of Fat Albert’s and Ralph’s. Second, as summarized above in paragraph 24, the evidence of McGowan, which the trial judge accepted unqualifiedly, was that, at all times, he thought Tannis was a principal of Fat Albert’s and Ralph’s and was representing head office in their negotiations and in the conclusion of the contract. Tannis acknowledged that, as a result of his interactions with Mr. McGowan, it was reasonable for Mr. McGowan to have had that understanding. As well, the evidence of McGowan was that, at all times, he thought that Krantzberg was the employee of Fat Albert’s and Ralph’s responsible for management of Ralph’s Sports Bar (Bank Street), an operation owned by Fat Albert’s and Ralph’s. In entering the contract to provide services to Ralph’s Sports Bar (Bank Street), in extending additional services to the sports bar, and in foregoing collection measures on the basis of Tannis’s promise that invoices would be paid, McGowan relied on his understanding that Tannis was representing Fat Albert’s and Ralph’s, and that Fat Albert’s and Ralph’s was ultimately responsible for payment of the debt.
Disposition
[35] The judgment of the trial judge as against Tannis personally is set aside and replaced by a judgment in the same amount and on the same terms against 6681875 Canada Inc. (c.o.b. as Fat Albert’s and Ralph’s).
[36] Within 30 days of the release of these reasons, the parties may make written costs submissions of three pages or less, plus any relevant attachments.
Aitken J.
Released: November 23, 2012
CITATION: 2066209 Ontario Inc. v. Tannis, 2012 ONSC 6665
COURT FILE NO.: 10-1660
DATE: 2012/11/23
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
2066209 ONTARIO INC.
Plaintiff/Respondent on Appeal
– and –
RALPH TANNIS, 6681875 CANADA INC., 6384455 CANADA INC., 6270735 CANADA INC., and 2161110 ONTARIO LTD.
Defendant/Appellant on Appeal
AMENDED REASONS FOR JUDGMENT
Aitken J.
Released: November 23, 2012