CITATION : EnerWorks Inc. v. Glenbarra Energy Solutions Inc. 2012 ONSC 748
COURT FILE NO.: 10-402777
MOTION HEARD: 20110823
ENDORSEMENT RELEASED: 20120323
SUPERIOR COURT OF JUSTICE – ONTARIO
RE:
EnerWorks Inc. Plaintiff v. Glenbarra Energy Solutions Inc. and Green Edge Products Inc. Defendants
BEFORE: MASTER D. E. SHORT
COUNSEL:
W. A. Chalmers
for the Plaintiff (moving party) Fax: 416 863.1515
C. A. L. Caruana
for the Defendants Fax: 905.940.8786
HEARD: August 23, 2011
REASONS FOR DECISION
“Show me the Money!”
I. Motion
[ 1 ] A Judgment Creditor, EnerWorks Inc (“EnerWorks”) brings this motion to require the witness being examined in aid of execution, to answer questions which he refused to answer on his initial examination, as a representative of the judgment debtor corporation, Glenbarra Energy Solutions Inc. (“Glenbarra Solutions”)
II. Overview
[ 2 ] In November of 2010, the Plaintiff, which manufactures renewable energy appliances, brought a contested motion for summary judgment in an action against the Defendant Glenbarra Solutions. EnerWorks originally sued the Defendant Green Edge Products Inc., but EnerWorks settled its claim and the counterclaim involving Green Edge, prior to the balance of the summary judgment motion being argued.
[ 3 ] On that motion, Justice Perell granted the judgment sought, and delivered reasons that can be found at EnerWorks Inc. v. Glenbarra Energy Solutions Inc., [2010] O.J. No. 5128 ; 2010 ONSC 6563 .
[ 4 ] Glenbarra and Green Edge, which are associated corporations, were EnerWorks' customers. Mr. Darren Cooper is the President of both corporations. Glenbarra and Green Edge acquired goods and services from EnerWorks and then supplied renewable energy appliances to their own customers.
[ 5 ] EnerWorks' action against Glenbarra was an action for payment for those goods and services. Justice Perell found their claim to be justified, and awarded EnerWorks a judgment in the amount of $448,938.11.
[ 6 ] In coming to the conclusion that there was no genuine issue for trial his Honour observed:
- In my opinion, there is no genuine issue for trial that EnerWorks has shown that Glenbarra is indebted to it for the 22 invoices and that in the absence of some affirmative evidence from Glenbarra to substantiate a different accounting of the indebtedness, there is no genuine issue for trial.
35 Proving the amount owing on an everyday commercial transaction is not rocket science. There is evidence that Glenbarra received the goods and services. There is evidence that it received the EnerWorks' invoices, some of which are supported by its own purchase orders or e-mail correspondence. EnerWorks says it has not been paid. In the face of that evidence, the onus shifts to Glenbarra to show that there is a genuine issue for trial about the indebtedness. It has failed to meet the evidentiary burden on it.
[ 7 ] However, what often does require something approaching rocket science, is recovering the amount of a judgment, once it has been awarded. [viz: Citi Cards Canada Inc. v. Pleasance , 2011 ONCA 3 ; 103 O.R.(3 rd ) 241]
[ 8 ] It turns out that Glenbarra Solutions is, but one of a number of companies, having similar ownership. It is that factual situation that underpins the bulk of the arguments made on this motion.
III. Factual Background
[ 9 ] In his reasons, Justice Perell rejected one of the asserted defences “whether EnerWorks is a proper party, because it assigned its claims against Glenbarra.” It would appear that neither side is made up of a simple, single, corporate entity in this case.
[ 10 ] The plaintiff now asserts that it is entitled to regard the assets of a number of related companies and organizations as being so interwoven that they ought to be treated as a single pot for the purposes of an examination in aid of execution against Glenbarra Solutions.
[ 11 ] Counsel for the plaintiff asserts that he is simply trying to find assets to which his client might be entitled to look in satisfaction of its judgment.
[ 12 ] It seems uncontested that various, defendant-related, entities shared space, shared common addresses, and reception and accounting services. Moreover, it would seem they shared or pooled their expertise as well.
[ 13 ] The examination of Mr. Cooper was understandably, an attempt to find where the assets of the related companies came from, and where they now resided.
[ 14 ] The issue I must address is whether the foregoing factors are sufficient to establish to the necessary degree and level "some connection" to the judgment debtor Glenbarra Solutions.
[ 15 ] As well, it would seem that I need to consider whether on such an examination, the concept of a “corporate veil” continues to have any applicability.
The Two-Step Examination
[ 16 ] Darren Cooper was examined on behalf of Glenbarra Solutions on January 20 , 2011. He was not represented by cou n sel on this first day of his examination as a representative of the company. The plaintiff learned at an early stage of the examination that Gl e nb a rra Solutions had little or n o si g ni f icant assets to satis f y the judgment. The factum of the defendant asserts that counsel th e n pr o ceeded to ask “a multitude o f questions relating to corpor a tions or per s ons o ther than Glenbarra Solutions in an attempt to s upport a c laim , comm e nc e d w hil e the e xamination w as on g oin g, for fraudul e nt prefer e nce or conveyance again s t th os e other compani e s”.
[ 17 ] I t i s Glenbarra Solutions ' p os iti o n that th e questi o n s r efus e d we re impr o per e ithe r on the b a si s that the y constituted a n abuse of proce s s or th a t the y were n o t permi s sible on an ex aminati o n in aid of e x ecu t io n with respect to that specific judgment debtor.
[ 18 ] Two further days of examination were held in the following month. On those occasions, Mr. Cooper was represented by counsel, who now also appeared on this motion.
[ 19 ] Throughout the first day , the plaintiff asked numerous questions relating to companies other than Glenbarra Solutions, this as well as various individuals including Mr. Cooper, Jean Aoun and Greg Judd. Such companies included:
(a) Glenbarra Inc.;
(b) Glenbarra Renewable Energy Solutions Inc.;
(c) Green Edge Products Inc.;
(d) Glenbarra Management Services Inc.;
(e) Glenbarra Energy Management Corp. (aka "Gemco");
(f) Glenbarra Construction Inc.;
(g) Glenbarra Contracting Inc.;
(h) Senarra Group Inc.;
(i) Senarra Development Inc.;
(j) Glenbarra Green Energy Capital Inc.;
(k) Glenbarra Green Energy Finance Inc.;
(l) Glenbarra General Contracting Inc.
[ 20 ] On the third d a y of the continuing examination, wh i le the examination was bein g condu c t e d b y th e plainti ff , the plaintiff c a used a n e w Statement of Claim to b e i s sued , bearin g Cour t File No . C V -11-4 2 0011 a ga in s t Glenbarra Solutions (the judgment debtor) and many of the above entities and indi v idu a l s. Included, as well as additional named defendants were Glenbarra Energ y; Glenbarra Ener g y Inc. ; Glenbarr a Group of Comp a nies ; and Green Edge Products Inc.
[ 21 ] The new Statement of Claim seeks de c larations that various transfers amongst various of the persons and entities listed above were fraudulent and the result of a conspirac y to delay, defeat , defraud or hinder the plainti f f's claims as against Glenbarra Solutions.
[ 22 ] How far is an examiner entitled to dig on an examination of a single judgment debtor in search of possible sources of recovery and useful evidence that might otherwise be sought on discovery to support claims asserted in the new action?
IV. Historical Perspective
[ 23 ] In 1881, the Ontario Court of Appeal provided early guidance in the case of The Ontario Bank v. Mitchell (1881), 32 U.C.C.P. 73 The rule under consideration in that case simply provided that the judgment debtor could be examined:
“1. Touching his estate and effects, and as to the property and means he had when the debt or liability which was the subject of the action in which judgment has been obtained against him was incurred.
As to the property and means he still has of discharging the said judgment.
As to the disposal he has made of any property since contacting such debt or incurring such liability
And as to any and what debts are owing to him .” [my emphasis throughout]
[ 24 ] Despite the specific references in the rule to the time when liability was incurred the Court held as follows (at p. 76):
“10 The principal object of the examination is to inform the creditor what property or means the debtor has to satisfy the judgment debt in whole or in part, and any questions which will establish or may establish that are properly put and are proper to be answered. The creditor is also entitled to be informed what property or means the debtor had at the time of contracting the debt.
11 The defendants seems [sic] to have thought the creditor can make no enquiry further back than to that period, but that is to misapprehend the chief object of the examination. The chief object is to shew what property the debtor has at the time of the examination which can be made available to the creditor, and it is material in making or in the attempt to make out present property, to shew that at some anterior time, no matter how far back, the debtor had property , and to get an account from the debtor where that property is, or what has been done with it.
12 It is not a sufficient account of property acquired before the judgment debt was incurred to say it all had been disposed of before the debt was incurred. The debtor must shew how, when, and to whom, and for what it was disposed of, as far as he is able to do it.
13 If the rule were as the defendants contend it is, the examination would be a farce....” [my emphasis]
[ 25 ] The dividing line between farce and over-reaching is now the issue that I must address.
VII. COSTS
[ 75 ] Success has been divided but on the matters of principle underlying the grounds for this motion, it would seem that the Judgment Debtor was generally successful. As a consequence. I intend to allow a credit equal to the two thirds of the partial indemnity costs of this motion as a credit against the existing judgment debt owed by Glenbarra Energy Solutions Inc. to the plaintiff.
[ 76 ] If the parties are unable to agree on the quantum of such costs, I am prepared to accept written submissions as to the appropriate quantum of those costs, supported by an appropriate cost outline, within 20 days. Any responding submissions may be received within 7 days thereafter. If no agreement is reached or no submissions are received within 30 days there will be no order as to costs.
Master D. E. Short
March 23, 2012
DS/ R48