COURT FILE NO.: 98-CV-141984
DATE: 20130613
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MAGDA DE LA TORRE and MATIZ COMMUNICATIONS INC.
Plaintiffs
– and –
1093641 ONTARIO LIMITED operating as CKDX – 88.5 FM, GARY GAMBLE and GARY TURNBULL
Defendants
Magda de la Torre, in person as self-represented
Mauro Marchioni and Adam Marchioni Student-at-law, for the Defendant 1093641 Ontario Limited
Gary Gamble and Gary Turnbull, in person as self-represented
HEARD: February 19, 20, 21 and 22, 2013
t. mcewen j.
reasons for decision
history of the action
[1] The plaintiffs, Magda de la Torre (“de la Torre”) and Matiz Communications Inc. (“Matiz”), originally brought this action against the defendants, 1093641 Ontario Limited operating as CKDX – 88.5 FM (“CKDX”), Gary Gamble (“Gamble”) and Gary Turnbull (“Turnbull”), seeking a number of different damages arising out of the following: (1) alleged agreements entered into between the plaintiffs and CKDX; and (2) repayment of monies paid to CKDX (the “capital injections”).
[2] de la Torre and Matiz also claim against Gamble, who was, at all material times, the general manager of CKDX, and Turnbull, who was, at all materials times, the owner of CKDX, alleging that they fraudulently and/or negligently made material misrepresentations to the plaintiffs concerning the inherent value of CKDX and prevented the plaintiffs from carrying out the terms of the alleged agreements entered into between them and CKDX.
[3] In or about December 1995 and January 1996, the plaintiffs had discussions with Turnbull and Gamble with respect to the plaintiffs’ possible management of CKDX and potentially becoming part-owners of CKDX.
[4] Ultimately, de la Torre wrote cheques advancing monies to CKDX to obtain a 5% ownership share in CKDX. She made capital injections into CKDX by writing further cheques for various debts owed by CKDX involving, amongst other things, salaries, outstanding accounts with service providers and promotional expenses. Matiz entered into a Management Agreement with CKDX on January 18, 1996 for the management of CKDX. Other agreements in writing were also entered into between CKDX and Matiz. The agreements were generally executed by de la Torre and her partner, Manuel Canales (“Canales”), on behalf of the plaintiffs, and Gamble and Turnbull on behalf of CKDX.
[5] Eventually, the relationship between the parties soured and the action was commenced by the plaintiffs. The Statement of Claim was issued on February 19, 1998. Initially, CKDX and Gamble were represented by the same solicitor and delivered a joint pleading. However, Gamble subsequently represented himself in the litigation. Turnbull and de la Torre were also self-represented.
the motion
[6] In February of 2001, CKDX and Gamble brought a motion seeking an order dismissing the action for delay and an order dismissing the claim of Matiz. Backhouse J. heard the motion on February 7, 2001. Backhouse J. dismissed Matiz’s claim on the basis that it was not an incorporated entity. Thereafter, de la Torre brought motions, without success, to reinstate the Matiz action before a Master and in the Divisional Court.
the commencement of trial
[7] At the commencement of trial, some time was spent reviewing the dismissal of the Matiz action and which claims were left to be advanced by de la Torre. de la Torre had difficulty setting out exactly which claims she wished to pursue.
[8] Initially, de la Torre requested permission to reinstitute the Matiz claims that were dismissed by Backhouse J. I declined to do so based on the fact that the proper procedure would have been to appeal the decision of Backhouse J. approximately 12 years ago. de la Torre had made efforts in this regard, but she was unsuccessful for reasons that were not made clear to me.
[9] After further submissions, de la Torre advised that she wished to pursue the following claims:
(a) the monetary value of her alleged 5% ownership in CKDX;
(b) the return of the capital injections made to CKDX; and
(c) the amount of $50,000 for the year she spent performing services for CKDX between 1996 and 1997.
[10] After hearing the submissions of the parties, I agreed with de la Torre that she could pursue her claims for the monetary value of the 5% interest and the capital injections. I refused to allow her to pursue the $50,000 claim as it had not been pleaded. To allow an amendment at this stage would be prejudicial to the defendants since they would now have to respond to a claim and gather evidence with respect to subject matter that was approximately 16 years old. de la Torre had several years to advance this claim and given this significant passage of time, the claim was also very likely to be statute barred. Furthermore, allowing the amendment would have required an adjournment and it was not in the best interests of justice to allow for further delay of this long outstanding action.
issues involving the claim, counterclaims of the defendants and cross-claim of CKDX against turnbull
[11] At the commencement of trial, the parties agreed to set aside the Order of Wilkins J., dated November 24, 2003, which struck the pleading of Turnbull and noted him in default. Therefore, the Order of Wilkins J. was set aside and Turnbull’s pleading was restored.
[12] The defendants withdrew their counterclaims against de la Torre on the last day of trial.
[13] CKDX continued to maintain its cross-claim against Turnbull.
de la torre’s standing to pursue the action
The Defendants’ Position
[14] The trial commenced with de la Torre advancing the two claims for the 5% interest and the capital injections. The defendants did not deliver opening statements after the plaintiffs’ opening statement. After the close of the plaintiffs’ case, counsel for CKDX, who was retained quite recently, advanced the theory of the defence for CKDX, which was adopted by Gamble and Turnbull.
[15] The main thrust of the defence was that de la Torre had no standing to advance the claims for the 5% interest and the capital injections. The cheques that de la Torre provided to CKDX for the 5% interest totalling $47,739.68 were written on an account held by “Matiz Communications”. The cheques that de la Torre provided to CKDX for the capital injections were written on accounts held by “Matiz Communications” or “The Media Group Inc.” (“The Media Group”). de la Torre testified that she owned The Media Group on a 50/50 basis with Canales. CKDX took the position that de la Torre had no standing in law to advance these claims because the cheques were not in the name of de la Torre and it could not be said that she actually advanced any monies. CKDX submitted that the claims should have been advanced by Matiz and/or The Media Group.
[16] In this regard, CKDX relied upon the fact that The Media Group was an incorporated company and that Matiz was the registered business name for Canadian Ibero American Travel Report Inc. (“Canadian Ibero”), an incorporated company that is controlled by de la Torre.
[17] To support its argument, CKDX cited the Supreme Court of Canada decision, Kosmopoulos v. Constitution Insurance Co., 1987 CanLII 75 (SCC), [1987] 1 S.C.R. 2, wherein the court stated, at pp. 10-12:
As a general rule a corporation is a legal entity distinct from its shareholders: Salomon v. Salomon & Co., [1897] A.C. 22 (H.L.). The law on when a court may disregard this principle by “lifting the corporate veil” and regarding the company as a mere “agent” or “puppet” of its controlling shareholder or parent corporation follows no consistent principle. The best that can be said is that the “separate entities” principle is not enforced when it would yield a result “too flagrantly opposed to justice, convenience or the interests of the Revenue”: L. C. B. Gower, Modern Company Law (4th ed. 1979), at p. 112. I have no doubt that theoretically the veil could be lifted in this case to do justice, as was done in American Indemnity Co. v. Southern Missionary College, supra, cited by the Court of Appeal of Ontario. But a number of factors lead me to think it would be unwise to do so.
There is a persuasive argument that “those who have chosen the benefits of incorporation must bear the corresponding burdens, so that if the veil is to be lifted at all that should only be done in the interests of third parties who would otherwise suffer as a result of that choice”: Gower, supra, at p. 138. Mr. Kosmopoulos was advised by a competent solicitor to incorporate his business in order to protect his personal assets and there is nothing in the evidence to indicate that his decision to secure the benefits of incorporation was not a genuine one. Having chosen to receive the benefits of incorporation, he should not be allowed to escape its burdens. He should not be permitted to “blow hot and cold” at the same time.
I am mindful too of this Court’s decision in the Aqua-Land Exploration Ltd. case, supra, in which the Court did not “lift the veil” in order to find that one of three shareholders in a corporation had an insurable interest in its asset. So also in the Wandlyn Motels Ltd. case, supra, the Court refused to regard a motel owned by a man who held all but two of the shares of the insured, Wandlyn Motels Ltd., as the property of that corporation. If the corporate veil were to be lifted in this case, then a very arbitrary and, in my view, indefensible distinction might emerge between companies with more than one shareholder and companies with only one shareholder ... In addition, it is my view that if the application of a rule leads to harsh justice, the proper course to follow is to examine the rule itself rather than affirm it and attempt to ameliorate its ill effects on a case-by-case basis.
For all these reasons, I would not lift the corporate veil in this case. The company was a legal entity distinct from Mr. Kosmopoulos. It, and not Mr. Kosmopoulos, legally owned the assets of the business.
[18] Furthermore, CKDX submitted that de la Torre, both at her examination for discovery and at trial, conceded that she did not have a personal bank account and the funds came from the accounts of Matiz and The Media Group. At her examination for discovery, de la Torre also conceded that the lawyer who prepared the Statement of Claim pleaded that Matiz was an incorporated company.
[19] Based on the above, CKDX submitted that de la Torre had no personal claims in the action and that her claims ought to be dismissed. This, of course, would end the action since Matiz’s claims have already been dismissed by the Order of Backhouse J.
[20] However, as stated previously, de la Torre testified that she owned The Media Group on a 50/50 basis with Canales. She also testified that she always considered that she and Matiz were interchangeable and that the money she advanced to CKDX was advanced on behalf of herself and Matiz.
[21] On a superficial level, the submissions of CKDX have some merit, particularly when one has regard to the excerpt from Kosmopoulos, above.
[22] Upon closer examination, however, for the following reasons, it is my view that this defence is without merit, does not keep with the true state of affairs that existed between the parties, and is contrary to the admissions made in the Statement of Defence of CKDX and Gamble.
[23] CKDX and Gamble attended before Backhouse J. and made submissions that the claim of Matiz should be struck on the basis that it was not an incorporated company. While the evidence that was presented at the motion was not before me, I have difficulty accepting that the motions judge would have dismissed the claim of Matiz if she had been aware that Matiz was, in fact, a business style for Canadian Ibero. Her brief endorsement did not reference Canadian Ibero in any way.
[24] At trial, CKDX submitted that de la Torre’s claims ought to be dismissed to the extent that the cheques were drawn on the Matiz bank account because the claims were really that of Canadian Ibero. In or about the time of the motion before Backhouse J., CKDX and Gamble knew that Matiz was a registered business style for Canadian Ibero. At the latest, they were aware of this fact at the examination for discovery on March 30, 2001, where the issue was fully explored. In my view, the defendants cannot have it both ways. They cannot attend before one judge of the Superior Court of Justice on a motion arguing that the claim of Matiz ought to be dismissed since it was not incorporated and then attend at trial and submit that de la Torre’s action ought to be dismissed because the claim was, in fact, the claim of Matiz or Canadian Ibero and ought to have been advanced as such. In my view, CKDX has been less than candid in pursuing this agenda.
The Law re: Use of Corporate Cheques
[25] The fact that a corporation is a separate and distinct legal entity from its shareholders is well-settled law. Piercing the corporate veil is an exception to this rule and a tool that the court only uses in exceptional circumstances. How this rule is applied and whether it is appropriate to pierce the corporate veil depends on the facts of each case.
[26] In this case, there is no need to refer to the “separate entities” doctrine and to consider whether the corporate veil should be pierced to allow de la Torre to pursue the claims because jurisprudence provides that when contracting on behalf of a corporation, one must make it clear to the other party that he or she is doing so on behalf of the corporation and not in his or her personal capacity: see e.g. Corkum v. Lohnes (1981), 1981 CanLII 2694 (NS CA), 43 N.S.R. (2d) 477 (S.C. (A.D.)), at para. 14; Victor (Canada) Ltd. v. Farbetter Addressing and Mailing Ltd. (1978), 3 B.L.R. 312 (Ont. H.C.); and Kobes Nurseries Inc. v. Convery, 2010 ONSC 6499, 77 B.L.R. (4th) 287 2010, aff’d 2011 ONCA 662, 98 B.L.R. (4th) 234.
[27] Although the use of corporate cheques is one factor to consider when determining whether a party understood that he or she was contracting with a corporation, corporate cheques, by themselves, generally have been found to be insufficient notice to alert a contracting party that he or she is dealing with a corporation: see e.g. 3253791 Canada Inc. v. Armstrong (2002), 2002 CanLII 14651 (ON SC), 27 B.L.R. (3d) 230 (Ont. S.C.); and Pennelly Ltd. v. 449483 Ontario Ltd. (1986), 20 C.L.R. 145 (Ont. H.C.).
[28] In Corkum, the appellant tried to argue that he was not personally liable for an agreement he signed in his own name because he did so in error. He argued that the agreement was always intended to be with his company. To prove this, the appellant introduced into evidence a cheque in the name of his company that was used to pay the consideration for the agreement. The court stated that if the appellant, “who obviously was in full control of his company, wished to pay Mr. Fancy by company cheque, I fail to see how that could make the company and not the appellant a party to the agreement” (at para. 14).
[29] As stated by Master Funduk in CHED-CKNG FM v. Goose Loonies Inc. (1995), 1995 CanLII 9116 (AB KB), [1996] 172 A.R. 117 (Q.B.), at para. 27, and cited by the court in Armstrong, expecting a party to realize that one was operating on behalf of a corporation through the use of corporate cheques “offends common sense. Creditors are interested in getting payments on the account. Whether it be a cheque by an individual, by a corporation, by a partnership or a trade name does not particularly matter.”
[30] In Hroncok v. Pellizzari, 2012 ONSC 6354, [2012] O.J. No. 5485, Hroncok entered into a high-risk investment with Pellizzari. To protect his investment, Hroncok’s money, US$250,000, was placed in the trust account of Pellizzari’s lawyer (Hickman), which was not to be released until a certain time. Hroncok sued Pellizzari and Hickman, alleging that Hickman wrongly released US$150,000 of Hroncok’s money to Pellizzari before the agreed upon time. Although Hroncok contracted personally with Pellizzari, the funds were advanced by Tyda Corp., a corporation where Hroncok was the sole shareholder. The issue arose as to whether Hroncok had standing to sue. After briefly canvassing the law in Pennelly, Armstrong and CHED-CKNG FM, the court stated the following, at paras. 85-88:
If Hroncok had not advanced the funds, Pellizzari could have sued him personally. If Hroncok could be sued on the contract as a party to it, it would be illogical to conclude that he could not sue only because one of his personal obligations was satisfied by another entity over which he had total control. Here, as Tyda’s only shareholder, Hroncok can reasonably be assumed to have had authority to direct Tyda to pay out the US$250,000 either because Tyda was paying out funds belonging to Hroncok or because Hroncok had agreed to borrow them from Tyda. Here, Pellizzari knew and expected to be dealing with Hroncok personally.
Hroncok gave evidence he is the sole shareholder of Tyda Corp. He said, “In my mind, Tyda was me.”
Hroncok gave evidence that although it had belonged to his parents, the US$250,000, the money he was lending to Pellizzari pursuant to the First Memorandum of Agreement was his money. In the circumstances here, I am prepared to infer that the US$250,000 payment by Tyda was made on Hroncok’s direction to Hroncok’s benefit and at Hroncok’s risk.
Pellizzari’s contract was with Hroncok. Where Hroncok is personally liable on that contract, where Pellizzari has received the benefit of the funds, did not appear to contest Hroncok’s personal status to sue, I grant judgment in favour of Hroncok against Pellizzari in the amount of US$150,000.
[Emphasis added.]
[31] As a result, all the circumstances must be considered to determine the intention of the parties and the use of corporate cheques will not, by itself, remove de la Torre’s standing to bring the two claims for her 5% share of CKDX and her capital injections.
Analysis re: The 5% Interest
[32] Even though the cheques for the 5% interest were written under the style of Matiz, the documentary evidence presented at trial supported the fact that the defendants acknowledged that de la Torre would receive the ownership interest personally as opposed to it being owned by Matiz and/or Canadian Ibero. This is confirmed by a number of documents, including the following:
(i) The July 12, 1996 letter from Turnbull to de la Torre confirming that she injected $47,739.68 into CKDX, which represented a 5% share in the company. He suggested arranging a corporate meeting with lawyers to transfer the share to her.
(ii) The July 17, 1996 undertaking by Turnbull to de la Torre in which he confirmed that the amount of $47,739.68 was paid to CKDX and the 5% share of CKDX could be transferred forthwith into de la Torre’s name or the name of her choice.
(iii) A further undertaking signed by Turnbull dated July 31, 1996, once again confirming receipt of the monies and transferring 5% of the shares of CKDX to de la Torre or her nominee.
(iv) A letter dated August 7, 1996 to the Canadian Radio-television and Telecommunications Commission from Turnbull and Gamble (copied to de la Torre) confirming the transfer of 5% of the shares to de la Torre.
(v) Correspondence generated between the solicitors for de la Torre and CKDX confirming a transfer of 5% of the shares of CKDX to de la Torre.
(vi) A Resolution of the Directors of CKDX dated September 6, 1996 confirming the transfer of 5% of the shares to de la Torre.
(vii) An undated Memorandum to de la Torre from Shirly (an employee of CKDX) confirming that de la Torre had invested $47,739.68 in CKDX.
[33] Based on the above, I find that de la Torre has established that she, personally, forwarded the monies to purchase the shares from CKDX.
Analysis re: The Capital Injections
[34] de la Torre used cheques drawn on the accounts of Matiz and The Media Group for the capital injections. Once again, however, when one considers the factual matrix of this case, I find that the defendants acknowledged and conceded that de la Torre was providing these funds on her own behalf. She was forwarding these funds to them in circumstances in which they obviously knew she was the payor. There was no evidence at trial to suggest that any of the defendants considered The Media Group to be a party to any of the transactions, nor was that position ever taken by the defendants when the capital injections were being advanced by anyone other than de la Torre.
[35] Further, CKDX and Gamble, in their Statement of Defence, made the following admissions:
The defendants admit that the plaintiffs made capital injections into the Station but deny that same totalled $91,739.00 as pleaded in paragraph 47 of the statement of claim and further deny that any funds injected into the Station were provided as consideration pursuant to any alleged share purchase agreement.
The defendants state that the capital injections made by the plaintiffs for the benefit of the Station totalled $74,846.70 and that said funds were advanced from time to time to cover operating expenses of the Station such as payroll and car allowances to sales persons.
[Emphasis added.]
[36] In light of the fact that Matiz’s claim was dismissed and the Statement of Defence was not subsequently amended, in my view, CKDX and Gamble admitted that de la Torre made capital injections to CKDX. After having made these admissions, it would be untenable to allow CKDX and Gamble to advance their theory of the claim that de la Torre is not the proper plaintiff to advance the capital injections claim.
Conclusion
[37] In the circumstances, I find that de la Torre can properly advance the claims with respect to the 5% ownership interest and the capital injections. Alternatively, this certainly would have been a fit and just case to allow de la Torre to amend the Statement of Claim to correct any ambiguities with respect to the aforementioned claims. I would have granted such an order pursuant to rules 1.04 and 5.04 of the Rules of Civil Procedure, R.R.O 1990, Reg. 194.
[38] Although the defendants made vague allegations that de la Torre was not very competent and did not advance the best interests of CKDX, they withdrew their counterclaim against her and those complaints have nothing to do with her claim for the 5% ownership interest and the money she invested for the capital injections. To the extent that I am in error, I find that the defendants have failed to establish, on a balance of probabilities, that her actions while providing services for CKDX were inappropriate or negligent so as to entitle them to avoid paying her back the monetary value of the 5% ownership interest or the capital injections that were made to CKDX. Very little evidence was advanced in this regard.
liability and Damages
The Monetary Value of the 5% Ownership Interest
[39] CKDX received the amount of $47,739.68 from de la Torre and acknowledged that it represented a 5% ownership interest in CKDX. de la Torre also conceded that the amount paid reflected a fair value for a 5% share of CKDX at the time of payment. Unfortunately, the relationship between the parties broke down and the ownership interest was never transferred to de la Torre.
[40] The defendants did not really present any defence to this claim other than the technical defence with respect to de la Torre’s standing to advance the claim, which I have already decided against.
[41] As a result, I need to determine the value of the 5% interest. de la Torre submitted that based on financial statements of the subsequent owners, the value of the station was in excess of $4 million. Unfortunately, there was no testimony or evidence of any kind at trial that put the documents into context. Furthermore, they were prepared several years after the transaction between the parties and there was evidence with respect to upgrades at CKDX post 1998. The parties also did not call any expert evidence on this issue.
[42] The only real defence raised on behalf of the defendants concerning quantum was raised by Turnbull. He stated that any amount should be reduced by 50% since de la Torre and Canales were 50/50 partners. de la Torre and Canales may have been 50/50 partners, but there was no evidence adduced at trial as to why this fact should reduce de la Torre’s claim, and in my view, there is no reason to reduce de la Torre’s claim. First, the cheques used to pay for the 5% share were from the account of Matiz, which was solely owned by de la Torre. Second, I have already found that it was clear to both parties that de la Torre would obtain the 5% interest personally. Third, all of the cheques were signed by de la Torre, and in my view, if there is any accounting to be done between her and Canales, it is of no benefit to the defendants.
[43] de la Torre paid $47,739.68 to CKDX. She never received the 5% interest and she never received a refund of the payment from CKDX. Thus, CKDX breached its agreement with de la Torre. In closing submissions, Turnbull conceded that the refund was not made because CKDX did not have the money to do so. Based on the above, de la Torre is entitled to the amount of $47,739.68 from CKDX as representing the monetary value of the 5% interest.
Capital Injections
[44] de la Torre made claims for a number of capital injections she made to CKDX. These capital injections included monies to pay salaries, miscellaneous disbursements, accounting fees, promotional expenses and a number of other items.
[45] Overall, the evidence disclosed that de la Torre and the defendants simply did not share the same vision as to how CKDX was to be operated. de la Torre made the capital injections on the understanding that she would become a part owner of CKDX and it is obvious that CKDX needed the money at the time the payments were made. Since CKDX breached the agreement and de la Torre never received the ownership interest, she is entitled to a return of the capital injections that were made on the basis that she was going to become a part owner of CKDX.
[46] The defendants did not really present any defence to this claim other than the technical defence with respect to de la Torre’s standing to advance the claim.
[47] CKDX did take exception to the fact that de la Torre did not provide invoices for the capital expenses. This is true but, in my view, de la Torre’s evidence and the cheques provided constituted sufficient proof. The defendants provided no evidence to dispute this in their testimony.
[48] It is not an easy task deciphering exactly what de la Torre is entitled to in this regard. She brought several cheques to trial for the first time for review. Her documentation was generally disorganized and difficult to follow.
[49] I will deal with the issue of the capital injections in the order that they were presented at trial as per the charts prepared by de la Torre.
(i) Advance to Cover Payroll – August 4, 1996:
Aug 12/96
Barbara Baker
$200.00
Aug 12/96
Thom Marriott
880.76
Aug 12/96
Gary Gamble
858.59
Aug 12/96
Scott Gamble
664.56
Aug 4/96
Shirly Deroo
443.81
Aug 12/96
Mike Stinson
384.90
Aug 12/96
Michael McDonnell
125.13
Aug 12/96
Laura Morrison
249.92
Aug 12/96
Mark de la Torre
110.50
Aug 9/96
Tracie Dakin
48.00
Total
$3966.17
[50] I would allow all of these claims. de la Torre’s testimony was to the effect that she was making these payments to help CKDX satisfy its payroll obligations. The defendants did not adduce any evidence to suggest that the amounts were not paid. The amounts claimed were supported by cancelled cheques and included a payment to Gamble himself.
(ii) 1093641 Ontario Limited o/a CKDX Balance Sheet – August 31, 1996
Aug 21/96
A & B Courier
$182.57
Aug 30/96
Bell Canada
1,500.00
Sept 20/96
Southham Pub
224.70
Total
$1,907.27
[51] I allow all of these expenses. de la Torre provided cheques in support of these claims and testified that they were paid on behalf of CKDX.
(iii) 1093641 Ontario Limited o/a CKDX Balance Sheet – October 1, 1996:
Sept 9/96
CKDX – Salaries
$3,300.00
Sept 19/96
J. Evans Engineer
2,000.00
Sept 19/96
CKDX – Salaries
2,000.00
May 1-30/96
Michelle Hernandez
875.00
June 7-27/96
Michelle Hernandez
875.00
July 10-30/96
Michelle Hernandez
875.00
Aug 2-29/96
Michelle Hernandez
795.00
Sept 7-19/96
Michelle Hernandez
525.00
Nov/95-Ap/96
Legal Fees
2,340.59
March 7/96
Danny Mellor
700.00
March-Ap/96
Diana Argudo
250.00
Aug 14/96
Michel Alba
100.00
May 14/96
Judy Hunt Comm
67.50
March-Aug/96
Promotions / Printing
2,090.82
July-Aug/96
Misc Office Expense
1,081.60
Sept 9/96
Debbie Farrugla Car Allow
100.00
Sept 9/96
Merrilee Chretien Car Allow
250.00
Sept 9/96
Barbara Baker Car Allowance
100.00
April / 96
Elder Engineering
1,560.00
April-July/96
Shear, Backal & Associates
349.85
July 20/96
Minister of Finance
113.75
Total
$20,349.11
[52] With respect to these claims, I would allow all of the amounts sought with the exception of the following:
Nov/95-Ap/96
Legal Fees
$2,340.59
March-Aug/96
Promotions / Printing
2,090.82
July-Aug/96
Misc Office Expense
1,081.60
April-July/96
Shear, Backal & Associates
349.85
July 20/96
Minister of Finance
113.75
Total
$5,976.61
[53] I am denying these specific claims because de la Torre did not establish that these expenses were incurred by her for activities associated with CKDX. In fact, the legal fees, the expenses for Shear, Backal & Associates and the Minister of Finance appear to be costs incurred in this lawsuit.
[54] With respect to the remaining expenses which I have allowed, I find that de la Torre established at trial that she incurred these expenses. She produced a number of cheques to support the expenses being sought, including CKDX salaries, J. Evans Engineer, Judy Hunt Comm, Debbie Farrugia Car Allowance, Merrilee Chretien Car Allowance and Barbara Baker Car Allowance. Although she did not have cheques for all of the payments, I am satisfied with her testimony that she did, in fact, pay the amounts. Her own testimony, which was not effectively challenged in cross-examination, was supported by the evidence of Michelle Hernandez (“Hernandez”), who testified that she was hired in 1996 by de la Torre to assist in promotions and sales at CKDX. Even though Hernandez identified de la Torre as her employer, it is clear that the services Hernandez provided were on behalf of CKDX as she was promoting the station. Hernandez’s testimony supports de la Torre’s claims that de la Torre was paying Hernandez and other staff on behalf of CKDX.
[55] Therefore, I would allow de la Torre the amount of $14,372.50 for these expenses.
(iv) 1093641 Ontario Limited o/a CKDX Balance Sheet – November 30, 1996:
March-Aug/96
Various
$485.00
Sept 23/96
AAA York Moving
521.65
November / 96
Razor’s Edge
403.10
Oct 2-24/96
Michelle Hernandez
1,050.00
Nov 13-21/96
Michelle Hernandez
350.00
Oct 9/96
Larry C. Stein
1,000.00
Nov 9/96
Debbie Farrugia
150.00
Nov 9/96
Long & Mc Quade
200.00
Oct 31/96
Electric Sound Crew
144.00
Oct 29/96
Paradise Banquet Hall
900.00
Nov 6/96
Obsession Travel
592.77
Nov 13/96
Guillermo Jaramillo
500.00
Oct 8/96
Nationwide Barter
339.25
Nov 7/96
Target
527.69
Total
$7,163.46
[56] I would allow all of the expenses being sought in the above balance sheet, with the exception of the “various” expenses totalling $485.00, for which no cheques were provided and no explanation was given. With respect to the account of Larry C. Stein in the amount of $1,000, he was assisting de la Torre with her purchase of the 5% interest in CKDX that was never finalized. In my view, it would be appropriate for her to be reimbursed for this amount. The rest of the items have been supported by cheques signed by de la Torre and I am satisfied with her explanation that they were made on behalf of CKDX.
[57] Therefore, I award de la Torre the amount of $6,678.46.
(v) Final Expenses Not Posted in CKDX Books:
Feb-May/97
Sackett Palmer Accountants
$2,220.25
Mar-April/97
Shear, Backal & Associates
345.80
Sept-Dec/96
Michel Alba
550.00
Jan-Oct/96
A & B Courier
368.70
Feb 2/97
Obsession Tours
772.00
Nov-Dec/97
Sackett Palmer Accounts
2,500.00
Dec 10/96
Barter Business Exchange
350.00
Dec 16/96
AAA Movers
344.25
March 28/97
National Crime Prevention
393.97
Nov-Dec/96
Michelle Hernandez
675.00
Jan/Feb/97
Jesus Paredes
900.00
Oct 17/96
The Noteworthy Company
177.50
Total
$9,597.47
[58] I would allow all of these expenses with the exception of the Shear, Backal & Associates account. With respect to the Sackett Palmer Accountants account in the amount of $2,220.25, Turnbull disputed that the firm acted as CKDX’s accountants. However, the documentation produced at trial demonstrated that the accountants were delivering reports to both Matiz and CKDX with respect to the preparation of financial statements and the financial review of CKDX. In the circumstances, I can only conclude that the services rendered involved CKDX. With respect to the rest of the expenses, I accept de la Torre’s explanation that she incurred these expenses as they are similar to the other expenses that she has incurred. Again, cheques were provided to prove payment for virtually all of these expenses.
[59] Therefore, I award de la Torre the amount of $9,251.67.
(vi) Balance Carry Forward:
March 27/96
Balloon King
$7.76
March 27 – 28/96
Your Expression
8.06
Oct. 2/96
Business Depo (Debbie)
34.99
Oct. 15/96
Hallmark
40.71
Oct. 24/96
Copy Center
6.09
March 3 – Oct. 30/96
Grand & Toy
258.25
April 4 – Oct. 23/96
Kinko’s
713.80
May 7/96
Howard Johnson
67.20
Total
$1136.86
[60] This claim involves approximately 40 separate items involving minor cash disbursements that de la Torre claimed she made on behalf of CKDX. They primarily involve expenses at Grand & Toy and at Kinko’s. No cheques were produced and no evidence was provided to support these amounts claimed by de la Torre and I would not allow any of these expenses being sought.
Conclusion
[61] Based on the above, de la Torre is entitled to the amount of $36,176.07 from CKDX for the capital injections she made to CKDX.
the cross-claim
[62] CKDX pursued its cross-claim against Turnbull on the basis of an indemnity and release that Turnbull executed on January 23, 1997. It reads as follows, according to CKDX’s and Gamble’s Statement of Defence:
Gary Turnbull shall indemnify and save harmless and forever discharge, 1093641 Ontario Limited against all manner of actions, causes of action, suits, claims and demands howsoever arising with respect to all aspects of the ownership and operation of 1093641 Ontario Limited, a corporation duly incorporated in the Province of Ontario, which carried on business from time to time as CKDX 88.5 FM and CKOX 88.5 FM provided that such actions, causes of action, suits claims or demands arose prior to the 23rd day of January, 1997.
Gary Turnbull specifically agrees to indemnify and save harmless and forever discharge 1093641 Ontario Limited from a debt incurred by 1093641 Ontario Limited listed as a Current Liability to Matiz in a Balance Sheet of 1093641 Ontario Limited dated November 30, 1996 in the amount of $81,125.69.
It is agreed that the amount of each debt or liability as listed in the Balance Sheet of November 30, 1996 may increase or decrease from time to time and that the indemnities, releases and discharges given shall apply to the amount of any claim made under the debts referred to in paragraphs 2 and 3 of this Agreement in addition to any interest claimed and plus reasonable legal expenses incurred in defence of, or in the pursuance of a settlement of any claim.
[63] In January of 1998, Turnbull sold his shares in CKDX to Anthony Panza and 1234870 Ontario Limited operating as Power Promotions. In that agreement, Turnbull agreed to the following, as reproduced in CKDX’s and Gamble’s Statement of Defence:
3(g) That the liability of $81,125.69 listed as due and owing to the Matiz Group in the Balance Sheet of CKDX dated November 30, 1996, attached as Schedule “A”, is now completely satisfied and that Turnbull shall indemnify and save harmless CKDX and Power Promotions from any claim thereunder of the Matiz Group, or its principles, agents, successors or assigns and Magda de la Torre.
- In addition to any release and indemnity given in this Agreement, Turnbull agrees to release, save harmless, indemnify and forever discharge CKDX and Power Promotions from any and all manner of actions causes of action, suits, duties, claims and demands howsoever arising in relation to Turnbull’s ownership and operation of CKDX.
[64] CKDX claimed that Turnbull was bound to indemnify it as a result of this agreement, and therefore, he is liable for any damages and costs adjudged against CKDX as a result of this action.
[65] Turnbull did not dispute that he executed the agreements, nor did he dispute that CKDX was entitled to enforce the indemnity agreements.
[66] Based on the foregoing, it is appropriate that CKDX should have judgment against Turnbull in the cross-claim in the amount of $83,915.75, which constitutes the full amount of the de la Torre claim against CKDX.
de la Torre’s Claims against Turnbull and Gamble
[67] de la Torre made a number of claims against Turnbull and Gamble, including allegations of fraud, negligent misrepresentation and deliberately intending to discredit her thus causing her distress and anxiety. No evidence was adduced at trial in support of these claims and I would dismiss all of de la Torre’s claims against Turnbull and Gamble.
disposition
[68] Based on the foregoing, de la Torre shall have judgment against CKDX in the amount of $83,915.75.
[69] CKDX shall have judgment against Turnbull on its cross-claim in the amount of $83,915.75.
[70] de la Torre’s claims against Turnbull and Gamble are dismissed.
[71] The defendants’ counterclaims against de la Torre are dismissed.
[72] If the parties cannot agree on costs or prejudgment interest, submissions can be made to me in writing. The plaintiffs shall provide their submissions within 21 days. The defendants shall provide their responses within 14 days and any reply from the plaintiffs can be delivered 7 days thereafter. If a court attendance is required, arrangements can be made through my office.
T. McEwen J.
Released: June 13, 2013
COURT FILE NO.: 98-CV-141984
DATE: 20130613
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MAGDA DE LA TORRE and MATIZ COMMUNICATIONS INC.
Plaintiffs
– and –
1093641 ONTARIO LIMITED operating as CKDX – 88.5 FM, GARY GAMBLE and GARY TURNBULL
Defendants
REASONS FOR DECISION
T. McEwen J.
Released: June 13, 2013