Solemio Transportation Inc. et al, 2013 ONSC 3257

COURT FILE NO.: CV-08-89749

DATE: 20131231

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Grand Financial Management Inc.

Plaintiff

– and –

Solemio Transportation Inc., Sami Ullah and Arnold Bros. Transport Inc.

Defendants

George Corsianos, Counsel for the Plaintiff

Matthew Tubie, Counsel for the Defendants Solemio Transportation Inc. and Sami Ullah

HEARD: May 27, 28, 29, 30 and 31, 2013

REASONS FOR judgment

mCkelvey j.

Introduction

[1] The plaintiff in this action, Grand Financial Management Inc. (Grand Financial), has brought an action for breach of contract against the defendant, Solemio Transportation Inc. (Solemio). Also named as a defendant is the principal of Solemio, Sami Ullah. Arnold Bros. Transport Ltd. (Arnold Bros.) was also named as a defendant in the action. However, prior to the commencement of trial, Arnold Bros. was let out of the action on consent.

[2] The plaintiff claims the sum of $219,250.00 from Solemio pursuant to a factoring agreement. The claim against Mr. Ullah is pursuant to a personal guarantee signed by Mr. Ullah.

[3] Both Solemio and Mr. Ullah deny the plaintiff’s claim. In addition, they have brought a counterclaim alleging that the actions of the plaintiff have adversely affected Solemio’s business and severely curtailed Mr. Ullah’s ability to earn a living.

Background

[4] The parties appear to agree on the relevant background leading up to the signing of a factoring agreement between Grand Financial and Solemio.

[5] Michael Rakhnayev is the chief financial officer of Grand Financial. He is a sophisticated business person. He has degrees in accounting and finance, and a history of working in finance as a tax manager in several companies. Grand Financial is a business operated by Mr. Rakhnayev’s brother. It provides a variety of financial services to companies in the trucking business. This includes providing cash flow to transportation companies. The business is located in Vaughan, but has customers all over North America.

[6] Cash flow assistance is often required by transportation companies. This is because there is often a delay in a company receiving payment for its services while expenses such as gas, insurance and maintenance require immediate payment.

[7] On July 10, 2007, Grand Financial and Solemio entered into a factoring agreement (the “factoring agreement”). This agreement provided that Solemio could offer to assign accounts receivable to Grand Financial. Grand Financial, if it accepted the account, would pay 90 percent of the account to Solemio and receive an assignment of the receivable. Following is a summary of some of the key provisions of the agreement:

• Paragraph 2.1 provides that the client (Solemio) may offer to sell, transfer and assign approved accounts to Grand Financial.
• Paragraph 2.4 provides that each offer to sell and account shall be subject to the terms and conditions of the agreement and shall be irrevocable by Solemio until Grand Financial either accepts or declines to accept it.
• Paragraph 3.2 provides that upon Grand Financial’s acceptance of any account offered to it by Solemio, such accounts are thereby transferred and assigned to Grand Financial.
• Paragraph 6.1 provides that Solemio grants to Grand Financial a security interest in the undertakings of the business.
• Paragraph 10.2 provides for remedies in the event of default by Solemio which include exercising any and all rights and remedies of a secured party under the Personal Property Security Act (Ontario).
• Paragraph 12.1 provides that the agreement shall continue indefinitely until terminated by a 60-day written notice by either party.
• Paragraph 12.2 provides that notwithstanding termination of the agreement, Solemio shall continue to be liable to Grand Financial for the full and prompt payment of accounts purchased by Grand Financial which are then outstanding and unpaid.
• The agreement further provides that Grand Financial shall continue to have a security interest in the collateral of the client, including any security interest granted under any security document until all such indebtedness of the client to Grand Financial is paid in full.

[8] In addition to the factoring agreement, Mr. Ullah executed a personal guarantee in relation to the factoring agreement. This personal guarantee, also dated July 10, 2007, sets out the terms of the guarantee as follows:

(a) Guarantee of obligations: the undersigned, jointly and severally, unconditionally guarantee to Grand full payment and prompt and faithful performance by the company of all its present and future indebtedness and obligations to Grand which may arise pursuant to the agreement. The words “indebtedness” and “obligation” are used here in their most comprehensive sense and include any and all advances, debts, obligations, and liabilities of the company heretofore, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, and whether the company may be liable individually or jointly with others, or whether recovery may be or hereafter become barred to any statute or limitations or otherwise become unenforceable. Said indebtedness and obligations guaranteed hereunder shall be collectively referred to herein as “obligations”.

[9] One of Solemio’s major clients was Arnold Bros. Transport Ltd. On July 10, 2007, Grand Financial sent to Arnold Bros. a direction signed by Mr. Ullah directing that,

Effective immediately, all the accounts payable to Solemio Transportation Inc. shall be paid directly to Grand Financial Management Inc.

[10] This direction was acknowledged by Ms. Helmiene Dueck, identified as the logistics manager for Arnold Bros. Her signature is dated July 18, 2007.

[11] It is apparently common in the transportation business for transportation companies to subcontract some of their freight delivery obligations. In the present case, Arnold Bros. routinely subcontracted some of their transportation work to Solemio, who in turn subcontracted some of the work to another company called Wild Lions Transport Inc. (Wild Lions). Wild Lions would carry out their services and submit their account to Solemio. Solemio would then mark up the cost of the transportation, include their own transportation fees, and bill Arnold Bros. for the delivery. Arnold Bros. would in turn bill their client for the service.

[12] Wild Lions had also entered into their own factoring agreement with Grand Financial. They had been doing business with Grand Financial for about a year prior to Solemio entering the factoring agreement of July 10, 2007, with Grand Financial.

[13] Following delivery of the notice of assignment by Solemio to Arnold Bros., Arnold Bros. made at least two payments with cheques addressed to Solemio care of Grand Financial. These cheques are dated August 22 and August 29, 2007. They were for $90,970.00 and $66,111.25 respectively. However, no further cheques were delivered by Arnold Bros. to Grand Financial in connection with Solemio’s services.

The Parties’ Positions

[14] The evidence of the parties is largely irreconcilable as to the events which occurred after the initial payments were made by Arnold Bros. as referred to above.

The Plaintiff’s Position

[15] Mr. Rakhnayev testified that he received a telephone call from Mr. Ullah at some point in September 2007. Mr. Ullah wanted to change the structure for payments under the factoring agreement. In particular, Mr. Ullah wanted Grand Financial to pay the invoices he received from Wild Lions as opposed to making payments on bills rendered by Solemio to Arnold Bros. Solemio would then proceed to bill Arnold Bros. Grand Financial would in turn get paid by Arnold Bros. in accordance with the direction for payment. Mr. Rakhnayev denied that there were any discussions about the factoring agreement being terminated. Instead, there was simply an agreement that Grand Financial would pay the Wild Lions’ accounts directly instead of waiting for an account to be rendered to Arnold Bros.

[16] Mr. Rakhnayev confirmed that Grand Financial made a series of payments based on invoices billed from Wild Lions to Solemio. However, they never received any payment in return from Arnold Bros. This situation did not, however, come to light until sometime in December when it was apparent that there was a debt owing by Solemio for something in excess of $300,000.00.

[17] Also, at around this time Mr. Rakhnayev discovered that Arnold Bros. had been paying the Solemio invoices directly to Solemio. The net effect of this arrangement from Mr. Rakhnayev’s perspective was that Solemio was having its accounts paid directly by Grand Financial, but breaching their obligation to have the accounts billed to Arnold Bros. paid to Grand Financial. Grand Financial viewed this conduct as a clear breach of the factoring agreement.

[18] Mr. Rakhnayev acknowledged that a number of payments were sent directly from Solemio to Grand Financial in satisfaction for some of the Wild Lions’ accounts. However, he also referred to at least four cheques from Solemio which did not clear the bank on which they were drawn, which in his view constituted a further breach of the factoring agreement.

[19] Grand Financial then took steps to enforce their security under the factoring agreement. They also tried to negotiate with Mr. Ullah. Approximately $35,000.00 was seized from Solemio’s RBC bank account. In addition, at one point Grand Financial was set to recover approximately $25,000.00 in funds owing to Solemio by Arnold Bros. However, Mr. Rakhnayev stated in his evidence that it was not in their interest to put Solemio out of business. He stated that Mr. Ullah told him that he needed this money to keep his business going. As a result, Grand Financial allowed Arnold Bros. to disperse the funds to Solemio. However, shortly afterwards in January 2008 Mr. Ullah disappeared and Solemio ceased its business operations.

[20] Mr. Rakhnayev also testified that he spoke with Ms. Dueck at Arnold Bros. in January 2008. She told him that Mr. Ullah told her it was no longer necessary to pay funds owing by Arnold Bros. to Grand Financial.

[21] It is significant to note that there was no written record kept by Mr. Rakhnayev about his discussion with Mr. Ullah when he says there was a discussion about making the payments directly to Wild Lions instead of waiting for an account to be delivered by Solemio to Arnold Bros. which in turn would be assigned to Grand Financial. This is surprising in light of the fact that this constituted a significant change to the arrangements contemplated in the factoring agreement.

The Position of Solemio

[22] Mr. Ullah was brought up in Pakistan and moved to Germany in 1996 where he obtained a grade 12 education. He came to Canada in 2001. By 2003 he had opened his own transport company, Solemio.

[23] In his evidence he stated that customers in the transport industry usually take anywhere from 30 to 90 days to pay accounts. Some businesses use factoring companies instead of waiting for the payment from their customers to maintain cash flow. His practice, however, was to ask for a “quick pay” from his customers. In this situation his customer would pay right away, but take a discount of 1.5 percent (which he subsequently corrected to 2.5 percent) off the invoice. This was the arrangement he had with Arnold Bros. before entering into the factoring agreement with Grand Financial.

[24] Mr. Ullah noted that his subcontractor Wild Lions had a factoring agreement with Grand Financial since at least January, 2007. Under the terms of this factoring agreement he would be required to pay Wild Lions’ invoices to Grand Financial. Between January to July, 2007 he was dealing regularly with Mr. Rakhnayev about payment for the Wild Lions’ invoices. In turn Mr. Rakhnayev wanted him as a client. He explained to Mr. Rakhnayev that he got a quick pay from Arnold Bros. However, Mr. Rakhnayev suggested that he try his services and told him that if he did not like it he could go back to his old system of dealing directly with Arnold Bros.

[25] Mr. Ullah states that he relied on the representations of Mr. Rakhnayev and entered into the factoring agreement. He was asked by Mr. Rakhnayev to sign the contractual documents. He was told these were a formality and he signed the documents without reading them.

[26] Mr. Ullah stated that he asked Mr. Rakhnayev why he had to sign a personal guarantee and was told that he did not have to worry about this unless his customers did not pay. As Mr. Ullah felt that he had good customers he was not worried about the personal guarantee.

[27] In the first couple of weeks after signing the factoring agreement Mr. Ullah sent his invoices to Grand Financial for processing. He then compared the cost of using Grand Financial to the discount charged by Arnold Bros. He concluded that Grand Financial was the more expensive alternative.

[28] According to Mr. Ullah, he telephoned Mr. Rakhnayev to advise him of his conclusion that he was losing money by using Grand Financial. He further told him that he wanted to end the factoring agreement and told him that he would not send in any more invoices. According to Mr. Rakhnayev urged him to leave the factoring agreement open suggesting he might want to use it in the future. Mr. Ullah maintains that he told Mr. Rakhnayev that he was not interested and that it was agreed that the agreement was terminated.

[29] Mr. Ullah testified that he relied on Mr. Rakhnayev’s confirmation that the factoring agreement was terminated and spoke with Ms. Dueck at Arnold Bros. He told her that he had terminated the contract with Grand Financial and would go back to the Quick Pay system. Ms. Dueck told Mr. Ullah that she needed to verify this with Mr. Rakhnayev. She then put the call on hold and called Mr. Rakhnayev for a three-way conversation. Mr. Rakhnayev confirmed to Ms. Dueck that Arnold Bros. could now deal directly with Solemio. This call is reported to have occurred at the end of July or beginning of August. Following this telephone call, Mr. Ullah dealt directly with Arnold Bros. for payment of his accounts.

[30] Mr. Ullah’s position is that the Wild Lions’ invoices, which were paid by Grand Financial to Wild Lions, were paid pursuant to the factoring agreement Wild Lions had with Grand Financial and were totally unrelated to the Solemio agreement with Grand Financial.

[31] With respect to the NSF cheques referenced by Mr. Rakhnayev in his evidence Mr. Ullah explained that Mr. Rakhnayev complained about delays in him paying the Wild Lions’ invoices. He wanted those invoices paid by Solemio within 60 days. This was contrary to the understanding with Wild Lions that Solemio could take up to 90 days to pay. Mr. Rakhnayev requested post-dated cheques from Solemio. Mr. Ullah agreed to this on the understanding that Mr. Rakhnayev would contact him before the cheques were cashed. On several occasions, however, Grand Financial cashed the cheques without checking with Mr. Ullah first. In those situations Mr. Ullah spoke with Mr. Rakhnayev. It was agreed that he would put a stop-payment on those cheques and then re-issue the cheques promptly and deposit them to Grand Financial’s account. The evidence adduced at trial, including copies of replacement cheques and bank deposit receipts have satisfied me that Mr. Ullah did in fact promptly deposit funds to Grand Financial’s credit on the cheques which were the subject of a stop-payment or an NSF return, except for the cheque for $31,000.00 which was paid directly to Wild Lions. I accept the defence evidence with respect to those subsequent payments.

Analysis of Credibility Issues

[32] Having considered the evidence of both Mr. Rakhnayev and Mr. Ullah I have considered that Mr. Ullah’s evidence with respect to the alleged oral agreement to terminate the factoring agreement is more credible for the following reasons:

1. Mr. Ullah’s evidence was corroborated in a number of important respects by the evidence of Helmiene Dueck. Ms. Dueck was at the relevant time the logistics manager for Arnold Bros. I consider Ms. Dueck to be an independent witness with no stake in the outcome of the action. Ms. Dueck confirmed that prior to entering into the factoring agreement Mr. Ullah and his company, Solemio, used to take advantage of their Quick Pay system. This involved prompt payment of invoices at an agreed upon discount of 2.5 percent. After the factoring agreement was entered into by Solemio Ms. Dueck confirmed receiving and signing the direction for payment which required Arnold Bros. to send all payments for Solemio to Grand Financial.

About two weeks after the factoring agreement was signed Ms. Dueck testified that Mr. Ullah called her and told her that he was no longer factoring his accounts through Grand Financial and that he would go back to billing Arnold Bros. directly on the Quick Pay system. Ms. Dueck testified that she was not able to simply accept Mr. Ullah’s word on this point. As a result she arranged for a three-way call to include both Mr. Ullah and Mr. Rakhnayev. She thought this call would have taken place either in late July or early August. In the telephone call Mr. Rakhnayev agreed that Arnold Bros. could go back to paying Solemio directly and that payment would not be required to be made to Grand Financial.

Shortly after that telephone call there was another three-way call with Ms. Dueck, Mr. Ullah and Mr. Rakhnayev participating. This is because Ms. Dueck was arranging for payment of both the invoices that had been rendered pursuant to the factoring agreement as well as invoices submitted directly by Solemio to Arnold Bros. under the Quick Pay system. Ms. Dueck wanted to know whether she could make the cheques out jointly to Grand Financial and Solemio, and then have the two companies sort out their respective entitlements. During this three-way call, both Mr. Rakhnayev and Mr. Ullah agreed to the joint invoices. This led in turn to Arnold Bros. sending out joint cheques payable to both Solemio and Grand Financial for $90,970.00 and $66,111.25 near the end of August.

After those two cheques were issued Arnold Bros. proceeded to pay Solemio only under its Quick Pay system.

Ms. Dueck agreed that she did not confirm the conversations in writing with both Mr. Rakhnayev and Mr. Ullah. She further agreed that she never received a written release authorizing Arnold Bros. to make the payments directly to Solemio. This was standard practice in the industry. Nevertheless, I accept Ms. Dueck’s evidence with respect to the conversations which contradicts Mr. Rakhnayev’s evidence and which strongly supports the evidence given by Mr. Ullah.

It is also significant to note that Ms. Dueck recalled receiving a message from Mr. Rakhnayev. She described Mr. Rakhnayev as being very angry. In his message Mr. Rakhnayev stated that someone was going to pay the money he was owed, and that he didn’t care who. He threatened to go after the customers of Arnold Bros. Ms. Dueck was vague with respect to the timing of this call. She thought this message was received close to the time that the other calls were made. However, she could not recall specifically when that message was received. In my view it is more likely the call was made later on, likely in December. Neither the evidence of Mr. Rakhnayev nor the evidence of Mr. Ullah suggests that a major issue with respect to the payments made directly to Solemio became an issue before sometime in December.

Ms. Dueck also testified that there was a follow-up telephone call from Mr. Rakhnayev in January 2008 in which he indicated that he was going to go after Arnold Bros. for the money he was owed. This matter was referred to the company’s vice president. As a result of that discussion, Arnold Bros. made a decision not to use Solemio’s services any further. It didn’t want to put their customers in jeopardy. As a result, Arnold Bros. gave a direction that Solemio trucks were to be stopped where they were located. Arrangements were made by Arnold Bros. to pick up the loads from the Solemio trucks.

I further accept Ms. Dueck’s evidence about the telephone calls referred to above which relate to Mr. Rakhnayev’s demands for payments from Arnold Bros. and its customers.

2. A letter dated January 22, 2008, from Mr. Rakhnayev to his then counsel was entered as an exhibit at trial on consent. Grand Financial waived any privilege on this document at trial. This letter contains a summary of Mr. Rakhnayev’s position, which he described in the following words,

Around the same time in August, Mr. Sami Ullah has phoned me to make arrangements to minimize his cost of factoring, and has insisted that the loads would be hauled by my other client, Wild Lions Transportation (“Lions”) who in fact has introduced me to Solemio. At which point we have made an arrangement with Solemio, Grand, and Lions of the following: In order for Solemio to save costs in factoring of his receivables directly with Grand and since we have security registration for both Solemio and Lions, we have agreed that Lions would haul the freight that was given to Solemio by Arnold and a few other freight brokers under the Solemio authorities, and that we would bill Solemio with Lions’ invoices. Solemio would then bill his brokers, the biggest client of which was Arnold Bros., and would then receive the cheques on a weekly basis from his clients and pay us the same week. Instead, Solemio has taken unauthorized Quick Pay from Arnold and other brokers for the past four months and has not been paying the funds to Grand, nor has he ever notified Grand of taking Quick Pay. This event serves as the first default of our agreement. [Emphasis added.]

It is apparent that the description of events given by Mr. Rakhnayev in the letter of January 22, 2008, is different than his evidence at trial in a material way. In his letter of January 22, 2008, he states it was his understanding that Solemio would bill and receive payment directly from Arnold Bros. and then remit the payments promptly to Grand Financial. This contrasts with his evidence at trial where he stated that his expectation was that Grand Financial would be paid directly by Arnold Bros.

3. In an earlier letter dated January 3, 2007 (the date is clearly incorrect and I believe should read January 3, 2008), Mr. Rakhnayev wrote a letter to Solemio Transportation with respect to the money it felt it was owed. In the first paragraph of that letter Mr. Rakhnayev states,

Per our record, invoices which were sold and assigned to us by Wild Lions Transport Inc. remain as outstanding.

This statement appears to recognize that the invoices of Wild Lions which were sent by Grand Financial to Solemio for payment were made pursuant to the factoring agreement Grand Financial had with Wild Lions as opposed to the factoring agreement Grand Financial says was in place with Solemio.

4. In a letter dated January 3, 2008, Mr.Rakhnayev wrote to Solemio demanding payment of the outstanding debt and threatening legal action. The letter goes on to state that once a judgment was obtained Grand Financial would take enforcement proceedings. However, there is no reference to Grand Financial taking any enforcement proceedings in the absence of a judgment. There is no indication that Grand Financial would rely on the security provisions under the factoring agreement or that it claimed entitlement to security in advance of a judgment. This correspondence from Mr. Rakhnayev appears consistent with the evidence of Mr. Ullah.

Conclusions with respect to the relationship between Solemio and Grand Financial

[33] It is undisputed that on July 10, 2007, Grand Financial and Solemio entered into a factoring agreement. In addition, Mr. Ullah signed a personal guarantee. I accept Mr. Ullah’s evidence that within several weeks after signing these agreements he had a further discussion with Mr. Rakhnayev at which point it was agreed that the agreements he had previously signed would be treated as terminated and that he was free to bill Arnold Bros. for any invoices beyond the date of their conversation.

[34] Wild Lions, however, continued to be a client of Grand Financial. Grand Financial continued to take assignments of the invoices of White Lions. The payments made by Grand Financial to Wild Lions were pursuant to the factoring agreement with Wild Lions not Solemio. Having taken an assignment of the Wild Lions’ accounts, Solemio was obliged to pay Grand Financial for those accounts. However, there was no obligation on Solemio to pay the Wild Lions’ accounts as soon as funds were received from Arnold Bros. Under the usual practice in the industry, payment for accounts would usually be delayed. In the present case Solemio introduced a document which was provided to Grand Financial. The document, which is dated October 19, 2007, and which was prepared by Wild Lions, confirms that the payment terms with Solemio allowed 45 to 90 days for payment.

The Issues

[35] Against the factual background described above the parties have raised a large number of issues to be addressed. They are as follows:

1. Does the Doctrine of Promissory Estoppel preclude Grand Financial from relying on the strict terms of the factoring agreement and the personal guarantee executed by Mr. Ullah?

2. If the Doctrine of Promissory Estoppel applies did Grand Financial in any event have the right to the benefit of the factoring agreement due to the termination provisions contained in the agreement?

3. The right of Grand Financial to judgment against Solemio for the Wild Lions’ invoices.

4. Have Solemio and Mr. Ullah established a claim for intentional interference with economic relations?

5. If so, is Mr. Ullah entitled to a judgment for a personal claim for his lost income or is such a claim barred as a derivative action?

6. If the answer to number 5 is no, what are Mr. Ullah’s damages?

7. If Solemio has established a claim for intentional interference with economic relations, what is the proper assessment of its damages?

8. Has Mr. Ullah established a claim for loss of reputation?

9. The claim by Solemio and Mr. Ullah for punitive damages.

10. What is the effect of the dissolution of Solemio in 2012 with respect to its claims in this action?

Issue #1

Does the Doctrine of Promissory Estoppel preclude Grand Financial from relying on the strict terms of the factoring agreement and the personal guarantee of Mr. Ullah?

[36] Initially, Solemio and Mr. Ullah raised non est factum as a basis for challenging the enforceability of the factoring agreement and personal guarantee, signed by Mr. Ullah. This position was abandoned during final argument.

[37] The Principle of Promissory Estoppel is summarized in the Supreme Court of Canada decision in Travellers Indemnity Co. of Canada v. Maracale, 1991 58 (SCC), [1991] 2 S.C.R. 50. In that case the court confirmed that the Principles of Promissory Estoppel are well settled. The party relying on the Doctrine is required to establish that the other party has, by its words or conduct, made a promise or assurance which was intended to affect the legal relationship and to be acted on. In addition, the person relying on the conduct must establish that, in reliance on a representation, he acted on it or in some way changed his position.

[38] In the Law of Contract in Canada by Fridman (6th Edition - 2011), the author sets out the essential requirements of Promissory Estoppel as follows:

1. There must have been an existing relationship between the parties at the time the statement on which the estoppel is founded was made;

2. There must be a clear promise or representation made by the party against whom the estoppel is raised, establishing his intent to be bound by what he has said;

3. There must have been reliance by the party raising the estoppel upon the statement or conduct of the party against whom the estoppel is raised;

4. The party to whom the representation was made must have acted upon it to his detriment;

5. The promissee must have acted equitably.

[39] In the present case, Grand Financial relies upon Section 12.1 of the Factoring Agreement which provides that the agreement shall continue indefinitely until terminated by a 60-day written notice by either party. There is no dispute about the fact that written notice was not provided by Solemio. However, in my view, the requirements for Promissory Estoppel have been established on the evidence. There is no dispute about the fact that there was an existing legal relationship between the parties at the time of the telephone call between Mr. Rakhnayev and Mr. Ullah. In addition, I accept there was a clear promise or representation made by Mr. Rakhnayev that the factoring agreement would be treated as terminated. I also find there was reliance by Solemio and Mr. Ullah upon the statement, and that they acted on this statement to their detriment. In particular, Mr. Ullah and Solemio proceeded to deal directly with Arnold Bros. with respect to their invoices and it was this action, at least in part, which led to Grand Financial taking subsequent default proceedings against them.

[40] I therefore conclude that Grand Financial is estopped from denying that the factoring agreement was terminated as of approximately two weeks following its execution. The logical and reasonable inference which I draw as well from the discussion with Mr. Ullah is that in addition Grand Financial would not rely on the other associated documents which were executed with the factoring agreement. This would include the personal guarantee. In addition, I note that the personal guarantee given by Mr. Ullah relates to the obligations owed to Grand Financial arising pursuant to the factoring agreement. Thus, the termination of the factoring agreement would also end Mr. Ullah’s obligations under his personal guarantee.

Issue #2

If the Doctrine of Promissory Estoppel applies did Grand Financial have the right to use the security provisions under the agreement following termination of the agreement itself?

[41] Grand Financial argues that even following the termination of the factoring agreement Solemio (and Mr. Ullah pursuant to his personal guarantee) were still liable to Grand Financial under the agreement. They rely upon section 12.2 of the agreement which is referenced above. In particular they rely upon the provision which states that the client shall continue to be liable to Grand Financial,

For the full and prompt payment of accounts purchased by Grand Financial hereunder which are then outstanding and unpaid, disputed or undisputed, and in respect of which, under the terms hereof, client is liable to Grand, as well as for any other indebtedness due to Grand from client.

[42] In my view the wording would make Solemio liable to Grand Financial for any indebtedness owed to Grand Financial at the date the agreement was terminated. It would not extend to debts accruing after the date of termination. The evidence in this case is that the debts owing to Grand Financial at the time the agreement was terminated were satisfied by the two cheques issued by Arnold Bros. for $90,970.00 and $66,111.25.

[43] I therefore conclude that on payment of the above amounts Solemio had no further obligations to Grand Financial which arose out of the factoring agreement signed by Solemio. This would in turn mean that Grand Financial lost the right to execute in accordance with the security provisions under the factoring agreement.

Issue #3

The right of Grand Financial to judgment against Solemio for the Wild Lions’ invoices

[44] Although I have found that Solemio did not have any further obligations to Grand Financial under its factoring agreement, Solemio was still obligated to pay Grand Financial for the Wild Lions’ invoices which had been assigned to Grand Financial by Wild Lions under the Wild Lions factoring agreement.

[45] The evidence led by Grand Financial with respect to the amount owed on the Wild Lions’ invoices is unsatisfactory. It alleges that it is owed $219,250.00. In support of its claim it produced a series of invoices of Wild Lions which were filed as exhibits, as well as a summary which is entitled, “Amount Owing on Outstanding Invoices”. However, there is no evidence with respect to any payments made by Solemio nor are there any detailed accounting records which would show the billings and credits for the Solemio account. It is significant that in Mr. Rakhnayev’s letter of January 22, 2008, there is reference to four cheques which Mr. Rakhnayev asserted were either stopped or returned NSF. As noted above I have accepted that the funds represented by those cheques were subsequently paid to Grand Financial. In his evidence Mr. Rakhnayev did not specifically recall if some of the funds represented in those cheques had been paid later. All of this creates considerable doubt on the actual amount owed by Solemio to Grand Financial.

[46] Having said that, Mr. Ullah in his evidence acknowledged that his company had a debt owing to Grand Financial of approximately $200,000.00. This was conceded in argument as well. I therefore conclude that Grand Financial is entitled to judgment against Solemio for the sum of $200,000.00 on account of the Wild Lions’ invoices, which were assigned to it by Wild Lions.

Issue #4

Has Solemio and Mr. Ullah satisfied the requirements for a claim for intentional interference with economic relations as alleged in their counterclaim?

[47] The tort of intentional interference with economic relations aims to provide a remedy to victims of intentional commercial wrongdoing. The three essential elements of this tort are (1) the defendant intended to injure the plaintiff’s economic interests; (2) the interference was by illegal or unlawful means; and (3) the plaintiff suffered economic loss or harm as a result. With respect to the first issue the question is whether Grand Financial intended to injure Solemio’s business interests. The importance of this criteria was highlighted in the Ontario Court of Appeal in Alleslev-Krofchak v. Valcom Limited, 2010 ONCA 557, 322 D.L.R. (4th) 193 where the court refers to the House of Lords decision in OBG Ltd. v. Allan, Douglas v. Hello! Ltd. and Mainstream Properties Ltd. v. Young, [2007] U.K.H.L. 21 and states,

Apart from the debate about the scope of “unlawful means”’, the lords agreed that intentional interference with economic relations requires that the defendant intend to cause loss to the plaintiff, either as an end in itself or as means of, for example, enriching himself. If the loss suffered by the plaintiff is merely a foreseeable consequence of the defendant’s actions, that is not enough. Moreover, there must be a causal connection between the unlawful means and the loss suffered by the plaintiff.

[48] Grand Financial in this action argues that there was never any intention to harm Solemio or Mr. Ullah. They point to the fact that Grand Financial subsequently allowed Arnold Bros. to pay directly to Solemio the $25,000.00 which was owed to Solemio and abandoned its rights under the security provisions of the factoring agreement. At least on the surface this would appear to be inconsistent with an intention to harm Solemio.

[49] However, there was considerable evidence given at trial to support a conclusion that the actions of Grand Financial were directly intended to both harm Solemio as well as enriching itself at the expense of Solemio.

[50] In his evidence, Mr. Ullah testified that in early January Mr. Rakhnayev called him by telephone and told him that he had to give him some business from other clients or he would “shut him down”. There was also evidence from Mr. Ullah of threats or intimidation in other telephone calls. For example, Mr. Ullah described a situation which occurred on January 4 or 5, 2008. He was owed approximately $125,000.00 by other clients. He was expecting cheques from these clients to arrive, but they did not arrive exactly on time. In a telephone conversation with Mr. Rakhnayev, Mr. Ullah informed him that he was going to have to stop payment on a cheque as a result. Mr. Rakhnayev told Mr. Ullah to give him a cheque for the funds owing or he would take steps to shut him down.

[51] The evidence of Ms. Dueck would support a conclusion that Mr. Rakhnayev would take any steps within his power, whether lawful or unlawful, to get the money he thought he was owed. Ms. Dueck testified to receiving a message from Mr. Rakhnayev. As noted above the timing of this message is somewhat uncertain, but the tone of Mr. Rakhnayev was described as being extremely angry, and Ms. Dueck was told that someone was going to pay Grand Financial the money it thought it was owed and Mr. Rakhnayev, “didn’t care who”.

[52] On balance I am satisfied that Mr. Rakhnayev and Grand Financial were well aware of and intended the natural consequences which he knew would flow from his deliberate actions in executing on security pursuant to an agreement which he knew was terminated. While it is true that he subsequently agreed to allow Arnold Bros. to pay directly to Solemio the $25,000.00 it was owed I have concluded that this was not a reflection of any attempt to accommodate Solemio. Arnold Bros. is a large business in the transportation industry which I infer might have the ability to affect Grand Financial’s business in the future. In addition, an employee of Arnold Bros. was a witness to the telephone conversation when Mr. Rakhnayev confirmed the termination of the factoring agreement. Insisting on payment pursuant to the factoring agreement under these circumstances from Arnold Bros. would be difficult to justify.

[53] The next issue which must be considered is whether the interference was by illegal or unlawful means.

[54] The evidence of Mr. Rakhnayev is that the issue of Solemio’s debt to Grand Financial was recognized in the latter part of December 2007. By that point, Mr. Rakhnayev became aware that Arnold Bros. had been paying Solemio directly by Quick Pay and that the necessary payments to Grand Financial were not being received. Mr. Rakhnayev testified that he moved early in January 2008 to address the debt owing by Solemio. This evidence appears consistent with the written documentation. On January 3, 2008, Mr. Rakhnayev wrote to Solemio stating that there was a debt owing of $330,100.00. The letter goes on to advise that legal action against Solemio would be filed by January 10, 2008. The letter further states,

Further, upon a court judgment your company will be subject to various enforcement proceedings including, interalia garnishment of any financial institution business account and lien of property or assets to be seized and sold, not to mention, such court judgment will be reported directly to all credit reporting bureaus to the detriment of your company’s credit history.

The letter goes on to demand payment in full by January 10^th.

[55] As noted above, the letter of January 3^rd does not make reference to any enforcement proceedings under the security provisions of the factoring agreement executed by Solemio. This supports my conclusion that Mr. Rakhnayev was aware of the fact that he had previously agreed to terminate that agreement.

[56] By January 10, 2008, however, Grand Financial was taking steps to enforce its security under the provisions of the factoring agreement signed by Solemio. It delivered to both Royal Bank of Canada and Arnold Bros. copies of the security documentation under the Solemio factoring agreement and claimed entitlement to the funds held by RBC in the Solemio bank account, and to the funds owing by Arnold Bros. to Solemio. RBC delivered approximately $35,000.00 held in Solemio’s RBC account to Grand Financial. Grand Financial ultimately permitted Arnold Bros. to pay to Solemio $25,000.00 which was owing to it.

[57] There was been considerable jurisprudence as to what constitutes “unlawful means” for purposes of this cause of action. In the Court of Appeal decision in Correia v. Canac Kitchens, 2008 ONCA 506, 91 O.R. (3d) 353, the court notes that the question of what amounts to “unlawful means”, is the one that has caused the most difficulty. The court stated that the intentional tort of interference with economic relations exists to fill a gap where no action could otherwise be brought for intentional conduct that caused harm through the instrument of a third party. Thus, in order to satisfy the test of “unlawful means” a plaintiff must not only establish that the conduct of the defendant was unlawful, but also that the defendant’s actions are not actionable directly by the plaintiff.

[58] This view was reiterated by the Ontario Court of Appeal in Alleslev-Krofchak, supra where the court states,

In my view, therefore, it is now clear that to qualify as “unlawful means”, the defendant’s actions (i) cannot be actionable directly by the plaintiff and (ii) must be directed at a third party, which then becomes the vehicle through which harm is caused to the plaintiff.

[59] I am also aware that the Supreme Court of Canada is currently considering an appeal in Bram Enterprises Ltd. v. A.I. Enterprises Ltd., 2012 NBCA 33. This case which is under reserve by the Supreme Court of Canada is considering the proper approach to the “unlawful means” requirement. Their decision in that case has not yet been released. As a result, my decision must be based upon the currently existing case law.

[60] I have concluded that the actions of Grand Financial do satisfy the requirement for “unlawful means”. By purporting to execute on security under an agreement which was terminated, the actions of Grand Financial were directed at third parties (namely, RBC and Arnold Bros.) which then became the vehicle through which harm was caused to Solemio. Indeed, Solemio was left in a situation where its funds were unlawfully seized without the authority of any court action or judgment.

[61] In addition it is apparent that a number of the actions taken by Grand Financial would not be actionable by Solemio. For example, the demand by Grand Financial that Arnold Bros. pay the amounts owing is not a demand which would be actionable by Solemio and it is a separate claim advanced by Grand Financial against Arnold Bros. for payment of the debt. Nevertheless, this unlawful act lead to Arnold Bros. terminating its business relationship with Solemio. There is also the threat that Grand Financial would pursue the customers of Arnold Bros. for payment. This was clearly an unlawful act as there was no basis under any of the contractual documentation for Grand Financial to pursue the customers of Arnold Bros. This, again, is another example of an unlawful act which was not actionable by Solemio.

[62] The third requirement for the tort of intentional interference with economic relations is for the plaintiff to have suffered economic loss or harm as a result. Clearly, this requirement is satisfied. As a result of the actions of Grand Financial the sum of $35,000 was wrongfully seized by Grand Financial from its RBC account and a significant business relationship with Arnold Bros. was destroyed.

[63] In conclusion I find that Solemio has established a valid claim against Grand Financial for intentional interference with economic relations. As all of the actions of Grand Financial were directed to the business affairs of Solemio, however, there is no basis for a finding in favour of Mr. Ullah personally.

Issue #5

Is Mr. Ullah entitled to a judgment for a personal claim for his lost income or is such a claim barred as a derivative action?

[64] As noted above, the actions of Grand Financial were taken against Solemio. There is no evidence of any action taken by Grand Financial against Mr. Ullah personally. Therefore I conclude that his personal claim has not been proven and is therefore dismissed.

[65] It is true that Mr. Ullah may have suffered some economic consequences as a result of the action taken against Solemio. However, that is not sufficient to support a personal claim against Grand Financial.

[66] Mr. Ullah asserts, for example, that he suffered a loss of salary of $250,000.00 based on the collapse of his business. This figure is arrived at on the basis that he was earning approximately $100,000.00 per annum from Solemio.

[67] However, the rule in Foss v. Harbottle (1843), 67 E.R. 189 provides that the shareholder of a corporation, even a controlling or sole shareholder, does not have a personal cause of action for wrong done to the corporation. This rule arises out of a basic principle of corporate law that a corporation has a separate legal existence from that of its shareholders. Thus, a shareholder cannot sue for the losses suffered by the corporation. See Meditrust Healthcare Inc. v. Shoppers Drug Mart, 2002 41710 (Ont. C.A.). The same principle would also appear to apply to claims by employees of a corporation. For example, in Royal Bank of Canada v. Batra, 2004 26625 (Ont. S.C.) Justice Karakatsanis comments,

It is clear that Batra claims these damages as shareholder, employee, officer and director of the company. The damages claimed relate to a lost employment income and her lost opportunity to profit and gain from the company. The damages Batra alleges are a consequence of the bank’s actions directed against the company and the harm suffered by the company.

[68] Justice Karakatsanis goes on to conclude that in the circumstances only the company was entitled to sue for the wrong done to it based on the rule in Foss v. Harbottle.

[69] I therefore conclude that Mr. Ullah’s claim is a derivative claim which is precluded under the rule in Foss v. Harbottle.

Issue #6

If Mr. Ullah’s personal claim for lost income is not barred as a derivative action, what are his damages?

[70] As Mr. Ullah’s claim is precluded, this question is moot.

Issue #7

If Solemio has established a claim for intentional interference with economic relations what is the proper assessment of its damages?

[71] Solemio adduced virtually no evidence with respect to its damages relating to the intentional interference with economic relations. In support of its claim the plaintiff referred to a one and a half page summary of damages. In that summary the following amounts are claimed:

DATE	DESCRIPTION	AMOUNT
January 2008 to June 2008	Loss due to all 3 trucks and trailers being reacquired by the lessor	$135,000.00
January 2008 to June 2008	Office telephone and utilities losses for 6 months	$77,121.00
January 2008 to June 2010	Sami Ullah’s loss in salary for 2 years and 6 months	$250,000.00
January 2008 to June 2008	Plaintiff’s loss in business income	$537,879.00
TOTAL		$1,000,000.00

[72] As previously noted the claim for Mr. Ullah’s loss in salary is a derivative claim and therefore not claimable personally.

[73] With respect to the claim for the loss of trucks, Mr. Ullah testified that because the RBC bank account for Solemio was frozen he was not able to pay the continuing expenses of Solemio. He continued to make payments on the leases for his trucks out of his own personal funds, but ultimately those trucks were repossessed. In his evidence Mr. Ullah referred to a lease agreement for two 2007 Kenworth T-600 trucks with a delivery date of April 6, 2006. Both of the trucks required down payments as well as continuing lease payments. However, Mr. Ullah did not introduce any evidence with respect to the value of the trucks at the time they were seized by the lessor. He suggested in his evidence that the value of $135,000.00 was calculated with the assistance of his accountant based on depreciation allowed under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) However, the accountant was not called as a witness, nor was there any evidence with respect to the calculations. It is also apparent that the actual depreciation could significantly vary from the depreciation permitted under the Income Tax Act. In addition, it is not apparent how the net loss would be affected by the fact that any future payments were not made after the trucks were seized. In the end I have concluded that Mr. Ullah has failed to present any reliable evidence which would allow me to place a value on the trucks at the time they were seized.

[74] Mr. Ullah has also claimed for office, telephone and utility expenses, which are said to total $77,121.00. While Mr. Ullah has provided samples of some utility bills they do not total the amount claimed, and there is no explanation as to how the sum of $77,121.00 was calculated. In any event it would appear that the ongoing expenses of Solemio would not be the proper basis for a claim as these expenses would have been incurred regardless of the actions of Grand Financial. Instead, the alleged damage to Solemio’s business is based on the loss of income which is the subject of a separate claim.

[75] The lost business income claim is asserted to be $537,879.00. Mr. Ullah did not introduce any accounting or expert opinion to support this claim. In fact, based on his evidence in cross examination it appears that the sum of $537,879.00 was arrived at by assuming a global loss of $1,000,000.00 and subtracting the other items which had already been included in the calculation of losses. This method of calculation is of no assistance to the court in assessing the loss of business income.

[76] In his evidence at trial Mr. Ullah stated that because his bank account was frozen by Grand Financial Solemio was not able to pay its bills or employees. This led to the seizure of the trucks and ultimately the demise of the business. Mr. Ullah maintained that the business was not in active operation after January 2008. He produced the unaudited financial statements for Solemio for 2003, 2004, 2005, 2006, and 2007. However, no financial statements were produced for the period after December 31, 2007. There was also no expert opinion adduced with respect to the loss suffered by Solemio, nor was any evidence given with respect to the value of the business prior to the actions complained of in this action.

[77] The unaudited financial statements for 2007 show that Solemio had a net profit of just under $114,000.00. However, there is no evidence as to the financial circumstances for Solemio for 2008 onwards. This evidence would have been in the company’s possession and was simply not adduced at trial.

[78] While Mr. Ullah maintained that the business was not operated after January 2008 there is at least some reason to be suspicious of this evidence. On cross examination Mr. Ullah was referred to the following evidence he gave at examination for discovery:

307. Q: Were you doing business after February, 2008? A: Yes.

308. Q: So, you were actually ... your trucks were in … A: They were on the road, yes.

309. Q: They were on the road? A: Yes.

310. Q: But these are all in February? A: Yes.

311. Q: So, you’re doing work in February? A: Yes.

312. Q: So, you’re collecting money? A: Yes.

[79] In addition, Mr. Ullah was cross-examined on the following answers given at his discovery:

324. Q: When did you cease doing business, Solemio? A: Sorry, can you repeat that question?

325. Q: You gave evidence, Mr. Ullah, that Solemio was no longer in existence, right? You are no longer carrying on business. A: Since 2009, like, April … May.

326. Q: So, just recently it stopped, ceasing business? A: Yes.

[80] Mr. Ullah’s discovery evidence calls into serious question his evidence at trial that the business stopped operating in January 2008. In the circumstances, I draw an adverse inference from the fact that no financial records were delivered for the period of 2008 onwards.

[81] There is also reason to be concerned that Solemio may have been experiencing financial difficulties by the end of 2007 for reasons unrelated to the actions of Grand Financial. While Solemio was entitled to a significant grace period in paying the Wild Lions’ invoices it is also clear on the evidence that Solemio was receiving prompt payment from Arnold Bros. The question remains, however, as to why Solemio would have accumulated a debt of approximately $200,000.00 owing to Grand Financial on account of the Wild Lions’ invoices despite the fact that it was receiving prompt payment for its own invoices to Arnold Bros. I conclude that on a balance of probabilities Solemio had significant liquidity problems unrelated to the actions of Grand Financial.

[82] In the circumstances I have concluded that Solemio has failed to prove on the evidence before me pecuniary losses that can be quantified. The plaintiff has failed to meet its onus to establish reliable estimates of its pecuniary damages. Even though the plaintiff has failed to adduce evidence that might reasonably be expected to be adduced in connection with damages, it is still the duty of this court to do its best, based on the evidence before it, to quantify the appropriate compensation owed to Solemio. Nevertheless, other courts have noted that a party who fails to present evidence which it reasonably would have been expected to produce to assist the court on the quantum issue cannot complain if the award fails to reflect evidence which was not adduced. The benefit of speculation, if such there be, does not go in favour of the defaulting party. See Acanthus Resources Ltd. v. Cunningham, 1998 ABQB 168, [1998] 5 WWR 646 at 655 (Q.B.)

[83] I am therefore left in a situation where there would appear to have been a significant and serious negative impact on the business of Solemio by reason of the actions taken by Grand Financial. The evidence of Ms. Dueck, for example, confirmed the evidence of Mr. Ullah that as a result of the issues that arose in January 2008 Arnold Bros. stopped doing any business with Solemio. In fact it ordered Solemio to stop its trucks wherever they were located and Arnold Bros. arranged to pick up the loads from those locations with its own trucks. It is also clear that Arnold Bros. was a major client of Solemio although we have no evidence of the actual amounts billed to Arnold Bros. prior to their ceasing doing business with Solemio in January 2008. The actions of Grand Financial must also have contributed to liquidity problems suffered by Solemio through their seizure of funds from the RBC account and effectively freezing the corporate account of that company with RBC.

[84] While Solemio has failed to prove the quantum of its pecuniary losses there does appear to be a reasonable basis to make an award of general damages for intentional interference with economic relations. This type of claim was supported in the Alleslev-Krofchak decision. The court awarded the sum of $100,000.00 stating, at paragraph 361:

The economic loss suffered by the plaintiffs as a result of the defendants intentional interference with their economic relations will be dealt with separately below. In addition to those damages, I award damages at large to Alleslev-Krofchak in the amount of $100,000.00. Damages at large can also be awarded in favour of a corporation such as Temagami; however, such damages are not personal. They are based on loss of reputation and associated economic loss.

[85] In Polar Ice Express Inc. v. Arctic Glacier Inc., 2007 ABQB 717, affirm 2009 ABCA 20, the court stated at paragraphs 116 -117:

If the defendant’s wrongful interference or the breach procured by it is such that, in the ordinary course of business, it would inflict damage on the plaintiff, it is unnecessary for the plaintiff to prove particular damage....The damages which may be awarded include those that were reasonably foreseeable to the defendant, including losses on other contracts which the defendant could foresee. Damages for these torts are "at large." They take into account not only the plaintiff's pecuniary loss but also non‑pecuniary damages for such matters as injured feelings, loss of reputation and the nature of the conduct.

[86] Courts have sometimes had difficulty quantifying an award of general damages “at large” as it involves a consideration of many factors, dependent largely on the facts. In Howard v. Madill, 2010 BCSC 525, Justice Bruce summarized some of the principles for an award of damages “at large” at paragraph 88 as follows:

1. Damages other than for pecuniary loss are “damages at large” and generally include compensation for loss of reputation, injured feelings, bad or good conduct by either party, or punishment.

2. Damages at large are compensatory for loss that can be foreseen but cannot be readily quantified.

3. Damages at large are a matter of discretion for the trial judge and are more a “matter of impression and not addition.”

4. Where damages at large are imposed for intentional torts, the assessment of damages provides an opportunity to condemn flagrant abuses of the legal process.

5. Damages at large involve a consideration of many factors including, the position, status and prior reputation of the plaintiff and the motives of the defendants as well as their knowledge of the risk of harm.

[87] In the present case I recognize that the actions of Grand Financial caused a significant pecuniary loss which is not capable of being reliably assessed. I also have considered that the actions of Grand Financial resulted in significant liquidity problems and no doubt contributed to a loss of reputation for Solemio. It also constituted a serious abuse of the legal process. Taking all of these circumstances into account I have concluded that a reasonable assessment of the damages at large is the sum of $175,000.00.

Issue #8

The claim by Solemio for punitive damages

[88] Solemio urges this court to make a substantial award for punitive damages. The sum of $250,000.00 is being sought in this regard. Punitive damages are only awarded in extraordinary situations. In general, punitive damages are considered in situations where the defendant’s misconduct is so malicious, oppressive, and high-handed that it would offend the court’s sense of decency. Punitive damages do not bear any relation to what the plaintiff should receive by way of compensation. Their aim is not to compensate a party, but rather to punish someone. It is the means by which a court expresses its outrage at what it considers egregious conduct of a party. See Hill v. Church of Scientology of Toronto, 1995 59 (SCC), [1995] 2 S.C.R. 1130 and N.M. Davis Corporation Limited v. Ross, 2012 ONSC 1697, 110 O.R. (3d) 196. As noted by the Supreme Court of Canada in Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595, punitive damages are very much the exception rather than the rule.

[89] I have concluded that an award of punitive damages is not appropriate in this case. While the conduct of Grand Financial was unlawful and inappropriate, this conduct does not rise to the level which would warrant, in my view, an award of punitive damages. In coming to this conclusion I have considered the context of Grand Financial’s actions. There is no dispute about the fact that Solemio ran up a very substantial debt in connection with the Wild Lions’ invoices which were owed to Grand Financial. This debt was incurred in circumstances where Solemio was receiving prompt payment from Arnold Bros. on account of the services provided by Wild Lions. While this does not excuse the conduct of Grand Financial it does suggest that Solemio contributed in its own way to an unhealthy business relationship developing between it and Grand Financial.

[90] It is also significant that the award of $175,000.00 for damages at large takes into account the serious abuse of the legal process which occurred here. The tort has a punitive component to it and is aimed at underhanded behaviour and expressing society’s disapproval of the defendant’s behaviour. See Alleslev-Krofchak v. Valcom Ltd., [2009] O.J. No. 2469 at paragraph 446.

Issue #9

Has Mr. Ullah established a claim for loss of reputation?

[91] Given that Mr. Ullah has not established a recognized claim it follows that he is not entitled to damages for loss of reputation. In any event, Mr. Ullah led very little evidence which would allow a reliable assessment of his personal damages under this heading. In his evidence in chief Mr. Ullah maintained that his personal credit rating has deteriorated to the point where the bank would not allow him to borrow money to operate a business. He did not produce any supporting evidence about this, however, such as correspondence from a bank denying a loan on this basis. Further, in cross-examination, Mr. Ullah acknowledged that he has been working at his father’s trucking business. While he denied any significant involvement in the business he is listed as one of the officers of the company, and he agreed that he volunteered to work for the company from time to time. In the end the plaintiff, in my view, has failed to adduce credible evidence which would support an assessment of damages under this heading.

Issue #10

What is the effect of the dissolution of Solemio in 2012 with respect to its claims in this action?

[92] It was acknowledged that Solemio was dissolved in 2012 for failure to make the necessary filings under the Canada Business Corporations Act, R.S.C. 1985, c. C-44. It would appear, however, that pursuant to Section 226(1) of that Act a civil action commenced by or against the corporation before its dissolution may be continued as if the corporate body had not been dissolved. I therefore conclude that the action both against and by Solemio is not a nullity, but is in fact valid and effective upon its revival pursuant to Section 209 of that Act.

Conclusion

[93] For the reasons noted above the plaintiff is entitled to judgment against Solemio Transportation Inc. in the sum of $200,000.00. The claim against Mr. Ullah personally is dismissed. Upon revival of Solemio, it is entitled to judgment against Grand Financial for the sum of $175,000.00. The claim by Mr. Ullah against Grand Financial is dismissed. Both Grand Financial and Solemio are entitled to pre-judgment interest on their respective claims. If the parties are not able to agree on costs an appointment may be requested through the trial coordinator’s office within 30 days of the date of the release of this decision. Written briefs shall be filed by the respective parties at least two days prior to the hearing on costs. If no steps are taken to request a hearing on costs within 30 days I make no order with respect to costs.

Justice M. McKelvey

Released: December 31, 2013