CITATION: G. R. Sibbick Limited v. The Estate of Kenneth Raymond Rattie by its Estate Trustee Tyler Rattie and 2035673 Ontario Inc., 2016 ONSC 2344
COURT FILE NO.: CV14-15
DATE: 2016April08
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
G. R. Sibbick Limited
Plaintiff
– and –
The Estate of Kenneth Raymond Rattie by its Estate Trustee Tyler Rattie
Defendant
James G. Ion, for the Plaintiff
Dennis Touesnard, for the Defendant
HEARD: April 4, 2016
REASONS FOR JUDGMENT
Justice J. C. Kent
ISSUE
[1] The issue for the court to determine is whether an outstanding account in the amount $130,313.15 is payable by Estate of Kenneth Rattie or by the numbered Ontario Corporation of which he was the vice-president.
BACKGROUND
[2] Counsel have agreed to the following facts as set out at Tab 1 of the Document Brief which is Exhibit 1:
The plaintiff, G. R. Sibbick Limited, is a supplier of fuel and related products.
The defendant, without prejudice to the determination of whether the corporate defendant, 2035673 Ontario Inc., or Kenneth Rattie personally operated Ken Rattie Transport, Ken Rattie Transport was a transportation company who purchased fuel on a credit basis from the plaintiff.
The parties did not enter into a written agreement.
The plaintiff did require the defendant to complete a credit application which identified the purchaser as “Ken Rattie Transport” and identified Ken Rattie Transport as a “transport company”.
Once credit was approved, the plaintiff provided to Ken Rattie Transport fuel cards which Ken Rattie Transport’s drivers would use to purchase fuel at the plaintiff’s locations.
The plaintiff would then generate an invoice that would be delivered weekly to Ken Rattie Transport showing the volume of fuel purchased under each card, the price per unit of fuel and the total amount owing plus HST.
Without prejudice to the issue of whether Ken Rattie Transport was operated by 2035673 Ontario Inc. or Kenneth Rattie personally, Ken Rattie Transport is indebted to the plaintiff for the sum of $130,313.15 inclusive of HST and exclusive of interest.
Ken Rattie Transport was not a registered business name under the Business Names Act, R.S.O. 1990, c. B. 17.
The cheques were drawn from Ken Rattie Transport’s account and used to pay the Plaintiff only indicated that the cheques were being drawn from the account of “Ken Rattie Transport”.
The trucks operated by the drivers of Ken Rattie Transport only indicated that the trucks belonged to or were part of the fleet of Ken Rattie Transport.
There was no identification of the corporation 2035673 Ontario Inc. on the Ken Rattie Transport cheques, its trucks that would arrive at the plaintiff’s yard or any signage at Ken Rattie Transport’s facility.
The plaintiff took no steps to determine whether Ken Rattie Transport, identified to it as a transport company, was a corporation, partnership or sole proprietorship.
With the possible exception of obtaining an Equifax credit search against Ken Rattie Transport, the plaintiff took no steps to determine what assets either Ken Rattie Transport or Ken Rattie personally had.
The plaintiff conducted no searches at all about the credit-worthiness of Kenneth Rattie personally.
Kenneth Rattie died April 27, 2014 and, by Last Will and Testament dated October 31, 2013, appointed Tyler Rattie as Estate Trustee.
EVIDENCE AT TRIAL
[3] Counsel agreed that all of the above agreed facts were to be accepted by the court as true, without the necessity of calling evidence at trial.
[4] Grant Sibbick, vice-president of the plaintiff company, testified that he was never told by Ken Rattie or anyone else that the numbered company 2035673 Ontario Inc. existed. He testified further that he observed no signage at either of the places of business of Ken Rattie Transport Company or on any of the trucks of the company that in any way indicated the existence of the numbered company. He testified further that he had socialized with Ken Rattie and that he had never been told that he was dealing with a numbered company rather than with Ken Rattie Transport.
[5] In his testimony at trial, Grant Sibbick indicated that only after credit problems developed and the plaintiff stopped supplying product to Ken Rattie Transport, did he learn of the existence of the numbered company. In cross-examination at trial, he was asked about the credit application made on behalf of Ken Rattie Transport. A copy of that application is at Tab 2 of Exhibit 1. On the application, where the applicant is to indicate “type of business (sole owner, partnership, corporation)”, Ken Rattie or someone on his behalf, wrote “transport company”. On the document where information concerning “partners or corporate officers”, was requested, Ken Rattie, or someone on his behalf, wrote “none”.
[6] Grant Sibbick conceded in cross-examination that the words “transport company” might mean that there was a possibility that the company could be a corporation. He agreed that he did not ask what “transport company” meant. He also agreed that it would have made sense for Ken Rattie to run his business through a corporation. He conceded that although he did not personally grant or approve or extend credit, that whether the company with whom he was dealing with was a sole proprietorship or corporation had nothing to do with the plaintiff’s decision to continue supplying product.
[7] Nelda Webster, the office administrator and credit and accounts manager for the plaintiff, testified at trial. She set up the account for Ken Rattie Transport with the plaintiff in 2006 and cut off the supply of product to the company in August of 2013 when it consistently fell behind in its payment obligations.
[8] Nelda Webster explained that most of her dealings with Ken Rattie Transport were directly with Ken Rattie and that all payments on the company’s account were made on cheques from “Ken Rattie Transport, Paris, Ontario”. A sample copy of a cheque from the company is found at Tab 6 of Exhibit 1.
[9] Nelda Webster explained that the existence of the numbered company only came to her attention after collection letters were sent to Ken Rattie Transport in August and September 2013. On August 9, 2013, a letter was sent from the credit risk manager for the plaintiff addressed to “Dear Ken, O/A Ken Rattie Transport” suspending the charging privileges of Ken Rattie Transport. A copy of that letter is found at Exhibit 1, Tab 10.
[10] On 20 September 2013, a letter was sent to Ken Rattie Transport to the attention of Ken Rattie by the corporate solicitor for the plaintiff threatening legal action unless the overdue balance owing by Ken Rattie Transport to the plaintiff was paid by 27 September 2013.
[11] Nelda Webster testified that Ken Rattie never mentioned the existence of a numbered company to her.
[12] In cross-examination, Nelda Webster agreed that the word company might mean corporation, but that she did not ask what the use of that word on the credit application meant.
[13] She was unable to say whether or not the plaintiff would have extended credit to Ken Rattie Transport if the credit application had indicated that the transport company was a corporation.
[14] Tyler Rattie, the now 25 year old son of the late Ken Rattie, testified that in 2012 to 2013, he did some part-time work for his father’s company and was involved in dispatching and logistics. It was his recollection that when his father started the transport business, he remembered him saying that the business was incorporated, but it was only when he became the trustee of his late father’s estate that he actually heard of the numbered company.
POSITION OF PLAINTIFF
[15] Counsel for the plaintiff referred the court to the Business Names Act, R.S.O. 1990, c B 17. Section 2 of that Act provides that:
2.(1) No corporation shall carry on business or identify itself to the public under a name other than its corporate name unless the name is registered by that corporation.
And further at subsection 6 that:
(6) A corporation and such other persons as are prescribed carrying on business under a registered name or, in the case of a corporation, identifying itself to the public under a registered name, shall set out both the registered name and the person’s name in all contracts, invoices, negotiable instruments and orders involving goods or services issued or made by the person.
[16] Counsel also referred to the Ontario Business Corporations Act, R.S.O. 1990, c B. 16 and specifically stressed section 10, subsection 1 and 5:
10.(1) The word “Limited”, “Limitee”, “Incorporated”, “Incorporee” or “Corporation” or the corresponding abbreviations “Ltd.”. “Ltee”, “Inc.” or “Corp.” shall be part, in addition to any use in a figurative or descriptive sense, of the name of every corporation, but a corporation may be legally designated by either the full or the abbreviated form.
(5) Despite subsection (4), a corporation shall set out its name in legible characters in all contract, invoices, negotiable instruments and orders for goods or services issued or made by or on behalf of the corporation and in all documents sent to the Director under this Act.
None of the above provisions were complied with by Ken Rattie Transport.
[17] Counsel reminded the court that the onus was on the defendant to establish that the plaintiff was aware at the time of contracting that the plaintiff was dealing with a limited company. See: Pennelly Ltd. V. 449483 Ontario Ltd.[1986] O.J. No. 2672 at para. 31.
[18] Counsel also relied on Nord Ovest Spa v. Gruppo Giorgio Ltd., [1994] O.J. No. 1657. At paragraph 24 of the Nord decision, the trial judge considered the aforementioned provisions of the Ontario Business Corporations Act and the Business Names Act and observed:
“It would appear that the purpose of this legislation is to protect the public, and as a consequence if someone expects to take advantage of the limited liability available to him by the process of incorporation, he should make the public aware of such corporation.”
At paragraph 19, the trial judge set out that it was the duty of the person carrying on business through a numbered Ontario company to “make it clear” that he was acting as agent for a corporation.
POSITION OF THE DEFENDANT
[19] Counsel for the defendant concedes that the law places an onus on an individual carrying on business through a corporation to disclose that fact. He suggests that identifying a business as a “transport company” is adequate in these circumstances.
[20] Counsel argues that it may be that it didn’t matter to the plaintiff at the time credit was extended whether or not it was dealing with a corporation. He suggests that the wording on the credit application constitutes some degree of notice to the plaintiff.
[21] Counsel reminded the court that non-compliance with the above noted provisions of the Business Names and Business Corporations Acts, does not automatically create personal liability.
[22] Counsel referred the court to the decision of Ontario Court of Appeal Truster v. Tri-Lux Fine Homes Ltd. 1998 CanLII 3497 (ON CA), [1998] O.J. No. 2001. At paragraph 21, the court indicated that “others must, at a minimum, be informed in a reasonable manner that they are dealing with a corporation and not an individual.” Counsel submits that on the basis of the evidence, the plaintiff ought reasonably to have known that it was dealing with a corporation and not an individual.
ANALYSIS
[23] What exactly do the words, “transport company” mean? Black’s Law Dictionary includes a corporation within its definition of company. It also includes other entities “whether incorporated or not”.
[24] Does the use of the word “company” by Ken Rattie or someone on his behalf provide adequate notice to the plaintiff and others with whom he is dealing with that the transport company is carrying on business as a corporation? Does the plaintiff have a corresponding obligation to investigate further once a limited degree of notice has been provided indicating that its customer might be an incorporated entity?
[25] Despite the able submissions of Mr. Touesnard on behalf of the defendant, this court is not prepared to find that the limited degree of notice provided by Ken Rattie was adequate, nor did it create an obligation upon the plaintiff to investigate further. In the Truster decision referred to by counsel, the last sentence of paragraph 21 provides as follows:
“In the last analysis, persons who set up after the fact that they contracted solely on behalf of another bear the onus of establishing that the party with whom they were dealing was aware of the capacity in which they acted.”
To find on the facts before the court in this case that a limited degree of notice was provided to the plaintiff sufficient to create an obligation to investigate further is over reaching. Such a finding cannot be made. It would constitute more than a mere refinement of the law but rather an expansion of the law.
RESULT
[26] For all of the above reasons, the plaintiff is entitled to judgment against the defendant.
[27] Counsel advise that there may be offer(s) that bear on costs. If counsel are unable to resolve the issues of costs, they may contact the trial coordinator at Brantford to arrange an appointment to make submissions.
Kent, J.
Released: April 8 2016
CITATION: G. R. Sibbick Limited v. The Estate of Kenneth Raymond Rattie by its Estate Trustee Tyler Rattie and 2035673 Ontario Inc., 2016 ONSC 2344
COURT FILE NO.: CV14-15
DATE: 2016April08
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
G. R. Sibbick Limited
Plaintiff
– and –
The Estate of Kenneth Raymond Rattie by its Estate Trustee Tyler Rattie
Defendant
REASONS FOR JUDGMENT
Kent, J.
Released: April 8 2016