M.B. Product Research Distributing Inc. v. Lionetti, 2016 ONSC 6889

M.B. Product Research Distributing Inc. v. Lionetti, 2016 ONSC 6889

CITATION: M.B. Product Research Distributing Inc. v. Lionetti, 2016 ONSC 6889

COURT FILE NO.: CV-15-522554

DATE: 20161104

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

M.B. PRODUCT RESEARCH DISTRIBUTING INC. c.o.b. as INTER-CANADA FISHERIES

Plaintiff

– and –

FELICE LIONETTI, GIANFRANCO LIONETTI a.k.a. JOHN LIONETTI and PAULO LIONETTI a.k.a. PAUL LIONETTI

Defendants

COUNSEL:

Nicholas C. Tibollo and Frances Tibollo, for the Plaintiff

Brandon Jaffe, for the Defendants

HEARD: October 18-19, 2016

M.D. FAIETA J.

REASONS FOR DECISION

1The plaintiff, M.B. Product Research Distributing Inc. c.o.b. as Inter-Canada Fisheries (“ICF”), claims damages of $42,927.33 for unpaid goods that it alleges were sold and delivered to the defendants between November 3, 2014 and December 5, 2014, for which about 18 invoices were issued by ICF (the “2014 Invoices”). The defendants submit that the orders were placed on behalf of a retail store operated by S. Antonio Fishmarket Inc., which was placed in receivership and closed in January 2015. For the reasons described below, I have dismissed this action.

BACKGROUND

2The defendant Felice Lionetti (“Felice”) is 66 years old. He has a grade five education. He immigrated to Canada from Italy in about 1967. Felice has some facility in speaking the English language. After arriving in Canada, Felice worked as a manual labourer and bricklayer in the construction industry. He decided to start a business selling fish and seafood as he had some experience doing so in Italy.

3Through the services of a lawyer, Felice arranged for the incorporation of S. Antonio Fishmarket Inc. (“SAFMI”) on January 16, 1996. Felice is an officer, director and sole shareholder of SAFMI. SAFMI opened its business at 120 Carlauren Road, Woodbridge, Ontario. Its customers included restaurants. At the time, Felice had little to no ability to write in English.

4Marc Benhaim (“Marc”) established ICF about 35 years ago. He is ICF’s sole shareholder, officer and director. ICF imports fish from all over the world. Most of his customers are retailers of fish and seafood. ICF’s warehouse is located in Vaughan, Ontario.

5Marc recalls that Felice called him one day in the late 1990s to say that he had opened a retail fish store and wanted to buy product from him. Marc testified that he went to SAFMI’s store. He saw a sign “San Antonio Fish Market” on the side of the building. He was met inside the store by Felice. They discussed the types of products that ICF imported, and Felice told Marc about the types of products that he was interested in purchasing. Marc testified that Felice did not give him a business card nor did he tell him that his company’s name was SAFMI. About one week later, Felice placed an order. The sale was made on credit payable 30 days from the date of the invoice. Marc does not recall who prepared the invoice; however, it was not computerized.

6Felice’s recollection of his first meeting with Marc is different. Felice started buying fish from ICF in 1997. Another supplier gave him ICF’s address as Felice was looking for a particular type of seafood that the supplier did not carry. Felice testified that he entered ICF’s premises, walked to the back of the store, and asked for the owner. He then went upstairs to meet Marc in his office. He told Marc that he operated a fish store and gave him a business card, which stated:

San Antonio Fish Market Inc. Live Lobster & Seafood Wholesale & Retail to the Public Felice Lionetti President 120 Carlauren Road, Unit #1 Woodbridge

7Felice stated that he always paid the ICF invoices with cheques drawn from SAFMI’s bank account. He explained he ordered fish from ICF in person on the first few occasions because he wanted to see the quality of the fish that he was buying. He also testified that he had two or three corporate cheques with him. Felice explained that after purchasing the fish and seafood that he had selected, Marc would write the date and amount payable on the corporate cheques, which Felice would then sign. Marc did not recall completing these cheques for Felice.

8The defendants Gianfranco Lionetti a.k.a. John Lionetti (“John”) and Paulo Lionetti a.k.a. Paul Lionetti (“Paul”) are Felice’s adult sons. They are officers of SAFMI. Paul worked on a full-time basis for SAFMI since 1998. After they joined, Felice, John and Paul would place orders for fish and seafood with ICF. They would typically speak with a sales representative named Bartha when placing orders for product. They never made their requests for products from ICF by way of written purchase order. Someone from SAFMI, whether John, Paul, Felice or an employee, would pick up the orders from ICF, typically using a truck or an automobile.

9The oldest available invoice, which is like all other ICF invoices produced at trial, is dated June 21, 2002, and appears to have been printed from a computer. It states:

SOLD TO: San Antonio Fish Mkt. John 120 Carlauren Road Unit #1 Woodbridge, Ontario L4L 8E5 SHIP TO: San Antonio Fish Mkt. 120 Carlauren Road, Unit #1 Woodbridge, Ontario L4L 8E5

10In or about August 2004, SAFMI moved their store, which had a footprint of about 2,500 square feet, to a much larger building located at 130 Creditview Road, Woodbridge, Ontario. This new location was about five minutes by car away from ICF’s premises.

11On February 11, 2005, SAFMI registered the business name “San Antonio Fish Market” under the Business Names Act, R.S.O. 1990, c. B.17. Paul explained that this change was made in order to give a better identity in the community to the name “San Antonio Fish Market,” which is represented by the words “S. Antonio Fishmarket” found in the corporate name SAFMI.

12Marc’s sons, Julien and Philippe, joined ICF in about 2009 or 2010 as sales representatives. Julien testified that his father introduced Felice to him when he started working for ICF. Marc told Julien that he would take over ICF sales to Felice, John and Paul. Julien stated that most of the orders that he received were placed by John. Due to the volume of orders, Julien could identify John by the sound of his voice. He stated that Felice, John or Paul would bring a post-dated cheque drawn on SAFMI’s bank account when they came to pick up their order; Felice, John, or Paul would then leave with a copy of the invoice that they had signed to acknowledge receipt of goods and that Marc had initialed. Julien stated that these cheques were usually delivered in an envelope, which he passed, unopened, to ICF’s accounts receivable clerk, Meagan Williams (“Meagan”). On occasion, a cheque drawn on SAFMI’s bank account was blank and it would be completed in Julien’s presence. If a cheque was returned for insufficient funds, Meagan would follow up with Felice, Paul or John. Meagan did not testify.

13Julien agreed that he may have received 900 envelopes that contained cheques from SAFMI during the period that he received their sales orders, but rarely opened any of those envelopes. When he did look at the cheque, he saw that it was drawn by S. Antonio Fish Market Inc., but he did not know whose company that was. Julien’s evidence is that he did not pay much attention to the name on the cheque, as his only concern was that ICF be paid. He was never told that ICF’s invoices should be issued to SAFMI.

14Julien stated that he would visit SAFMI’s premises on occasion and observed two signs in large blue letters on their building, which stated “San Antonio Fish Market”. He also admitted that another sign located near a loading dock stated “San Antonio Fish Market Inc.”, with “Inc.” written in small letters.

15Paul testified that SAFMI had a fleet of 14 Ford E-350 cube vans and several leased vehicles. He stated that one of the cube vans was usually used to pick up orders from ICF. Paul testified that from about 2011 or 2012, someone from SAFMI went approximately three to four times per week to pick up orders from ICF. Julien testified that the orders placed by John, Paul and Felice were taken away by one of them or someone else in an automobile or a cube van. The evidence is that the cube van had the logo “San Antonio Fish Market” in large letters on its side. While Julien admitted seeing the cube van at the ICF loading dock, neither he nor Marc saw the logo on the side of the vehicle.

16Felice and Paul testified that they, as well as John and their 35 employees, wore clothing at work that was embroidered with the name “San Antonio Fish Market Inc.”. Both Julien and Marc denied seeing any such embroidered clothing.

17Julien testified that the goods purchased from ICF were re-packaged and re-branded to reflect the “San Antonio Fish Market” logo. Photographs show that the name “San Antonio Fish Market” was prominently displayed on the new packages. These photographs reflect Julien’s observations on those occasions that he visited SAFMI’s store.

18Marc testified that in June 2014, he went with Julien to see Felice at the store because he was concerned that payments were slow. They met with Felice, John and Paul. Marc denies asking Felice for a personal guarantee. The upshot of the meeting was that ICF would require receipt of a post-dated cheque at the time that an order was picked up. Paul testified that, due to ICF’s heightened concern with getting paid, Julien would check the amount of the post-dated cheque delivered at the time that Paul picked up an order from ICF.

ANALYSIS

19ICF advances a claim in breach of contract and unjust enrichment. However, the claim in unjust enrichment was not pursued at trial.

20The outcome of this action turns on whether the goods, reflected by the 2014 Invoices, were sold by ICF to the defendants or to SAFMI. ICF submits that SAFMI’s existence was undisclosed until it was placed in receivership.

21A person who is contracting on behalf of a corporation must give reasonable notice to the other contracting party of the capacity in which he or she is acting.

22In Truster v. Tru-Lux Homes Ltd. (1998), 1998 CanLII 3497 (ON CA), 110 O.A.C. 101, at para. 21, the Ontario Court of Appeal stated:

[P]ersons wishing to benefit from the protection of the corporate veil should not hold themselves out to the public without qualification. They should identify the name of the company with which they are associated in a reasonable manner or risk being found personally liable if the circumstances warrant it.

23Citing the above decision, the Ontario Court of Appeal in Total Crane Erectors Ltd. v. Fontana, 2007 ONCA 121, at para. 3, stated:

If a party is contracting for another and does not make it clear to the person with whom he is contracting that he is contracting in the capacity of an agent, he will be personally liable. There is no conflict in the legal authorities. An agent will be personally liable if he fails to disclose that he acts as agent.

24ICF provided the court with over 20 cases on this issue. However, the determination of whether a person ordering goods made it clear to the vendor that he or she was contracting on behalf of a corporation is fact specific. For instance, none of the cases provided involve a situation where goods had been supplied without a written purchase order by several individuals over many years and were paid for by the same corporate entity. Accordingly, I find those cases of little assistance.

25Given the following circumstances, I find that ICF was aware that the orders were made on behalf of SAFMI, rather the defendants personally.

26First, by the time that the orders in respect of the 2014 Invoices had been placed, ICF had received about 3,000 cheques paid from SAFMI’s bank account over a period of approximately 18 years. None of the orders from ICF were paid by any other means. ICF knew that the goods ordered by Felice, John or Paul were ordered on behalf of SAFMI, as the thousands of orders that were placed by Felice, John or Paul were paid for by SAFMI. I do not accept Marc’s evidence that he was unaware that the cheques were drawn by SAFMI. I accept Felice’s evidence that Marc helped Felice complete blank cheques drawn by SAFMI; Marc did not contradict this evidence. As well, Julien testified that he observed, on occasion, that the cheques provided to him were drawn by SAFMI. Finally, every cheque drawn by SAFMI was processed by ICF’s accounts receivable clerk; thus, she knew that SAFMI paid for the goods sold by ICF.

27Further, SAFMI carried on business under the name “San Antonio Fish Market”. It was entitled to do so since the name “San Antonio Fish Market” was registered pursuant to subsection 2(1) of the Business Names Act, which states:

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.

28The ICF invoices indicated that the goods were “sold to: San Antonio Fish Mkt.”. Given the size of SAFMI’s operations, and its use of the registered name, knowledge that the registered name belonged to SAFMI should be imputed to ICF.

29ICF submits that SAFMI did not comply with the two statutory public disclosure obligations in respect of its name, SAFMI. As a result, ICF contends that it cannot be taken to have known that the orders in respect of the 2014 Invoices were placed by SAFMI rather than the defendants.

30Subsection 10(5) of the Business Corporations Act, R.S.O. 1990, c. B.16, states:

[A] corporation shall set out its name in legible characters in all contracts, 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.

31By its terms, this language only applies to written documents.

32A similar provision exists under s. 2(6) of the Business Names Act, for corporations that use a registered name. It states:

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.

33In my view, SAFMI did not breach this provision as its purchase orders were communicated orally, rather than “set out” in writing, to ICF.

34I find that SAFMI breached none of the above statutory disclosure provisions in respect of the 2014 Invoices.

35I further note that s. 7(3) of the Business Names Act states:

No contract is void or voidable by reason only that it was entered into by a person who was in contravention of this Act or the regulations at the time the contract was made.

36SAFMI registered the use of “San Antonio Fish Market” on February 11, 2005. This registered name was on SAFMI’s building at 130 Creditview Road for almost ten years prior to the 2014 Invoices. In addition, this registered name was displayed on the trucks that picked up supplies from ICF, as well as on the packaged goods sold by SAFMI.

37I do not accept the evidence of Julien or Marc that they never saw the registered name San Antonio Fish Market on the trucks owned by SAFMI that, for many years, picked up goods from the ICF facility. In any event, when Julien and Marc went for a meeting at SAFMI’s store in June 2014, they could not but have seen SAFMI’s registered name written in large, blue letters on the side of SAFMI’s building.

CONCLUSIONS

38I dismiss ICF’s action. I find that the defendants had disclosed to ICF that they acted as agents for SAFMI in placing orders including those related to the 2014 Invoices. The defendants shall deliver their costs submissions within 14 days of today’s date. The plaintiff shall deliver their costs submissions within 28 days of today’s date. The costs submissions shall be no more than five pages long, exclusive of a bill of costs and any offers to settle that were exchanged.