NEWMARKET COURT FILE NO.: CV-12-111979-00 DATE: 20170118 ONTARIO SUPERIOR COURT OF JUSTICE (IN THE MATTER OF THE Construction Lien Act R.S.O. 1990, c.C.30, as amended)

BETWEEN:

2199273 ONTARIO INC. Plaintiff – and – ELENA ABRAMOV Defendant

Counsel: M. Reinhard and A. Winicki, for the Plaintiff G. Corsianos, for the Defendant

HEARD: January 12, 2017

REASONS FOR DECISION

MULLIGAN J.

[1] This matter was commenced under the Construction Lien Act R.S.O. 1990, c.C.30. The defendant Elena Abramov (“Abramov”) is a homeowner. The plaintiff 2199273 Ontario Inc. (“219”) alleges that it entered into a contract with the defendant for construction work on her residence and alleges it is has not been paid the balance of its account.

[2] Abramov brings a motion for summary judgment seeking to dismiss the action as against her as well as an order discharging the construction lien registered against the subject property. In the alternative if she is not successful in this summary judgment motion she seeks an order that the plaintiff post security for costs on the basis the plaintiff is impecunious and has no assets.

[3] The Construction Lien Act requires that leave be granted to bring a motion under the Act. I am satisfied that leave ought to be granted in the circumstances of this case.

BACKGROUND

[4] The plaintiff issued a claim against the defendant in November, 2012 claiming $204,572.56 being the balance owing to it pursuant to a contract. The plaintiff claims that the total contract price was $366,600 plus GST. The defendant submits it owes nothing to the plaintiff on two bases. First, that it did not have a contract with 219. Second, that at all material times she had an agreement instead with Salvatore Ritorto and paid him $212,600 by way of cash and cheques.

[5] The discrete issue to be determined on this motion is whether or not the defendant had a contract with 219. The defendant submits that there was no contract with this plaintiff and the action ought to be dismissed pursuant to the summary judgment procedures in the Rules of Civil Procedure. The plaintiff submits that there was a contract between it and the defendant and all material times Sam Ritorto was its representative, onsite employee and spokesperson. It is not disputed that Abramov entered into a contract for work to be done on her residence. The contract was signed on or about February 21, 2012 for a stipulated price of $230,000. Thereafter work was commenced and payments were made from time to time. Payments were made most in cash to Sam Ritorto. Extensive additional work to the residence was not reduced to writing between the parties.

[6] The contract itself showed the contractor as “Custom Mouldings Int.” with an address at 4 Racine Road, Unit 12, Toronto. Abramov received a copy of Mr. Ritorto’s business card showing an address at 4 Racine Road, Unit 12, Etobicoke.

[7] The invoice uses the short form “Int”. There is an issue about whether this stands for international or interiors. 219 filed a business name report registering the name “Custom Mouldings International” showing its head office at 259 Westmorland Avenue, Toronto. The affidavit of the shareholder and officer of the plaintiff, filed in support of this motion, indicates that is her residential address but the showroom and shop for the business was at 4 Racine Avenue, Unit 12.

[8] The defence affidavit indicates that a business name report regarding a different corporation, 2164791 Ontario Inc., showed a registration for “Custom Moulding Interiors”. The person authorizing this registration was Salvatore Ritorto. The address given was 4 Racine Road, Etobicoke, Unit 11.

[9] Mr. Ritorto’s business card referred to a webpage www.ccmmoulding.com. That webpage showed “Custom Mouldings Int.”

[10] As appears from the affidavit of Abramov filed she made substantial cash payments and obtained receipted acknowledgements signed by S. Ritorto. In addition one payment was made by cheque. A cheque drawn for $12,600 was payable to “Custom Moulding International”.

[11] Ms. Abramov’s position with respect to this motion is set out in para. 6 of her affidavit which states in part:

I entered into an agreement with one, Sam Ritorto a.k.a. Salvatore Ritorto (“Ritorto”) to do certain work at my house. At all material times Ritorto held himself out to be an individual carrying on business as Custom Moulding Int. purveyors of custom plaster mouldings which he supplied and installed. At no time was a corporation involved in the work. In particular, the plaintiff was not in any way involved in the work done at my house.

[12] The position of the plaintiff is set out in the affidavit of Sam Ritorto at paras. 3 and 23:

[3] I have been employed by 2199273 which operates under the business name Custom Mouldings International, or Custom Mouldings Int. for short (“Custom Mouldings”), for over seven year. 2199273 was incorporated on February 27, 2009. On the same day, the business name Custom Mouldings was registered under the Ontario Business Name Act, 1990…

[23] As indicated above, the agreement was completed by workers employed by Custom Mouldings. Materials and supplies were delivered to the residence via four vans, all of which had the words “Custom Mouldings International” painted on the siding. The cheque that (the defendant) provided as part payment for the renovations was made payable to Custom Mouldings. [The defendant] was well aware that the work was being carried out by Custom Mouldings and not by me personally. …I never stated that I operated the business personally under the Custom Mouldings name. I do not deliberately withhold the fact that Custom Mouldings was operated by a corporation and not me personally, and I do not believe she was prejudiced in any way by not knowing this.

ANALYSIS

The Business Names Act, R.S.O. 1990 c.B.17

[13] Both counsel made reference to the Business Names Act (“BNA”) and its relevance to these proceedings. The Act provides as follows at para. 2(6):

The 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 and all contracts, invoices, negotiable instruments and orders involving goods or services issued or made by the person.

[14] Paragraph 7(3) provides:

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.

[15] It is not disputed that in this case the contract entered into by the parties did not set out the registered corporate name or the entity on the contract which simply stated: Custom Mouldings Int.

[16] The test on a motion for summary judgment is captured in rule 20.04(2) of the Rules of Civil Procedure which provides as follows:

20.04(2) The court shall grant summary judgment if,

(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or

(b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.

(2.1) In determining under clause (2) (a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.
2. Evaluating the credibility of a deponent.
3. Drawing any reasonable inference from the evidence.

(2.2) A judge may, for the purposes of exercising any of the powers set out in subrule (2.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation.

[17] The Supreme Court of Canada has given guidance on the issue of whether or not there is a genuine issue for trial. As the court provided as para. 49 in Hryniak v. Mauldin, 2014 SCC 7 at para. 49:

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This would be the case when the process 1) allows the judge to make the necessary findings of fact, 2) allows the judge to apply the law to the facts, and 3) is a proportionate, more expeditious and less expensive means to achieve a just result.

Prejudice to the Defendant

[18] The defendant argues that it she was prejudiced by this construction lien action being commenced against her. In my view the prejudice to the defendant is no greater than any other homeowner who has a claim brought against it by a contractor for monies owing to it. Any such defendant can defend the claim and seek costs if they are successful in such a defence.

CONCLUSION

[19] I am satisfied that there was a contract between 219 and Abramov. The contract which the defendant accepted was with Custom Mouldings Int. 219 had previously registered a business name Custom Mouldings International. Although most payments were made in cash the defendant did write a cheque on one occasion to Custom Mouldings International. If it was important to her she could have conducted a name search to determine if Custom Mouldings International was a sole proprietorship of Mr. Ritorto or alternatively business name for 2199273 Ontario Inc. Meanwhile work progressed on the defendant’s home. Although 219 was in breach of s. 2(6) of the Business Names Act by not identifying itself on the contract I decline to exercise my jurisdiction under para. 7(3) to declare the contract void in the circumstances here.

[20] I am satisfied that the contract between the parties is not voidable under the terms and provisions of the Business Name Act. There is no issue that substantial work was done on the defendant’s home. Mr. Ritorto was there every day. The plaintiff corporation claims that money is owing pursuant to the contract for work done and as yet unpaid for. In my view it would deny the plaintiff access to justice to grant summary judgment to the defendant based on the failure to note the corporate name on the contract. This is a case that ought to be tried on its merits and is not amenable to summary judgment. A trial is required to determine, what, if anything is owing to the plaintiff.

[21] The defendant’s motion for summary judgment is therefore dismissed.

SECURITY FOR COSTS

[22] The defendant brings a motion for security for costs on the basis that it appears that the plaintiff corporation has no assets. By way of affidavit, served only on the motion day, the sole shareholder officer and director of the plaintiff corporation, Bao-Ngoc Hong Nguyen, indicated that the plaintiff corporation was impecunious and had debts owing to Revenue Canada. Further she states she has limited personal assets. Her real property purchased for $324,472 is now encumbered with a mortgage for $330,000. In addition she has personal debts to Revenue Canada and her wages are being garnished.

[23] A motion for security for costs requires a consideration of rule 56.01 of the Rules of Civil Procedure which provides:

56.01(1) The court, on motion by the defendant or respondent in a proceeding, may make such order for security for costs as is just where it appears that,

(d) the plaintiff or applicant is a corporation or a nominal plaintiff or applicant, and there is good reason to believe that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent.

[24] It is the defendant’s position that security for costs of $30,000 ought to be posted with respect to this proceeding. The defendant further submits that the plaintiff has not set out with robust particularity its financial position. Further the affidavit of the sole shareholder of the corporation should be given no weight given its late delivery to the court.

Analysis

[25] It is clear that Rule 56 and the cases that have interpreted it attempt to balance the fairness and access to justice rights of the parties. Security for costs should not be ordered in a case where the plaintiff has a legitimate action if the order would act to deny access to justice. See RSWH Vegetable Farmer’s Inc. v. Bayerische Landesbank, 2009 ONSC 3454 at para. 25. On the other hand courts do not want a successful defendant to be effectively deprived of costs where, for example, wealthy shareholders have decided to carry on business and litigation through a shell corporation. See Smith Bus Lines Limited v. Bank of Montreal at para. 43. With these tensions at play once a plaintiff establishes it has no financial assets the onus shifts to that plaintiff to establish it is impecunious.

[26] I am satisfied on the record before me that the plaintiff is impecunious. Further its sole shareholder has also indicated she is impecunious and cannot raise funds with respect to this litigation.

[27] The plaintiff submits that it has a good case on the merits. Clearly there is dispute about what if anything is owing to the plaintiff as a result of work done on the defendant’s residence. The defendant does not dispute that work was done but rather submits that the work done was fully paid for and nothing remains owing.

[28] I have reviewed the Statement of Claim and Statement of Defence as well as the affidavits filed in support. I am unable to determine if there is anything frivolous or vexatious with respect to this claim. There are issues which ought to be properly determined by trial.

[29] In my view this is not an appropriate case requiring the plaintiff to post security for costs. Motion for security for costs is dismissed.

COSTS

[30] At the conclusion of the motion both counsel indicated that costs should be awarded to the success party in the amount of $6,000 all inclusive. I therefore fix costs in the amount of $6,000 all-inclusive payable by the defendant Elena Abramov to the plaintiff 2199273 Ontario Inc. within 30 days of the release of this endorsement.

MULLIGAN J. Released: January 18, 2017