COURT FILE NO.: CV-20-00646048

DATE: 20210702

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Drive Auto Group Inc.

Plaintiff

AND:

David Hay Limited c.o.b. Fix Auto Richmond Hill, 9743839 Canada Limited c.o.b. Fix Auto Thornhill, 2508774 Ontario Ltd. c.o.b. Fix Auto Oak Ridges, 9033955 Canada Limited, c.o.b. as Collision Repair Experts Toronto North, Doublesee Collision Etobicoke Inc. c.o.b. as Collision Repair Experts Toronto West and as Collision Repair Experts, 2635063 Ontario Ltd. and Amir Tajbakhsh c/o/b/ as Collision Repair Experts Toronto

Defendants

BEFORE: Mr. Justice Chalmers

COUNSEL: P. Feldman, for the Plaintiff/Moving Party

S. Ilavsky for the Defendants/Responding Parties, David Hay Limited c.o.b. Fix Auto Richmond Hill, 9743839 Canada Limited c.o.b. Fix Auto Thornhill, 2508774 Ontario Ltd. c.o.b. Fix Auto Oak Ridges, 9033955 Canada Limited, c.o.b. as Collision Repair Experts Toronto North, 2635063 Ontario Ltd. and Amir Tajbakhsh c/o/b/ as Collision Repair Experts Toronto

HEARD: May 21, 2021, by videoconference

ENDORSEMENT

OVERVIEW

[1] The Plaintiff operates a group of auto dealerships. The Defendants operate a group of auto body repair facilities throughout the Greater Toronto Area. Mr. Tajbakhsh is the sole Director of David Hay Limited c.o.b. as Fix Auto Richmond Hill, 2508774 Ontario Ltd. c.o.b. as Fix Auto Oak Ridges, 2635063 Ontario Ltd., 9743839 Canada Limited c.o.b. as Fix Auto Thornhill or Carstar Thornhill and 9033955 Canada Limited c.o.b. as Collision Repair Experts Toronto North and CarStar Willowdale.

[2] The Defendants ordered auto parts from the Plaintiff. The sales were subject to a credit application which was entered into on November 3, 2017. The credit application provides that a 2% service charge per month may be charged on unpaid invoices after 30 days. By October 31, 2019, the Plaintiff was owed $279,431.97. In February 2020, the Defendants proposed a payment schedule for the overdue accounts. Post-dated cheques were provided to the Plaintiff. The cheques were in the name of four different entities, one of which was Collision Repair Experts Toronto. The Plaintiff agreed to the deferred payment schedule on the understanding that if there was a default of any payment, the total amount owing would immediately become due. Only two of the payments were made. The sum of $260,720.56 remained outstanding.

[3] The Plaintiff brought a motion for summary judgment against the Defendants. The motion was heard February 22, 2021. On the morning of the motion, counsel advised that there was a partial settlement. The corporate Defendants consented to Judgment in the amount of $260,790.56, subject to the determination by this court of the issues of pre-judgment interest and costs. The motion with respect to Mr. Tajbakhsh was adjourned on consent. By endorsement dated February 22, 2021, I ordered pre-judgment interest on the amounts owing at the rate of 2% per month from December 1, 2019. I reserved the issue of costs to the summary judgment motion against Mr. Tajbakhsh.

[4] Mr. Tajbakhsh signed cheques in the name of Collision Repair Experts Toronto in the amount of $140,621.52. None of the cheques cleared. Collision Repair Experts Toronto is not a corporation or registered business entity. According to Mr. Tajbakhsh, Collision Repair Experts Toronto is a business style name for the corporation, 9033955 Canada Limited. Mr. Tajbakhsh states that he was advised that “9033955 Canada Limited c.o.b. Collision Repair Experts Toronto North” was too long a name to fit on the cheques and as a result of a clerical error the cheques only displayed the name of Collision Repair Experts Toronto. Mr. Tajbakhsh states that at all times, he was dealing with the Plaintiff in his capacity as a Director of the Defendant corporations and not in his personal capacity.

[5] The Plaintiff argues that Mr. Tajbakhsh delivered cheques from an entity, Collision Repair Experts Toronto that is neither a corporation nor registered business. Mr. Tajbakhsh signed the cheques. The cheques were returned non-sufficient funds. The Plaintiff argues that pursuant to the Bills of Exchange Act, R.S.C. 1985, c. B-4 (the “Act “), Mr. Tajbakhsh is personally responsible for honouring the cheques.

[6] For the reasons set out below, I find Mr. Tajbakhsh is personally liable to honour the cheques. I grant judgment in favour of the Plaintiff against Mr. Tajbakhsh in the amount of $140,621.52.

THE ISSUES

[7] The issues to be determined on this motion are as follows:

a. Is this matter appropriate for summary judgment?

b. Is Mr. Tajbakhsh personally liable to the Plaintiff to honour the cheques in the name of Collision Repair Experts Toronto?

ANALYSIS

Is this matter appropriate for summary judgment?

[8] The court shall grant summary judgment if it is satisfied that there is no genuine issue requiring a trial. A trial is not required if the record before the court;

a. allows the judge to make the necessary findings of fact,

b. allows the judge to apply the facts to the law, and

c. is a proportionate, more expeditious and less expensive means to achieve a just result than going to trial: Hryniak v. Mauldin, 2014 SCC 7, at para. 49 and 66.

[9] The court on a motion for summary judgment is required to undertake the following analysis:

a. The parties have placed before the court all evidence that will be available at trial;

b. On the basis of the record, the court decides whether it can make the necessary findings of fact, apply the law to the facts and thereby achieve a fair and just adjudication on the merits; and

c. If the court cannot grant judgment on the motion, the court should:

i. Decide those issues that can be decided in accordance with the principles set out above,

ii. Identify the additional steps that will be required to complete the record to enable the court to decide any remaining steps,

iii. In the absence of compelling reasons to the contrary the court should seize itself of the further steps required to bring the matter to resolution: Seda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200 at para. 33.

[10] There are no material facts in dispute. The issue to be determined is primarily a legal one; namely whether Mr. Tajbakhsh is personally responsible to honour the cheques written in the name of Collision Repair Experts Toronto. I am satisfied that the record allows me to make the necessary findings of fact and to apply the facts to the law. I am also satisfied that summary judgment is the most proportionate expeditious and less expensive means to achieve a just result.

Is Mr. Tajbakhsh personally liable to the Plaintiffs to honour the cheques in the name of Collision Repair Experts Toronto?

[11] The Plaintiff argues that in signing the cheques in the name of Collision Repair Experts Toronto, Mr. Tajbakhsh is personally liable to honour the cheques. The Plaintiff relies on Section 94 of the Act which provides:

94. (1) A bill is dishonoured by non-payment when;

a. it is duly presented for payment and payment is refused or cannot be obtained; or,

b. presentment is excused and the bill is overdue and unpaid.

(2) Subject to this Act, when a bill is dishonoured by non-payment, an immediate right of recourse against the drawer, acceptor and endorsers accrues to the holder.

[12] Mr. Tajbakhsh signed the cheque in the name of Collision Repair Experts Toronto, the cheque was presented for payment and was refused. The Plaintiff argues that pursuant to s. 94 of the Act, Mr. Tajbakhsh is personally liable for payment. There is no dispute in the evidence that Mr. Tajbakhsh signed the cheques and that the cheques were in the name of Collision Repair Experts Toronto. There is also no dispute that Collision Repair Experts Toronto is not a registered business corporation. Mr. Tajbakhsh argues that Collision Repair Experts Toronto is a business style of 9033955 Canada Limited. It is conceded that 9033955 Canada Limited does not appear on the face of the cheques.

[13] Mr. Tajbakhsh argues that he signed the cheques in a representative capacity of 9033955 Canada Limited c.o.b. as Collision Repair Experts Toronto and not in his personal capacity. He states that he did not notice that the bank had made an error on the face of the cheques when they were provided to the Plaintiffs. Mr. Tajbakhsh is the corporate officer of the company and he takes the position that there was no intention to be personally liable for the obligation: H.S.C. Aggregates Ltd. v. McCallum, 2014 ONSC 6214, at para. 30. He further states that the Plaintiff was not mislead by the cheques and knew at all times that they were dealing with the corporate entities and not Mr. Tajbakhsh personally.

[14] Mr. Tajbakhsh states that the cheques were to have the name of the corporate entity 9033955 Canada Limited printed on the face of the cheques but because the name was too long, or as a result of a clerical error, the corporate name did not appear. Mr. Tajbakhsh does not provide the source of his belief that the name was too long to fit on the cheques. The only evidence on which Mr. Tajbakhsh relies is an e-mail from Nicholas Dawkins at Finastra dated March 31, 2021. Finastra is apparently the entity responsible for printing the cheques. In the e-mail, Mr. Dawkins states that on January 15, 2020, Finastra had been advised that the business name was “Collision Repair Experts Toronto North”. He also states that the next order was submitted directly by RBC which indicated that the business name was “Collision Repair Experts Toronto. There is nothing in Mr. Dawkins’ e-mail that refers to an error on the part of the bank or that the complete name could not fit on the face of the cheque. Mr. Dawkins does not state that the corporation name, 9033955 Canada Limited was to appear on the cheques. The Defendants did not file an affidavit from Mr. Dawkins or anyone at RBC

[15] Mr. Tajbakhsh produced heavily redacted bank records. The records include a cheque (#01666) in the name of “9033955 Canada Limited L & G General Auto Body”. The numbered company appears at the top of the cheque with the business style under the name of the numbered company. I am of the view that there is sufficient space on the face of the cheque for the style “Collision Repair Experts Toronto” to appear under the name of the numbered company.

[16] In Deloitte & Touche v. Meramveliotakis, 2000 CanLII 22761 (ONSC), Sachs, J. considered whether the person signing a cheque in a representative capacity was personally liable. In that case, the cheque was signed by “Peter Takis” under the words “Unit Park” and beside the word “per”. Mr. Takis argued that it was clear on the face of the cheque that he was signing it in a representative capacity on behalf of “Unit Park”, which was a business style for a group of incorporated entities. Mr. Takis stated that the name of the corporate entity was, “Unit Park Holdings Inc.” That name does not appear on the face of the cheque. In imposing personal liability on Mr. Takis, Sachs, J. stated:

6. Mr. Takis submitted that by adding the word “per” before his signature he made it clear that he was signing in a representative capacity only and therefore, under section 51(1), he is not personally liable. This argument ignored the second half of 51(1), which provides that merely adding the words such as “per”, which describes the signer of the cheque as filling a representative capacity, is not sufficient to exempt the signer of that cheque from personal liability. Section 51(2) of the Bills of Exchange Act makes it very clear that “the policy of the law to uphold the validity of negotiable instruments is very strong.” (Crawford and Falconbridge, Banking and Bills of Exchanges, 8th ed. (Toronto: Canada Law Book, 1986), vol. 2, at p. 1406). In order to escape personal liability, it must be clear on the face of the instrument itself that the person signing the cheque is signing only as agent on behalf of a principal. That clarity cannot exist when the name of the principal is not disclosed.

7. This view is reinforced by section 131 (1) of the Bills of Exchange Act, which reads:

Where a person signs a bill in a trade or assumed name, he is liable thereon as if he had signed in his own name.

8. Mr. Takis argued that this section is confined to the situation where the actual signature on the cheque is not that of the individual concerned, but that of a trade or assumed name. In other words, on the facts of the case before me, this section would only apply if Mr. Takis had signed the cheque in question “Unit Park”. I disagree. The section is designed to complete a statutory scheme aimed at promoting certainty in the commercial world with respect to negotiable instruments. It is aimed at precisely the situation that existed in this case. Mr. Takis signed a cheque on behalf of an entity that is essentially a trade name for any one of fifteen other legal entities. Since the legal entity whose account the cheque was issued is not on the face of the cheque, Mr. Takis, who signed using only a trade name, is personally liable.

9. While not determinative of the issue before me, it is worth noting that this policy of promoting certainty with respect to negotiable instruments in also reinforced by the provisions of section 2(6) of the Business Names Act, R.S.O. 1990, c. B.17. That subsection provides that a corporation is under a duty, when carrying on business under a registered name, to identify itself to the public by setting out both the registered name, and the name of the underlying corporate entity, on all the negotiable instruments it uses.

[17] Here, the cheque was signed by Mr. Tajbakhsh on behalf of the trade name Collision Repair Experts Toronto. Although Mr. Tajbakhsh states that it was his intention to sign the cheque in the name of the corporate entity, that is not made clear on the face of the instrument. The name of the legal corporate entity, 99033955 Canada Limited does not appear on the face of the cheque. As noted by Sachs, J. the clarity required in the Act cannot exist if the name of the corporate entity does not appear on the face of the cheque.

[18] Mr. Tajbakhsh takes the position that he should not be personally liable because the reason the corporate name did not appear on the face of the cheque was as a result of an error by the bank or printer. As noted above, I find the evidence put forward by Mr. Tajbakhsh on this issue to be lacking. In any event, it is my view that this is not a valid reason for not imposing liability pursuant to the Act. The purpose of the Act is to provide certainty in upholding negotiable instruments. It is the responsibility of the person signing the instrument to ensure that it properly reflect the name of the corporate entity. Mr. Tajbakhsh may have recourse against the party that may have erred with respect to the name on the cheques, but this does not affect the Plaintiff’s right to judgment pursuant to the Act.

[19] I find Mr. Tajabkhsh is personally liable for the cheques signed by him under the trade name “Collision Repair Experts Toronto” in the amount of $140,621.52.

DISPOSITION

[20] I grant summary judgment to the Plaintiff against Mr. Tajbakhsh in the amount of $140,621.52.

[21] I impose liability on Mr. Tajbakhsh pursuant to the Act. It is my view that the pre-judgment interest on this amount is as set out in the Courts of Justice Act, R.S.O. c. C.43, and not the rate of interest set out in the credit application. Mr. Tajbakhsh did not execute the credit application in his personal capacity and therefore the interest rate set out in the application in the amount of 2% per month on overdue amounts, does not apply to him personally. If the parties cannot agree on the amount of pre-judgment interest payable on the judgment against Mr. Tajbakhsh, the parties may arrange a case conference with me.

[22] The Plaintiff is successful on the motion both with respect to corporate Defendants and Mr. Tajbakhsh, personally, and is presumptively entitled to its costs. Before releasing this endorsement, I received Bills of Costs from the parties. The Plaintiff seeks partial indemnity costs in the amount of $16,342.33, inclusive of counsel fee, disbursements and HST. The Defendants’ Bill of Costs on a partial indemnity basis is in the amount of $17,703.32 inclusive of counsel fee disbursements and HST.

[23] I award costs to the Plaintiff fixed in the amount of $15,000, inclusive of counsel fee, disbursements and HST. In fixing costs, I considered the factors identified in Rule 57.01 of the Rules of Civil Procedure, as well as the overall objective of any costs award; that it be fair and reasonable and within the reasonable expectation of the unsuccessful party to pay: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at paras. 26 and 38. The amount of costs awarded to the Plaintiff is less than the amount the Defendants would have sought in costs if successful on the motion, and therefore is within the Defendants’ reasonable expectations.

DATE: JULY 2, 2021