Court File and Parties

COURT FILE NO.: CV-21-00002277-00 DATE: 2023 04 11

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

MAXPRO MANAGEMENT SERVICES LTD. Plaintiff

D. Jaswal, Counsel for the Plaintiff

• and -

GLOBAL TRANSAUTO INC. Defendant

M. Tubie, Counsel for the Defendant

HEARD: March 21, 2023 and April 6, 2023

REASONS FOR DECISION ON THE MOTION FOR SUMMARY JUDGMENT

MCGEE J.

[1] This is the Plaintiff’s Motion for summary judgment against the Defendants on a breach of contract in the amount of $120,995.09 CAD plus interest at the contractual rate of 18% per annum, and for a further amount of $102,798.44 USD, also for interest at 18% per annum.

[2] This Motion was originally scheduled to be heard on January 17, 2023. It was adjourned on consent to March 21, 2023.

[3] It came before me on March 21, 2023 and proceeded as an unopposed Motion. No materials had been filed by the Defendants, and none of the Defendants nor their counsel, Mr. Tubie, appeared. I held the matter down until the afternoon, asking Plaintiff’s counsel to contact Mr. Tubie in a final effort to receive the Defendant’s submissions.

[4] Mr. Tubie did not appear at 2:15 p.m., at which point the Motion began. Approximately 15 minutes later, Mr. Tubie joined the Zoom hearing and indicated that he had mis-diarized the event. He did not explain why no materials had been filed. He sought a further adjournment.

[5] I granted the adjournment to today on two strict conditions: that the Defendants pay costs thrown away of $1,700 on or before March 31, 2023, and that they serve and file a Factum on or before the same date. I marked the return date as peremptory and endorsed that should the Defendants fail to take either of the two steps, the matter would conclude on April 6, 2023 as an unopposed Motion.

[6] The Defendants filed a factum by March 31, 2023. The costs were not paid.

[7] The Defendants did not appear today. They were paged and Court was held down until 10:15 a.m. Mr. Tubie, counsel for the Defendants, did not appear. He was also paged. Earlier that morning, he had emailed Plaintiff’s counsel saying that he had not received the $1,700 from his clients, and he asked Mr. Dhanbir to have Her Honour excuse him from the proceeding. The email was marked as an Exhibit to today’s motion.

[8] The Motion proceeded as unopposed.

Factual Background

[9] The Plaintiff, Maxpro Management Services Ltd. (“MaxPro”), is a corporation incorporated pursuant to the federal laws of Canada, whose registered office is in Mississauga, Ontario. MaxPro is in the business of providing fuel cards to those engaged in ground transportation.

[10] The Defendant, Global Transauto Inc. (“Global”), is a corporation incorporated pursuant to the provincial laws of Quebec. Global is in the transportation business as a provider of moving goods across Canada and the United States.

[11] The Defendant, Djamilya Kar (“Ms. Kar”), is the president of Global and she is a personal guarantor of all debts and liabilities owed by Global to MaxPro.

[12] The Defendant, Mido Salik (“Mr. Salik”), is an individual residing in the province of Quebec. The Plaintiff asserts that he is the directing and operating mind of Global.

[13] On December 20, 2018, MaxPro, Global, and Ms. Kar entered into a Fuel Card Agreement whereby MaxPro agreed to provide discount fuel cards to Global to enable Global to run its business and provide its trucking personnel with discount fuel cards (the “Agreement”). On the same date, MaxPro and Global entered into a General Security Agreement to secure payment of Global’s obligations.

[14] Pursuant to Article 2 of the Agreement, MaxPro agreed to provide discount fuel cards in Canada and the United States. As per Article 3.05 of the Agreement, Global agreed to pay Maxpro by pre-authorized debit on the date of any invoice. Global further agreed that late payment of any invoice would bear interest at a rate of 1.5% per month or 18% per annum. If any payment were returned due to non-sufficient funds, the Defendants would pay an additional $45.00 each time that happened.

[15] Ms. Kar personally guaranteed all amounts due and owing under the Agreement. As the Guarantor, Ms. Kar agreed to be personally liable for any and all payments and liabilities of Global as owing to MaxPro. The written guarantee, and Ms. Kar’s personal obligation, are not in dispute.

[16] Invoices totalling $120,995.09 CAD and $102,768.44 USD respectively were rendered from December 23, 2019, to Monday, January 13, 2020. No amounts have ever been paid on these invoices.

[17] Pre-judgment interest calculated at the contractual rate of eighteen percent (18%) per annum from the Invoices’ due dates to March 21, 2023, total the amounts of $71,016.38 CAD and $60,318.08 USD respectively. No amounts have ever been paid towards the interest charges.

[18] The Plaintiffs issued this Statement of Claim on April 16, 2020. The Defendants filed a Statement of Defence on February 28, 2022 but have otherwise taken no steps in the litigation other than seeking adjournments.

Analysis on Summary Judgment

[19] Rule 20.04 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 under Courts of Justice Act, R.S.O. 1990, c. C.43 (the “Rules”) provides that the Court shall grant summary judgment if it is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.

[20] The test with respect to summary judgment as set by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 at para. 66 is as follows:

a. Is there a genuine issue requiring a trial based on the evidence, without using the fact-finding powers available under the Rules (“Step 1”)?

b. If there appears to be a genuine issue requiring a trial, can a trial be avoided by using the fact-finding powers of the Court under Rule 20.04, to make a determination by way of summary judgment (“Step 2”)?

c. Does the use of these fact-finding powers go against the interests of justice such that the powers should only be exercised at trial (“Step 3”)?

[21] The Rules relating to summary judgment must be interpreted broadly, favouring proportionality and fair access to affordable, timely, and just adjudications of claims: see para. 5 of Hryniak.

[22] In determining, under Step 1 of the test, whether there is a genuine issue requiring a trial, the Supreme Court states at para. 49 of Hryniak that a judge may be able to reach a fair and just determination on the merits on a summary judgment motion if such a process:

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

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

c. is a proportionate, more expeditious and less expensive means to achieve a just result.

[23] The Defendants admit to owing MaxPro the amounts set out in the unpaid invoices, and the rate of contractual interest thereon. At no point in this litigation have they taken issue with the quantum of the invoices or the accrual of interest. Instead, they resist summary judgment on three grounds:

1. The action is premature because the Plaintiff, by their conduct in permitting previous delays in payment, have waived timely payment.

2. The correct jurisdiction for this action is Quebec.

3. Mr. Salik was never a directing or controlling mind of Global, he made no decisions for the corporation, and he is not a party to the Agreement.

[24] The first two grounds are easily answered at the first step of the test. Absent an agreement in writing per Article 8.09, Article 3.05 of the Agreement states that Global is obliged to pay MaxPro on the invoice date. No waiver of payment was ever given to the Defendants. Good faith efforts to collect overdue accounts do not operate to defeat enforcement.

[25] Article 8.05 of the Agreement states that the Agreement is governed by and construed in accordance with the laws of Ontario. That Article goes on to state that this provision “shall apply even if the Agreement may not be entirely physically executed in the Province of Ontario.”

[26] The third ground requires me to move to Step 2 of the analysis. A judgment against Mr. Salik personally, requires me to see Global not as a separate legal entity that shields the actions of its directors, but as a closely held corporation with no separateness from its directors.

[27] The Plaintiff asserts that Mr. Salik intermingled the affairs of Global with his own, treated the fuel cards as if they belonged to him personally, and improperly used them outside of Global’s operations. Maxpro further asserts that Mr. Salik misrepresented Global’s ability and intention to pay their invoices when he delayed payment and provided them with false assurances. Maxpro asserts that that Mr. Salik was personally in control of the corporation’s actions which resulted in the monies owed.

[28] Ms. Kaur, the Client Relations Manager for MaxPro deposes two affidavits: December 29, 2023 and March 7, 2023. She sets out at para. 6 of her first affidavit that it was Mr. Salik who first approached Maxpro in and around December 2018 with an inquiry about purchasing fuel cards. Mr. Salik represented himself as being the owner of Global, and in all subsequent dealings, he represented that he could bind Global.

[29] Ms. Kaur attests that when Global demanded payment on the December 23, 2019 invoices, Mr. Salik called MaxPro on or about December 28, 2019 to advise that he was out of the country, and that no one else at Global had the ability to authorize payment. He instructed MaxPro to re-debit Global’s account for payment. Maxpro did so and continued to provide fuel cards on December 30, 2019 and January 6 and 13, 2020, only to have the payment on the prior and subsequent invoices returned as non-sufficient.

[30] MaxPro’s subsequent attempts to collect from Global proved equally fruitless. Mr. Salik ceased returning their inquiries. He has not since been in communication with Global. [1]

[31] Mr. Salik has never provided evidence in this proceeding. He, Global, and the guarantor to the Agreement, Ms. Kar, have been represented throughout this proceeding by the same counsel.

[32] On a Motion for summary judgment, a Court is entitled to assume that the record contains all the evidence that would be adduced at trial. The Court is required to take a "hard look" at that evidence to determine whether a genuine issue for trial exists, see 1061590 Ontario Ltd. v. Ontario Jockey Club, [1995] O.J. No 132 (ONCA) at para. 36. A responding party may not rest on mere allegations or denials contained in the pleadings. As often stated, they must put their best foot forward. The responding party must set out, in an affidavit or by other evidence, specific facts to show that there is a genuine issue for trial: see 1061590 Ontario Ltd. at para. 35.

[33] Mr. Salik leads no evidence as to whether he is a controlling mind of Global, whether he received a benefit from the use of the fuel cards, whether the cards were used in or outside the usual course of Global’s operations, whether if or why he represented to Maxpro that only he had the authority to authorize payment, or why he told Maxpro to re-debit Global’s account at a time when there were insufficient funds to cover the payment.

[34] The only evidence before me is Ms. Kar’s affidavit dated January 10, 2023 in which she asserts at para. 5 that:

Mr. Salik was never the directing or controlling mind of the defendant Global as alleged. He was in charge of administrative responsibilities with limited authority which did not involve making any of the decisions alleged to have been made by him nor did he gain any benefit from those decisions which only I had authority to make. The company was owned by me and the bare and unsupported allegation that Salik was the owner is untrue. That is why I was the guarantor under the Agreement, not him. He was not a party to the Fuel Card Agreement and whatever conduct he engaged in complained of by the Plaintiff was carried out on my instructions and subject to my approval without any personal benefit to him.

[35] This evidence directly conflicts with the Quebec regulatory declaration “Information Statement of a Legal Person in the Enterprise Register of Quebec” as of December 22, 2022. It shows that Mr. Salik has been a Director of Global since September 11, 2020. [2]

[36] The Information Statement also shows Ms. Kar’s address as 1503-100 Ferguson Avenue South, Hamilton Ontario, contrary to her January 10, 2023 Affidavit that states she is of the City of Montreal in the Province of Quebec. This is important because it is Ms. Kar who asserts in this proceeding that the action should be moved to Quebec because all the Defendants reside in Quebec.

[37] Both the Information Statement and social media posts attached to Ms. Kaur’s March 7, 2023 Affidavit clearly show that Ms. Kar resides in Ontario. In fact, the social media posts show Ms. Kar to be living in Waterloo, Ontario from September 17, 2022 to December 31, 2022, the period during which she represents herself in this proceeding to be living in Montreal. [3]

[38] When I apply my fact-finding powers under Rule 20.04, I must give Mr. Kar’s January 11, 2023 Affidavit little to no weight.

[39] In 642947 Ontario Ltd. v. Fleischer, [2001] O.J. No. 4771 (ONCA), Laskin J.A. states at para. 68 that:

Typically, the corporate veil is pierced when the company is incorporated for an illegal, fraudulent, or improper purpose. But it can also be pierced if when incorporated “those in control expressly direct a wrongful thing to be done” [citation omitted]. Sharpe J. set out a useful statement of the guiding principle in Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. [full citation omitted]: “the courts will disregard the separate legal personality of a corporate entity where it is completely dominated and controlled and being used as a shield for fraudulent or improper conduct.”

[40] In Wildman v. Wildman, (2006), 82 O.R. 3(d) 401 (ON CA) relied on this passage and added at para. 38 that:

It is clear from this passage that a company need not have been created with an improper purpose in mind to justify piercing the corporate veil; it is sufficient that the corporation is used for an improper purpose.

[41] In Woodbine Truck Centre Ltd. (c.o.b. Woodbine Leasing & Rentals) v. Jantar Building Systems Inc., [1997] O.J. No 1555 (Ontario Court of Justice (Gen Div)), Cameron J. found at para. 26 that to lift the corporate veil there must be:

a. control of the corporation by the defendant;

b. the exercise of the control to commit fraud, wrong, or breach of duty; and

c. this misconduct must be the proximate cause of the plaintiff's injury or loss.

[42] I find that the three-part test from Woodbine is applicable in this case. As the decisions in Fleischer and Wildman make clear, there is no requirement that the corporation be found to have been incorporated for a fraudulent or improper purpose before a court will pierce the corporate veil. The veil can be pierced where an individual exercises control over a corporation to commit a wrong that is the proximate cause of the plaintiff’s injury or loss.

[43] I find that I can avoid a trial by using the fact-finding powers of the Court under Rule 20.04 to determine by way of summary judgment that Mr. Salik represented himself as a controlling mind of Global with the sole authority to make payments. I find that he significantly increased the Plaintiff’s losses on December 28, 2019 by misrepresenting that Global had sufficient funds to pay for the fuel cards, thus prompting the advance of further fuel cards on December 30, 2019, January 6 and January 13, 2020.

[44] Mr. Salik has presented no evidence to the contrary but for a bald denial within his pleadings. Given the misrepresentations in her January 10, 2023 affidavit, I do not find Ms. Kar’s assertion that only she had control of the corporation to be credible. I find that maintaining the separateness of Global from Mr. Salik would lead to an inequitable result and that in these circumstances, it is appropriate for Mr. Salik to be held to be jointly liable as a director of Global.

Decision

[45] Having engaged the fact-finding powers in Step 2, I find that a trial is unnecessary in these circumstances, and that it does not go against the interests of justice for a decision to be rendered prior to trial. I therefore grant summary judgment on the breach of contract with the effect that all three Defendants are jointly and severally liable to MaxPro in the amount of the invoices, with interest at the contractual rate of 18% per annum thereon.

[46] Judgment to issue in accordance with the draft Judgment signed this day for the payment of $120,995.09 CAD with interest thereon of $71,016.38; and $102,768.44 USD with interest of $60,318.08.

[47] Pursuant to Rule 121(1) of the Courts of Justice Act, I also order that the USD amounts shall be paid in an amount in Canadian currency sufficient to purchase the amount of the obligation in the United States Dollar at a bank in Ontario listed in Schedule I to the Bank Act (Canada) at the close of business on the first day on which the bank quotes a Canadian dollar rate, before the day payment of the obligation is received by the Plaintiff within 30 days of this Order.

Costs on the Action and Motion

[48] The Plaintiff seeks a substantial indemnity of costs of $12,480 in fees and $378.43 in disbursements plus harmonized sales tax (“HST”), in addition to the prior award of costs thrown away of $1,700 inclusive of HST.

[49] I have reviewed counsel’s reasonable hourly rate, time spent, and the steps taken in the action within the Plaintiff’s March 21, 2023 Bill of Costs. I have also learned of their outstanding Offer to Settle since January 2023 to settle the collection of the amounts owing by a payment of principal only.

[50] I award a rounded figure of $13,000 in fees by removing the attendance fee for one hour on March 21, 2023 (as it has already been addressed) and adding a half day attendance fee for April 6, 2023. Substantial Indemnity costs are appropriate given the terms of the Rule 49 Offer to Settle and the Plaintiff’s reasonable conduct throughout.

[51] Costs are awarded to the Plaintiff in the amount of $15,117.62, being $13,378.43 in fees and disbursements plus HST of $1,739.19.

McGee J.

Released: April 11, 2023

Footnotes

[1] Maxpro has heard within the ground transportation industry subsequent information concerning Mr. Salik that I find to be inadmissible, as it is hearsay.

[2] The Information Statement is attached as Exhibit A to the December 29, 2022 affidavit of Ms. Kaur.

[3] Because the Information Statement was last updated on March 21, 2022, Ms. Kar’s Hamilton address may have changed to Waterloo, but at no time does it appear in the record before me that she ever lived in Quebec.