Court File and Parties

Court File No.: CV-23-93911 Date: 2024/06/18 Superior Court of Justice - Ontario

Re: Laura Ikenouye, Applicant And: FTA Logistics Inc. and The Estate of Paul Ikenouye, Respondents

Before: Somji J.

Counsel: Sean Taylor, for the Applicant No one appeared for the Respondents

Heard: February 13, 2024

Ruling on Application

[1] The Applicant Laura Ikenouye seeks an order under s. 250(1) of the Business Corporations Act, R.S.O. 1990, c. B.16 (“the Act”) rectifying the records of the Respondent corporation FTA Logistics (“FTA”) to remove her name from the list of company directors.

[2] Laura Ikenouye is the daughter of Paul Ikenouye, FTA’s sole shareholder. Paul Ikenouye passed away in August 2023. While Laura Ikenouye worked for her father’s company for nine years, she did not know that her father had appointed her as a director of the company.

[3] On October 7, 2019, Laura Ikenouye received a collection letter from Canada Revenue Agency (“CRA”) regarding FTA’s unpaid taxes. She informed her father of the letter expecting would deal with it and did not do anything further because she did not believe she was the director of the company. In July 2023, shortly before her father’s death, CRA contacted her again about FTA’s unpaid taxes. Upon learning this, Laura Ikenouye requested her counsel to file a Notice of Change removing her from the role. However, Service Ontario indicated that such a change would leave the company without a director. Consequently, Laura Ikenouye’s only option to avoid liability for $30,000 in unpaid taxes by FTA is to obtain an order that the company register and records be rectified to remove her as a director on the grounds that she never consented to such an appointment.

[4] Given Service Ontario’s position, Laura Ikenouye also seeks an order requiring FTA appoint one or more directors forthwith in compliance with the requirements of the Act for the period commencing October 7, 2017, and going forward, and upon FTA’s failure to do so, for an order that the company be wound up.

[5] The issues to be decided are:

a. Was Ms. Ikenouye appointed as a director of FTA without her consent? b. Should the court order FTA to appoint a director and for the company to be wound up if they fail to do so?

[6] All references are to the Business Corporations Act unless otherwise stated.

Notice of Hearing

[7] Before addressing the substantive issues, I will address the notice of the hearing to the Respondents. On December 4, 2023, a process server attempted to serve FTA the Application Record personally at its last known address, but that address proved to be a UPS store with no knowledge of FTA. The process server then mailed the Application Record to the address registered by the corporation with the Ministry of Public and Business Service Delivery.

[8] In addition, a process server served the Application Record on December 14, 2023, with the Estate of Paul Ikenouye by leaving a copy with Marguerite Ikenouye.

[9] Counsel for Laura Ikenouye did receive an email on January 22, 2024, written by a person claiming to be the daughter of Peggy Ikenouye, the deceased’s widow, and providing information on her behalf. However, I find the email is inadmissible given that the author of the email did not identify themselves and the email contains hearsay evidence.

[10] Neither the Estate of Paul Ikenouye nor FTA filed any responding materials or sent a representative to the hearing. Based on the materials filed, I am satisfied that proper service has been made and that the matter can proceed in the absence of the Respondents.

Issue 1: Was Ms. Ikenouye appointed as a director of FTA without her consent?

[11] Laura Ikenouye filed with the court a Notice of Change for FTA dated August 22, 2023. This document indicates that she and her step sister Tanya Bunton were appointed as directors of FTA on November 1, 2006. The deceased Paul Ikenouye was listed as a director effective September 29, 2005. Paul Ikenouye made all the tax filings. The last corporate filing was for the year 2015 and was filed in March 2017.

[12] On September 14, 2020, the Honourable Justice Corthorn found that Ms. Bunton had not consented to becoming a director for FTA and accordingly, Her Honour exercised her inherent jurisdiction and ordered FTA to rectify their register and records to remove her as director: Bunton v FTA Logistics Inc. and Ikenouye, 2020 ONSC 5463 at paras 21 and 28. At that time Laura Ikenouye and Paul Ikenouye remained listed as directors, and hence Ms. Bunton was able to obtain a Notice of Change to remove herself as director going forward. However, she still required a court order to remove her from the list of directors retrospectively: Bunton at para 30.

[13] Laura Ikenouye now seeks the same declaratory relief along with an order for FTA to rectify its register and records.

[14] The election and appointment of directors of a corporation is governed by section 119. Subsection 119(9) states that consent is required from an individual elected or appointed as a director:

[15] S. 119(9) reads:

Consent required

(9) Subject to subsection (10), the election or appointment of a director under this Act is not effective unless the person elected or appointed consents in writing before or within 10 days after the date of the election or appointment. 1999, c. 12, Sched. F, s. 8.

[16] If, however, the person elected or appointed consents within that ten-day period, then the election or appointment of that individual as a director is valid: s. 119(10).

[17] The requirement for consent was confirmed in Pereira v The Queen, 2007 TCC 737 at paras. 12, 13, and 16.

[18] Section 250(1) provides that where the name of a person is alleged to be or have been wrongly entered or retained in…the registers or other records of a corporation…any aggrieved person may apply to the court for an order that the registers or records be rectified. Upon such an application, the court may make any order it thinks fit including an order that (a) the register or records be rectified or (c) determining the right of a party to proceedings to have their name… deleted or omitted…from the registers or records of the corporation: s. 250(2)

[19] In this case, it appears that FTA cannot make any such correction given the corporation does not appear operational and did not respond to this proceeding. Consequently, Laura Ikenouye requires declaratory relief that she was never a director of the corporation.

[20] Section 97 provides that, “[t]he Court of Appeal and the Superior Court of Justice…may make binding declarations of right, whether or not any consequential relief is or could be claimed.” The Ontario Court of Appeal has found that a Superior Court judge may exercise their inherent jurisdiction to declare an individual was never a director of a company under s. 97 of the Courts of Justice Act. See: Danso-Coffey v Ontario, 2010 ONCA 171 at para 3; Bunton v FTA Logistics Inc. and Ikenouye, 2020 ONSC 5463 at para 26.

[21] Laura Ikenouye has provided an affidavit dated November 17, 2023, and a supplemental affidavit dated March 22, 2024, attesting that she was neither aware that her father had appointed her a director nor did she consent to such an appointment.

[22] Laura Ikenouye explains that she commenced working for her father’s company when she was 18. Her roles varied over the years but were always administrative and involved day to day operations. While she was given signing authority for cheques, she had to obtain her father’s approval to issue those cheques. She attests that she did not make any financial, managerial, or executive decisions related to the company. In addition, she was renumerated only as an employee and filed examples of her T4s to support her position.

[23] Laura Ikenouye was aware that in her later years of employment at FTA, the company was struggling. She fielded calls from creditors. In 2018, she resigned and took a lower paying job as a cleaner to support herself and her three children. She believes that after her resignation, her father was the only person involved with the company until his death.

[24] When Laura Ikenouye received a demand letter from CRA in 2019, she contacted her father right away. He assured her that he would take care of the matter with CRA, and she believed he would do so rather than put her at risk for tax liability. It is unclear if CRA followed-up on the tax liability with either Paul Ikenouye or Ms. Bunton, but Laura Ikenouye attests that she did not hear further from CRA until July 2023 just before her father’s death. By this time, her father had also developed dementia.

[25] Laura Ikenouye does not have any knowledge of what happened to the corporate records, and in fact, believes it is possible that her father would have destroyed them. Corporate records were similarly unavailable when Ms. Bunton made her application. Laura Ikenouye contacted Tanya Bunton to see if she might assist her in this matter but she refused to be involved. I accept Ms. Ikenouye’s evidence and that she does not have access to the corporate records.

[26] As was the case with Ms. Bunton, there is no evidence as to how Laura Ikenouye came to be listed as one of the FTA directors. There is no record of the FTA articles of incorporation or minutes of any shareholder meetings where Laura Ikenouye would have, at minimum, acknowledged acceptance of her appointment: Pereira at para 13.

[27] As explained by Corthorn J in Bunton at para 19, “there must be something more than the mere appearance of an individual’s name in the list of directors as evidence of consent to the appointment or election to that position: see also Pereira v. R., 2007 TCC 737, [2008] 3 C.T.C. 2154, at para. 13. Consent in writing is required before the appointment of a director becomes effective: Pereira, at paras. 12-13.” The rationale for this requirement is presumably to protect persons from potential financial liability, in this case tax liability, that might flow from assuming such a role: Pereira at para 12.

[28] Here, there are no corporate records demonstrating that Laura Ikenouye consented in writing to become a director or acknowledged acceptance of such an appointment. On the contrary, Laura Ikenouye attested that she had no knowledge that she had been appointed a director until receiving the CRA letter in 2019. Furthermore, there is no evidence that she engaged in any functions consistent with such a position. On the basis of the evidence as a whole, I find that Laura Ikenouye did not consent to be appointed as a director of FTA and any such appointment was not legally valid.

[29] Laura Ikenouye is granted a declaration that she was never a director of FTA and there will be an order that FTA rectify its register and records removing her as a director.

Issue 2: Should this court order FTA to appoint a director failing which FTA would be wound up?

[30] Laura Ikenouye argues that she is unlikely to be able to file a Notice of Change to remove herself as director as demonstrated by her previous attempt to do so because it would leave FTA without any director. Consequently, she argues that this court should order FTA to appoint another director for the period of November 1, 2016, and if they fail to do so, order that FTA be wound up pursuant to s. 207.

[31] Upon review of the materials filed, I decline to make such orders for the following reasons. First, I am not satisfied that such an order is necessary. Having granted Laura Ikenouye declaratory relief that she is not and never was a director of FTA, any liability that would otherwise flow from that position has been effectively addressed.

[32] Second, I find that Laura Ikenouye has not provided sufficient evidence to establish that the statutory grounds for an order to wind up a company pursuant to s. 207 has been met. The factum contains a very limited analysis of this issues and the case cited in support involved very different facts. I am not persuaded that such an order can be made based on the record filed.

[33] Finally, the original Application Record served on the Respondents indicated that it would be seeking an order for declaratory relief, an order that FTA rectify its records and register, and an order that FTA appoint one or more directors for the period commencing October 7, 2017. There is no mention that the Applicant would be seeking an order for FTA to be wound up. This relief appears only in the supplemental factum and affidavit of March 22, 2024, which does not appear to have been served on the Respondents. If Laura Ikenouye was seeking a further order that FTA be wound up for failure to abide by court orders, it was incumbent on her to notify FTA and the Estate of Paul Ikenouye accordingly.

[34] Laura Ikenouye’s request for these additional forms of relief are denied.

Order

[35] There will be an Order:

i) declaring that Laura Ikenouye was never a director of FTA; and ii) that FTA and the Estate of Paul Ikenouye will take steps to rectify the register and records of the company to remove Laura Ikenouye from the list of directors historically and present.

Costs

[36] Laura Ikenouye is entitled to her costs for this motion. No bill of costs was filed. Should Ms. Ikenouye seek an order for costs against the Respondents, counsel should file a bill of costs and brief written submission by July 19th, 2024 via email to scj.assistants@ontario.ca and to my attention.

Somji J. Date: June 18, 2024