Citation: Globex Foreign Exchange Corporation v. Launt, 2010 NSSC 229
Date: 20100611
Docket: Hfx No. 321220
Registry: Halifax
Between:
Globex Foreign Exchange Corporation
Plaintiff
v.
Carl Launt and 3077860 Nova Scotia Ltd.
Defendants
Judge: The Honourable Justice M. Heather Robertson
Heard: April 20, 2010, in Halifax, Nova Scotia
Decision: June 11, 2010
Counsel: Franco Tarulli, for the plaintiff
Tim Hill, for the defendants
Robertson, J.:
[1] The defendant, Carl Launt (“Launt’), makes a motion for summary judgment on evidence pursuant to Civil Procedure Rule 13.04. His affidavit dated March 1, 2010 is in evidence.
[2] The court has also reviewed the affidavit of Jeff Matheson, the authorized agent of Globex Foreign Exchange Corporation (“Globex”), who resists this application and seeks a continuation of the action with further discoveries ordered by the court to further establish its claim.
[3] The facts are as follows: The plaintiff, Globex, is a currency trader who entered into a contract with 3077860 Nova Scotia Limited (“Numberco”) for the purchase of _1,198,000 pounds sterling, on December 30, 2008. Numberco funded the purchases with a deposit in the amount of $124,676.02 Canadian dollars. Numberco failed to pay for the funds purchased and Globex incurred loss and damage in the amount of $89,410.84 Canadian dollars when they resold the currency.
[4] Carl Launt is the sole director and shareholder of Numerco and funded the company with the deposit required to effect the trades.
[5] The Launt affidavit sets out the three transactions as Exhibits A, B and C and produces the demand letter upon Numberco from a solicitor engaged by the plaintiff for payment.
[6] Exhibit G to the Launt affidavit is the email correspondence dated August 11, 2009, from counsel for Launt stating that Numberco was a defunct company with no assets, and did not intend to oppose the application for summary judgment against Numberco for the debt owing. He attached the tax returns for 2007 and 2008 to demonstrate that the company was defunct. A summary judgment was thus obtained.
[7] Globex then commenced an action against Numberco and Launt dated December 9, 2009, claiming that Launt was responsible for the unpaid debt of Numberco owed to Globex. The statement of claim filed by the plaintiff, in terms of suggesting liability on the part of Launt, contains the following allegations (paragraph numbers are those in the statement of claim):
3. Further, at all relevant times, the numbered company was Launt’s duly authorized agent, servant or employee.
4. On December 3, 2008, Launt caused the Numbered Company to enter into contracts with Globex on his behalf.
9. As the numbered company’s principal, master and employer, Launt is identified with the numbered company’s breach of contract.
[8] Launt deposes in his affidavit that at no time did he advise the plaintiff that Numberco was entering into any agreements as agent for him, nor was Numberco ever his agent for any purpose.
[9] There is no evidence before the court documentary or otherwise, which would demonstrate that Launt was ever a party to the contracts in question or that he offered to guarantee the contracts or did he provide any guarantees for payment.
[10] To this end, the court is left with the bare allegations made by counsel for Globex in submissions, but there are no facts pleaded in the statement of claim to support his contention.
[11] The defendant Launt relies on MacNeil v. Bethune, 2006 NSCA 21 and Papaschase Indian Band No. 136 v. Canada (Attorney General) 2008 CarswellAlta 398, 2008 SCC 14, J.E. 2008-689 at paras. 10-11, in which the Supreme Court sets out the requirement that each party put its “best foot forward” with respect to the existence or non-existence of material issues to be tried.
[12] Although Launt bears the heavier burden of showing there is “no genuine issue of material fact requiring trial,” the plaintiff cannot merely rely on its pleadings and must advance some evidence to support the allegations made. The plaintiff has not adduced any evidence showing that Numberco was the agent and Launt the principal in these transactions.
[13] It is obvious from the evidence before me that the plaintiff and Numberco were the contracting parties, as evidenced from the plaintiff’s first action against Numberco solely. Once the plaintiff realized that Numberco was impecunious, the plaintiff commenced its action against Launt.
[14] The plaintiff submits it has a real chance of success in establishing liability against Launt in his personal capacity relying on Provincial Electric (1969) Ltd. v. Registered Holdings Ltd., et al, [1977] N.S.J. No. 731; Clarkson Co. Ltd. v. Zhelka et al, [1967] 2 O.R. 565; and Buanderie centrale de Montréal Inc. v. Montreal (City), [1994] S.C.J. No. 80. These cases are significantly different on their facts.
[15] It would be inaccurate to describe Launt as an undisclosed principal as Globex were aware of Mr. Launt. They chose to contract with Numberco and made no demands for assurances that Numberco was solvent nor any demand for guarantees from Numberco’s sole shareholder Launt.
[16] In Spring Garden Holdings Ltd. v. Ryan Duffy’s Restaurants Ltd., [2010] NSSC 71, Smith, A.C.J.S.C. at para. 50 states:
[50] In White v. E.B.F. Manufacturing Ltd., supra, Saunders J.A. quoted with approval from Le Car GmbH v. Dusty Roads Holdings Ltd. et al., supra, where Murphy J. identified three situations where the courts have lifted the corporate veil:
(a) where failure to do so would be unfair and lead to a result “flagrantly opposed to justice”;
(b) where representations are made or activities undertaken for a fraudulent or other objectionable, illegal or improper purpose to facilitate doing something that would be illegal or improper for an individual shareholder to do personally; or
(c) where the corporation is merely acting as the controlling shareholder’s agent.
[17] In this case the plaintiff does not allege fraud and at para. 61, Smith, A.C.J.S.C. noted that:
[61] In Medjuck and Budovitch Ltd. et al. v. ADI Limited et al., supra, Stratton J. suggested that in the case of some group enterprises the courts will pay regard to the commercial reality of the group rather than to “the niceties of the separate legal identities of each constituent company” (¶ 35). Interestingly, despite these comments, Justice Stratton did not lift the corporate veil in that case.
[62] The comments of Stratton J. were used, however, by Grant J. in Stewart v. Webster, 2006 NBQB 321, to lift the corporate veil. That case went on to appeal (2007 NBCA 50). In a concise (two paragraph) decision the Court of Appeal stated:
1. The trial judge pierced the corporate veil and found the appellant personally liable for losses the respondents sustained in connection with a townhouse they purchased from a company controlled by the appellant (see 2006 NBQB 321 (N.B. Q.B.)). There is absolutely no evidence to support a piercing of the corporate veil and the correlative finding of personal liability on the part of the appellant. In short, there is not a scintilla of evidence supporting a finding that the company in question or any related corporation was “being used [by the appellant] as a shield for fraudulent or improper conduct” (see Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co., 28 O.R. (3d) 423, [1996] O.J. No. 1568 (Ont. Gen. Div.), at 433‑34, aff’d [1997] O.J. No. 3754 (Ont. C.A.)).
[63] The Court of Appeal overturned the trial judge's decision to lift the corporate veil.
[18] That is exactly the situation in this case. Globex contracted with Numberco. There is no reason to lift the corporate veil on the basis of the evidence before me.
[19] The defendant Launt has in my view demonstrated clearly that he was not the principal in the transactions as alleged, nor was Numberco his agent for any purpose. Launt has demonstrated to my satisfaction that there is no genuine issue of material fact requiring trial.
[20] The applicant’s motion for summary judgment on the evidence is allowed.
[21] I will be happy to hear submissions in writing on the matter of costs, failing any agreement.
Justice M. Heather Robertson