Terra Eckert - v. -, 2015 SKPC 101

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2015 SKPC 101 Date: July 7, 2015 File: 14-0305 Location: Prince Albert _____________________________________________________________________________ Between: Terra Eckert - and - G. Raymond Contracting Ltd., George Raymond & John Keyuk Appearing: Terra Eckert For the Plaintiff John Keyuk For the Defendant DECISION F.M. DAUNT, J INTRODUCTION [ 1 ] Terra Eckert wanted to move a house and hired G. Raymond Contracting Ltd. to build her a basement for this purpose. Nobody measured the house.

The basement was the wrong size, costing the plaintiff $16,006.92 to make the basement fit for its required purpose. She now sues for damages. G. Raymond Contracting Ltd. has been stricken from the Corporate Registry and all its assets have been sold. The plaintiff seeks to amend her Statement of Claim to add the defendants in their personal capacity. She asks the Court to hold the individual defendants personally liable for her damages. John Keyuk seeks to have his name removed from the suit, saying he is not a director of the corporation, but a mere employee.

Both defendants deny liability either personally or on behalf of the corporation.

FACTS [ 2 ] For ease of reference, see Appendix A for a simplified timeline. [ 3 ] According to the Corporate Registry for Saskatchewan, G. Raymond Contracting Ltd. was incorporated on February 26, 2010. The Nature of Business is described as “Road and General Construction”. The company had one director and one shareholder. George Raymond was the sole director and president of the corporation. John Keyuk, owning 100 shares out of 100 issued, was the sole shareholder.

The registered office of the corporation was George Raymond’s address in Ile a la Crosse, while the mailing address was John Keyuk’s, in Prince Albert. The corporation was struck from the Corporate Registry on July 31, 2012. [ 4 ] One day in September 2012, John Keyuk walked into Affinity Insurance to buy plates for a vehicle. Terra Eckert assisted him. In the course of their conversation, Mr. Keyuk mentioned that he was starting up a construction company. Ms. Eckert had bought an old two-storey house. She wanted it moved onto some land near St. Louis.

She needed someone to build her a walkout basement to support that house. She sent Mr. Keyuk an email with the more or less correct dimensions of the house to be moved. She attached a rough sketch she had drawn to give him an idea of what she had in mind. This sketch had the wrong dimensions. [ 5 ] The two met in person and corresponded by email several times over the next few months. Mr. Keyuk signed his emails “John Keyuk, President, G. Raymond Contracting Ltd.” Ms. Eckert needed a quote to obtain financing, and a building plan in order to get the permits required for the project.

Using the incorrect dimensions from the rough sketch, Mr. Keyuk drew up a draft quote. The “quote by John Keyuk” was on the letterhead of G. Raymond Contracting Ltd. [ 6 ] Ms. Eckert showed the draft to a Mr. Peter Halayka, a building inspector. On November 13, 2012, he told Ms. Eckert, “[A]dvise your basement contractor that the footings must have step-down footings and frost wall construction for the walkout area.” Ms. Eckert forwarded these instructions to Mr. Keyuk. Mr. Keyuk ignored this instruction. At trial, he said he disagreed with it, because the soil was not susceptible to frost.

It would appear that this decision was never discussed with Ms. Eckert or the building inspector. [ 7 ] Terra Eckert, not being a builder, relied on the defendants’ expertise to design a foundation that would fit and support the house to be moved. She made it clear that she wanted high ceilings and large windows. She wanted a walkout basement that didn’t feel like a basement. Upon receipt of the draft quote, the only change she requested dealt with the size of the windows. That change being made, she happily accepted the quote on November 15, 2012.

Nobody noticed the error in the dimensions. [ 8 ] Although they had a wealth of experience on other types of projects, neither John Keyuk nor George Raymond had ever before built a basement upon which an existing house would be moved. The primary focus of the business was earth moving. However, Mr. Keyuk figured it was “not a big deal to build a basement,” and readily took on the project. [ 9 ] There were some problems with the construction, including “blow-outs” in the concrete forms. On December 13, 2012, they had their second blow-out. On the same day, G.

Raymond Contracting Ltd. was restored to the Corporate Registry, and John Keyuk had a heart attack. [ 10 ] On December 14, 2012, Ms. Eckert was at the site and noticed several problems with the construction. For example, there was a problem with “blow-outs” on the forms, because no rods were used to hold the sides together. There was no step-down footing, as directed by the building inspector. As a result of these issues, Ms. Eckert sent Mr.

Keyuk an email terminating the relationship and offering to meet to discuss payment for work performed, site clean-up, and other issues arising from the termination of the contract. Despite some serious health issues, Mr. Keyuk, in effect, begged Ms. Eckert to let them continue with the project. [ 11 ] She relented and decided not to repudiate the contract. The defendants did some work for which they did not charge Ms. Eckert, recognizing that they were responsible for the errors. Work resumed. The basement construction concluded, and Ms. Eckert paid G.

Raymond Contracting for the work, despite her reservations. [ 12 ] In preparation for moving the house onto the foundation, earth was moved to backfill the foundation. Because there was no

step-down footing, this made the basement walls too short to have a walkout. Ms. Eckert purchased a septic tank. She expected it to be installed before the foundation was backfilled. This was not done. Mr. Keyuk says that is because plans were needed and permits required, although there is no evidence he informed Ms. Eckert of these requirements. [ 13 ] When the house arrived in February 2013, it didn’t fit. The basement’s dimensions were incorrect. This was a big problem. Ms. Eckert continued to work with Mr. Keyuk for a short time after that, trying to find a way to correct the problem.

The relationship quickly broke down, however, deteriorating into finger-pointing and blaming. Ms. Eckert requested a written guarantee before continuing to work with Mr. Keyuk. The next evening, she received an invoice from G. Raymond Contracting Ltd. for $4,193.38 for “additional work on basement project and place[ment] of home.” She replied immediately questioning the amount of the invoice. The next day, Mr. Keyuk appeared at her workplace demanding payment. She paid him $1,000.00. She still questions the bill.

She agrees that she should pay for the joists that needed replacing, but questions the labour costs and the material costs. Mr. Keyuk, in cross- examination, says that what he paid for materials was none of her business. The amount he charged her for materials was not what he paid for them. Ms. Eckert says the job of backfilling around the basement was in the original quote and was already paid for. Everything else was a result of the defendants’ mistakes, and she should not be responsible for paying it. [ 14 ] The defendants then abandoned the site. Ms.

Eckert hired another company to fix the problems caused by the defendants’ mistakes. Because no contractors were available on short notice, the house sat for another seven months before it could be moved onto the basement, costing Ms. Eckert more money than this Court could legally award in damages. [ 15 ] On January 26, 2014, Ms. Eckert sent a letter to George Raymond and John Keyuk outlining her complaints. In that letter, she states “I am writing to notify you of my intention to take your company, G.

Raymond Contracting Ltd. and yourselves, George Raymond and John Keyuk, to Small Claims Court.” She further states, “In order to avoid a Small Claims action against your company and your persons, I demand payment....”. On April 17, 2014, Ms. Eckert commenced proceedings by filing a Statement of Claim. She was assisted in this by court staff. I note from the court file that the Intake Form dated March 5, 2014 names the defendants as John Keyuk and George Raymond. The Statement of Claim names only Raymond Contracting Ltd. (also known as G. Raymond Contracting Ltd.).

The Summons, issued April 30, 2014, is directed to Raymond Contracting Ltd. (also known as G. Raymond Contracting Ltd.), George Raymond and John Keyuk. The first return date was June 6, 2014. John Keyuk appeared and asked to adjourn the Case Management Conference to give him time to prepare. George Raymond was not served. The Case Management Conference was adjourned to July 17, 2014. Ms. Eckert was present, as was John Keyuk, who appeared on behalf of the company and on behalf of Mr. Raymond. He asked for a further adjournment because Mr. Raymond was going through five weeks of cancer treatment. Ms.

Eckert opposed this adjournment. The adjournment was granted with an order that it proceed on the next date with or without Mr. Raymond, who was granted leave to appear by telephone if necessary. On the same day, George Raymond signed a Counterclaim for $19,018.96 on behalf of the corporation for unpaid invoices. [ 16 ] On July 31, 2014, the corporation G. Raymond Contracting Ltd. was once again struck from the Corporate Registry. To date, it has not been restored. The assets of the company have been sold. [ 17 ] On September 12, 2014, the Case Management Conference proceeded. It was adjourned to give Ms.

Eckert an opportunity to consider transferring her claim to the Court of Queen’s Bench. On September 19, 2014, Ms. Eckert advised she wished to continue in Small Claims Court, and another Summons was issued to compel the defendants to attend Court on November 21, 2014, for a Case Management Conference. A trial date was set for March 11, 2015. On that date, the plaintiff was present and ready to proceed. Ms. Eckert had two witnesses present, and a statement from a third. Mr. Keyuk appeared on behalf of the corporation and Mr. Raymond. Mr. Raymond was too sick to attend Court, and Mr.

Keyuk asked for an adjournment. At that time, he submitted that he was only an employee of the defendant corporation, and not a proper officer. [ 18 ] An adjournment was granted to May 22, 2015. On that date, Mr. Keyuk on behalf of the defendants amended the Counterclaim, reducing it by $15,825.58, as he discovered that the plaintiff had actually paid this amount. The defendants maintained their Counterclaim for $3,193.38. The trial proceeded on May 22 and continued into May 25, 2015. Mr. Keyuk again applied to be removed as a defendant. Ms.

Eckert applied to amend her Statement of Claim to include John Keyuk and George Raymond in their personal capacities. ISSUES 1. Should the Statement of Claim be amended to add John Keyuk and George Raymond as defendants in their personal capacity? 2. Is the defendant corporation liable in contract and tort for the deficiencies in the project?

3. Is the plaintiff liable in contract to pay the final invoice to the corporation? 4. Should the corporate veil be pierced to allow personal liability of the individual defendants? ANALYSIS 1. Amending the Statement of Claim [ 19 ] Mr. Keyuk says he is not a proper defendant because he is not named in the Statement of Claim, the document which commences these proceedings. The plaintiff says that she intended to sue both defendants personally. Court staff actually drew up the document, and she should not be prejudiced by a clerical error. She seeks to amend the Statement of Claim to reflect her true intention. [ 20 ]

Section 47 of The Small Claims Act states: “No proceedings pursuant to this Act are to be considered invalid for informality if there has been substantial compliance with this Act .” [ 21 ] In her demand letter, Ms. Eckert made it perfectly clear that she intended to hold both Mr. Raymond and Mr. Keyuk personally liable for her damages. Mr. Keyuk was properly served with a Summons naming him as a defendant. He appeared in Court in answer to that Summons, and has conducted the defence, not only on his own behalf, but on behalf of the corporation and Mr. Raymond personally. I find that Mr.

Keyuk had adequate notice of the claim against him, and that the claim was made against him personally. He has ably defended that claim. There has been no prejudice to him by the inadvertent error in drafting the Statement of Claim. [ 22 ] I therefore allow the plaintiff to amend her Statement of Claim to add the names John Keyuk and George Raymond as defendants. 2. Liability [ 23 ] Who was responsible for ascertaining the correct dimensions of the basement to be built? Mr. Keyuk maintains that he expected Ms. Eckert to provide the correct dimensions to the house. Ms.

Eckert says she relied on the defendants to design and build a structure that would support the house to be moved. [ 24 ] Mr. Keyuk relied on the drawing provided by Ms. Eckert which contained the wrong dimensions. In her email to him, she states: “The dimensions of the house that I am moving from Leroy to St. Louis area are: 28’4” (currently there is about 2” of siding on this wall that will be coming off) x 24’3”.” The estimate of two inches of siding is obviously that: an estimate. In the same email, she continues: “Attached are a couple photos of the basement that the house sits on now.

Not sure if that helps you at all. It shows the joists (which run the 24” length) and the supports. And (don’t laugh) a couple sketches, one showing the basement for purposes of plumbing that will need to be accounted for when building the basement as well as a site map. The drawings are pretty ugly but you’ll get the idea...”. In the sketch of the basement, she has the dimensions as 26’4” by 24’3”. [ 25 ] It is clear that her sketches were never meant to be blueprints. They were approximate, meant as a starting point for discussions. Furthermore, on October 16, 2012, Ms.

Eckert said she needed more accurate building plans to give to the RM office so she could get a building permit. Mr. Keyuk replied: “Don’t worry about the basement plans I will draft them up for you with the specifications and all the detail they will require (No cost).” On November 5, 2012, Mr. Keyuk sent Ms. Eckert an email stating “I will be back in a few days... I am working on your design and we will be available to do the job. We won’t let you down.” [ 26 ] Ms. Eckert’s witness Ryan Wawro was qualified as an expert in the field.

He has been involved in building 35 to 40 commercial and residential foundations. He has been involved in projects like Ms. Eckert’s. He testified that, if he were doing this project, the first thing he would ask is whether it is a new house or an old house being moved. If it is an old house, he would go to the location and take measurements. He would engage an engineer to perform tests to see what kind of foundation might be necessary for the specific house on the specific site. Mr. Raymond admitted in cross-examination that the defendants should have measured the house.

[ 27 ] There are two routes to liability in this case: contract and tort. a. Contract [ 28 ] The contract was not to build a basement with specific dimensions. Rather, Ms. Eckert contracted with the defendants to design and to build a basement that would support a specific house. She was quoted a price to complete that contract. The basement was the wrong size.

I find that the defendants breached a fundamental term of the contract. “Certain terms are implied in every building contract: materials must be of proper quality, the work must be performed in a good and workmanlike manner, the materials and work, when completed, must be fit for their intended purposes, and the work must be completed without undue delay.” [1] Fitness for purpose goes to the heart of the contract. It is worthless to the plaintiff to have a construction that will not support the house.

Because the defendants committed a fundamental breach, the plaintiff was entitled to repudiate the contract and sue for damages. It was the builder’s responsibility to ascertain the correct dimensions of the house to be moved and to build a structure that would fit that house and would support the weight of that specific house. b. Tort [ 29 ] Apart from any contract, the defendants may be held liable for the tort of negligence if their work falls below the standard of care required.

In the case of a building contract: ... [T]he duty in tort with respect to materials and workmanship flows from the contractor’s duty to ensure that the building meets a reasonable and safe standard of construction. The duty in tort extends only to reasonable standards of safe construction and the bounds of that duty are not defined by reference to the original contract. [2] [ 30 ] Thus, the duty in tort exists separately from the contractual duties between the parties, and it requires construction to a “reasonable and safe standard.” [ 31 ] In tort, the defendants had a duty of care to the plaintiff.

They breached that duty by negligently failing to measure the house. This caused damage to the plaintiff. The defendants are liable for the cost of repairing that damage. Furthermore, they were directed to build step-down footings and a frost wall. This was on the advice of the building inspector. This was not done. Mr. Wawro was asked in cross-examination about the need for a frost wall when building on sandy soil. He testified that, in those circumstances, he would consult an engineer to test the soil before deciding whether to forgo the construction of a frost wall. [ 32 ] Mr.

Keyuk did not consult an engineer or other professional to test the soil. Rather, he eye-balled it and figured it would not be susceptible to frost. That decision (or lack thereof) was never discussed either with the plaintiff or with the building inspector. This caused further problems and expense to the plaintiff, apart from the incorrect dimensions. [ 33 ] The defendant submits that, because the plaintiff paid the entire price of the original contract, she agreed that the work was done to her satisfaction, and cannot now claim for deficiencies apart from the incorrect size of the structure.

She replies that she was bullied into paying for the work. The fact is, though, that the full extent of the deficiencies could not have been known to the plaintiff until the house was physically moved to the site, after the bill had been paid. I draw no inference that the plaintiff agreed to have a basement of the wrong size, with walls of the wrong height, with no protection from the dangers of frost. [ 34 ] I find that the plaintiff has proven liability on a balance of probabilities in both contract and tort. 3. The Final Invoice

[ 35 ] Ms. Eckert also claims reimbursement of the $1,000.00 paid on the final invoice. The defendant corporation counterclaims for $3,193.38, being the unpaid portion of the final invoice. The bill was not itemized in detail, and so it is difficult to determine what amount was for what job. For example, the house had joists that needed to be replaced. This job was extraneous to the original contract. It needed to be done because it was an old house. I find that some of the work done was exterior to the original contract, and the defendant corporation has a right to be paid for that work.

However, the bulk of the work was to remedy mistakes made by the defendants, or was work to which the plaintiff did not agree. The plaintiff is not entitled to reimbursement of the $1,000.00 already paid, but neither is the defendant entitled to be paid for the remainder of the invoice. [ 36 ] I also find that the defendant corporation, being not registered at the time of trial, is disabled from maintaining any claim for payment on the contract in this Court.

Section 275 of The Business Corporations Act states:

(1) A corporation that is not registered under this Act is not capable of commencing or maintaining any action or other proceeding in a court in respect of a contract made in whole or in

part in Saskatchewan in the course of, or in connection with, its business.

(2) In any action or proceeding, the onus shall be on the corporation to prove that it was registered.

(3) No provision of this

section applies to a Canada corporation.

(4) In this section, “court” means any court. [ 37 ] The defendant corporation was stricken from the Registry almost immediately after it commenced its Counterclaim. It is, therefore, “not registered under this Act. ” Thus, it is “not capable of maintaining any action,” including a Counterclaim. The Defendant Corporation’s Counterclaim is dismissed. 4. Piercing the Corporate Veil a. The Corporation [ 38 ] The plaintiff asks this Court to pierce the corporate veil and hold Mr. Keyuk and Mr. Raymond personally liable for the negligence of the company.

Generally speaking, a corporation is liable for its actions in the same way a natural person is liable for his or her actions. The corporation shields its directors, officers and shareholders from personal liability for those actions. Under certain circumstances, however, the courts have seen fit to pierce that corporate veil and to hold individuals liable for actions taken in the name of the corporation. [ 39 ] The first question, however, is this: In the case at bar, is there a corporate veil to pierce? A body corporate is a legal creation.

Unless a corporation is duly constituted pursuant to the laws of the relevant jurisdiction, there is no separate legal person. When Mr. Keyuk first entered into a contract with Ms. Eckert, there was, in law, no corporation. It had been stricken from the Registry for failure to file the annual return. In such a case, s. 14 of The Business Corporations Act applies: 14(1) Except as provided in this section: (

a) a person who enters into, or purports to enter into, a written contract in the name of or on behalf of a corporation before the corporation comes into existence: (

i) is personally bound by the contract; and (ii) is entitled to the benefits of the contract; and (

b) the contract has effect as a contract entered into by the person mentioned in clause (a).

(2) A corporation may, within a reasonable time after it comes into existence, by any action or conduct signifying its intention to be bound thereby, adopt a written contract made before it came into existence in its name or on its behalf, and upon such adoption: (

a) the corporation is bound by the contract and is entitled to the benefits thereof as if the corporation had been in existence at the date of the contract and had been a party thereto; and (

b) a person who purported to act in the name of or on behalf of the corporation ceases, except as provided in subsection (3), to be bound by or entitled to the benefits of the contract.

[ 40 ] Mr. Keyuk signed his correspondence as “President, G. Raymond Contracting Ltd.” However, in September, October, and November of 2012, there was no “G. Raymond Contracting Ltd.” By virtue of The Business Corporations Act , Mr. Keyuk became personally bound by the contract unless the corporation adopted it. By the time the corporation was reinstated on December 13, 2012, the work was well underway. The same date, the builders had their second “blow-out,” and Mr. Keyuk had a heart attack. Both before and after reinstatement, the plaintiff made her cheques payable to “Raymond Contracting,” never to “G.

Raymond Contracting Ltd.” Ms. Eckert attempted to repudiate the contract on December 16, 2012, and Mr. Keyuk, despite serious health troubles, persuaded her to change her mind. [ 41 ] The corporation comprised Mr. Keyuk and Mr. Raymond. The corporation did not formally adopt the contract, so the question becomes this: Did the corporation by its conduct qua corporation signal its intention to adopt the existing contract? From the evidence, nothing changed after the corporation was restored to the Registry. No matter what the corporate status, business continued as usual.

The same people were doing the same things both before and after restoral. Neither the corporation nor its principals performed any act on behalf of the corporation that could constitute an intention to bind the corporation to the contract. Given the problems that had already arisen during the project, it would not be in the best interests of the corporation to become party to a contract that was likely to lose money or result in corporate liability. [ 42 ] At the time they entered the contract, the true nature of the business venture was a partnership between Mr. Keyuk and Mr. Raymond.

They both put money into the business and they both took money out. Mr. Keyuk took on the role of business development, and Mr. Raymond was more “on the operational side.” Mr. Keyuk was certainly not, as he submitted, a mere employee. The Partnership Act states: 3(1) Partnership is the relation that subsists between persons carrying on a business in common with a view of profit.

(2) The relation between members of any company or association who constitute a body corporate under any law in force in Saskatchewan is not a partnership within the meaning of this Act . [ 43 ] At the time the parties entered into the contract, there was no “body corporate”. Therefore, subsection (2) did not apply, unless the corporation adopted the contract. I have found that it did not. [ 44 ]

Section 4 of the Act lists certain things to take into account when determining whether or not a partnership exists. In particular, subsection 4(3) states that “The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business...”. Based on the whole of the business relationship between Mr. Keyuk and Mr. Raymond, I find that they were operating a de facto partnership under the firm name of “G.

Raymond Contracting” at the times their corporation was defunct. [ 45 ] Regarding the liability of partners, I have reproduced the relevant portions of The Partnership Act in Appendix B. According to The Partnership Act , the act of one partner binds all of the partners, who may be held jointly or severally liable for any damages incurred by a third party. That is the case here. The breach of contract and the negligence --- failure to measure the house and failure to construct step-down footings and a frost wall – both occurred while the corporation was not in existence. Both Mr. Raymond and Mr.

Keyuk failed to measure the house and failed to follow instructions to build the frost wall. Each acted in concert with the other. These breaches occurred before the company was restored to the Corporate Registry but were not discovered until after. I have found that the corporation did not adopt the contract, and so both Mr. Keyuk and his partner, Mr. Raymond, are personally liable for the damages. [ 46 ] If I am wrong on that and the corporation is liable, I shall proceed to examine whether this is an appropriate case to find the principals of the corporation personally liable for damages. b.

The Corporate Veil [ 47 ] The plaintiff drew to the Court’s attention the cases of Shopper’s Drug Mart Inc. v 6470360 Canada Inc. [3] and SPC Holdings v Gabriel . [4] In Shopper’s , Pepall J.A. states: In Fleischer , Laskin J.A. stated that only exceptional cases that result in flagrant injustice warrant going behind the corporate veil. It can be pierced if those in control expressly direct a wrongful act to be done. At para. 68, he states: 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”.... Sharpe J. set out a useful statement ofthe guiding principle...: “the courts will disregard the separate legal personality of a corporate entity where it is completely dominatedand controlled and being used as a shield for fraudulent or improper conduct.” [citations omitted] [48] In the case at bar, in the face of pending litigation, the defendants allowed the company to be struck from the Registry. Theysold the assets, leaving the corporation insolvent. They knew that the basement was the wrong size.

It was at least reasonablyforeseeable that they would be found at fault and ordered to pay Ms. Eckert’s expenses for fixing the mistake. They must have knownthat winding up the corporation would make any judgment against that corporation unenforceable. By conducting themselves in thismanner, Mr. Raymond and Mr. Keyuk have attempted to frustrate the plaintiff’s claim against them. Winding up the corporation whileMs. Eckert had a valid claim against it, I find, was a wrongful act. [49] In SPC Holdings, Woods P.C.J. summarized the law: In the oft-cited Ontario decision of Clarkson Co. Ltd. v.

Zhelka, (ON SC), [1967] 2 O.R. 565 (H.C.J.), Thomson J.observed that it would be “flagrantly opposed to justice” for a court to allow the corporate veil to protect a company’s “corporators”where: (

a) the company was formed for the express purpose of committing a wrongful act; (

b) once the company was formed, those in control of it expressly directed a wrongful act; (

c) the company is a sham – that is, a mere agent, or facade or alter ego, of a controlling corporator; or (

d) clear and express statutory provisions permit the lifting of the corporate veil. [50] There, as here, the facts clearly engage points (

b) and (c). The wrongful act was in winding down a corporation andliquidating its assets without regard for the interests of a person dealing with the company, while litigation was pending. Furthermore,given its history of lapsing and reinstatement, the existence of the company was indistinguishable from the acts of its principals, Mr.Keyuk and Mr. Raymond. [51] Another case, similar to the case at bar, and cited in Shopper’s Drug Mart, is Pelliccione v John F. Hughes Contracting andDevelopment Co. (2005), (ON SC), 47 CLR (3d) 104 (Ont SC).

In that case, Ferrier J. summarizes point (c), above,as follows: In The Law and Practice of Canadian Business Corporations (Toronto: Butterworths, 1999), K.P. McGuinness sets out a

summary ofthe circumstances in which the courts have ignored the separate existence of the corporation in cases where the corporation can be said tobe a sham, a facade or an alter ego of its shareholders. He states at 39-40: ...While it is not possible to point to a specific passage of any individual judgment as authority for the following proposition, thefollowing rules would none the less seem to provide a fair

summary of the numerous cases decided with respect to the agency of a singleshareholder corporation vis-a-vis its shareholder and the question of whether a corporation is being used as a sham or alter ego by theshareholder(

s) who stand behind it, or is an agent on their behalf. A corporation will not be viewed as an agent (in the absence of anactual agency agreement) or alter ego or sham where, (

a) the shareholders of the corporation respect the separate ownership by the corporation of its own property, thereby recognizing ineffect that it is to that property that the creditors of the corporation must look for their payment; and (

b) the corporation’s board of directors can be seen to be performing their duties as directors to act in good faith, with a view to its bestinterests, and are performing their other duties owed to that corporation by law (and thereby implicitly to all other persons interested inthe corporation, including its creditors and security holders). On the other hand, if the shareholder(

s) of a corporation, (

a) treat the property of the corporation as if it belonged to the shareholders to do with as they wish, without regard to the interests ofother persons dealing with the corporation; or (

b) cause the board of that corporation to disregard the interests of the corporation and act instead solely in the interests of theshareholder, without regard to other persons having an interest in or claim against the corporation, so that in effect the corporation becomes a mere instrumentality employed by the shareholder in pursuit of his (or her) own interest, thenthere is, no doubt, good reason to disregard the separate personality of the corporation. For in such a case, the court merely adopts thesame approach to the corporation as that which has been adopted by the shareholder himself.

[ 52 ] In the case of G. Raymond Contracting Ltd., it mattered not to the two members of the company whether it was registered or not; whether they filed an annual return; who was, in fact, “President” of the company; or whether they met the legal requirements and obligations of a corporation in Saskatchewan. They carried on business the same way, incorporated or not. Mr. Keyuk at times claimed to be Vice-President and then President of another company called “Sikon”.

In cross-examination, he said he called himself by those titles because people like to think they’re dealing with someone with authority in the organization. [ 53 ] The two defendants sold the assets of the company without regard to the plaintiff’s claim against it. In so doing, they frustrated her legitimate claim. In these circumstances, I find that this is an appropriate case to pierce the corporate veil and hold Mr. Raymond and Mr. Keyuk personally liable, jointly and severally, for Ms. Eckert’s damages. 5.

Damages [ 54 ] The plaintiff has proven a breach of contract and negligence on a balance of probabilities. She is therefore entitled to recover the cost of repairing the deficient work, even if the cost of repair is higher than the cost of the contract. [5] In this case, Ms. Eckert has proven that the cost to remedy the negligent construction was $16,006.92. The plaintiff is also entitled to her costs in these proceedings, being $100.00 for issuing the Summons and $20.71 for service of the Summons.

She is also entitled to pre-judgment interest on the $16,006.92 in accordance with the The Pre-judgment Interest Act from August 21, 2013, the date of the invoice from C & A Woodworks Ltd., whom she hired to repair the deficiencies. [ 55 ] As I have found that the corporation never adopted the contract, the action against G. Raymond Contracting Ltd., is dismissed. The defendants John Keyuk and George Raymond are jointly and severally liable for the aforementioned amounts. Judgment is awarded to the plaintiff accordingly.

The corporate Defendant’s Counterclaim is dismissed. [ 56 ] Dated this 7 th day of July, A.D. 2015, at the City of Prince Albert, in the Province of Saskatchewan. __________________________ F.M. Daunt, J APPENDIX A – TIMELINE Feb. 26, 2010 Incorporation date: G. Raymond Contracting Ltd. Jul. 27, 2011 Annual Return. Jul. 31, 2012 G. Raymond Contracting Ltd. struck from Corporate Registry. Sept. 26, 2012 Email from Ms. Eckert to Mr. Keyuk with sketch of basement. Oct. 29, 2012 Mr. Keyuk has a heart attack. Nov. 13, 2012 Inspector’s instruction re: step-down footings and frost wall. Nov. 15, 2012 Ms.

Eckert accepts the quote. Nov. 20, 2012 (approx.) Defendants begin work on site.

Dec. 13, 2012 Second “blow-out”. G. Raymond Contracting Ltd. restored to Registry. Mr. Keyuk has second heart attack. Dec. 14, 2012 Ms. Eckert visits site, notices problems. Dec. 16, 2012 Ms. Eckert attempts to repudiate contract. Mr. Keyuk persuades her to reconsider. Feb. 8, 2013 House arrives on site. Doesn’t fit. Aug. 21, 2013 Invoice from C & A Woodworks Ltd. Jan. 26, 2014 Plaintiff sends demand letter to Defendants. Apr. 17, 2014 Statement of Claim filed. June 6, 2014 Case Management Conference – adjourned at Defence request. July 17, 2014 Case Management Conference – adjourned at Defence request.

Defendant Corporation files Counterclaim. July 31, 2014 G. Raymond Contracting Ltd. struck from Corporate Registry. Sept. 12, 2014 Case Management Conference. Nov. 21, 2014 Case Management Conference continues. Mar. 11, 2014 First trial date – adjourned at Defence request. May 22, 2015 Trial proceeds. APPENDIX B – The Partnership Act Definition: 3(1) Partnership is the relation that subsists between persons carrying on a business in common with a view of profit.

(2) The relation between members of any company or association who constitute a body corporate under any law in force in Saskatchewan is not a partnership within the meaning of this Act. R.S.S. 1978, c.P-3, s.3 .

Rules for determining existence: 4 In determining whether a partnership does or does not exist, regard shall be had to the following rules: 1 Joint tenancy, tenancy in common, joint property, common property or part ownership does not of itself create a partnership as to anything so held or owned, whether the tenants or owners do or do not share any profits made by the use thereof; 2 The sharing of gross returns does not of itself create a partnership, whether the persons sharing the returns have or have not a joint or common right or interest in the property from which or from the use of which the returns are derived; 3 The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but the receipt of such share, or of a payment contingent on or varying with the profits of a business, does not of itself make him a partner in the business and in particular: (

a) the receipt by a person of a debt or other liquidated amount by instalments or otherwise out of the accruing profits of a business does not of itself make him a partner in the business or liable as such; (

b) a contract for the remuneration of a servant or agent of a person engaged in a business by a share of the profits of the business does not of itself make the servant or agent a partner in the business or liable as such; (

c) a person, being the surviving spouse or child of a deceased partner and receiving by way of annuity a portion of the profits made in the business in which the deceased person was a partner, is not by reason only of such receipt a partner in the business or liable as such; (

d) the advance of money by way of loan to a person engaged or about to engage in any business on a contract with that person that the lender shall receive a rate of interest varying with the profits or shall receive a share of the profits arising from carrying on the business,

does not of itself make the lender a partner with the person or persons carrying on the business or liable as such, provided that the contract is in writing, and signed by or on behalf of all the parties thereto; (

e) a person receiving by way of annuity or otherwise a portion of the profits of a business in consideration of the sale by him of the goodwill of the business is not by reason only of such receipt a partner in the business or liable as such. R.S.S. 1978, c.P-3, s.4 ; 1984-85-86, c.38, s.28 .

Interpretation: 6 Persons who have entered into partnerships with one another are for the purposes of this Act called collectively a firm, and the name under which their business is carried on is called the firm name. R.S.S. 1978, c.P-3, s.6 .

RELATIONS OF PARTNERS TO PERSONS DEALING WITH THEM Power to bind firm: 7 Every partner is an agent of the firm and his other partners for the purpose of the business of the partnership; and the acts of every partner who does any act for carrying on in the usual way business of the kind carried on by the firm of which he is a member, bind the firm and his partners, unless the partner so acting has in fact no authority to act for the firm in the particular matter, and the person with whom he is dealing either knows that he has no authority, or does not know or believe him to be a partner. R.S.S. 1978, c.P-3, s.7 .

Partners bound by acts of firm: 8

An act or instrument relating to the business of the firm and done or executed in the firm name or in any other manner showing an intention to bind the firm, by any person thereto authorized, whether a partner or not, is binding on the firm and all the partners; but this

section does not affect any general rule of law relating to the execution of deeds, instruments or documents affecting land or negotiable instruments. R.S.S. 1978, c.P-3, s.8 . Liability of partner: 11 Every partner in a firm is liable jointly with the other partners for all debts and obligations of the firm incurred while he is a partner; and after his death his estate is also severally liable in due course of administration for those debts and obligations so far as they remain unsatisfied but subject to the prior payment of his separate debts.

Liability of firm for wrongs: 12 Where by a wrongful act or omission of a partner acting in the ordinary course of the business of the firm, or with the authority of his copartners, loss or injury is caused to any person not being a partner in the firm or any penalty is incurred, the firm is liable therefor to the same extent as the partner so acting or omitting to act. R.S.S. 1978, c.P-3, s.12 . Liability joint and several: 14 Every partner is liable jointly with his copartners and also severally for everything for which the firm while he is a partner therein becomes liable under either

section 12 or 13. R.S.S. 1978, c.P-3, s.14 .