2020 QCCQ 827, 2020 QCCQ 827

McMillan c. Arkorful-Cadorin 2020 QCCQ 827 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL TOWN OF MONTREAL Division de pratique No: 500-22-252476-190 DATE: January 13, 2020 ______________________________________________________________________ PRESIDED BY THE HONOURABLE DAVID L. CAMERON, J.C.Q. ______________________________________________________________________ LINDA MCMILLAN and GARY UPTON Plaintiffs v.

ISAAC ARKORFUL-CADORIN and IC.KM CONSTRUCTION INC Defendants ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] The Plaintiffs, Linda McMillan and Gary Upton contracted with the Defendant, Isaac Arkorful-Cadorin, an individual doing business under the name Stad Construction and Renovations, in September 2018. [ 2 ] They alleged that the work performed was faulty and resulted in extensive damages to the property.

Their claim is for $72,302.26 in damages, and $10,000 in punitive damages. [ 3 ] They also name IC.KM Construction Inc. (IC.KM), a company of which Isaac Arkorful-Cadorin is a shareholder and director, as a solidary defendant. [ 4 ] IC.KM petitions the Court to dismiss the Plaintiffs’ application for want of any lien de droit and to declare it abusive, ordering damages in the amount of $3,000 and punitive damages in the amount of $2,000. [ 5 ] The petition to dismiss is based on the assertion of that the facts alleged, even if true, would not establish a cause of action against IC.KM.

This is the notion that it is unfounded in law, even if the facts alleged are true, as set out in

article 168 of the Code of Civil Procedure . [ 6 ] It is also based on the assertion that the claim against IC.KM constitutes an excessive and unreasonable use of the judicial system. [ 7 ] The Petitioner’s attorney refers to the examination out of Court of Linda McMillan held on May 28th, 2019. Essentially, the witness has no knowledge of IC.KM and was unable to answer questions concerning the allegations made against the latter in the Plaintiffs’ originating application.

He refers to the Plaintiffs’ application as “nothing more than a feeble attempt to attach another Defendant to the lawsuit in the event that the Plaintiffs could not collect from the sole contractual party being Stad subtitled issues”. Issues [ 8 ] At this preliminary stage, the Court must determine the answers to the following issues: 1. Is the action of IC.KM unfounded in law even if the facts alleged are taken to be true? 2. Is the application against the Defendant IC.KM an excessive and unreasonable use of the judicial system? And if so, what is the appropriate remedy?

Analysis [ 9 ] All of the allegations of the originating application that relate to the contractual situation would, if true, establish a contractual lien de droit only with the Defendant Isaac Arkorful-Cadorin, doing business under the name Stad Construction and renovations. [ 10 ] There is no attempt to bring IC.KM into the picture as a co-contracting party for the construction work that allegedly gave rise to the claim. These are the allegations from paragraphs 1 to 34 of the originating application.

[ 11 ] These allegations can be characterised as not only invoking contract liability of the Defendant Arkorful-Cadorin, but also constituting allegations that the faulty conduct was also “unwarranted, unlawful and abusive” and “reckless in nature”. [ 12 ] The allegations concerning IC.KM, which are not contractual in nature, relate to Mr.

Arkorful-Cadorin’s conduct in connexion with the co-defendant IC.KM, conduct that is characterised in the allegations as “the continued bad faith of Cadorin”. [ 13 ] The allegations of interest begin at paragraph 35, where its alleged that Arkorful-Cadorin did not reside at the place he gave as his residence, and that the Plaintiffs learned he had abandoned the said premises in the month of May without paying multiple months of rent.

The allegations go on to say that he caused the matriculation of his sole proprietorship to be voluntarily radiated around November 6, 2018, that he “is now carrying on business strictly under the veil of a corporate umbrella, namely IC.KM, with the sole purpose of avoiding personal liability” and that IC.KM “was incorporated with the goal of concealing fraudulent and/or illicit activity on the part of Cadorin and/or activities inconsistent with public order and/or industry norms”. [ 14 ] The Plaintiffs place emphasis on the fact that the construction work, consisting essentially of roofing, is subject to a contractual warranty for five years (P-5).

The document entitled “Five year limited guarantee” is on the letterhead of Stad Construction and Renovations, a business that was “radiated” from the Registraire des Entreprises du Québec , shortly after the signing of this document. [ 15 ] The registry also shows that IC.KM Construction Inc. was constituted on July 25, 2018, and immatriculated on July 26, 2018, its first shareholder being Mr. Arkorful-Cadorin. Although he is described as not being the majority shareholder, the second shareholder being another individual.

Mr Arkorful-Cadorin is listed as director and president. [ 16 ] The theory of the case is therefore that the Corporation should not be allowed to rely upon its distinct legal personality from that of Mr.

Arkorful-Cadorin as the Corporation was formed to facilitate the latter’s conduct in arranging his affairs so as to avoid personal liability for the contract performed and the guarantee associated with it. [ 17 ] The principles that operate in determination under 168 are clear: the Court must, for the purpose of the exercise, deem the allegations to be true, and unless it is abundantly clear that these allegations could not support the cause of action, the matter must be considered best decided by the judge seized on the merits. [ 18 ] Applying those principles here, various other explanations suggest themselves, such as that of a legitimate and lawful business enterprise between two individuals who had formed a company around the same time that the work had been performed.

It is also possible, provided that the Plaintiffs could establish the truth of the factual allegations made, that the new Corporation is part of an arrangement of affairs on the part of Mr.

Arkorful-Cadorin who, by continuing his business enterprise under a new corporate entity, would seek to hinder the claims of consumers such as the Plaintiffs who were dealing with Mr Arkorful-Cadorin under his unincorporated business name. [ 19 ] While the individual’s personal liability is not changed by these alleged arrangements, it is at least possible that, given the unlawful and fraudulent intentions that are being asserted in his regard, the continuation of his construction activities, in the name of a corporation, might have the effects that are being attributed to him, rightly or wrongly. [ 20 ] It is not at this stage of the case that the Court can evaluate the evidence and determine whether these allegations are fact or probable, let alone plausible.

But taking them at face value, it is not possible to establish at this stage that no cause of action could exist. [ 21 ] The theories concerning the corporate veil are, in the history of corporate law, relatively new legal concepts, and the present case, although it does not necessarily fit neatly into any particular jurisprudential category, should be allowed to proceed in order to give the Plaintiffs the opportunity to pierce that veil. [ 22 ] On the issue of abuse, the Court does not see at this stage a way to determine that question: it may well be that the Plaintiffs’ allegations prove to be false and, not only untrue, that they are unfounded to a degree that a procedural abuse has occurred in the case. [ 23 ] If, at that stage, it becomes clear to a judge that this is the case, the appropriate remedies can be put in place.

While the Plaintiff McMillan has testified and has not been able to substantiate her allegations, it is premature to anticipate what the testimony of Mr. Arkorful-Cadorin himself will disclose when he is compelled to testify. [ 24 ] The petition presently before the Court was offered before the completion of his examination on discovery.

The Court is not in a position to assess the way that his explanations will come out concerning the matters alleged, namely the circumstances of his change of address, the incorporation of the new corporate and business entity, his intentions concerning the five-year guarantee in light of the radiation of his sole proprietorship shortly thereafter. [ 25 ] A determination of the relative value of the Plaintiffs assertions in this matter can best be assessed when the Court decides on the merits after hearing having the benefit of the adversary process.

It would not be appropriate at this stage to preconceive what the outcome of that hearing will be. BY THESE REASONS, THE COURT: DISMISSES the application to dismiss the originating application in regards to the defendant IC.KM Construction Inc.; With legal costs to follow the outcome of the case.

__________________________________ DAVID L. CAMERON, J.C.Q. Me Jeffrey Schwartz Schwartz Gerson Avocats Attorney for the Plaintiffs Me Joseph Perlini Joseph Perlini Avocats Attorney for the Defendants Date of hearing: November 21, 2019