Vivian Lois Nelson v. Robert Wayne Nelson, 2012 SKPC 16

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2012 SKPC 016 Date: January 5, 2012 File: NB091-11 Location: North Battleford, Saskatchewan _____________________________________________________________________________ Between: Vivian Lois Nelson and Robert Wayne Nelson - and - Viktoria Granite & Marble Ltd., 101155491 Saskatchewan Ltd., Ronald Roger Cyr and Victoria Nikolaevna Cyr Ryan Armstrong For the Plaintiffs Tanner Daniels For the Defendants ______________________________________________________________________________ DECISION V. H.

MEEKMA , J _ _____________________________________________________________________________ INTRODUCTION [ 1 ] The plaintiffs sue for the return of monies they paid to Viktoria Granite & Marble Ltd. (hereinafter referred to as “Viktoria

Granite”) for granite countertops which they never received. The monies were deposited into the account of 101155491 Saskatchewan Ltd. (hereinafter referred to as the “numbered company”). The defendant, Ronald Roger Cyr (hereinafter referred to as “Mr. Cyr”), is the sole director of both companies. The defendant, Victoria Nikolaevna Cyr (hereinafter referred to as “Mrs.

Cyr”), is the wife of Ronald Roger Cyr, and was a shareholder and director of Viktoria Granite when the first quote was given to the plaintiffs and continued to be involved with the operation thereafter. [ 2 ] Following the trial, defence conceded judgment against both corporate defendants. The plaintiffs are also asking for judgment against Mr. and Mrs. Cyr personally. [ 3 ] At the points in time when the plaintiffs paid for the countertops, Viktoria Granite was in financial difficulty, owed money to an employee for unpaid wages, and judgment had been issued against Viktoria Granite and Mr.

Cyr personally and their vehicle seized. EVIDENCE AND FINDINGS OF FACT [ 4 ] The plaintiffs first obtained quotes for the supply of granite kitchen countertops from Viktoria Granite at the Lloydminster location on September 16, 2010. An agreement was finalized on February 10, 2011, for Viktoria Granite to supply and install countertops for the plaintiffs for a contract price of $10,846.69. A fifty percent deposit was required upon acceptance of the quote and had to be paid before Mr.

Cyr would come out to the plaintiffs’ farm home near Lloydminster to prepare the template. [ 5 ] The plaintiffs were provided with an account number, purportedly for Viktoria Granite, at the CIBC branch in North Battleford. The plaintiffs wired $6,000.00 to that account from an overseas friend/business associate on February 18, 2011. The wire transfer did not go through at first because, unbeknownst to the plaintiffs, the account was actually in the name of the numbered company, not Viktoria Granite.

On that same date, February 18, 2011, the employee at the Lloydminster location handed in her resignation because she had not been paid for three weeks. [ 6 ] On February 19, 2011, Mr. Cyr attended at the plaintiffs’ residence to template the kitchen. Mrs. Cyr and their child waited outside in a vehicle with “Viktoria Granite” printed on the side of it. Mr.

Cyr told the plaintiffs that they would be installing the countertops three days after receiving the final payment from the plaintiffs so the plaintiffs should proceed with ripping out the old countertops, which they did. [ 7 ] The employee of Viktoria Granite in Lloydminster had suggested to the plaintiffs that they attend at Omni, a granite supply business in Edmonton, to choose the granite and Viktoria Granite would then order what the plaintiffs had chosen directly from Omni. Mrs. Nelson also discussed this process with Mr. Cyr.

In January, the plaintiffs had driven to Omni in Edmonton and chosen their granite. The final quote from Viktoria Granite included the three slabs of granite chosen by the plaintiffs. [ 8 ] The plaintiffs had ordered their own sinks which did not arrive until March 21, 2011. Mrs. Cyr called Mr. Nelson prior to March 21, 2011, and asked for the final payment as the countertops were ready to be installed. Mr. Nelson queried how they could be ready when they still did not have the sinks, and the holes would have to be cut to fit. Mrs. Cyr said that they “needed the money anyway”, so Mr.

Nelson assumed that everything was ready and arranged to have another $4,900.00 wired to the same account number, again by wire transfer bank draft payable to Viktoria Granite. The funds were deposited into the bank account of the numbered company on March 24, 2011. Mrs. Nelson confirmed the bank account number with Mr. Cyr because of the difficulty they had putting through the first transfer. It was not until sometime later that the plaintiffs learned that the account was not in the name of Viktoria Granite, but the numbered company.

On March 24, 2011, the defendants redeemed a motor vehicle which had been seized by the sheriff to be sold that very day pursuant to a writ of execution against Viktoria Granite and Mr. Cyr. [ 9 ] On or about March 26, 2011, Mrs. Cyr had met Mrs. Nelson in Lloydminster to pick up the sinks, as Mrs. Cyr indicated that she was attending there to interview potential employees for the Viktoria Granite location in Lloydminster. [ 10 ] The plaintiffs waited for the installation, which never happened. The Lloydminster business was closed. Telephone calls were

[ 10 ] The plaintiffs waited for the installation, which never happened. The Lloydminster business was closed. Telephone calls were not answered in Lloydminster or North Battleford, not even Mr. Cyr’s cell phone. The plaintiffs sent emails. On April 11, 2011, in response to a pressing email from Mr. Nelson, Mr. Cyr called and advised them that Mrs. Cyr’s father had died and they were going to Montreal for the funeral. On April 11, 2011, Mr. Nelson had called Omni in Edmonton and discovered that the defendants had never picked up the granite which the plaintiffs had chosen. When he asked Mr.

Cyr why the granite had not been picked up, Mr. Cyr told him that he had purchased the same granite from Omni in Saskatoon. Mr. Nelson later discovered that there was no Omni operation in Saskatoon. [ 11 ] In court, Mr. Cyr denied ever saying that his wife’s father had died and that they were going to Montreal for a funeral. He testified that his wife’s father is still alive and with them at this time. I believe the evidence of Mr. Nelson that the conversation did, in fact, take place. This is corroborated by the email April 11, 2011, where Mr. Cyr advises Mr.

Nelson that while they were in Montreal, their employees damaged one of the three slabs of granite and it had to be replaced. [ 12 ] By email on April 12, 2011, Mr. Cyr advised Mr. Nelson that he would be collecting the granite from Omni on April 14, 2011. He offered to waive the final 10 percent for the inconvenience, however, at that time the plaintiffs had already paid in full for the countertops via the wired funds. [ 13 ] On April 21, 2011, Mr. Nelson went to the North Battleford business location and found no one around, only bits and pieces of left-over granite.

Then in May 2011, Viktoria Granite hired an employee as a “general manager”, who began communicating with the plaintiffs, promising completion. By this time, the plaintiffs had already contacted the R.C.M.P. to investigate the defendants for fraud, but held off when the new employee assured them that they would be receiving their granite. On May 12, 2011, she advised that she had asked Omni in Edmonton to hold the granite which the plaintiffs had chosen.

On July 25, 2011, the employee, Theresa Joss-Bilous, advised the plaintiffs that she had left Viktoria Granite because she was not being paid. [ 14 ] The plaintiffs went to the home of Mr. and Mrs. Cyr in North Battleford and collected their sinks, which were stored in the Cyr garage. They never received anything from the defendants for any of the money that they had paid. [ 15 ] Mr. Cyr is now the sole shareholder and director of Viktoria Granite. Mrs. Cyr was an equal shareholder and director of Viktoria Granite until October 2, 2010. [ 16 ] The numbered company is incorporated as a “holding company”. Mr.

Cyr is the sole director and no shares have ever been issued. [ 17 ] Land Titles registry information shows the numbered company as the registered owner of a building under construction, now listed for sale with a realtor in North Battleford for $249,900.00. Among other encumbrances is a mortgage for $125,000.00 registered June 27, 2011, by Agricenter Sales

(1977) Ltd. and a writ of execution registered September 6, 2011, against the Cyrs and Viktoria Granite by the Saskatchewan Labour Standards Branch collection unit for $1,594.61. [ 18 ] Mr. and Mrs. Cyr are also registered owners of a home at 1662 - 105 th Street, North Battleford, Saskatchewan, listed for sale for $309,000.00.

There are mortgages for $194,969.50 and $54,000.00 registered against it, the latter on May 4, 2011, as well as the Labour Standards writ of execution and a builder’s lien for $17,237.40 registered September 26, 2011. [ 19 ] A 2005 Cadillac vehicle had been seized by the sheriff pursuant to a writ of execution against Mr. Cyr and Viktoria Granite on March 18, 2011, but was redeemed on March 24, 2011, the date when tenders were to close.

This date exactly coincides with the date that the second bank draft for $4,900.00 was wired to the numbered company’s account. [ 20 ] Cynthia Spence left her employment at Viktoria Granite in Lloydminster on February 18, 2011. She testified for the plaintiffs. She had referred the plaintiffs to Omni in Edmonton and had prepared the final quote after the granite had been chosen. She left the employ of Viktoria Granite because she was never paid on time and at that time had not been paid for three weeks. She was also concerned about her integrity. Mr. Cyr had told her that she should “lie better”.

He would ask her to tell a customer fictitious reasons for not getting a job done. Her final pay cheque bounced on March 6, 2011, which Mrs. Cyr had dated February 18, 2011, and drawn on the numbered company account for $998.71.

[ 21 ] Ms. Spence testified that Mr. Cyr ran the business. He cut the granite and Mrs. Cyr did the bookkeeping. [ 22 ] Theresa Joss-Bilous also testified for the plaintiff. She was employed as general manager for Viktoria Granite from May 1, 2011, to July 15, 2011. She and her husband had planned to invest in the business and did disburse between $16,000.00 and $19,000.00 for gravel, rebar and blueprints for the new building under construction. The mortgage for $125,000.00 was registered by their company, Agricenter Sales, but that amount was never disbursed.

She left because of complaints from customers about work not being completed, calls from creditors, and not being paid after the end of May. She saw no work done on any granite from May 1st to July 15th. [ 23 ] Both Mr. and Mrs. Cyr testified. Their evidence was totally unbelievable. For example: - They both testified that they did not know the matter was set for trial, they thought it was only a meeting, and therefore did not bring any documents with them (bank records, company records, business records); - Mr.

Cyr testified that he bought the granite for the plaintiffs from Michelangelo’s in Saskatoon and the plaintiffs had refused it (the plaintiff called a representative of Michelangelo’s in rebuttal, who testified by telephone that Michelangelo’s did not supply the granite); - Mr. Cyr claimed that the final quote filed by the plaintiffs was not the final quote, it could have been printed after the fact, i.e., implying that it was a forgery, because the original one “gets a signature”. He said, “It could be somebody else.

That can be anything.” He offered no evidence as to what the final quote was or how it may have differed from that filed by the plaintiffs; - Mr. Cyr testified that he told the plaintiffs a numbered company would be purchasing the granite; - Mr. Cyr denied telling Mr. Nelson that his wife’s father died; “I never said that at all. He’s in pretty good shape. He’s here now”; - Mrs. Cyr testified that she only had signing authority for Viktoria Granite, not the numbered company, and the cheque she signed for Ms. Spence was a “mistake”. “I don’t know why I signed that cheque. I just wanted to pay that girl”; - Mrs.

Cyr claimed to have little involvement with Viktoria Granite. She said the accounting office in Saskatoon said she could have some salary. Her only interaction with the plaintiffs was when she obtained the sinks. She only went to Lloydminster to find a receptionist to help her husband out because he was not making the right decisions. She denied calling the plaintiffs and requesting the $4,900.00 payment; - Mrs. Cyr claimed that she never knew she was director of Viktoria Granite until the end of 2010. If she signed documents, she was “not interested”.

When asked why she wanted to be removed from the company, she responded, “I want him to find someone he can trust, that he can put on the bank accounts. Today I have to come and be here, so if something happened, I have nothing to do with it...I didn’t want to be involved and no other reason”; Also of note is that at the opening of the trial, the plaintiffs raised the fact that on the last date the matter had been set for trial, the defendants obtained an adjournment on the basis that Mr.

Cyr’s mother had died and the sitting judge indicated in granting the adjournment that if no death certificate was produced on the adjourned trial date, it would reflect on their credibility. No death certificate was produced. [ 24 ] Mr. and Mrs. Cyr are not credible. I believe the plaintiffs and their witnesses. Without reservation, I found them truthful and forthright; the defendants, quite to the contrary.

ANALYSIS [25] The defence having conceded judgment against both corporate defendants at the completion of the trial, the only issueremaining is whether liability should also attach to Mr. and Mrs. Cyr personally. [26] The plaintiffs argue that the Court should pierce the corporate veil and find the defendants personally liable, that being theironly hope for collection. [27] The plaintiffs also argue that s. 7 of The Builders’ Lien Act , S.S. c. B-7.1, makes the defendant, Mr.

Cyr, a trustee of thefunds paid, however, on my reading of s. 7, it is a trust for the benefit of labourers and subcontractors, not an owner such as the plaintiffs. [28] The corporate veil can be pierced to impose liability on directors and shareholders who control the company where they areguilty of fraudulent or improper conduct. It was noted in Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co., (ON SC), [1996] O.J. No. 1568, 28 O.R. (3d) 423 (Ont. Ct. Gen.

Div.): ...the courts will disregard the separate legal personality of the corporate entity where it is completely dominated and controlled andbeing used as a shield for fraudulent or improper conduct (para. 22). One of the requirements is “conduct akin to fraud that would otherwise unjustly deprive claimants of their rights” (para. 23). [29] Typically, the corporate veil is pierced in exceptional cases, where not to do so would be flagrantly unjust. The Ontario Court of Appeal in 642947 Ontario Ltd. v. Fleischer, (ON CA), [2001] O.J.

No. 4771, 56 O.R. (3d) 417, 209 D.L.R. (4th)182, in discussing personal liability referred to Transamerica, supra, and would have imposed personal liability on the principals whowere in control of the company with no assets to honour its undertakings had the company been found liable. They knew the companyhad no assets when they tendered an undertaking to the Court for the company, to their advantage. They dominated and controlled thecompany and it was used by them for improper conduct (para. 70). [30] An allegation of fraud must be pled and particularized in the pleadings so as not to mislead the defendants.

This being a smallclaims case, the plaintiffs prepared the claim themselves, but I am satisfied that the following particulars alleged are sufficient: We wired $6,000.00 to Viktoria Granite & Marble Ltd. on February 21 as we were told that they were going to Edmonton to pick upslabs and that if we wanted our order to not be delayed the deposit had to be paid right away.

We recently found out that although hegave us the name of Viktoria Granite & Marble Ltd. as the name of his bank account to wire the money to, the bank account number thathe gave us and that the money was transferred to was not Viktoria Granite & Marble Ltd., it was a numbered holding company of his101155491 Saskatchewan Ltd. ... We ordered custom sinks from another company in the U.S. which arrived March 21, 2011.

That same week his wife, VictoriaNikolaevna Cyr, called me and said our granite was ready and they would install it the next week and that we had to make the finalpayment before they would do the install. I told her that the countertops couldn’t be completely ready since they needed our sinks whichhad just arrived in order to cut the holes for the sinks. We transferred the balance of $4,900.00 March 24, 2011 (again the funds ended upin his holding company 101155491 Saskatchewan Ltd.), assuming that she just had not been informed about the sinks being required tofinish the countertops.

She said they would pick up the sinks March 26, 2011. ... April 11, 2011, we found out after calling the granite wholesaler Omni Surfaces in Edmonton that he hadn’t ever picked up the slabs wehad picked out, so we then knew that all the stories were all lies.

... Ronald Cyr called that evening and when I confronted him, he claimed that he had bought the same granite style from Omni inSaskatoon, which was another lie as they do not have a location in Saskatoon. ... On one trip I filed a fraud complaint with the R.C.M.P. which they are now investigating. ... To this date our slabs have never been picked up at Omni in Edmonton despite all the promises to do so, therefore, there was obviouslynever any intention to complete the work. [31] The fact that Mrs. Cyr is not a shareholder or director of either company does not absolve her from liability.

Employees, aswell as officers, of corporations can be liable. See Bellows v. Quik Cash Ltd., 2004 NLSCTD 191 , [2004] N.J. No. 352; 241Nfld. and P.E.I. R. 224 (Newfoundland and Labrador Supreme Court, Trial Division) at para. 53: The decided cases in which employees and officers of companies have been found personally liable for actions ostensibly carried outunder a corporate name are fact-specific. In the absence of findings of fraud, deceit, dishonesty or want of authority on the part ofemployees or officers, they are also rare. [32] Mrs.

Cyr was involved with the operation of the companies throughout and stood to benefit from the funds received from theplaintiffs.

She was the bookkeeper; she interviewed potential employees; she received a salary; she signed cheques for both companies,one of them on the numbered company account to pay an employee who then went to the Labour Board, at the time when the plaintiffsmade the first deposit to that numbered company; she was present when the plaintiffs’ cupboards were templated; she collected the sinksfrom them; she called them for the final deposit, telling them that the counters were ready to install, at the very time when the Cyrs’vehicle had been seized by the sheriff pursuant to a writ of execution against her husband personally and Viktoria Granite. [33] Mrs.

Cyr presented herself as a representative of Viktoria Granite to the plaintiffs. Resigning as a director and shareholderdoes not absolve her from liability when she continued to benefit from the wrongdoing and her motivation in removing herself was, in herwords, “so if something happened, I have nothing to do with it.” It was a family business, she was involved in the operation, and she liedto the plaintiffs to their detriment. The deposit to the numbered company account was to avoid the creditors of Viktoria Granite and todivert those funds to the payment of personal liabilities of the Cyrs and Viktoria Granite.

She was a party to a fraud on the plaintiffs. [34] Mr. Cyr is no less liable. He controlled the companies and arranged to have the monies wrongfully deposited into thenumbered account in order to avoid the creditors of Viktoria Granite and the Cyrs, so that the money could be used to pay debts forwhich he and Mrs. Cyr would be personally responsible. He used both companies for a wrongful and fraudulent purpose when he tookthe plaintiffs’ money and diverted it with no possibility of Viktoria Granite ever fulfilling its obligations. CONCLUSION

[ 35 ] The plaintiffs will have judgment against all four defendants, jointly and severally, for the sum of $11,619.07 as claimed, including $100.00 costs. The judgment against Ronald Roger Cyr and Victoria Nikolaevna Cyr personally is founded on fraud. ___________________________________________ V. H. Meekma, J