Date: 19990513
Docket: T-2413-98
BETWEEN:
CHROMASCAN INC.
Plaintiff
- and -
HER MAJESTY THE QUEEN
Defendant
- and -
GILMORE PRINTING SERVICES INC.
Defendant
- and -
TAXSAVE CONSULTANTS LIMITED
Defendant
AND BETWEEN:
GILMORE PRINTING SERVICES INC.
Plaintiff by Counterclaim
- and -
CHROMASCAN INC.
Plaintiff by Counterclaim
- and -
PETER BLAIS
Defendant by Counterclaim
- and -
SANDRA BLAIS
Defendant by Counterclaim
REASONS FOR ORDER AND ORDER
BLAIS J.
[1] There is a motion before the Court filed on April 23, 1999 for an order removing John Parr Telfer as solicitor of record for the plaintiff and for an order for security for costs as against the plaintiff and other reliefs.
[2] This motion is filed by the solicitor for the defendant Gilmore Printing Services Inc.
[3] The defendant Gilmore Printing Services Inc. has also filed and served a notice of change of solicitors dated April 23, 1999. This notice having the effect of appointing Gibson and Augustine as solicitors of record for Chromascan Inc. replacing John Parr Telfer that was the solicitor of record for Chromascan Inc. so far.
[4] Counsel for the plaintiff Chromascan Inc., John Parr Telfer, has filed and served a notice of motion requesting an order that the notice of change of solicitors dated April 23, 1999, be removed from the record of the Court.
[5] Given the particular situation, it has been decided on consent by the parties, that the motion filed by the defendant Gilmore Printing Services Inc. on April 23, 1999, be heard only on the first element that is the request for an order removing John Parr Telfer as solicitor of record for the plaintiff and all other reliefs sought in this notice of motion will be adjourned sine die.
[6] This Court will also address the plaintiff"s motion that the notice of change of solicitors, dated April 23, 1999, be removed from the record.
[7] The Court will decide who is the solicitor of record for the plaintiff Chromascan Inc.
THE ISSUE
[8] The issue is whether a document signed on January 29, 1998 by Mr. Peter Blais on behalf of Chromascan Atlantic Inc., and Chromascan Inc. and personally, had the legal effect of transferring the ownership and the control of the company Chromascan Inc. from Peter Blais and Sandra Blais to Robert Gilmore.
[9] This document introduced as part of exhibit "PB-3" to the affidavit of Peter Blais, dated April 26, 1999, and also as part of exhibit "A" to the affidavit of D. Kenneth Gibson, dated April 23, 1999, expresses the following:
| FROM: Hurley, Dodd, Parsley, Solicitors |
| RE: Chromascan Atlantic Inc. and/or Chromascan Inc. |
NOTICE/AUTHORIZATION/DIRECTION
This will serve to confirm that the shares of the above noted Companies have been sold and that the new authorized signing officer is Robert Gilmore.
You are hereby authorized and directed to take all future instructions and directions regarding any files you have or are handling for the above noted Companies from either Robert Gilmore and/or his Solicitors, Gibson & Augustine and for so doing this shall be your good and sufficient authority.
DATED at Ottawa this 29 day of January, 1998.
Per: "signed"
Peter Blais
I have authority to bind the Corporation.
Chromascan Inc.
Per: "signed"
Peter Blais
I have authority to bind the Corporation.
"signed"
Peter Blais (Personally)
RELEVANT FACTS
[10] Before July 15, 1994, Mr. Peter Blais and Sandra Blais were the owners of the company known as Chromascan Inc.
[11] Pursuant to an asset purchase agreement dated July 15, 1994, Peter Blais and Sandra Blais, as sole principals and shareholders of Chromascan Inc., sold to 1084825 Ontario Inc. all of its business, undertaking and assets as a going concern, including all assets, accounts receivable, tax refunds and all right and title to the name "Chromascan".
[12] 1084825 Ontario Inc. became HB Technolith which was acquired by Gilmore Investments Corp., pursuant to a share purchase agreement, dated June 23, 1995.
[13] Mr. Peter Blais remained with Gilmore Printing Services as an employee, which employment was terminated in 1997.
[14] Some time between 1995 and 1997, Peter Blais owned a controlling interest in a printing business in New-Brunswick called Chromascan Atlantic Inc.
[15] In 1997, an action was commenced by J.P.S. and R.E. Gilmore Investments against Chromascan Inc., Chromascan Atlantic Inc., Peter Blais and his wife Sandra Blais.
[16] After negotiations, the litigation was settled on certain terms; those terms included series of documents.
[17] One of those documents was the document quoted earlier in paragraph [8] that had the effect of transferring and releasing all signing authority and control of Chromascan Inc. to Robert Gilmore.
[18] On January 29, 1998, Peter Blais signed a direction and authorization regarding Chromascan Inc. addressed to CIBC in Ottawa and in Aylmer, Quebec, stating:
You are hereby authorized regarding the above noted account of Chromascan Inc. to change the signing authority from Peter Blais to Robert Gilmore and this shall be your good and sufficient authority to do so.
[19] On January 29, 1998, Peter Blais signed a notice/authorization/ direction regarding Chromascan Atlantic Inc. and for Chromascan Inc. addressed to solicitors stating:
This will serve to confirm that the shares of the above noted companies have been sold and that the new authorized signing officer is Robert Gilmore.
You are hereby authorized and directed to take all future instructions and directions regarding any files you have or are handling for the above noted companies from either Robert Gilmore and/or his solicitors, Gibson & Augustine and for so doing this shall be your good and sufficient authority.
[20] On January 29, 1998, Peter Blais signed a statutory declaration stating:
I retain no interest in the name Chromascan Atlantic Inc. and/or Chromascan or any variation thereof. I retain no assets which are the property of Chromascan Atlantic Inc., Chromascan Inc. and/or Chromascan or any variation thereof.
[21] All those documents with their signatures were filed.
[22] The plaintiff"s counsel has filed a certificate of Chromascan Inc. dated April 26, 1999, with a photocopy of the shareholders register and the directors" register for Chromascan Inc.
[23] These registers show that Mr. Peter Blais and his wife Sandra Blais are the only shareholders of Chromascan Inc. and that Peter Blais is the president and that Sandra Blais is the secretary of the said company. A resolution of the directors of Chromascan Inc. was also filed by plaintiff and in which Peter Blais and Sandra Blais confirmed that the notice of change of solicitors that was filed in the Federal Court, had been filed by strangers to the corporation and without authority of the corporation.
[24] We also have other official documents showing that Mr. Robert Gilmore is the legal president of Chromascan Inc. and that he was duly authorized for signing and making decisions on behalf of the company Chromascan Inc.
[25] When counsel for the plaintiff Chromascan Inc., John Parr Telfer was asked about the documents signed by Peter Blais on January 29, 1998, expressing clearly that all assets and power that he detained in the company Chromascan Inc. were transferred to Robert Gilmore, he replied that it was a mistake for the name of Chromascan Inc. to be appearing on these documents and that these documents can be qualified as recitals or explanations which have no operative or legal effect regarding a transfer. Chromascan Inc. still exists as a corporation and Mr. and Mrs. Blais remained the shareholders.
[26] Counsel for the defendant Gilmore Printing Services Inc. confirmed to the Court that he is not challenging the fact that Mr. Peter Blais and Mrs. Sandra Blais are still shareholders of Chromascan Inc., upon what is contained in the shareholders" register.
[27] Nevertheless, counsel for the defendant Gilmore Printing Services Inc. pretends that the intention of the parties was to transfer all the powers in the company to Mr. Gilmore and the fact that Mr. Blais and his wife may still be the shareholders because the paperwork to finalize the transaction was not completed, does not give them control of the company.
[28] There was no necessity to rush the paperwork since there was nothing in the company Chromascan Inc. at the moment of the transaction in January 1998 and later on, Mr. Blais simply refused to agree with the paperwork to finalize the transaction.
ANALYSIS
[29] The Court has to assess the real intention of the parties when the transactions were made.
[30] It is clear that Mr. Peter Blais was a businessman and that he was accompanied by a counsel for all those transactions that were signed before and on January 29, 1998.
[31] The pretension that he has signed those documents with no intention to give any legal effect to those directions transferring Chromascan Inc. to Mr. Robert Gilmore cannot be accepted from a man that should have known what he was signing.
[32] I even consider that a major objective of those transactions was to ensure that all assets, all powers and even the name Chromascan Inc. would be transferred from Mr. Blais to Mr. Gilmore and that furthermore, the transaction was made in consideration of a compensation included in the transactions.
[33] The fact that the paperwork for the book of the company to reflect the real intention of the parties and the real transfer of authority in that company was not done at the time, is not sufficient to limit the legal effect of the transaction.
[34] In my opinion, it is clear that the ownership, the name and the power in the company were transferred from Peter Blais to Robert Gilmore on that very day of January 29, 1998.
[35] In my opinion, Mr. Peter Blais had no right whatsoever to give instructions to any counsel to act on behalf of Chromascan Inc., of which control had been transferred to Robert Gilmore following the transactions of January 29, 1998.
[36] In my opinion, Mr. Robert Gilmore has now the right to decide what solicitor of record should be appointed to represent Chromascan Inc.
[37] I consider that the letter signed by Robert Gilmore as president of Chromascan Inc. dated April 22, 1999 to John Parr Telfer, solicitor for Chromascan Inc. so far, has the legal effect to confirm that John Parr Telfer has no authority to take directions from Peter Blais with respect to Chromascan Inc. and also to direct counsel John Parr Telfer to withdraw immediately from all pending actions in which he is solicitor of record for or purport to act for Chromascan Inc, particularly in action T-2413-98, in the Federal Court of Canada.
[38] Nevertheless, the notice of change of solicitors dated April 23, 1999, is not acceptable as it is, because the solicitor of record for the plaintiff would be the same as the solicitor of record for the defendant.
CONCLUSION
[39] Therefore, THIS COURT ORDERS THAT:
| - Counsel John Parr Telfer be removed as solicitor of record for the plaintiff Chromascan Inc; |
| - The notice of change of solicitors, dated April 23, 1999, appointing Gibson and Augustine as solicitor of record for the plaintiff Chromascan Inc. be removed from the record of the Court; |
| - The plaintiff Chromascan Inc. be given until May 25, 1999 to appoint a new solicitor of record; |
| - With costs in favour of the defendant Gilmore Printing Services Inc. |
Pierre Blais
Judge
OTTAWA, ONTARIO
May 13, 1999
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