Plomberie Chauffage Alma (1980) Inc. v. M.N.R., [1991] 1 CTC 385

Pinard, J. [Translation]:—The Court must decide here on the merits of an objection by a third party to the seizure in execution made herein.

The objector in fact claims to be owner of the two vehicles seized on December 15,1988 in execution of a writ of fieri facias issued by this Court on October 24, 1988 on the basis of a registered certificate, having the same force and effect as a judgment of the Court, for a debt of the seized corporation to the seizing Department totalling $14,098.33, plus interest and costs. The two vehicles seized are a 1984 Chevrolet S-10 and a 1987 Dodge Colt.

First, the objector objected to the seizure because it claims that it is the sole owner of the vehicles in question, alleging that it had purchased them from the seized corporation by contracts of purchase dated October 29, 1984 and September 15, 1986. Second, the judgment creditor disputed the objection on the ground that at the time of the execution the judgment debtor was owner of the vehicles, as they were then registered in his name with the Régie de l'assurance-automobile of Quebec.

The evidence clearly showed that each of the vehicles seized was bought by the objector Plomberie Chauffage Alma (1980) Inc. In the case of the 1984 Chevrolet, the sales contract of October 29, 1984 showed that it was bought from the dealer Talbot Chevrolet Oldsmobile Ltée. In the case of the 1987 Dodge Colt, the sales contract of September 15, 1986 showed that it was bought from the dealer Dupont Autos Enr. In each of these two cases, the information obtained from the Régie de l'assurance-automobile of Quebec showed that the vehicle was bought by Plomberie Chauffage Alma (1980) Inc. and that it was initially registered in the latter's name. The fact that the vehicles were subsequently registered in the name of the seized corporation Plomberie Chauffage Alma inc. may, as was actually admitted by the witness John Belley, an administrative technician with the Régie de l'assurance-automobile of Quebec, result simply from administrative error; in the case of the 1987 Dodge Colt, Mr. Belley even said that the administrative error was virtually a certainty.

In the circumstances, in view of the fact that the objecting corporation and seized corporation are separate entities, I consider that the objector has established that it is the sole owner of the two vehicles seized in the case at the bar and that it accordingly is entitled to the requested release of the seizure in execution concerned.

The fact that these companies actually have the same corporate name, to which the objector only added in one case the figures for the year 1980, does not lead this Court to lift the corporate veil in the exercise of its discretion so as to make the objector subject to the obligations of the seized corporation towards the judgment creditor. An exception should only be made to the principle that a company is legally independent, and its artificial personality disregarded, when this is necessary to prevent fraud, [1] which is not the case here.

Plomberie Chauffage Alma Inc. decided on February 28, 1980 to divide its operations and sell to Plomberie Chauffage Alma (1980) Inc. all its plumbing, heating and heating oil distribution business, that is the part of its assets connected with the building industry. Plomberie Chauffage Alma Inc. then allowed its building employees to become shareholders in Plomberie Chauffage Alma (1980) Inc. and so participate in a business in their field. As Plomberie Chauffage Alma Inc. was thus no longer working in the building industry and it was now only concerned with an apartment building, a building which incidentally it had to make over to its mortgage creditor in 1985 due to financial problems, it was quite understandable that the purchasers of its plumbing, heating and heating oil distribution business should want to take advantage of the goodwill attached to its corporate name.

Additionally, the sale of the vehicles to the objector was in each case made before the seizure and the weight of the evidence is that the vehicles concerned were used by the objector in connection with its commercial activities.

Bearing all this in mind, it is not a matter of great importance that in the first year following the purchase of the 1984 Chevrolet, that is immediately before Plomberie Chauffage Alma Inc. became inoperative, this vehicle was also used for personal reasons by Alfred Guay, the president of the defendant company, who at the time was also a shareholder of the objector company.

As regards the objector's delay in having the registration certificates corrected (they were not corrected at its request until March 3, 1990), this could only have an effect on the costs of the case at bar, which the confusion thus created in some measure encouraged. This delay by the objector and the resulting confusion certainly could not be taken to mean a wish to place the vehicles beyond the reach of the instant seizure, as the tax debt was not that of the objector but that of Plomberie Chauffage Alma Inc.

For all these reasons, the rule that the judgment debtor and the objector are separate entities must be observed, judgment is accordingly rendered upholding the latter's objection, finding that it is the sole owner of the two vehicles seized in this proceeding and granting the requested release from the execution; the whole without costs, despite the objector's success, in view of its delay in having the registration certificates corrected.