Subject Matter: Breach of contract and fraudulent misrepresentation in a deal for medical gloves. 11054660 Canada Inc. (Canadian Choice Supply) failed to deliver goods or refund payments.
Key Facts
- BH Frontier entered a contract with Canadian Choice Supply (distributor) and Hongray (manufacturer) for 107,600 boxes of gloves.
- BH Frontier paid over $1.3M USD; $504,980 USD worth of goods were never delivered.
- Fraudulent receipts were presented, claiming funds were sent to Hongray but were misdirected to unknown individuals in China.
Trial Court Findings
- Fraud in Canada: The appellants knowingly misrepresented a direct relationship with Hongray, which influenced the plaintiff to contract with them.
- Corporate Veil Pierced: Appellants Salami and Chai were held personally liable for their deceitful actions, as they dominated Canadian Choice Supply for improper conduct.
Court of Appeal Decision
- Corporate Veil: Upheld piercing the veil based on fraudulent misrepresentation, equating it with "conduct akin to fraud."
- Fraud Analysis: Confirmed the trial judge's division of fraud between Canada (misrepresentation) and China (misappropriation), rejecting claims this was beyond the pleadings.
- Costs: Upheld a $100,000 costs award for the trial and $10,000 for the appeal, denying leave to appeal costs further.
- Damages: $504,980 USD, awarded by Morgan J. for fraudulent misrepresentation. (In addition to the $504,980 in damages that Dunphy J. previously granted.)
Legal Principles Affirmed
- Piercing the Corporate Veil: Conduct akin to fraud justifies disregarding corporate separateness.
- Distinct Fraud Analysis: Fraud in different jurisdictions can be analyzed separately if supported by pleadings and evidence.
- Cost Awards: Substantial indemnity costs are discretionary and tied to findings of fraud.
Outcome
- The appeal was dismissed in its entirety.
