CIT Financial Ltd. v. LeGrow Holdings Ltd., (2004) 242 Nfld. & P.E.I.R. 84 (NLTD)

• Judge: Barry, J.
• Court: Supreme Court of Newfoundland and Labrador (Canada)
• Case Date: September 27, 2004
• Jurisdiction: Newfoundland and Labrador
• Citations: (2004), 242 Nfld. & P.E.I.R. 84 (NLTD);2004 NLSCTD 189

CIT Financial v. LeGrow Holdings (2004), 242 Nfld. & P.E.I.R. 84 (NLTD);

  719 A.P.R. 84

MLB headnote and full text

Temp. Cite: [2004] Nfld. & P.E.I.R. TBEd. OC.024

CIT Financial Ltd. (plaintiff) v. Legrow Holdings Ltd. (defendant)

(200001T2184; 2004 NLSCTD 189)

Indexed As: CIT Financial Ltd. v. LeGrow Holdings Ltd.

Newfoundland and Labrador Supreme Court

Trial Division

Barry, J.

October 18, 2004.

Summary:

An Ontario business corporation, Recomm International Display Corp., had a contract with the defendant respecting the lease and conditional sale of equipment. Recomm assigned the contract to the plaintiff. The plaintiff sued the defendant. The parties sought a determination of a preliminary question of law: whether the plaintiff was barred from proceeding because Recomm was an extra-provincial company which had not registered under the Province's Corporations Act.

The Newfoundland and Labrador Supreme Court, Trial Division, answered the question affirmatively and dismissed the action.

Company Law - Topic 7886

Extra-provincial corporations - Licensing or registration - Status of unregistered corporation to maintain action - An Ontario business corporation (Recomm) had a contract with the defendant in Newfoundland and Labrador - Recomm assigned the contract to the plaintiff - The plaintiff sued the defendant - Recomm was not registered to do business in Newfoundland and Labrador as required by the Corporations Act - Pursuant to s. 452(4), the plaintiff, claiming through Recomm, could not maintain an action based on the subject of the assignment unless Recomm was registered under the Act - The contract expressly permitted the assignment and provided that the defendant agreed "not to assert against the Assignee any claim by way of abatement, defense, set-off" etc. ("no defence" clause) - The Newfoundland and Labrador Supreme Court, Trial Division, rejected the plaintiff's argument that the defendant waived the right to rely on s. 452 of the Act given the "no defence" clause - The registration requirement in s. 452 was a rule of procedure - However, it was not a private right of the defendant which it could waive - The statutory incapacity of assignees prevented unregistered companies from evading the operation of s. 452 by assignment - These protections were for the general public - The general "no defence" clause made no specific reference to s. 452 - Clear and direct language was required in order to contract out of statutory provisions - See paragraphs 21 to 25.

Company Law - Topic 7886

Extra-provincial corporations - Licensing or registration - Status of unregistered corporation to maintain action - An Ontario business corporation (Recomm) had a contract with the defendant in Newfoundland and Labrador - Recomm assigned the contract to the plaintiff - The plaintiff sued the defendant - Recomm was not registered to do business in Newfoundland and Labrador as required by the Corporations Act - Pursuant to s. 452(4), the plaintiff, claiming through Recomm, could not maintain an action based on the subject of the assignment unless Recomm was registered under the Act - The contract expressly permitted the assignment and provided that the defendant agreed "not to assert against the Assignee any claim by way of abatement, defense, set-off" etc. ("no defence" clause) - The plaintiff argued that the "no defence" clause and the defendant's consent to assignment of the lease constituted a representation intended to affect legal relations between the defendant and an assignee, which the plaintiff relied on and acted on to its detriment - Therefore, the defendant was estopped from reliance upon s. 452 - The Newfoundland and Labrador Supreme Court, Trial Division, rejected the argument - To promote the policy of the Act, an assignee of contracts made within the Province should have the responsibility to ensure, upon accepting assignment, that the assignor was registered - See paragraphs 27 to 29.

Estoppel - Topic 1022

Estoppel in pais (by conduct) - By agreement - What constitutes - [See second Company Law - Topic 7886 ].

Waiver - Topic 11

General principles - Waiver of a requirement enacted in public interest - [See first Company Law - Topic 7886 ].

Cases Noticed:

Newcourt Credit Inc. v. Hummel Pharmacy Ltd., (1998), 113 O.A.C. 389 (Div. Ct.), refd to. [para. 21].

AT&T Canada Inc. v. College of Medical Pharmacy Ltd., [1997] O.T.C. Uned. 674 (Gen. Div.), refd to. [para. 21].

Human Rights Commission (Ont.), Dunlop, Hall and Gray v. Etobicoke (Borough), [1982] 1 S.C.R. 202; 40 N.R. 159, refd to. [para. 22].

Angus v. Hart and Angus and Sun Alliance Insurance Co., [1988] 2 S.C.R. 256; 87 N.R. 200; 30 O.A.C. 210, refd to. [para. 23].

Counsel Trust Co. v. Locke (1986), 76 N.S.R.(2d) 36; 189 A.P.R. 36 (T.D.), refd to. [para. 23].

Lacroix v. Dominique (1999), 141 Man.R.(2d) 1 (Q.B.), refd to. [para. 23].

Ryan v. Moore et al. (2003), 224 Nfld. & P.E.I.R. 181; 669 A.P.R. 181 (Nfld. C.A.), refd to. [para. 23].

Canadian Marconi Co. v. Canada (1989), 28 F.T.R. 165 (T.D.), refd to. [para. 24].

Martin v. Strange, [1943] 4 D.L.R. 367 (Alta. C.A.), refd to. [para. 24].

Mutual Life Assurance Co. v. Levitt, [1939] 2 D.L.R. 324 (Alta. C.A.), refd to [para. 24].

Gray Tractor Co. v. Van Troyen, [1925] 1 D.L.R. 718 (Sask. K.B.), refd to. [para. 24].

Syncrude Canada Ltd. et al. v. Hunter Engineering Co. and Allis-Chalmers Canada Ltd. et al., [1989] 1 S.C.R. 426; 92 N.R. 1; 57 D.L.R.(4th) 321, refd to. [para. 26].

Canadian Imperial Bank of Commerce v. Grotsky et al. (1994), 120 Sask.R. 305; 68 W.A.C. 305 (C.A.), refd to. [para. 31].

Ellis v. JSS Enterprises Ltd. et al. (2003), 221 Nfld. & P.E.I.R. 223; 661 A.P.R. 223 (Nfld. T.D.), refd to. [para. 31].

Duff v. Duff (1988), 12 R.F.L.(3d) 435 (Ont. S.C.), refd to. [para. 33].

Dowe, Re; Bank of British Columbia v. Thorne Riddell Inc. (1986), 62 C.B.R.(N.S.) 289 (B.C.C.A.), refd to. [para. 33].

Statutes Noticed:

Corporations Act, R.S.N. 1990, c. C-36, sect. 452 [para. 20].

Counsel:

Todd S. Newhook, for the plaintiff;

Stephen J. Willar, for the defendant.

This matter was heard on September 27, 2004, before Barry, J., of the Newfoundland and Labrador Supreme Court, Trial Division, who delivered the following decision on October 18, 2004.