Executive Summary: Key Legal and Evidentiary Issues

• Summary judgment was granted against Popes Property Holdings Inc. (PPH), the corporate assignee, for breach of an agreement of purchase and sale.

• The court awarded $224,610.85 in damages to the plaintiff due to PPH’s failure to complete the real estate transaction.

• There was no genuine issue requiring a trial regarding PPH’s liability or the adoption of the agreement.

• Nicholas Pope was not held personally liable as PPH validly adopted the contract after incorporation under s. 21 of the OBCA.

• The court granted Pope’s reverse summary judgment motion despite objections over lack of formal notice, finding the plaintiff had sufficient factual notice.

• The court found no grounds to pierce the corporate veil, as there was no evidence of fraudulent or improper conduct by Pope.

Facts of the Case
On March 11, 2022, the plaintiff, Fady Dawood, agreed to sell a property located at 16 Natchez Road, Kitchener, Ontario for $880,000 to a third-party buyer. The buyer had an express right to assign the agreement. On March 18, 2022, the buyer assigned the agreement to Popes Property Holdings Inc. (PPH), which was not yet incorporated at the time. Nicholas Pope, who would later become the sole director, officer, and shareholder of PPH, signed the assignment and provided a $5,000 deposit.

PPH was incorporated on March 30, 2022, and failed to complete the transaction scheduled for May 2, 2022. Dawood subsequently resold the property for $710,000, claiming a loss of $224,610.85. He sought recovery of the loss from both PPH and Pope.

Outcome of the Case
The Ontario Superior Court of Justice granted summary judgment against PPH. The court held that there was no genuine issue requiring a trial because PPH had clearly adopted the agreement under s. 21(2) of the Ontario Business Corporations Act (OBCA) following its incorporation. The court found that PPH assumed the buyer’s obligations and was liable for the failed transaction, awarding the full amount of damages claimed.

Regarding Nicholas Pope, the court dismissed the plaintiff’s motion for summary judgment against him and instead granted Pope’s cross-motion for reverse summary judgment. Although Pope signed the assignment and likely paid the deposit, the court found he acted on behalf of the soon-to-be-incorporated PPH. Once PPH adopted the agreement, Pope ceased to be personally bound by it, as provided under the OBCA.

Legal Reasoning
The court applied Rule 20 of the Rules of Civil Procedure, which permits summary judgment where there is no genuine issue requiring a trial. The framework from Hyrniak v. Mauldin was followed, emphasizing proportionality and the ability of the judge to make findings of fact on the record.

For reverse summary judgment, the court relied on Graham v. Toronto (City), confirming that actual notice through a formal notice of motion is not strictly required if factual notice is given. The plaintiff had six weeks’ access to the defendant’s factum and authorities referencing reverse summary judgment, satisfying procedural fairness.

The court also considered s. 21 of the OBCA, which allows corporations to adopt pre-incorporation contracts. Upon adoption, liability transfers from the individual to the corporation. The court found sufficient evidence that PPH adopted the agreement and that all parties expected the assignee to be PPH once incorporated.

The plaintiff’s arguments seeking to hold Pope personally liable amounted to an attempt to pierce the corporate veil. However, the court found no evidence that Pope used PPH as a vehicle for fraudulent or improper conduct. The legal test from Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. was not satisfied, as there was no domination or misuse of the corporation for wrongful purposes.

Conclusion
The court held PPH responsible for the failed purchase and awarded damages to the plaintiff. However, it dismissed all claims against Nicholas Pope personally, finding no legal basis to pierce the corporate veil or impose personal liability. The case affirms the legal protections afforded to individuals acting on behalf of a corporation under Ontario corporate law and contract law principles.