- Court Pierces Corporate Veil Where Third Party Used For the Improper Purpose of Thwarting Default Judgment
- April 25, 2017 | Authors: Jillian Brenner; Adrian J. Howard; Beverley Moore; Chantal Saunders
- Law Firm: Borden Ladner Gervais LLP - Ottawa Office
- Asics Corporation v. 9153-2267 Québec Inc., 2017 FC 257
The Court dismissed the corporate Third Party's motion opposing the execution of a Writ of Seizure and Sale and seeking various other types of relief. The Plaintiff opposed the motion on the basis that the Third Party is being used by Joseph Nassar and Jean-Pierre Nassar (the "Two Individuals") for the improper purpose of thwarting a Default Judgment issued against the Defendant, after it was found to have infringed the Plaintiff's rights in certain trademarks.
The Writ was executed at two locations formerly used by the Defendant to sell its products, and now used by the Third Party to sell similar products. The Third Party sought to nullify and set aside the seizure, on the basis that it legitimately owns the goods that were seized and it is not a party named in the Writ. The Third Party submitted that the onus was upon the Plaintiff to meet the strict test for lifting the corporate veil, to permit the Plaintiff to execute the Default Judgment against the seized goods and the Third Party.
The Plaintiff submitted that the Third Party is under the complete control of the two Individuals, and was incorporated for the sole purpose of evading the Default Judgment, and therefore, the Third Party's corporate veil should be pierced. The Court agreed and concluded that the Plaintiff had met the strict test for lifting the corporate veil to permit the Plaintiff to execute the Default Judgment against the Third Party. The Court found that the evidence established on a balance of probabilities that the Third Party is the "alter ego of its principals, Joseph Nassar and Jean-Pierre Nassar". The evidence also established, inter alia, that the business was transferred from the Defendant to the Third Party for the dishonest and improper purpose of evading the Default Judgment, and potentially other judgments, issued against the Defendant by this Court.