Damages against an associated company

 

In this case, the plaintiff had obtained a default judgment against a company that it had provided services to as well as associated companies that it not contracted with. The defendants moved to set aside the default judgment with the main thrust being that the judgment against the associated companies was improper because the plaintiff had never provided services to them. The motions judge agreed with Paul Gemmink’s argument that the defendants had not shown a valid defence and that the judgment should therefore not be set aside. He found that the judgment was valid under section 21(3) of the Business Corporations Act because there was evidence to show that the contract for services had been entered into on behalf of the associated companies before they were incorporated and that they had received the benefit of the work done by the plaintiff. The judgment against the associated companies was crucial since one of the associated companies is the only one that has any assets.  2011 ONSC 179