Can I sue the person who signed the bounced cheque? What if the person signed it on behalf of a business? Here is the latest Ontario case:
In Drive Auto Group Inc. (ONCA) a personal defendant (Amir Tajbakhsh) who was carrying on business as the un-incorporated entity ‘Collision Repair Experts Toronto’ wrote a number of cheques to different auto businesses in Toronto.
‘Collision Repair Experts Toronto’ was not a registered (unincorporated) business entity (para 4, 12)
The question on summary judgement was: can the personal defendant (Amir Tajbakhsh) be held liable for the 11 dishonoured cheques in the name of ‘Collision Repair Experts Toronto’.(para 1)
The personal defendant (Tajbakhsh) was the sole director of a number of the defendant auto-shops which ordered parts from the plaintiff (Drive Auto Group Inc.). (para 2) Some of those purchases were paid by cheques signed by the personal defendant (Tajbakhsh) in the name of ‘Collision Repair Experts Toronto’ (para 12).
The personal defendant pleaded that he was signing on behalf of a corporate defendant (9033955 Canada Limited) which the personal defendant said was the trade name of that corporation. (13)
The personal defendant says the bank erred in failing to put the full corporate name on the face of the cheque (14). The judge at first instance rejected this evidence because the defendant himself produced another bank document showing the corporate name fully inscribed on the face of another cheque. (15)
What about ‘per’?
The personal defendant argued that the word ‘per’ was written on the cheque, being the universal styling when a person is signing for another. (16)
Although ‘per’ may be universal usage, Sach J. in Deloitte & Touche v. Meramveliotakis (ONSC), points out that the Bills of Exchange Act s.51(1) says the following:
- Signing in representative capacity
- 51 (1) Where a person signs a bill as drawer, endorser or acceptor and adds words to his signature indicating that he has signed for or on behalf of a principal, or in a representative character, he is not personally liable thereon, but the mere addition to his signature of words describing him as an agent, or as filling a representative character, does not exempt him from personal liability. (ECC emphasis)
The first instance judge (Chalmers J.) re-emphasizes Sachs J. statement that ‘the policy of the law to uphold the validity of negotiable instruments is very strong’ (16)
As against the use of a ‘trade name’, Chalmers J. further cites the Bills of Exchange Act s.131(1)
- Trade-name or assumed name
- 131 (1) Where a person signs a bill in a trade-name or assumed name, he is liable thereon as if he had signed it in his own name. (ECC emphasis)
Any company carrying on business under a trade name is under a duty to identify itself to the public under its corporate name on all negotiable instruments. (16)
The personal defendant was therefore liable for the dishonoured cheques.(19)
The ONCA re-emphasized the reliance upon the Bills of Exchange Act in upholding personal liability.
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