Claim against Coquitlam company with ‘virtually nothing to seize’ struck down; further payment hearing permitted

Allegations that a Coquitlam company essentially ran a three-card monte game to thwart creditors failed to persuade a provincial court judge, according to a recent provincial court decision.

Droid Media Communications, a Victoria, B.C.-based information technology company, previously won a $35,216 judgment against Coquitlam company QMI Manufacturing but has yet to receive the money.

In January 2020, QMI was making products designed to close water and gas valves after a leak. Droid representative Donald Dobbie struck a deal with Raymond Wood of QMI to distribute the Coquitlam company’s product on Vancouver Island.

Approximately three months later, Dobbie sent Wood a $20,010 deposit toward Droid’s first commercial purchase from QMI.

QMI eventually terminated the exclusive distribution agreement and refused to return Dobbie’s deposit, arguing Droid was entitled only to receive QMI products.

Droid took the matter to court seeking the deposit, damages and other costs. After no one from QMI attended the hearing, Droid was granted a default judgment of $35,216.

However, at a subsequent payment hearing QMI representatives contended the company: “had no capital and no way to pay out the judgment.”

Droid tried to collect on the judgment through a payment hearing and then through an order for seizure and sale.

“These efforts proved fruitless as DMC discovered that QMI had no assets or capital, and virtually nothing to seize,” according to the judgment.

The two companies landed back in court in February, with Droid alleging officers at QMI as well as several other companies transferred capital before the judgment to ensure the Coquitlam company was: “judgment proof.’

The defendants included QMI’s accountant as well as companies Geo Alert and Avcom Systems.

QMI called the allegations “patently ridiculous,” arguing Droid was trying to: “pierce QMI’s corporate veil in an attempt to hold its principles, officers and other entities liable for the default judgment.”

The judge sided with QMI.

There was nothing “innately suspicious” regarding the financial transactions, most of which occurred well before the initial claim was filed, wrote Judge Lisa Mrozinski.

“The transactions alleged are numerous as one might expect for an ongoing business enterprise,” Mrozinski concluded.

As a legal principle, it is generally not appropriate to judge whether a company officer should be liable for a company’s legal obligations on a payment hearing, the judge noted.

While the claim was struck, Mrozinski stated that Droid should be able to go over QMI’s accounts, “in order to determine how QMI’s capital, assets or inventory may have been handled or disposed of.”

Droid is permitted to set down another payment hearing to “explore this question,” Mrozinski wrote.