This Action was commenced by the Plaintiff for the recovery of a debt. The Plaintiff was induced to lend money to a corporation. Rather than repay the loan, the corporation purported to issue preferred shares and grant a mortgage. This corporation then became insolvent and was controlled by the Defendants.

The Plaintiff had provided a number of documents as evidence to the Defendants as part of a Notice to Admit Facts. The Defendants did not respond to the Notice within the 20-day period after service as stipulated by Rule 6.37. The Defendants applied to withdraw the deemed admissions but ultimately abandoned the application. Consequently, Read J. found that the Defendants effectively admitted the facts set out in these records.

The Defendants argued that the shares were issued to the Plaintiff without the express consent of the Defendant Mr. Taylor, who was a director and shareholder of the Defendant corporation. The Court noted a number of problems with this argument, including that lack of authority must be expressly pled under Rule 13.6(3)(n), which was not done and thus could not be argued at Trial. In the result, Justice Read held that the preferred shares were properly issued and were valid. The Plaintiff was both a shareholder and a creditor of the Defendant corporation.