155569 Canada Ltd. v. 248524 Alberta Ltd. et al., (1999) 251 A.R. 393 (QB)

• Judge: Veit, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: September 08, 1999
• Citations: (1999), 251 A.R. 393 (QB)

155569 Can. Ltd. v. 248524 Alta. Ltd. (1999), 251 A.R. 393 (QB)

MLB headnote and full text

Temp. Cite: [1999] A.R. TBEd. SE.064

155569 Canada Limited (plaintiff) v. 248524 Alberta Ltd. (defendant)

248524 Alberta Ltd. (defendant/plaintiff by counterclaim) v. Eli Adler and Eli Adler through or in the name of D.F.C. Diversified Financial Corp., Canpro Investments Limited, 155569 Canada Limited, Trans-America Investments Ltd., Ellis Developments Ltd., Samuel Shapiro, Darene Investments Ltd., and Cambridge Builders Inc. (defendants by counterclaim)

(Action No. 8803-03147)

In The Matter Of the Trustee Act, The Business Corporations Act, and the Partnership Act, Revised Statutes of Alberta 1980 as amended

374363 Alberta Ltd. (applicant) v. 238524 Alberta Ltd., G.S.I. Guaranteed Syndicated Investments Ltd., Receiver of Ellis Developments Ltd., Anne Reeves, Peat Marwick Limited, Receiver of Darene Investments Ltd., Ellis Developments Ltd., Darene Investments Ltd., 155569 Canada Limited, Canpro Investments Ltd., Cambridge Builders Inc., Eli Adler, and Eli Adler through or in the name of D.F.C. Diversified Financial Corp. (respondents)

(Action No. 8903-17603; 1999.ca.ab.qb.682)

Indexed As: 155569 Canada Ltd. v. 248524 Alberta Ltd. et al.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Veit, J.

September 13, 1999.

Summary:

Adler and Shapiro, through their com­panies, Ellis Developments and Darene Investments, built a shopping mall. To obtain permanent financing, Adler decided to sell limited partnership units. Adler and Shapiro sold their interest in the mall to a company (248524) in which they each held 50% of the shares. They were to be paid by a $10 million mortgage and the sale of 120 limited partnership units. The partnership gave Ellis and Darene a general assignment of rents and leases. Adler was the managing officer of 248524. Adler, Shapiro, Ellis and Darene went bankrupt. The receivers became the directors of 248524. Adler remained a limited partner. The assignees of the mort­gage started foreclosure proceedings. Trans-America, a company controlled by Adler, negotiated the purchase of the security for $7,500,000. Trans-America assigned its rights to 155569, a company controlled by Azrieli. 155569 commenced foreclosure proceedings. 248524 contested its obligation to pay the mortgage and counterclaimed for damages, claiming misrepresentation, fraud and conspiracy.

The Alberta Court of Queen's Bench, in a decision reported at 170 A.R. 183, allowed the foreclos­ure action. The court dismissed 248524's counterclaim because it had no status to bring the claims. The court ordered Ellis and Darene to transfer their shares in 248524 to a successor manager. 155569 claimed costs against the limited partners of 248524.

The Alberta Court of Queen's Bench, in a decision reported 247 A.R. 239, dis­missed the claim for costs against the limited part­ners. The limited partners sought costs on the costs hearing.

The Alberta Court of Queen's Bench awarded each of the limited partners costs of $5,000 on the costs hearing.

Practice - Topic 7020.1

Costs - Party and party costs - Entitle­ment to party and party costs - Successful party - Quantum - The gen­eral partner of a limited partnership defended the plain­tiff's foreclosure proceedings and counter­claimed for damages - The general partner raised money for the liti­gation by a cash call to the limited part­ners and promising the limited partners a return on con­tribu­tions above the cash call - The plain­tiff claimed costs against the limited part­ners who contrib­uted above the cash call - The Alberta Court of Queen's Bench held that the contribution by the limited part­ners to the litigation was anal­ogous to champerty -However, the court refused to award costs because the limited partners were not adequately notified of the costs claim - The limited partners each sought $5,000 costs on the costs hearing - The Alberta Court of Queen's Bench held that $5,000 costs was reasonable where it was less than they would have been entitled to under schedule C - See para­graphs 6, 14 to 16.

Practice - Topic 7021

Costs - Party and party costs - Entitle­ment to party and party costs - Successful party - Exceptions - Conduct - The gen­eral partner of a limited partnership defended foreclosure proceedings by the plaintiff and counter­claimed for damages - The general partner raised money for the litigation by a cash call to the limited partners and promising the limited partners a return on contribu­tions above the cash call - The plaintiff claimed costs against the limited partners who contributed above the cash call - The Alberta Court of Queen's Bench held that the contribution by the limited partners to the litigation was analogous to champerty - However, the court refused to award costs because the limited partners were not adequately notified of the costs claim - The limited partners sought costs of the costs hearing - The plaintiff claimed that the limited partners should be denied costs because of their conduct - The Alberta Court of Queen's Bench held that although the limited part­ners champertous conduct could deprive them of costs, it would be unfair to do so because they were denied the opportunity to put evi­dence before the court where they did not receive notice - See paragraphs 5, 10 to 13.

Cases Noticed:

Nordstern Allgemeine Versicherungs AG v. Internav Ltd., [1999] E.W.J. No. 2697 (C.A.), refd to. [paras. 7, 12].

Grover v. Human Rights Commission (Alta.) et al. (1999), 237 A.R. 370; 197 W.A.C. 370 (C.A.) refd to. [para. 7].

Counsel:

M.J. McCabe, for the plaintiff, Canpro Investments Ltd.;

R.G. Walker, for Adler, Trans America Investments Ltd. and D.F.C. Diversified Financial Corp.;

D.G. Ingram, Q.C., for Andersson;

B.R. Crump, for Broadview Resources Ltd., Miles Patterson Holding Corp., Reid, Warneke, Otto (limited partners);

J.C. Prowse, for Vreim, McCombs, Ran­dall Kreutz, Raymond Kreutz and Can­cilla (limited partners);

This application was heard at Edmonton, Alberta, on September 8, 1999, by Veit, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following judgment on September 13, 1999.