155569 Canada Ltd. v. 248524 Alberta Ltd. et al., (1999) 247 A.R. 239 (QB)

• Judge: Veit, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: November 04, 1997
• Citations: (1999), 247 A.R. 239 (QB)

155569 Can. Ltd. v. 248524 Alta. Ltd. (1999), 247 A.R. 239 (QB)

MLB headnote and full text

Temp. Cite: [1999] A.R. TBEd. JN.013

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. 248524 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)

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

Alberta Court of Queen's Bench

Judicial District of Edmonton

Veit, J.

May 21, 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 dis­missed the claim for costs against the limited partners.

Courts - Topic 2004

Jurisdiction - General principles - Inherent jurisdiction - The Alberta Court of Queen's Bench stated that the authority to award costs against nonparties in ex­ceptional circumstances came within the court's inherent jurisdiction - See para­graphs 35, 59.

Criminal Law - Topic 3

General principles - General and defini­tions - Common law offences - Cham­perty and maintenance - The Alberta Court of Queen's Bench stated that "[i]t appears likely that maintenance, including champerty, is not a crime in Canada. Con­sideration must be given to the effect of ss. 9(a) and 8(2) of the Criminal Code. Sec­tion 8(2) states that the criminal law of England that was in force in a province immediately before April 1, 1955, con­tinues in force in the province except as altered, varied, modified or affected by this Act or any other Act of the Parliament of Canada. Section 9(a) states that no person shall be convicted or discharged of an offence at common law. The combined effect of these two sections is that even if maintenance remained a crime in Canada, it is one for which an offender cannot be punished." - See paragraph 53.

Partnership - Topic 3208

Relations between partners and third parties - Liability of individual partners - Limited partners - 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 limited partners bore most, if not all, of the costs -The foreclosure action was allowed and the counterclaim was dismissed - The plaintiff claimed costs against the limited partners who contributed above the cash call - The Alberta Court of Queen's Bench held that the litigation was undertaken for the bene­fit of the limited partners - Those limited partners who made additional contributions invested in the lawsuit and their actions constituted maintenance or misconduct akin to maintenance - The court held that an order of costs could be made against the limited partners on the basis of the miscon­duct - However, the court refused to award costs because the limited partners were not given adequate notice of the costs claim.

Partnership - Topic 3208

Relations between partners and third parties - Liability of individual partners - Limited partners - The Alberta Court of Queen's Bench stated that "[t]he mere fact that limited partners contribute to the costs of litigation incurred by a general partner is not enough to make them liable for costs of the proceedings. Nor is the mere fact that the limited partners are the per­sons who would eventually benefit from the litigation enough to make them liable for the costs of the proceedings. Something more is needed in order to pierce the limited partnership veil." - See paragraph 39.

Practice - Topic 6939

Costs - General principles - Necessity of pleading costs - The Alberta Court of Queen's Bench stated that "[i]t is custom­ary ... for Alberta litigants to claim costs in their pleadings although it is not techni­cally necessary for them to do so. It would be wise for an Alberta litigant to make an explicit claim for costs if the litigant will be seeking a specific form of costs such as the new Schedule C, solicitor and client costs, or an indemnity of costs. It is im­perative for a party to give notice as early as possible to a nonparty litigant that costs will be claimed against them." - See paragraph 63.

Practice - Topic 6939

Costs - General principles - Necessity of pleading costs - [See first Partnership - Topic 3208 ].

Practice - Topic 7765

Costs - Special orders - Costs against non­party - [See Courts - Topic 2004 , both Partnership - Topic 3208 and first Practice - Topic 6939 ].

Practice - Topic 7770

Costs - Special orders - Liability of nonparty funding litigation - [See first Partnership - Topic 3208 ].

Torts - Topic 6280

Abuse of legal procedure - Maintenance and champerty - General - The Alberta Court of Queen's Bench stated that "[t]ra­ditional case law does not establish the taking of a benefit as a pre-requisite to the tort of maintenance." - See paragraph 56.

Cases Noticed:

Symphony Group v. Hodgson, [1993] 4 All E.R. 143 (C.A.), refd to. [paras. 9, 10, 14, 23, 26].

Rockwell Developments Ltd. v. Newton­brook Plaza Ltd. (1972), 27 D.L.R.(3d) 651 (Ont. C.A.), refd to. [paras. 9, 11, 23, 38].

Smith v. Canadian Tire Acceptance Ltd. (1995), 22 O.R.(3d) 433 (Gen. Div.), affd. (1995), 26 O.R.(3d) 95 (C.A.), leave to appeal refused (1996), 205 N.R. 398; 96 O.A.C. 400 (S.C.C.), refd to. [paras. 9, 10, 23, 26, 36].

Young v. Young et al., [1993] 4 S.C.R. 3; 160 N.R. 1; 34 B.C.A.C. 161; 56 W.A.C. 161; 108 D.L.R.(4th) 193, refd to. [paras. 9, 10, 11, 23, 26].

269355 Alberta Ltd. v. Starlight Invest­ments Ltd. (1987), 53 Alta. L.R.(2d) 142 (Q.B.), refd to. [paras. 9, 23].

Kerr & Richards Sports Inc. v. Fulton et al. (1993), 146 A.R. 59; 13 Alta. L.R.(3d) 254 (Q.B.), refd to. [paras. 9, 23, 38].

Shah v. Karanjia, [1993] 4 All E.R. 792 (Ch. D.), refd to. [paras. 9, 10, 14, 50].

Weltco Properties Ltd. v. Retlaw Group International Inc. et al. (1991), 116 A.R. 198 (Q.B.), refd to. [paras. 9, 10, 11].

Ollmann Estate v. Locator of Missing Heirs Inc. - see Buday et al. v. Locator of Missing Heirs Inc.

Buday et al. v. Locator of Missing Heirs Inc. (1993), 68 O.A.C. 97; 108 D.L.R.(4th) 424 (C.A.), refd to. [paras. 9, 10].

First Mortgage Co. v. Noud, [1925] 4 D.L.R. 221 (B.C.S.C.), refd to. [para. 9].

Sturmer and Beaverton (Town), Re (1912), 2 D.L.R. 501 (Ont. Div. Ct.), refd to. [para. 10].

F.B.M. v. D.J.J., [1984] O.J. No. 810 (Co. Ct.), refd to. [para. 10].

Alexanian v. Dolinski (1973), 2 O.R.(2d) 609; 43 D.L.R.(3d) 649 (C.A.), refd to. [paras. 10, 11, 26, 28, 36].

Gulf Canada Resources Ltd. v. Merlac Marine Inc. et al. (1994), 18 O.R.(3d) 239 (Gen. Div.), refd to. [paras. 10, 11, 28].

Royal Bank of Canada v. McColeman, [1994] O.J. No. 3916 (Gen. Div.), refd to. [paras. 10, 26, 36].

Kerr & Richard Sports Inc. v. Fulton et al. (1992), 133 A.R. 382 (Q.B.), refd to. [paras. 10, 13].

718632 Ontario Inc. v. Club 404 Ltd., [1994] O.J. No. 599 (Gen. Div.), refd to. [para. 10].

Tradewinds International Consulting Ltd. v. Saskatchewan Food Processors Asso­ciation Inc. et al. (1996), 145 Sask.R. 216 (Q.B.), refd to. [paras. 10, 26, 36].

Pace v. Delzotto, [1996] O.J. No. 932 (Gen. Div.), refd to. [para. 10].

R. v. Goodman, [1939] S.C.R. 446, refd to. [paras. 10, 14].

Newswander v. Giegerich (1907), 39 S.C.R. 354, refd to. [paras. 10, 11].

Carlson v. Chambers, [1947] 1 W.W.R. 353 (Sask. K.B.), refd to. [para. 10].

American Home Assurance Co. et al. v. Brett Pontiac Buick GMC Ltd. et al. (1992), 116 N.S.R.(2d) 319; 320 A.P.R. 319 (C.A.), refd to. [para. 20].

Fredrickson v. Insurance Corp. of British Columbia, [1986] 4 W.W.R. 504 (B.C.C.A.), affd. [1988] 6 W.W.R. 633; 86 N.R. 48 (S.C.C.), refd to. [para. 10].

931473 Ontario Ltd. v. Coldwell Banker Canada Inc. (1991), 5 C.P.C.(3d) 271 (Ont. Gen. Div.), refd to. [paras. 11, 28].

Fredrickson v. Insurance Corp. of British Columbia, [1985] 5 W.W.R. 342 (B.C.S.C.), affd. [1986] 4 W.W.R. 504 (B.C.C.A.), affd. [1988] 6 W.W.R. 633; 86 N.R. 48 (S.C.C.), refd to. [para. 11].

Khokar v. Blackburn et al. (1993), 146 A.R. 69; 13 Alta. L.R.(3d) 223 (Q.B.), refd to. [para. 12].

Merchant Retail Services Ltd. v. Baloun (1996), 188 A.R. 63; 39 Alta. L.R.(3d) 174 (Q.B.), refd to. [para. 12].

Agricultural Credit Corp. of Saskatchewan v. Crush, [1991] 5 W.W.R. 221; 96 Sask.R. 248 (Q.B.), refd to. [para. 12].

Canada Trustco Mortgage Co. v. Murray et al. (1992), 104 Sask.R. 103 (Q.B.), refd to. [para. 12].

Skidmore et al. v. Blackmore, [1995] 4 W.W.R. 524; 55 B.C.A.C. 191; 90 W.A.C. 191 (C.A.), refd to. [para. 12].

Bell Canada v. Canadian Radio-Television and Telecommunications Commission - see Bell Canada, Re.

Bell Canada, Re (1984), 48 N.R. 197; 34 C.P.C. 121 (F.C.A.), refd to. [para. 12].

Foothills Pipe Lines (Alta.) Ltd. v. Berezowski (Duanne B.) Professional Corp. (1983), 35 A.R. 377; 18 Alta. L.R.(2d) 365 (Q.B.), refd to. [para. 12].

Epilepsy Canada v. Alberta (Attorney General) et al. (1994), 155 A.R. 259 (C.A.), refd to. [para. 12].

Young v. Young (1990), 75 D.L.R.(4th) 46 (B.C.C.A.), refd to. [para. 12].

Fraser River Contracting Ltd. v. F.W.P. Construction Ltd., [1978] 2 W.W.R. 355 (B.C.S.C.), refd to. [para. 12].

Oasis Hotel Ltd. v. Zurich Insurance Col. (1981), 124 D.L.R.(3d) 455 (B.C.C.A.), refd to. [para. 13].

Wiegand v. Huberman (1997), 108 D.L.R.(3d) 450 (B.C.S.C.), refd to. [para. 13].

20th Century Television and Appliances Ltd. v. Midnapore Property Investments Ltd. et al. (1991), 120 A.R. 114; 8 W.A.C. 114; 85 Alta. L.R.(2d) 114 (C.A.), refd to. [para. 14].

269335 Alberta Ltd. v. Starlight Invest­ments Ltd. (1987), 53 Alta. L.R.(2d) 142 (Q.B.), refd to. [para. 14].

Hill v. Wright, [1917] 3 W.W.R. 442 (Alta. S.C.), refd to. [para. 14].

Aiden Shipping Co. v. Interbulk Ltd., [1986] 2 All E.R. 641; 67 N.R. 223 (H.L.), refd to. [para. 14].

Paterson et al. v. Hamilton et al., [1997] 4 W.W.R. 568; 202 A.R. 34 (Q.B.), refd to. [para. 14].

Bradlaugh v. Newdegate (1883), 11 Q.B.D. 1, refd to. [para. 15].

Singh v. Observer Ltd., [1989] 2 All E.R. 751, revd. [1989] 3 All E.R. 777 (C.A.), refd to. [para. 15].

Hill v. Archbold, [1967] 3 All E.R. 110 (C.A.), refd to. [para. 51].

Tredtex Trading Corp. v. Credit Suisse, [1980] 3 All E.R. 721, refd to. [para. 51].

Authors and Works Noticed:

Halsbury, Contract, vol. 9, paras. 400, 401, 402 [para. 13].

Halsbury, Laws of England (3rd Ed. 1952), vol. 1, paras. 79, 80, 81, 82 [para. 14].

Orkin, M.M., The Law of Costs (2nd Ed. 1995), generally [paras. 9, 11, 12].

Stevenson, W.A., and Cote, J.E., Alberta Civil Procedure Handbook (1997), pp. 326, 327 [para. 13].

Stevenson, W.A., and Cote, J.E., Civil Procedure Guide (1996), vol. 2, pp. 1967, 1968, 1969 [para. 13].

Counsel:

M.J. McCabe and D.R. Cranston, for the plaintiff, Canpro Investments Ltd.;

R.J. Young, for 248524 Alberta Ltd. and 374363 Alberta Ltd.;

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

A. Veylan, for Orthodontic Management Consultants Ltd./Terry Carlyle;

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

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

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

R. Sadownik, for Albert (limited partner);

S.V. Wensel, Q.C., for Barbara Frankland Howarth (limited partner) (a.k.a. Dr. Barbara F. Turner).

This application was heard on March 21 and November 4, 1997, by Veit, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following judgment on May 21, 1999.