Lafrentz v. M & L Leasing, 2000 ABQB 714

• Judge: Perras, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: June 26, 2000
• Citations: 2000 ABQB 714;(2000), 275 A.R. 334 (QB)

Lafrentz v. M&L Leasing (2000), 275 A.R. 334 (QB)

MLB headnote and full text

Temp. Cite: [2000] A.R. TBEd. OC.099

Helo Lafrentz and Uwe Lafrentz (plaintiffs) v. M & L Leasing, a Limited Partnership (defendant)

(Action No. 0003 00357; 2000 ABQB 714)

Indexed As: Lafrentz v. M & L Leasing

Alberta Court of Queen's Bench

Judicial District of Edmonton

Perras, J.

October 13, 2000.

Summary:

Michel sued, inter alia, the Lafrentzes, who were his partners in a road marking business and a farming business. Michel sought (1) compensation for management services or, alternatively, compensation on a quantum meruit basis for managing the businesses; (2) damages for lost opportunity to sell the farming business; (3) various declarations relating to the road marking business based on breach of contract or breach of fiduciary duties or, alternatively, a civil conspiracy; (4) an accounting of the road marking busi­ness; and (5) punitive and exemplary dam­ages and interest on any awards.

The Alberta Court of Queen's Bench, in a decision reported 199 A.R. 81, allowed the action in part, determined the issues and awarded Michel compensation for managing the farming business on a quantum meruit basis and loss of a proportionate share of profits from the road marking business. The court awarded Michel costs at 3.5 times column 6 on schedule "C" with no limiting rule to apply. On appeal, the issue arose as to whether Michel was entitled to compen­sa­tion for managing the farming business.

The Alberta Court of Appeal, in a decision reported at 232 A.R. 82; 195 W.A.C. 82, dismissed the appeal. The Lafrentzes sat­isfied the judgment and sued the roadmaking partnership for indemnity . Michel defended the action on behalf of the partnership, asserting, inter alia, that the partnership had no obligation to indemnify the Lafrentzes for the portion of the judgment relating to their personal liability. Michel also raised the issue of res judicata where the issue of the Lafrentzes' personal liability had been liti­gated and determined.

The Alberta Court of Queen's Bench held that the Lafrentzes were entitled to be in­demnified for the portion of the award that related to the partnership's liability. Because co-debtors were entitled to equal contribu­tion, the firm's liability was limited to 1/4 of the judgment. The issue of the Lafrentzes' personal liability was res judicata.

Creditors and Debtors - Topic 1246

Debtors' rights - Contribution between debtors - Joint debtors - Michel obtained judgment against his two partners (the Lafrentzes) in their personal capacity, his corporate partner and the partnership - The Lafrentzes paid the judgment debt and sued the partnership for indemnification - The Alberta Court of Queen's Bench held that the Lafrentzes were not entitled to be indemnified for the amount paid relating to their personal liability - They were entitled to indemnification for the portion relating to the partnership's liability - Judgment against the partnership was actually judg­ment against the four partners - The action was framed in contract, and, alteratively, quantum meruit, not damages - The judg­ment was a debt and partners were co-debtors - Each partner, as among them­selves, was liable for 1/4 of the judg­ment against the partnership and the Lafrentzes were entitled to be indemnified by the partnership for the amount paid in excess of their proportional share - See paragraphs 27 to 38.

Estoppel - Topic 386

Estoppel by record (res judicata) - Res judicata as a bar to subsequent proceedings - Issues decided in prior proceedings - Michel obtained judgment against his two partners (the Lafrentzes) in their personal capacity, his corporate partner and the partnership - The Lafrentzes paid the judgment debt and sued the partnership for full indemnification - The Lafrentzes asserted that their liability incurred in the ordinary course of the partnership's busi­ness - The Alberta Court of Queen's Bench held that the issue of the Lafrentzes' personal liability was res judicata - See paragraphs 44 to 50.

Limitation of Actions - Topic 207

Practice - Limitation period - Commencement of - Judgment debtors sued for indemnification - The defendant asserted that the action was statute barred - The Alberta Court of Queen's Bench rejected the assertion - A claim for in­demnification began to run at the earliest, when the amount and nature of the claim of the person seeking indemnity was de­termined - Here time began to run either when the reasons for judgment were ren­dered or when the formal judgment was entered, or when the order was issued requiring payment to be made by the judg­ment debtors - The Limitations of Actions Act provided for a six year limita­tion period and the action was commenced well within that period - See paragraphs 39 to 43.

Limitation of Actions - Topic 2052

Actions in contract - Actions for debt - When time begins to run - [See Limita­tion of Actions - Topic 207 ].

Partnership - Topic 5101

Relations between partners - Conflicts of interest - General - Michel obtained judg­ment against his partners and the partner­ship - Two of partners sued the partner­ship for indemnification - Michel defended the action - The partners asserted that Michel could not defend the action, because he was in a conflict of interest having sued the firm - The Alberta Court of Queen's Bench held that no conflict of interest existed - Queen's Bench Rule 80 permitted a partner sued in the name of the firm to defend in his own name and the partner was entitled to have the case tried on its own merits as if the partnership had defended - An action against the firm was an action against the partners - The part­nership was not an entity and was not capable of being preju­diced by a conflict of interest - See para­graphs 10 to 12.

Partnership - Topic 5141

Relations between partners - Right to indemnity - General - [See Creditors and Debtors - Topic 1246 ].

Practice - Topic 180

Persons who can sue and be sued - Part­nerships - Limited partnerships - Limited partners - Michel obtained judgment against his two partners and the partner­ship - The two partners sued the partner­ship for indemnification - The partners asserted that the Alberta Rules of Court and the Partner­ship Act did not permit Michel, as a limited partner, to defend on the partner­ship's behalf - The Alberta Court of Queen's Bench rejected the asser­tion - Rule 80(2) merely re-stated the basic prin­ciple that when a firm was sued in the partnership's name, the partners themselves were the defendants, and could defend on that basis - Where A, B, and C and ABC firm are sued, A, B, and C are either im­properly named, since only the firm or the partners should be sued, or, as here, A, B and C were sued in their per­sonal capacity, and not as partners - Michel was entitled to make his case and it mattered little whether it was on his or the firm's behalf - Although s. 76 of the Partnership Act stated that a limited part­ner was not a proper party to proceedings against a limited partnership, Michel was not named as a party - Moreover, Michel was not a limited partner where he had been actively involved in running the business (Partner­ship Act, s. 63) - See paragraphs 16 to 19.

Practice - Topic 186

Persons who can sue and be sued - Part­nerships - Action against - In firm name - [See Partnership - Topic 5101 and Prac­tice - Topic 180 ].

Practice - Topic 186

Persons who can sue and be sued - Part­nerships - Action against - In firm name - Michel obtained judgment against his two partners and the partnership - The two partners sued the partnership for indemni­fi­cation - Michel defended the action - The partners asserted that Michel could only make representations on his own behalf, but not on the partnership's behalf - The Alberta Court of Queen's Bench rejected the assertion - The partnership had no separate existence - See paragraph 15.

Cases Noticed:

155569 Canada Ltd. v. 258524 Alberta Ltd. et al. (2000), 255 A.R. 1; 220 W.A.C. 1 (C.A.), affing. (1996), 192 A.R. 116; 43 Alta. L.R.(3d) 189 (Q.B.), refd to. [para. 11, footnotes 2, 5].

Bleau v. Michetti Pipe Stringing et al. (1994), 156 A.R. 76 (Q.B. Master), refd to. [para. 11, footnote 3].

International Association of Science and Technology for Development et al. v. Hamza (1995), 162 A.R. 349; 83 W.A.C. 349; 28 Alta. L.R.(3d) 125 (C.A.), refd to. [para. 11, footnote 3].

Smith v. Falk, [1940] O.W.N. 271 (S.C. Master), refd to. [para. 11, footnote 4].

Carter (Clarence) and Sons et al. v. M. & P. Developments et al. (1984), 31 Man.R.(2d) 29 (C.A.), refd to. [para. 11, footnote 4].

Suffield v. Kennedy (1920), 56 D.L.R. 275 (Man. C.A.), refd to. [para. 11, footnote 6].

Bank of Montreal v. Hyssop, [1924] 1 W.W.R. 839 (Alta. S.C.), refd to. [para. 12, footnote 10].

Herrington v. Hamilton (City) et al. (1963), 39 D.L.R.(2d) 131 (S.C.C.), refd to. [para. 17, footnote 13].

Henuset Brothers Ltd. v. Pan Canadian Petroleum Ltd. et al. (1977), 6 A.R. 385; 82 D.L.R.(3d) 345 (T.D.), refd to. [para. 28, footnote 14].

Silliman Construction (Alberta) Ltd. and Majestic Properties Ltd. v. Johnson, Ming & Co. et al. (1981), 36 A.R. 407 (Q.B. Master), affd. (1982), 20 Alta. L.R.(2d) 262 (Q.B.), revd. (1984), 53 A.R. 369 (C.A.), refd to. [para. 28, foot­note 14].

Husky Oil v. Oster (1978), 87 D.L.R.(3d) 86 (Sask. Q.B.), refd to. [para. 28, foot­note 14].

Giffels Associates Ltd. v. Eastern Con­struction Co. et al., [1978] 2 S.C.R. 1346; 19 N.R. 298, refd to. [para. 28, footnote 14].

Petrie v. Petrie, [1943] 1 D.L.R. 501 (Ont. H.C.), affd. [1943] 3 D.L.R. 812 (Ont. C.A.), affd. [1944] 2 D.L.R. 609 (S.C.C.), refd to. [para. 29, footnote 16].

Luk v. Shortt et al. [1998] B.C.T.C. Uned. 109 (S.C.), refd to. [para. 29, footnote 16].

Hutchinson v. Sterk, [1991] A.J. No. 658 (Q.B. Master), refd to. [para. 29, foot­note 16].

Tempo Building Supplies Ltd. v. Con-Serv Contracting Inc., [1982] B.C.J. No. 238 (Co. Ct.), refd to. [para. 30, footnote 18].

Kadlec v. Tracey (1999), 23 B.C.T.C. 295 (S.C.), refd to. [para. 30, footnote 18].

Shoker v. Vollans et al. (1998), 110 B.C.A.C. 225; 178 W.A.C. 225; 163 D.L.R.(4th) 572 (C.A.), refd to. [para. 32, footnote 21].

Western Delta Lands Partnership v. 3557537 Canada Inc., [2000] B.C.T.C. 505 (S.C.), refd to. [para. 33, footnote 22].

98956 Investments Ltd. (Receivership) v. Fidelity Trust Co. (1988), 89 A.R. 151; 61 Alta. L.R.(2d) 193 (C.A.), refd to. [para. 39, footnote 26].

Killam Transit Mix Ltd. v. Andre, [1985] A.J. No. 239 (Q.B. Master), refd to. [para. 39, footnote 26].

Moncton (City) v. Aprile Contracting Ltd. et al. (1977), 19 N.B.R.(2d) 445; 30 A.P.R. 445 (Q.B.), affd. (1980), 29 N.B.R.(2d) 631; 66 A.P.R. 631 (C.A.), refd to. [para. 39, footnote 26].

Peterson Steels Inc. v. Arctic Steamship Line et al. (1980), 114 D.L.R.(3d) 157 (F.C.T.D.), refd to. [para. 39, footnote 26].

Canada Deposit Insurance Corp. et al. v. Prisco (1996), 181 A.R. 161; 116 W.A.C. 161 (C.A.), leave to appeal refused (1996), 205 N.R. 314; 193 A.R. 80; 135 W.A.C. 80 (S.C.C.), refd to. [para. 40, footnote 28].

Statutes Noticed:

Alberta Rules of Court, rule 80(2) [para. 16].

Authors and Works Noticed:

Lindley and Banks on Partnership (17th Ed. 1995), para. 109 [para. 11, footnote 2].

Lindley on the Law of Partnership, p. 564 [para. 26].

Manzer, Alison R., A Practical Guide to Partnership Law (1990), para. 3.1527 [para. 17, footnote 12].

Williams, Granville, Joint Obligations (1949), pp. 163 [paras. 29, 35, 36, foot­notes 16, 17, 23, 24]; 166 [para. 31, footnote 19].

Counsel:

W. Paul Sharek (Emery Jamieson), for the plaintiffs;

Harold W. Veale (Ogilvie and Company), for the defendant.

Perras, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, heard this action on June 26, 2000, and delivered the following reasons for judgment on Octo­ber 13, 2000.