L & B Electric Ltd. v. Oickle, 2006 NSCA 130

• Judge: Bateman, Oland and Hamilton, JJ.A.
• Court: Court of Appeal of Nova Scotia (Canada)
• Case Date: December 07, 2006
• Jurisdiction: Nova Scotia
• Citations: 2006 NSCA 130;(2006), 249 N.S.R.(2d) 346 (CA)

L&B Electric Ltd. v. Oickle (2006), 249 N.S.R.(2d) 346 (CA);

    792 A.P.R. 346

MLB headnote and full text

Temp. Cite: [2006] N.S.R.(2d) TBEd. DE.013

L & B Electric Limited, a body corporate and Larry B. Oickle (appellants) v. Carolyn Marie Selig, James Carroll Selig, David Dawson Corkum, George Maurice Fancy, Michael Lindsay Hull, Norman Francis Myra, Gerald Ivan Seamone and Randolph Willis Tanner (respondents) and L & B Electric Limited, a body corporate and Ross M. Bunnell and Rosemary Fraser (respondents)

(266352; 2006 NSCA 130)

Indexed As: L & B Electric Ltd. v. Oickle

Nova Scotia Court of Appeal

Bateman, Oland and Hamilton, JJ.A.

December 7, 2006.

Summary:

Oickle was a 40% shareholder in a company he and Bunnell founded in 1985. Bunnell and the company's controller (Fraser) were the officers and directors. Oickle resigned in 2003. The company brought an action against Oickle for breach of fiduciary duty (surreptitious competition, appropriating company opportunities and misuse of company resources). The company sought an accounting, damages and injunctive relief to give effect to the forfeiture of Oickle's shares under the provisions of the shareholders' agreement. Oickle's defence and counterclaim, inter alia, denied the competition and sought a declaration that the company purchase Oickle's shares. The counterclaim also alleged that Bunnell misused company resources for personal use and for the benefit of Fraser, the other director. Oickle changed solicitors (former solicitor suspended). Oickle applied to add Fraser as a defendant, to amend the statement of defence to withdraw the admission that he owed the company a fiduciary duty and to claim an oppression remedy. Oickle also sought leave to commence a derivative action on the company's behalf against Bunnell and Fraser.

The Nova Scotia Supreme Court, in a judgment reported (2005), 233 N.S.R.(2d) 244; 739 A.P.R. 244, held that (1) the rule in Foss v. Harbottle precluded the adding of Fraser as a defendant, because Oickle as a shareholder had no cause of action against Fraser for wrongs done to the company; (2) it was just that Oickle be permitted to withdraw his admission of owing a fiduciary duty; (3) Oickle was a "complainant" with status to seek an oppression remedy and leave should be granted to claim an oppression remedy; and (4) Oickle should be granted leave to bring a derivative action on the company's behalf against Bunnell and Fraser, subject to conditions. Bunnell and Fraser appealed.

The Nova Scotia Court of Appeal, in a judgment reported (2006), 242 N.S.R.(2d) 356; 770 A.P.R. 356, dismissed the appeal. The remaining shareholders/employees of the company were granted leave to intervene in the proceedings. The company and Oickle appealed.

The Nova Scotia Court of Appeal dismissed the appeal. Since the shareholders/employees had a direct interest in the proceedings, and the trial judge determined that permitting the intervention would not unduly delay the proceedings or otherwise prejudice the parties, the trial judge did not err in her discretionary interlocutory decision to add them as intervenors. The court agreed that it was unnecessary that the shareholders/employees bring a different perspective before being added as intervenors.

Practice - Topic 680

Parties - Adding or substituting parties - Intervenors - General - The Nova Scotia Court of Appeal stated that "intervention has often been permitted where the applicant has a direct interest in the proceeding, subject to the judge's discretion to refuse intervention if it would 'unduly delay or prejudice the adjudication of the rights of the parties to the proceeding' (rule 8.01(1)(c)). This is consistent with a liberal interpretation of our Rules. 'Direct' interest is consistently used in the language of the case law but has no single meaning in its application. ... Absent a direct interest, intervenor status may be granted if the applicant has some genuine interest in the issues between the parties. In such circumstances the court will consider whether the intervenor will bring a new or different perspective to the consideration of the issues ... Even where the applicant has a direct interest, the question of whether a proposed intervenor's position would be adequately represented by the existing parties is not completely irrelevant to the judge's exercise of discretion under rule 8.01(1)(c). Where the judge finds that the intervention may delay the proceeding or otherwise prejudice the rights of the parties, the fact that the intervenor's position is adequately represented by an existing party may militate against allowing the intervention. Where there is no direct interest in the subject matter of the proceeding, the cases reveal that a variety of additional factors may be considered ..." - The court stated that where a proposed intervenor had a direct interest, and the intervention would not unduly delay the proceedings or otherwise prejudice the parties, it was not necessary that the proposed intervenors bring a different perspective to the proceeding - See paragraphs 11 to 15.

Practice - Topic 682

Parties - Adding or substituting parties - Intervenors - Interest in subject matter - Oickle was a 40% shareholder in a company he and Bunnell founded in 1985 - Bunnell and the company's controller (Fraser) were the officers and directors - Oickle resigned in 2003 - The company brought an action against Oickle for breach of fiduciary duty (surreptitious competition, appropriating company opportunities and misuse of company resources) - Oickle's defence and counterclaim, inter alia, denied the competition and sought a declaration that the company purchase Oickle's shares - The counterclaim also alleged that Bunnell misused company resources for personal use and for the benefit of Fraser, the other director - It was subsequently held that the rule in Foss v. Harbottle precluded the adding of Fraser as a defendant, because (1) Oickle as a shareholder had no cause of action against Fraser for wrongs done to the company; (2) it was just that Oickle be permitted to withdraw his admission of owing a fiduciary duty; (3) Oickle was a "complainant" with status to seek an oppression remedy and leave should be granted to claim an oppression remedy; and (4) Oickle should be granted leave to bring a derivative action on the company's behalf against Bunnell and Fraser, subject to conditions - That decision was affirmed on appeal - The remaining shareholders/employees of the company were granted leave to intervene in the proceedings - The company and Oickle appealed - The Nova Scotia Court of Appeal dismissed the appeal - Since the shareholders/employees had a direct interest in the proceedings, and the trial judge determined that permitting the intervention would not unduly delay the proceedings or otherwise prejudice the parties, the trial judge did not err in her discretionary interlocutory decision to add them as intervenors - The court agreed that it was unnecessary that the shareholders/employees bring a different perspective before being added as intervenors.

Cases Noticed:

Exco Corp. v. Nova Scotia Savings & Loan et al. (1983), 59 N.S.R.(2d) 331; 125 A.P.R. 331 (C.A.), refd to. [para. 5].

French v. Fish et al., [1997] A.R. Uned. 45; 143 D.L.R.(4th) 626 (C.A.), refd to. [para. 7].

Save The Eaton's Building Coalition v. Winnipeg (City) et al. (2001), 160 Man.R.(2d) 236; 262 W.A.C. 236; 206 D.L.R.(4th) 541 (C.A.), refd to. [para. 7].

Canada (Attorney General) v. Saskatchewan Water Corp. et al., [1991] 2 W.W.R. 614; 92 Sask.R. 295 (C.A.), refd to. [para. 7].

Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada Ltd. (1990), 74 O.R.(2d) 164; 45 C.P.C.(2d) 1 (C.A.), refd to. [para. 7].

Starr v. Puslinch (Township) et al. (1976), 12 O.R.(2d) 40 (Div. Ct.), refd to. [para. 7].

Dha v. Ozdoba (1991), 47 C.P.C.(2d) 23 (B.C.C.A.), refd to. [para. 7].

Klachefsky v. Brown, [1988] 1 W.W.R. 755 (Man. C.A.), refd to. [para. 7].

Ontario Securities Commission v. Electra Investments (Canada) Ltd. (1983), 44 O.R.(2d) 61 (C.A.), refd to. [para. 7].

Arrow Construction Products Ltd. v. Nova Scotia (Attorney General) (1996), 148 N.S.R.(2d) 392; 429 A.P.R. 392 (C.A.), refd to. [para. 7].

Anderson v. Co-Operative Fire & Casualty Co. (1983), 58 N.S.R.(2d) 163; 123 A.P.R. 163 (T.D.), refd to. [para. 9].

Halifax Flying Club v. Maritime Builders Ltd. (1973), 5 N.S.R.(2d) 364 (T.D.), refd to. [para. 9].

Bluenose II Preservation Trust Society v. Tall Ships Art Production Ltd. (2003), 217 N.S.R.(2d) 188; 683 A.P.R. 188; 37 C.P.C.(5th) 300 (S.C.), refd to. [para. 9].

Nicholson v. Maritime Electric Co. et al. (1979), 24 Nfld. & P.E.I.R. 283; 65 A.P.R. 283 (P.E.I.S.C.), refd to. [para. 9].

Schofield v. Ontario (Minister of Consumer and Commercial Relations) (1980), 19 C.P.C. 245 (Ont. C.A.), refd to. [para. 10].

United Transportation Union, Locals 1778 and 1923 et al. v. B.C. Rail Ltd. et al. (1990), 45 C.P.C.(2d) 33 (B.C.C.A.), refd to.[para. 12].

MacMillan Bloedel Ltd. v. Mullin (1985), 66 B.C.L.R. 207 (C.A.), refd to. [para. 12].

Hansen v. Royal Insurance Co. et al. (1985), 52 O.R.(2d) 755 (H.C.), refd to. [para. 14].

Statutes Noticed:

Civil Procedure Rules (N.S.), rule 8.01 [para. 8].

Counsel:

Victor J. Goldberg and Martha Mann, for the appellants, L & B Electric Ltd. and Larry Oickle;

Michael S. Ryan, Q.C., for the respondents, Carolyn Marie Selig, James Carroll Selig, David Dawson Corkum, George Maurice Fancy, Michael Lindsay Hull, Norman Francis Myra, Gerald Ivan Seamone and Randolph Willis Tanner;

Martin Dumke and Rubin Dexter, for the respondents, Ross M. Bunnell and Rosemary Fraser.

This appeal was heard on November 17, 2006, at Halifax, N.S., before Bateman, Oland and Hamilton, JJ.A., of the Nova Scotia Court of Appeal.

On December 7, 2006, Bateman, J.A., delivered the following judgment for the Court of Appeal.