Alberta (Treasury Branches) v. Ghermezian et al., (1999) 249 A.R. 240 (QB)

• Judge: W.K. Moore, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: September 01, 1999
• Citations: (1999), 249 A.R. 240 (QB)

Alta. v. Ghermezian (1999), 249 A.R. 240 (QB)

MLB headnote and full text

Temp. Cite: [1999] A.R. TBEd. SE.026

Alberta Treasury Branches (plaintiff) v. Nader Ghermezian, Raphael Ghermezian, Bahman Ghermezian, Eskander Ghermezian, 273905 Alberta Ltd., Howard Anson, Mavis Halliday, 218703 Alberta Ltd., 579511 Alberta Ltd., 298936 Alberta Ltd., West Edmonton Mall Property Inc., WEM Holdings Inc., WEM Management Inc., Avista Financial Corporation, 298926 Alberta Ltd., ABNR Equities Corp., Devcor Investment Corporation, Elmer Leahy, Ventana Investments Inc. and Adirondack Investments Ltd. (defendants)

(Action No. 9803-14545)

Indexed As: Alberta (Treasury Branches) v. Ghermezian et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

W.K. Moore, J.

September 1, 1999.

Summary:

Alberta Treasury Branches (ATB) sued the defendants alleging that they bribed its former superintendent to secure a refinancing package for a mall. ATB had guaranteed the loans made by the Toronto-Dominion Bank (TD). ATB sought rescission of the loan documents on the ground of fraud. Alterna­tively, ATB sought to invoke the enforce­ment provisions of the loan documents on the basis that the mall had not been main­tained to the standards required therein. Several of the defendants alleged that: ATB was not able to seek relief on behalf of TD; ATB had no right to claim fraud because this cause of action rested with its prede­cessor, the Province of Alberta; and ATB could not seek the remedy of rescission as TD would be affected by the rescission and TD was not a party. They applied, inter alia, to strike out or dismiss a substantial part of ATB's claims. ATB alleged that these issues should not be decided at this time, but should be left to the trial judge.

The Alberta Court of Queen's Bench held that: it was proper to decide these issues at this time; ATB was entitled to sue for fraud; ATB could seek rescission as it was a pos­sible remedy for fraud; and whether or not rescission was available was for the trial judge to decide.

Editor's Note: For prior decisions in this proceeding, see [1999] A.R. Uned. 23; [1999] A.R. Uned. 409; [1999] A.R. Uned. 410; 241 A.R. 107; 241 A.R. 308; 241 A.R. 329; 242 A.R. 326 and 246 A.R. 178.

Contracts - Topic 4183

Remedies for breach - Rescission - When available - General - [See first Contracts -Topic 9001 ].

Contracts - Topic 7407

Interpretation - General principles - Whole contract to be considered - [See third Contracts - Topic 9001 ].

Contracts - Topic 9001

Rights and liabilities of stranger to contract - General - Privity of contract - Excep­tions - ATB sued the defendants alleging that they bribed its former superintendent to secure a refinancing package - ATB had guaranteed the bank loans - ATB sought rescission of the loan documents on the ground of fraud - Certain defendants alleged that ATB could not claim fraud because this cause of action rested with its predecessor, the Province of Alberta; nor could it seek rescission as the bank would be affected by rescission and the bank was not a party - The Alberta Court of Queen's Bench held ATB assumed the Province's position in all respects through the legisla­tion by which it succeeded to the Province - Alternatively, the cause of action for fraud was transferred at common law through a successor agreement - ATB could seek rescission as a possible remedy for fraud - Whether or not rescission was available was for the trial judge to decide -See paragraphs 74 to 113.

Contracts - Topic 9001

Rights and liabilities of stranger to contract - General - Privity of contract - Excep­tions - The Alberta Court of Queen's Bench stated that in order for one party to establish that it has the right to sue without the other parties to a contract, or on behalf of other parties to the contract, the plaintiff must demonstrate that "i) It has a special title to sue on its own behalf or on behalf of the other parties to the contract; ii) The defendant is not prejudiced by not having all parties to the contract before the court, such as being deprived of a defence which it would have if all parties were before the court; iii) There is no risk of subsequent proceedings brought by the other parties not before the court; and iv) The court will be able to effectively adjudicate all issues in question." - See paragraph 59.

Contracts - Topic 9001

Rights and liabilities of stranger to contract - General - Privity of contract - Excep­tions - ATB sued the defendants alleging that they bribed its former superintendent to secure a refinancing package - ATB had guaranteed the bank loans - ATB sought rescission of the loan documents on the ground of fraud - Alternatively, ATB sought to invoke the enforcement provi­sions of the loan documents on the basis that the mall had not been maintained to the standards required therein - Certain defendants alleged that ATB could not bring an action on the bank's behalf because ATB was not a party to every agreement in the refinancing package - The Alberta Court of Queen's Bench rejected the argument - The contractual provisions when viewed as a whole gave ATB a sufficient title to bring all actions relating to the loan documents on the bank's behalf - See paragraphs 17 to 70.

Practice - Topic 2230

Pleadings - Striking out pleadings - Grounds - Failure to disclose a cause of action or defence - ATB sued the defen­dants alleging that they bribed the former super­intendent of ATB in order to secure a refinancing package - ATB had guaranteed the loans made by a bank - ATB sought rescission of the loan docu­ments on the ground of fraud - Alterna­tively, ATB sought to invoke their enforcement provi­sions - Certain defend­ants alleged that ATB could not seek relief on behalf of the bank or claim fraud (because this cause of action rested with its predecessor, the Province) or seek rescission - They sought to strike out or dismiss parts of ATB's claims before trial - ATB argued that these issues should be left to the trial judge - The Alberta Court of Queen's Bench disagreed - Chambers judges were to determine any issues which could be resolved prior to trial which would aid in streamlining the proceedings - See para­graphs 1 to 15.

Practice - Topic 5702

Judgments and orders - Summary judg­ments - Jurisdiction or when available - [See Practice - Topic 2230 ].

Cases Noticed:

Pacific Western Airlines Ltd. v. D.E.E.L. Enterprises and Gauthier et al. (1977), 2 A.R. 166; 2 Alta. L.R.(2d) 52 (C.A.), refd to. [para. 5].

Northland Bank (Liquidation) v. Hongkong Bank of Canada (1991), 120 A.R. 296; 8 W.A.C. 296 (C.A.), refd to. [para. 5].

Cascade Development Corp. et al. v. Red Deer College (1992), 129 A.R. 55 (Q.B.), refd to. [para. 5].

Fullowka v. Whitford (1996), 147 D.L.R.(4th) 531 (N.W.T.C.A.), refd to. [para. 6].

Zickefoose v. Barotto Sports Ltd. et al. (1992), 131 A.R. 292; 25 W.A.C. 292; 7 Alta. L.R.(3d) 359 (C.A.), refd to. [para. 7].

Byrne et al. v. Hall, Pain & Foster et al., [1999] 2 All E.R. 400 (C.A.), refd to. [para. 9].

Farm Credit Corp. v. Miller et al. (1992), 126 A.R. 335 (Q.B.), refd to. [para. 10].

Triple Five Corp. v. Eaton (T.) Co. and Mayson (1977), 4 A.R. 222 (C.A.), refd to. [para. 11].

Madill v. Alexander Consulting Group Ltd. et al. (1999), 237 A.R. 307; 197 W.A.C. 307 (C.A.), folld. [para. 13].

England (Attorney-General) v. Royal Bank of Canada, [1948] O.W.N. 782 (H.C. Master), refd to. [para. 20].

Gagnon et al. v. Centre-Town Develop­ments Ltd. (1976), 14 O.R.(2d) 550 (Div. Ct.), refd to. [para. 20].

Muscat v. Camilleri (1974), 2 O.R.(2d) 459 (H.C.), refd to. [para. 20].

Wournell (P.A.) Contracting Ltd. and Wournell v. Allen (1980), 37 N.S.R.(2d) 125; 67 A.P.R. 125; 108 D.L.R.(3d) 723 (C.A.), refd to. [para. 21].

Evans v. Hooper (1875), 1 Q.B.D. 45 (C.A.), refd to. [para. 24].

Petrie v. Bury et al. (1824), 3 B. & C. 353, refd to. [para. 31].

London Drugs Ltd. v. Brassart and Vanwinkel, [1992] 3 S.C.R. 299; 143 N.R. 1; 18 B.C.A.C. 1; 31 W.A.C. 1, addendum 147 N.R. 336; 21 B.C.A.C. 159; 37 W.A.C. 159 (S.C.C.), refd to. [para. 60].

London Drugs Ltd. v. Kuehne & Nagel International Ltd. - see London Drugs Ltd. v. Brassart and Vanwinkel.

Edinburgh United Breweries Ltd. v. Molleson, [1894] A.C. 96, dist. [para. 78].

Weltco Properties Ltd. v. Retlaw Group International Inc. et al. (1991), 116 A.R. 198 (Q.B.), refd to. [para. 85].

Pigott et al. v. Nesbitt, Thomson & Co., [1939] O.R. 66 (C.A.), affd. [1941] 4 D.L.R. 353 (S.C.C.), refd to. [para. 85].

National Trust Co. v. Mead, [1990] 2 S.C.R. 410; 112 N.R. 1; 87 Sask.R. 161, refd to. [para. 92].

Authors and Works Noticed:

American Law Institute, Restatement of the Law (Second) of Agency (2nd Ed. 1958), vol. 2, para. 363 [para. 25].

Annual Practice (1999), vol. 1, p. 349 [para. 9].

Bowstead and Reynolds on Agency (16th Ed. 1996), pp. 550, 554, 556 [para. 38].

Halsbury's Laws of England (4th Ed. 1976), vol. 3, pp. 506, 507 [para. 86].

Supreme Court Practice - see Annual Practice.

Waddams, Stephen M., The Law of Con­tracts (4th Ed. 1999), pp. 307, 308 [para. 95].

White Book - see Annual Practice.

Counsel:

J.E. Redmond, Q.C., and R.J. Cotter, for the plaintiff;

C.D. O'Brien, Q.C., and B. Mellett, for the West Edmonton Mall defendants;

F.R. Foran, Q.C., and J.G. Hopkins, for Her Majesty the Queen.

This application was heard by W.K. Moore, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following judgment on Sep­tember 1, 1999.