Alberta (Treasury Branches) v. Ghermezian et al., (2000) 266 A.R. 170 (CA)

• Judge: O'Leary, Picard and Sulatycky, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: January 18, 2000
• Citations: (2000), 266 A.R. 170 (CA);2000 ABCA 228

Alta. v. Ghermezian (2000), 266 A.R. 170 (CA);

    228 W.A.C. 170

MLB headnote and full text

Temp. Cite: [2000] A.R. TBEd. SE.006

Alberta Treasury Branches (plaintiff/respondent) v. Nader Ghermezian, Raphael Ghermezian, Bahman Ghermezian, Eskander Ghermezian, 273905 Alberta Ltd., 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. and Devcor Investment Corporation (defendants/appellants) and Howard Anson, Mavis Halliday, Elmer Leahy, Ventana Investments Inc. and Adirondack Investments Ltd. (defendants/not on appeal)

(9903-0420-AC; 9903-0421-AC; 2000 ABCA 228)

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

Alberta Court of Appeal

O'Leary, Picard and Sulatycky, JJ.A.

August 18, 2000.

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. Some 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, in a decision reported at 249 A.R. 240, 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. Certain defendants appealed.

The Alberta Court of Appeal allowed the appeal in part, ordering that the action be stayed until such time as TD was joined as a party.

Editor's Note: For prior decisions in these proceedings, 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, 246 A.R. 178, and 250 A.R. 327; 213 W.A.C. 327.

Contracts - Topic 4183

Remedies for breach - Rescission - When available - General - 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, nor could it seek rescission as the bank would be affected by rescission and the bank was not a party - A cham­bers judge determined the issues in favour of the plaintiff - The defendants appealed - The Alberta Court of Appeal affirmed that the cause of action as well as the right to seek any available relief, including rescis­sion, passed from the Province to ATB through the legisla­tion by which it succeeded to the Province; however, the bank had to be joined as a party for a court to fully adju­dicate the issues.

Contracts - Topic 9001

Rights and liabilities of strangers to con­tract - General - Privity of contract - Excep­tions - [See Contracts - Topic 4183 ].

Practice - Topic 351

Parties - Joinder of parties - General - Person whose participation is necessary for full and effectual adjudication - [See Contracts - Topic 4183 ].

Cases Noticed:

Attorney-General for England v. Royal Bank of Canada, [1948] O.W.N. 782 (H.C.), refd to. [para. 15].

Gagnon and Centre-Town Developments Ltd., Re (1976), 14 O.R.(2d) 550 (Div. Ct.), refd to. [para. 15].

Coulson v. Secure Holdings Ltd. (1976), 1 C.P.C. 168 (Ont. C.A.), refd to. [para. 15].

Morandan Investments Ltd. v. Spohn (1987), 58 O.R.(2d) 621 (Dist. Ct.), refd to. [para. 15].

Counsel:

C.D. O'Brien, Q.C., and E.B. Mellett, for the appellants;

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

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

This appeal was heard on January 18, 2000, by O'Leary, Picard and Sulatycky, JJ.A., of the Alberta Court of Appeal. The Court of Appeal delivered the following decision on August 18, 2000.