Century Services Inc. v. Multi-Corp Inc. and Lobsinger, (1997) 211 A.R. 241 (QB)

• Judge: Hawco, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: December 19, 1997
• Citations: (1997), 211 A.R. 241 (QB)

Century Services Inc. v. Multi-Corp Inc. (1997), 211 A.R. 241 (QB)

MLB headnote and full text

Temp. Cite: [1998] A.R. TBEd. JA.012

Century Services Inc., formerly known as Century Disposals Inc. (plaintiff) v. Multi-Corp Inc. and Michael Lobsinger (defendants)

(Action No. 9501-02747)

Indexed As: Century Services Inc. v. Multi-Corp Inc. and Lobsinger

Alberta Court of Queen's Bench

Judicial District of Calgary

Hawco, J.

December 19, 1997.

Summary:

The plaintiff sued the corporate defendant for breach of an alleged contract to sell the assets of one of the defendant's subsidiary companies for a guaranteed amount plus a fixed percentage. The plaintiff claimed the individual defendant (Lobsinger) was per­sonally liable. The defendants claimed that there was no agreement and, in any event, it was subject to approval by the Board of Directors (which was not obtained).

The Alberta Court of Queen's Bench found the corporate defendant liable for breach of contract. The parties reached an agreement on all essential terms, subject to Board approval. Board approval was not obtained, but that was because the individual defendant breached his obligation to put the deal before the Board for its consideration. The defen­dants could accordingly not rely on the lack of approval in defence to the action. Finally, the conduct of the individual defendant did not merit finding him personally liable. The court awarded the plaintiff $396,180 in damages for lost profits on the sale.

Company Law - Topic 4966

Contracts by companies - Personal liability of officers - Circumstances when officer not liable - [See Company Law - Topic 5115 ].

Company Law - Topic 5115

Contracts by companies - Formalities - Approval by board of directors - The plaintiff offered to sell the corporate defen­dant's assets at auction for a guaranteed minimum plus a fixed percentage - The defendant (through its president Lobsinger) told the plaintiff that if the guaranteed minimum was at a higher amount they had a "deal", subject to approval by the defen­dant's board of directors - The plaintiff increased the minimum and confirmed the agreement in writing - The defendant did not respond - Lobsinger did not present the deal to the board - Instead, the defendant contracted with another company -The plaintiff sued for breach of contract - The defendant alleged that there was no agree­ment and that, in any event, there was no contract until approved by the board of directors (which did not happen) - The Alberta Court of Queen's Bench found the corporate defendant liable for breach of contract - An agreement including all essential terms was reached - The defen­dant could not rely on lack of board appro­val in defence of the action, where Lobsinger breached his obligation to put the "deal" before the board for their con­sideration - The court held that Lobsinger's conduct did not merit a finding of personal liability.

Cases Noticed:

Canadian Imperial Bank of Commerce v. Secrist (1993), 140 A.R. 111; 10 Alta. L.R.(3d) 342 (Q.B.), refd to. [para. 46].

Casey Estate and Chignecto Holdings Ltd. v. Chrysler Canada Ltd. (1978), 33 N.S.R.(2d) 607; 57 A.R. 607 (T.D.), refd to. [para. 46].

Bawitko Investments Ltd. v. Kernels Pop­corn Ltd. (1991), 53 O.A.C. 314; 79 D.L.R.(4th) 97 (C.A.), dist. [para. 46].

McCauley v. McVey and MacFarlane (1979), 27 N.R. 604; 98 D.L.R.(3d) 577 (S.C.C.), refd to. [para. 53].

Dynamic Transport Ltd. v. O.K. Detailing Ltd., [1978] 2 S.C.R. 1072; 20 N.R. 500; 9 A.R. 308, refd to. [para. 54].

Moon v. Metropolitan Toronto Association for Community Living (1989), 6 R.P.R.(2d) 284 (Ont. S.C.), refd to. [para. 55].

Einhorn v. Westmount Investments Ltd. (1970), 11 D.L.R.(3d) 509 (Sask. C.A.), refd to. [para. 60].

Jackson v. Trimac Industries Ltd. (1992), 134 A.R. 321 (Q.B.), affd. 155 A.R. 42; 73 W.A.C. 42 (C.A.), refd to. [para. 61].

Counsel:

J.D. Bruce McDonald (Bennett Jones Verchere), for the plaintiff;

William R. Pieschel, Q.C. (Parlee McLaws), for the defendants.

This action was heard before Hawco, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the fol­lowing judgment on December 19, 1997.