Chisum Log Homes & Lumber Ltd. et al. v. Investment Saskatchewan Inc. et al.,

• Jurisdiction: Saskatchewan
• Judge: Ryan-Froslie, J.
• Neutral Citation: 2007 SKQB 368
• Citation: 2007 SKQB 368,(2007), 303 Sask.R. 174 (QB),[2008] 2 WWR 320,303 Sask R 174,303 SaskR 174,(2007), 303 SaskR 174 (QB),303 Sask.R. 174
• Date: 15 October 2007
• Court: Court of Queen's Bench of Saskatchewan (Canada)

Chisum Log Homes v. Inv. Sask. Inc. (2007), 303 Sask.R. 174 (QB)

MLB headnote and full text

Temp. Cite: [2007] Sask.R. TBEd. OC.062

Chisum Log Homes & Lumber Ltd., Debra Varga, Garry Varga, Andrew Varga, William Varga, and Amanda Peacock (plaintiffs) v. Investment Saskatchewan Inc., Crown Investments Corporation of Saskatchewan, the Government of Saskatchewan, the Northern Hamlet of Weyakwin (defendants)

(2006 Q.B. No. 295; 2007 SKQB 368)

Indexed As: Chisum Log Homes & Lumber Ltd. et al. v. Investment Saskatchewan Inc. et al.

Saskatchewan Court of Queen's Bench

Judicial Centre of Prince Albert

Ryan-Froslie, J.

October 15, 2007.

Summary:

The plaintiffs commenced an action against the defendants claiming breach of contract, negligent misrepresentation, negligence, breach of fiduciary duty and interference with economic relations. The defendants Investment Saskatchewan Inc., Crown Investments Corporation of Saskatchewan and the Government of Saskatchewan applied for orders: (i) striking the plaintiffs' statement of claim against them pursuant to rules 173(a), (c) and (e) of the Queen's Bench Rules of Court on the grounds it disclosed no reasonable cause of action or was frivolous, vexatious and an abuse of process and (ii) for summary judgment pursuant to rules 188 and 189 on the grounds the plaintiffs' claims were barred by the Limitations Act. The plaintiffs applied pursuant to rule 165 to amend their statement of claim.

The Saskatchewan Court of Queen's Bench allowed the defendants' applications in part and allowed the plaintiffs' request to amend the statement of claim.

Company Law - Topic 9244

Dissolution or surrender or forfeiture of Charter - Restoration or reinstatement - Procedure (incl. notice) - The plaintiffs commenced an action against the defendants claiming, inter alia, breach of contract - The action concerned a 1991 contract between the corporate plaintiff (Chisum) and Northern Forest Operations Ltd. (NOF) - It was alleged that timber allocations and a Crown lease were never assigned to Chisum as required by the contract and as a result the plaintiffs suffered damages - The plaintiffs argued that Investment Saskatchewan Inc. (ISI) was a successor of NFO (a dissolved corporation) and thus liable under the contract - ISI argued that the Chisum's claims for breach of contract could only be brought against NFO who was the other party to the contract - While Chisum could have followed NFO's assets into the hands of its shareholder, pursuant to s. 219 of the Business Corporations Act, that right had now expired - The Saskatchewan Court of Queen's Bench stated that Chisum had two alternatives - It could have applied to bring an action under s. 219(2) within two years of NFO's dissolution or it could have applied to have NFO revived pursuant to s. 202(1) of the Act and then brought its action to follow NFO's assets to ISI - Section 219 did not establish a limitation period - Rather it permitted actions to be brought against dissolved companies without the necessity of reviving those companies - The plaintiffs' claims against NFO or its alleged successor should not be struck by reason of s. 219 of the Business Corporations Act, which merely governed procedure - See paragraphs 52 to 56.

Company Law - Topic 9415

Actions by corporations - Parties - Proper plaintiff - The plaintiffs commenced an action against the defendants claiming breach of contract, negligent misrepresentation, negligence, breach of fiduciary duty and interference with economic relations - The action concerned a 1991 contract between the corporate plaintiff (Chisum) and Northern Forest Operations Ltd. - It was alleged that timber allocations and a Crown lease were never assigned to Chisum as required by the contract and as a result the plaintiffs suffered damages - The statement of claim alleged that the plaintiff Garry Varga was the sole shareholder of Chisum and that the contract was signed by him as an officer of the corporation - There was no claim that the other individual plaintiffs were shareholders, officers, directors or employees of the corporation, only that Chisum was operated by the plaintiff Garry Varga "with his family" - Three defendants argued that the individual plaintiffs had no reasonable cause of action against them as those plaintiffs were not parties to the contract and did not have the necessary "proximity" to establish the requisite duty of care for their claims in negligence and tort - The Saskatchewan Court of Queen's Bench held that there was no reasonable cause of action by the individual plaintiffs against the three defendants - Having set up the corporate entity, the plaintiff Garry Varga could not now claim personal damages for wrongs alleged to have been done to the corporation - The mere fact the other individual plaintiffs were members of a shareholder's family and involved in Chisum's operations did not disclose any basis for their claims - They were not parties to the contract - Their other claims were too remote - They could not establish that the defendants owed them a duty of care - See paragraphs 24 to 31.

Company Law - Topic 9445

Actions by corporations - In tort - Personal claims by officers, shareholders or employees - [See Company Law - Topic 9415 ].

Crown - Topic 1561

Torts by and against Crown - Negligence by Crown - General - The plaintiffs commenced an action against the defendants claiming breach of contract and various torts, including negligence - The action concerned a 1991 contract between the corporate plaintiff (Chisum) and Northern Forest Operations Ltd. (NFO) - It was alleged that timber allocations and a Crown lease were never assigned to Chisum as required by the contract and as a result the plaintiffs suffered damages - The plaintiffs alleged that Investment Saskatchewan Inc. (ISI) was a successor of NFO and that Crown Investments Corporation of Saskatchewan (CIC) was liable, as ISI's sole shareholder and was charged with the responsibility for supervising ISI's operations pursuant to ss. 5 and 13 of the Crown Corporations Act, 1993 - The Saskatchewan Court of Queen's Bench referred to the test for determining if a duty of care existed with regard to Government employees, departments and agencies and held that it was plain and obvious that the plaintiffs could not establish the requisite "sufficiently close relationship" with CIC necessary to establish a reasonable cause of action against CIC for negligence - See paragraphs 91 to 93.

Equity - Topic 3611

Fiduciary or confidential relationship - General principles - Crown - The plaintiffs commenced an action against the defendants claiming breach of contract, various torts and breach of fiduciary duty - The action concerned a 1991 contract between the corporate plaintiff (Chisum) and Northern Forest Operations Ltd. (NOF) - It was alleged that timber allocations and a Crown lease were never assigned to Chisum as required by the contract and as a result the plaintiffs suffered damages - The plaintiffs alleged that Investment Saskatchewan Inc. (ISI), a Crown corporation, was a successor of NFO and that Crown Investments Corporation of Saskatchewan (CIC) was liable, as ISI's sole shareholder and was charged with the responsibility for supervising ISI's operations pursuant to ss. 5 and 13 of the Crown Corporations Act, 1993 - The plaintiffs argued that there was a fiduciary relationship between them and the defendant Government of Saskatchewan (Saskatchewan) arising from ss. 5 and 13 of the Act (discretionary power to supervise subsidiary Crown corporations) - The Saskatchewan Court of Queen's Bench struck the portions of the claim alleging breach of fiduciary duty - Sections 5 and 13 did not give Saskatchewan any discretion nor place upon it any duty of care that could affect the plaintiffs - The sections merely set out the objects and purposes of CIC and provided for the winding up and dissolution of Crown corporations - The Crown was not normally viewed as a fiduciary in the exercise of its legislative or administrative function - See paragraphs 107 to 115.

Fraud and Misrepresentation - Topic 2515

Misrepresentation - General principles - Concurrent liability in contract and tort - The plaintiffs commenced an action against the defendants claiming, inter alia, breach of contract and negligent misrepresentation - The action concerned a 1991 contract between the corporate plaintiff (Chisum) and Northern Forest Operations Ltd. (NOF) - It was alleged that timber allocations and a Crown lease were never assigned to Chisum as required by the contract and as a result the plaintiffs suffered damages - A defendant argued that the substance of the complaint was not a "representation", but rather a "contractual term", the breach of which would only support a claim in contract - The Saskatchewan Court of Queen's Bench stated that the fact that an alleged misrepresentation was also a term of the contract did not preclude a plaintiff from suing in both tort and contract - In this case, it was not plain and obvious that the fact the negligent misrepresentation complained of was also a term of a contract would result in the plaintiff's claim in negligence being dismissed - See paragraphs 63 to 65.

Practice - Topic 5264

Trials - General - Trial of preliminary issues - Application - Question of law - Three defendants applied pursuant to rules 188 and 189 of the Queen's Bench Rules of Court for summary judgment against the plaintiffs on the grounds that their claims were barred by limitation periods - An agreed statement of facts to support the application had not been filed - The Saskatchewan Court of Queen's Bench stated that it could waive the requirement of an agreed statement of facts in rule 188 under rule 5 in exceptional circumstances where the facts were undisputed and clear from the pleadings - In this case, the court could not determine the issue of the limitation periods without an agreed statement as to facts - See paragraphs 135 to 147.

Practice - Topic 5269

Trials - General - Trial of preliminary issues - Evidence - [See Practice - Topic 5264 ].

Cases Noticed:

F.P. v. Saskatchewan (2004), 249 Sask.R. 42; 325 W.A.C. 42; 2004 SKCA 59, refd to. [para. 16].

Sandy Ridge Sawing Ltd. v. Norrish and Carson (1996), 140 Sask.R. 146 (Q.B.), refd to. [para. 16].

Country Plaza Motors Ltd. et al. v. Indian Head (Town) et al. (2005), 272 Sask.R. 198; 2005 SKQB 442, refd to. [para. 17].

Walcer and Coleman v. Wood et al. (1983), 30 Sask.R. 117 (Q.B.), refd to. [para. 17].

Harrison v. Camgoz et al., [1997] 2 W.W.R. 615; 151 Sask.R. 127 (Q.B.), refd to. [para. 17].

Hunt v. T & N plc et al., [1990] 2 S.C.R. 959; 117 N.R. 321, refd to. [para. 20].

Hunt v. Carey Canada Inc. - see Hunt v. T & N plc et al.

Sagon v. Royal Bank of Canada et al. (1992), 105 Sask.R. 133; 32 W.A.C. 133 (C.A.), refd to. [para. 21].

Collins v. McMahon et al., [2002] Sask.R. Uned. 96; 2002 SKQB 201, refd to. [para. 22].

Foss v. Harbottle (1843), 67 E.R. 189, refd to. [para. 27].

Prudential Assurance Co. v. Newman Industries Ltd., [1982] 1 All E.R. 354 (C.A.), refd to. [para. 28].

Hercules Management Ltd. et al. v. Ernst & Young et al., [1997] 2 S.C.R. 165; 211 N.R. 352; 115 Man.R.(2d) 241; 139 W.A.C. 241, refd to. [para. 28].

Houle v. Banque Nationale du Canada, [1990] 3 S.C.R. 122; 114 N.R. 161; 35 Q.A.C. 161, refd to. [para. 28].

Caglar v. Moore et al., [2005] O.T.C. 935 (Sup. Ct.), refd to. [para. 34].

Petromines Acquisitions Ltd., Re, [2001] 9 W.W.R. 544; 295 A.R. 377; 2001 ABQB 568, refd to. [para. 34].

Smith v. Yorkshire Guarantee Co. (1916), 10 W.W.R. 475 (B.C.C.A.), refd to. [para. 34].

Great Northern Railway Co. v. Cole Agencies Ltd. (1964), 47 D.L.R.(2d) 267 (Sask. Q.B.), refd to. [para. 34].

Lash v. Concord Concrete Forming Co. (1979), 23 O.R.(2d) 721 (Co. Ct.), refd to. [para. 34].

D & K Equipment Distributors Ltd. v. K.G.'s Palisade Restaurant Ltd. (1977), 2 B.C.L.R. 362 (Co. Ct.), refd to. [para. 34].

Tweddle v. Atkinson (1861), 1 B. & S. 393 (K.B.), refd to. [para. 37].

Busse Farms Ltd. v. Federal Business Development Bank (1998), 172 Sask.R. 133; 185 W.A.C. 133 (C.A.), refd to. [para. 41].

National Trust Co. v. Mead, [1990] 2 S.C.R. 410; 112 N.R. 1; 87 Sask.R. 161, refd to. [para. 41].

Salomon v. Salomon & Co., [1897] A.C. 22 (H.L.), refd to. [para. 46].

Saskatoon Real Estate Board v. Saskatoon (City) (1988), 61 Sask.R. 215 (C.A.), refd to. [para. 47].

Tridont Leasing (Canada) Ltd. v. Saskatoon Market Mall Ltd. (1995), 131 Sask.R. 169; 95 W.A.C. 169 (C.A.), refd to. [para. 48].

Hedley Byrne & Co. v. Heller & Partners Ltd., [1964] A.C. 465 (H.L.), refd to. [para. 59].

Queen (D.J.) v. Cognos Inc., [1993] 1 S.C.R. 87; 147 N.R. 169; 60 O.A.C. 1, refd to. [para. 60].

BG Checo International Ltd. v. British Columbia Hydro and Power Authority, [1993] 1 S.C.R. 12; 147 N.R. 81; 20 B.C.A.C. 241; 35 W.A.C. 241, refd to. [para. 64].

Martel Building Ltd. v. Canada, [2000] 2 S.C.R. 860; 262 N.R. 285; 2000 SCC 60, refd to. [para. 64].

Foster Advertising Ltd. v. Keenberg and Manitoba, [1987] 3 W.W.R. 127; 45 Man.R.(2d) 1 (C.A.), refd to. [para. 66].

A.O. Farms Inc. v. Canada (Minister of Agriculture) et al., [2000] F.T.R. Uned. 510; 28 Admin. L.R.(3d) 315; 2000 CarswellNat 2619 (T.D.), refd to. [para. 66].

Hoffman et al. v. Monsanto Canada Inc. et al. (2005), 264 Sask.R. 1; 2005 SKQB 225, refd to. [para. 72].

Tottrup v. Lund et al., [2000] 9 W.W.R. 21; 255 A.R. 204; 220 W.A.C. 204; 2000 ABCA 121, refd to. [para. 72].

Canson Enterprises Ltd. et al. v. Boughton & Co. et al., [1991] 3 S.C.R. 534; 131 N.R. 321; 6 B.C.A.C. 1; 13 W.A.C. 1, refd to. [para. 78].

Baskerville et al. v. Thurgood, [1992] 5 W.W.R. 193; 100 Sask.R. 214; 18 W.A.C. 214 (C.A.), refd to. [para. 79].

Frame v. Smith and Smith, [1987] 2 S.C.R. 99; 78 N.R. 40; 23 O.A.C. 84, refd to. [para. 80].

Guerin v. Canada, [1984] 2 S.C.R. 335; 55 N.R. 161, refd to. [para. 81].

Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.), refd to. [para. 92].

Nielsen v. Kamloops (City) and Hughes, [1984] 2 S.C.R. 2; 54 N.R. 1, refd to. [para. 92].

Swift Current (City) v. Saskatchewan Power Corp. et al. (2007), 293 Sask.R. 6; 397 W.A.C. 6; 2007 SKCA 27, refd to. [para. 92].

Norberg v. Wynrib, [1992] 2 S.C.R. 226; 138 N.R. 81; 9 B.C.A.C. 1; 19 W.A.C. 1, refd to. [para. 94].

Thorvaldson et al. v. Saskatchewan et al., [1991] 5 W.W.R. 436; 93 Sask.R. 22; 4 W.A.C. 22 (C.A.), refd to. [para. 99].

Pepsi-Cola Canada Beverages (West) Ltd. v. Retail, Wholesale and Department Store Union, Local 558 et al. (1998), 172 Sask.R. 40; 185 W.A.C. 40 (C.A.), affd. [2002] 1 S.C.R. 156; 280 N.R. 333; 217 Sask.R. 22; 265 W.A.C. 22; 2002 SCC 8, refd to. [para. 99].

Duke et al. v. Puts (2004), 241 Sask.R. 187; 313 W.A.C. 187; 2004 SKCA 12, refd to. [para. 100].

Reach M.D. Inc. v. Pharmaceutical Manufacturers Association of Canada et al. (2003), 172 O.A.C. 202; 227 D.L.R.(4th) 458 (C.A.), refd to. [para. 101].

Spicer and Gaetz v. Volkswagen Canada Ltd. (1978), 28 N.S.R.(2d) 496; 43 A.P.R. 496; 91 D.L.R.(3d) 42 (C.A.), refd to. [para. 101].

Roncarelli v. Duplessis, [1959] S.C.R. 121, refd to. [para. 117].

Odhavji Estate et al. v. Woodhouse et al., [2003] 3 S.C.R. 263; 312 N.R. 305; 180 O.A.C. 201; 2003 SCC 69, refd to. [para. 118].

Alberta v. Nilsson (1999), 246 A.R. 201; 70 Alta. L.R.(3d) 267; 1999 ABQB 440, refd to. [para. 122].

Uni-Jet Industrial Pipe Ltd. et al. v. Canada (Attorney General) et al. (2001), 156 Man.R.(2d) 14; 246 W.A.C. 14; 2001 MBCA 40, refd to. [para. 122].

O'Hara v. Chapman Estate and MacVicar (1987), 61 Sask.R. 140; 46 D.L.R.(4th) 504 (C.A.), refd to. [para. 133].

Cameco Corp. v. Insurance Co. of the State of Pennsylvania et al. (2000), 194 Sask.R. 57; 2000 SKQB 250, refd to. [para. 137].

Stagman v. Hamm, [1984] 5 W.W.R. 148; 34 Sask.R. 265 (C.A.), refd to. [para. 138].

Goertz v. Zmud (1995), 137 Sask.R. 289; 107 W.A.C. 289 (C.A.), refd to. [para. 139].

P.R.A. v. Orange Benevolent Society, [2002] Sask.R. Uned. 119; 2002 SKQB 211, refd to. [para. 139].

Counsel:

E. Lenoie, for the plaintiffs;

R.W. Leurer, Q.C., for the defendants, Investment Saskatchewan Inc. and Crown Investments Corp. of Saskatchewan;

C. Ohashi, for the defendant, Government of Saskatchewan;

R. Cherkewich, for the defendant, Northern Hamlet of Weyakwin.

These applications were heard by Ryan-Froslie, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Prince Albert, who delivered the following fiat on October 15, 2007.