Communities Economic Development Fund v. Canadian Pickles Corp. et al., (1989) 62 Man.R.(2d) 170 (CA)

• Judge: Monnin, C.J.M., O'Sullivan and Huband, JJ.A.
• Court: Court of Appeal (Manitoba)
• Case Date: November 09, 1989
• Jurisdiction: Manitoba
• Citations: (1989), 62 Man.R.(2d) 170 (CA)

Com. Economic Dev. v. Cdn. Pickles (1989), 62 Man.R.(2d) 170 (CA)

MLB headnote and full text

Communities Economic Development Fund (plaintiff/respondent) v. Rudy Vincent Maxwell (defendant/appellant) and Canadian Pickles Corporation and June O'Donnell (defendants)

(Suit No. 193/89)

Indexed As: Communities Economic Development Fund v. Canadian Pickles Corp. et al.

Manitoba Court of Appeal

Monnin, C.J.M., O'Sullivan and Huband, JJ.A.

December 13, 1989.

Summary:

The Communities Economic Development Fund, by statute, was empowered to "encourage the optimum economic development of remote and isolated communities". The Fund loaned money to Canadian Pickles Corp. to purchase new equipment and to provide working capital. When the loan went into default, the Fund sued the corporation and the guarantors for repayment.

The Manitoba Court of Queen's Bench, in a decision reported in [1989] 3 W.W.R. 514, and in paragraphs 42 to 96 below, allowed the action. The defendant guarantor Maxwell, who was the corporation's solicitor, a 25% shareholder, a director and corporate secretary, appealed.

The Manitoba Court of Appeal, Monnin, C.J.M., dissenting, allowed the appeal and set aside the judgment as against the defendant Maxwell.

Guarantee and Indemnity - Topic 3114

Discharge and other defences of surety - Invalidity of principal contract - Where contract a nullity - The Communities Economic Development Fund loaned money to a corporation - The loan exceeded the statutory mandate of the Fund, because the loan was made to an enterprise located in a community which was neither remote nor isolated - The Manitoba Court of Appeal held that the primary loan was ultra vires and was therefore a nullity, rather than an illegal contract - Accordingly, the court held that there was nothing for the guarantors of the loan to guarantee and no legal action could be founded on the guarantee - The guarantors could not be liable for repayment of monies "had and received", since the monies were neither had nor received by them - See paragraphs 25 to 40.

Cases Noticed:

Breckenridge Speedway Ltd. v. R., [1970] S.C.R. 175; 70 W.W.R.(N.S.) 481; 9 D.L.R.(3d) 142, refd to. [paras. 9, 27, 91].

Provincial Treasurer of Alberta v. Meadow Rue Holdings Ltd. et al. (1986), 45 Alta. L.R.(2d) 294 (C.A.), not appld. [paras. 9, 27, 91].

Brougham v. Dwyer (1913), 108 L.T. 504, consd. [para. 29].

T.D. Bank v. Rooke (1983), 49 B.C.L.R. 168; 24 B.L.R. 124; 3 D.L.R.(4th) 715 (C.A.), refd to. [para. 71].

Donoghue v. Stevenson, [1932] A.C. 562 (H.L.), refd to. [para. 78].

Hedley Byrne & Co. v. Heller & Partners Ltd., [1964] A.C. 465; [1963] 3 W.L.R. 101; [1963] 2 All E.R. 575 (H.L.), refd to. [para. 78].

Anns v. Merton London Borough Council, [1978] A.C. 728; [1977] 2 W.L.R. 1024; [1977] 2 All E.R. 492 (H.L.), refd to. [para. 78].

Kamloops v. Nielsen, [1984] 2 S.C.R. 2; [1984] 5 W.W.R. 1; 66 B.C.L.R. 273; 29 C.C.L.T. 97; 26 M.P.L.R. 81; 11 Admin. L.R. 1; 10 D.L.R.(4th) 641; 8 C.L.R. 1; 54 N.R. 1, refd to. [para. 80].

Central Trust Co. v. Rafuse and Cordon, [1986] 2 S.C.R. 147; 34 B.L.R. 187; 42 R.P.R. 161; 37 C.C.L.T. 117; 31 D.L.R.(4th) 481; 75 N.S.R.(2d) 109; 186 A.P.R. 109; 69 N.R. 321, refd to. [para. 80].

Leigh & Sillivan (Sillavan) Ltd. v. Aliakmon Shipping Co., [1986] A.C. 785; [1986] 2 W.L.R. 902; [1986] 2 All E.R. 145 (H.L.), refd to. [para. 80].

T.D. Bank v. Brot, [1958] O.R. 152 (H.C.), consd. [para. 82].

N.S. Savings & Loan Co. v. MacFarlane Bros. Ltd. (1981), 49 N.S.R.(2d) 579; 96 A.P.R. 579 (T.D.), refd to. [para. 85].

Moase Produce Ltd. v. Royal Bank (1987), 64 C.B.R.(N.S.) 191; 66 Nfld. & P.E.I.R. 196; 204 A.P.R. 196 (P.E.I.S.C.), refd to. [para. 87].

Bauer v. Bank of Montreal, [1980] 2 S.C.R. 102; 33 C.B.R.(N.S.) 291; 10 B.L.R. 209; 110 D.L.R.(3d) 424; 32 N.R. 191, refd to. [para. 89].

Statutes Noticed:

Communities Economic Fund Act, S.M. 1971, c. 84; C.C.S.M., c. C-155, generally [paras. 7, 25, 44]; sect. 17(2) [para. 45].

Communities Economic Development Fund Act, R.S.M. 1987, c. C-155, C.C.S.M., c. C-155, sect. 1, sect. 3, sect. 9(7) [para. 90]; sect. 10 [para. 77]; sect. 10(1) [para. 74]; sect. 10(3) [para. 75].

Authors and Works Noticed:

Halsbury's Laws of England (4th Ed.), vol. 9, para. 678 [para. 33].

Linden, Canadian Tort Law (4th Ed. 1988), p. 257 [para. 79].

Counsel:

S. Green, Q.C., for the appellant;

D.G. Murray, for the respondent.

This appeal was heard before Monnin, C.J.M., O'Sullivan and Huband, JJ.A., of the Manitoba Court of Appeal on November 9, 1989. The decision of the Court of Appeal was delivered on December 13, 1989, when the following opinions were filed:

Monnin, C.J.M., dissenting - see paragraphs 1 to 16;

Huband, J.A. (O'Sullivan, J.A., concurring) - see paragraphs 17 to 41.