Desjardins et al. v. Côté et al., 2003 NBQB 214

• Judge: LaVigne, J.
• Court: Court of Queen's Bench of New Brunswick (Canada)
• Case Date: May 30, 2003
• Jurisdiction: New Brunswick
• Citations: 2003 NBQB 214;(2003), 267 N.B.R.(2d) 115 (TD)

Desjardins v. Côté (2003), 267 N.B.R.(2d) 115 (TD);

    267 R.N.-B.(2e) 115; 702 A.P.R. 115

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2003] N.B.R.(2d) TBEd. JN.025

Élide Desjardins and Léonide L. Côté (plaintiffs) v. Fernand A. Côté and Association régionale des personnes handicapées physiquement de Grand-Sault Inc. (defendants) and The Town of Grand Falls/La Ville de Grand-Sault, a town incorporated under the Municipalities Act of the Province of New Brunswick and Amie-e des personnes handicapées physiquement de Mad-Vic/Friends of the Physically Handicapped of Mad-Vic, an unincorporated association (third parties)

(E/C/204/92; 2003 NBQB 214)

Indexed As: Desjardins et al. v. Côté et al.

New Brunswick Court of Queen's Bench

Trial Division

Judicial District of Edmundston

LaVigne, J.

May 30, 2003.

Summary:

Two members of a non-profit corporation brought a derivative action against the com­pany and its president. They sought the return to the company of parcels of land and sums of money they alleged were illegally transferred to the president.

The New Brunswick Court of Queen's Bench, Trial Division, allowed the action.

Company Law - Topic 6504

Nonprofit corporations (incl. charities) - General - Prohibition against members receiving pecuniary benefits - [See Com­pany Law - Topic 6588 ].

Company Law - Topic 6506

Nonprofit corporations (incl. charities) - General - Fiduciary duties - [See Com­pany Law - Topic 6588 ].

Company Law - Topic 6588

Nonprofit corporations (incl. charities) - Rights of members and interested persons - Derivative actions - Two members of a non-profit corporation brought a derivative action against the corporation and its presi­dent - They sought the return to the cor­poration of parcels of land and sums of money they alleged were illegally trans­ferred to the president - The New Bruns­wick Court of Queen's Bench, Trial Divi­sion, allowed the action - The transfers complained of were ultra vires given that they were not authorized by the Companies Act or by the letters patent - As the trans­fers complained of were ultra vires, the plaintiffs had the right to sue - Finally, the president had failed in his fiduciary duty in using his position to appropriate company property for his own use to the cor­poration's disadvantage - See paragraphs 175 to 214.

Limitation of Actions - Topic 6010

Trusts - General - Recovery of trust prop­erty - Two members of a non-profit cor­poration brought a derivative action against the corporation and its president - They sought the return to the corporation of parcels of land and sums of money they alleged were illegally transferred to the president - The president argued the action was barred by the six-year limitation peri­od under s. 9 of the Limitation of Actions Act - The New Brunswick Court of Queen's Bench, Trial Division, held that the action was not barred as it constituted an exception under s. 56 of the Act - The president was in a position of trust with respect to the company and its assets - The plaintiffs' action was to recover trust prop­erty, either still retained by the trustee, such as the land, or previously received by him and converted to his own use, such as the sums received - See paragraphs 76 to 85.

Torts - Topic 6280

Abuse of legal procedure - Maintenance and champerty - General - Two members of l'Association régionale des personnes handicapées physiquement de Grand-Sault Inc., a non-profit corporation, brought a derivative action against the corporation and its president - They sought the return to the corporation of parcels of land and sums of money they alleged were illegally transferred to the president - The plaintiffs obtained financial assistance from third parties Amie-e des personnes handicapées physiquement de Mad-Vic/Friends of the Physically Handicapped of Mad-Vic and the Town of Grand Falls - The New Brunswick Court of Queen's Bench, Trial Division, held that there was no main­tenance or champerty - There was no evidence that the third parties were ill-intended or wanted a share of the profit of the litigation - See paragraphs 34 to 62.

Cases Noticed:

Young v. Young et al., [1993] 4 S.C.R. 3; 160 N.R. 1; 34 B.C.A.C. 161; 56 W.A.C. 161, consd. [para. 37].

Phillips v. Communications, Energy and Paperworkers Union, Local 146, [1998] N.B.J. No. 551, consd. [para. 38].

McIntyre Estate v. Ontario (Attorney Gen­eral) (2002), 164 O.A.C. 37; 61 O.R.(3d) 257 (C.A.), consd. [para. 39].

Parlee v. McFarlane (1999), 210 N.B.R.(2d) 284; 536 A.P.R. 284 (C.A.), consd. [para. 70].

Canadian Imperial Bank of Commerce v. Lush et al. (2002), 251 N.B.R.(2d) 291; 654 A.P.R. 291 (C.A.), refd to. [para. 71].

Laird et al. v. Gregory et al. (1992), 124 N.B.R.(2d) 367; 312 A.P.R. 367 (C.A.), consd. [para. 73].

Kelly Cove Salmon Ltd. v. Allingham, [1996] N.B.J. No. 509, consd. [para. 74].

Stratis v. Stratis (1981), 34 N.B.R.(2d) 522; 85 A.P.R. 522 (C.A.), refd to. [para. 81].

Ouellet and Boutot v. Boutot Estate (1984), 58 N.B.R.(2d) 273; 151 A.P.R. 273 (T.D.), refd to. [para. 82].

Saskatchewan Land & Homestead Co. v. Moore (1913), 26 O.W.R. 125, affd. (1914), 16 D.L.R. 871, consd. [para. 83].

Foss v. Harbottle (1843), 2 Hare 461; 67 E.R. 189, refd to. [para. 171].

Sass v. St. Nicholas Mutual Benefit As­sociation of Winnipeg et al., [1937] S.C.R. 415, refd to. [para. 172].

Burrows et al. v. Becker et al., [1969] S.C.R. 162, refd to. [para. 172].

Gordon, Dixon, Baillie and Munroe v. Nova Scotia Teachers' Union (1983), 59 N.S.R.(2d) 124; 125 A.P.R. 124; 1 D.L.R.(4th) 676 (N.S.C.A.), refd to. [para. 172].

Balsdon v. Good Shepherd Shelter Founda­tion (1984), 9 D.L.R.(4th) 298 (B.C.C.A.), refd to. [para. 172].

Wasauksing First Nation et al. v. Wasau­sink Lands Inc. et al., [2002] O.T.C. 50 (Sup. Ct.), consd. [para. 178].

Canadian Aero Service Ltd. v. O'Malley et al., [1974] S.C.R. 592, refd to. [para. 210].

Statutes Noticed:

Companies Act, R.S.N.B. 1973, c. C-13, sect. 18(2)(h) [para. 185]; sect. 37 [para. 180]; sect. 96(1) [para. 194]; sect. 96(2) [para. 195].

Limitation of Actions Act, R.S.N.B. 1973, c. L-8, sect. 55, sect. 56 [para. 79].

Rules of Court (N.B.), rule 27.06(9) [para. 64].

Authors and Works Noticed:

Rainaldi, Linda A., Remedies in Tort, pp. 14-7, 14-8, 14-9 [para. 36].

Counsel:

John C. Friel, Q.C., and Brigitte Sivret, for the plaintiffs;

Paul A. Bertrand, for the defendant, Fer­nand A. Côté;

David R. Oley, for the defendant, l'Asso­ciation régionale des personnes handi­capées de Grand-Sault Inc.;

J.C. Marc Richard, Q.C., for the third party, The Town of Grand Falls/La Ville de Grand Sault;

Gérald Carroll, for the third party Amie-e des personnes handicapées physiquement de Mad-Vic/Friends of the Physically Handicapped of Mad-Vic.

This action was heard from July 29 to August 2, 2002, from December 9 to 12, 2002, from January 6 to 10, 2003, on Janu­ary 16, 2003, and from January 27 to 29, 2003, by LaVigne, J., of the New Brunswick Court of Queen's Bench, Trial Division, Judicial District of Edmundston.

LaVigne, J., delivered the following deci­sion on May 30, 2003.