Father & Son Investments Inc. v. Maverick Brewing Corp., 2007 ABQB 651

• Judge: Bielby, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: October 10, 2007
• Citations: 2007 ABQB 651;(2007), 436 A.R. 130 (QB)

Father & Son Inv. v. Maverick Brewing (2007), 436 A.R. 130 (QB)

MLB headnote and full text

Temp. Cite: [2008] A.R. TBEd. FE.067

In The Matter Of the interim receivership of Maverick Brewing Corporation.

Father & Son Investments Inc. (applicant) v. Maverick Brewing Corporation (respondent)

(BK03 114978; 2007 ABQB 651)

Indexed As: Father & Son Investments Inc. v. Maverick Brewing Corp.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Bielby, J.

November 2, 2007.

Summary:

Father & Son Investments Inc. was a subordinate secured creditor of Maverick Brewing Corp. Father & Son's application for the appointment of a receiver of Maverick was granted on July 4, 2007. Father & Son was awarded its costs of the application on a substantial indemnity basis with such priority as the court was to determine. The sale proceeds generated in the receivership were inadequate to pay out the preferred creditors and then to pay out the first secured creditor. Father & Son applied for a declaration that it was entitled to its costs in the receivership application and subsequent applications to rank in priority to all other charges except the receiver's own and that of the Canada Revenue Agency.

The Alberta Court of Queen's Bench allowed the application in part. Father & Son's award of costs under the July 4, 2007, order was entitled to priority over all other claims except for that of the receiver and its counsel. Father & Son was not entitled to priority for other costs it had incurred on its own behalf as creditor.

Editor's note: for a related decision involving these parties, see 439 A.R.247.

Receivers - Topic 3593

Claims - Priorities - Costs - Father & Son Investments Inc. was a subordinate secured creditor of Maverick Brewing Corp. - Father & Son's application for the appointment of a receiver of Maverick was granted on July 4, 2007 - Father & Son was awarded its costs of the application on a substantial indemnity basis with such priority as the court was to determine - The sale proceeds generated in the receivership were inadequate to pay out the preferred creditors and then to pay out the first secured creditor - Father & Son applied for a declaration that it was entitled to its costs in the receivership application and subsequent applications to rank in priority to all other charges except the receiver's own and that of the Canada Revenue Agency - The Alberta Court of Queen's Bench allowed the application in part - A creditor might logically receive super priority for its costs when the costs (i) were incurred while the creditor took actions that increased the recovery from a debtor, (ii) the increased recovery provided a benefit to higher ranked creditors and (iii) the creditor's actions were not the consequence of a separate legal duty - As the appointment of the receiver by Father & Son had increased the recovery of Maverick's creditors, including those with a higher priority, Father & Son's award of costs under the July 4, 2007, order was entitled to priority over all other claims except for that of the receiver and its counsel - Father & Son was not entitled to priority for other costs it had incurred on its own behalf as creditor - See paragraphs 31 to 57.

Receivers - Topic 4101

Compensation - Priorities - General - [See Receivers - Topic 3593 ].

Cases Noticed:

Batten, Proffitt & Scott v. Dartmouth Harbour Commissioners (1890), 45 Ch. D. 612, refd to. [para. 22].

Wright v. Kirby (1857), 23 Beav. 463; 53 E.R. 182 (C.A.), refd to. [para. 23].

Ford v. Chesterfield (Earl) (1856), 21 Beav. 426; 52 E.R. 924 (C.A.), refd to. [para. 23].

Wrexham, Mold and Connah's Quay Railway Company, In re, [1900] 1 Ch. 261 (C.A.), refd to. [para. 24].

Lancashire, Derbyshire and East Coast Railway Acts, In re, [1903] 2 Ch. 711 (Ch. Div.), refd to. [para. 25].

Braid Builders Supply & Fuel Ltd. v. Genevieve Mortgage Corp. (1972), 29 D.L.R.(3d) 373; 17 C.B.R.(N.S.) 305 (Man. C.A.), refd to. [para. 33].

Charlebois v. Great Northwest Central Railway (1896), 11 M.R. 135, refd to. [para. 33].

Kowal (Robert F.) Investments Ltd. v. Deeder Electric Ltd. (1975), 21 C.B.R.(N.S.) 201; 59 D.L.R.(3d) 492 (Ont. C.A.), refd to. [para. 34].

Royal Bank of Canada v. Vulcan Machinery & Equipment Ltd. (1992), 3 Alta. L.R.(3d) 358; 13 C.B.R.(3d) 69 (Q.B.), refd to. [para. 34].

Toronto-Dominion Bank v. Usarco Ltd. et al. (2001), 142 O.A.C. 70; 196 D.L.R.(4th) 448; 24 C.B.R.(4th) 303 (C.A.), leave to appeal refused (2001), 281 N.R. 200; 156 O.A.C. 200 (S.C.C.), refd to. [para. 34].

Residential Warranty Co. of Canada Inc. (Bankrupt), Re (2006), 393 A.R. 340; 2006 ABQB 236, affd. (2007), 417 A.R. 153; 410 W.A.C. 153; 275 D.L.R.(4th) 498; 2006 ABCA 293, refd to. [para. 35].

Pugsly, Re (1988), 63 O.R.(2d) 635; 67 C.B.R.(N.S.) 98 (H.C.), refd to. [para. 35].

Ontario Council of the International Brotherhood of Painters and Allied Trades, Local 1590 v. Broome (Trustee of) (1986), 61 C.B.R.(N.S.) 233; 1 A.C.W.S.(3d) 305 (Ont. S.C.), refd to. [para. 35].

McLeod, Re (1949), 29 C.B.R. 163 (Ont. H.C.), refd to. [para. 35].

Sharma v. 643454 Alberta Ltd. et al. (2006), 392 A.R. 353; 2006 ABQB 119, refd to. [para. 37].

Jackson, Arlette, etc. v. Western Crane Service Ltd. (Receivership) (1986), 70 A.R. 147; 45 Alta. L.R.(2d) 156 (C.A.), refd to. [para. 38].

Hean Wylie Peach de Stefanis, Re (2005), 210 B.C.A.C. 171; 348 W.A.C. 171; 9 C.B.R.(5th) 189; 2005 BCCA 156, affing. [2004] B.C.T.C. 10; 50 C.B.R.(4th) 175 (S.C.), refd to. [para. 39].

Kennedy, Re (1997), 213 A.R. 120; 18 C.P.C.(4th) 81 (Q.B.), refd to. [para. 39].

Blyth, Re (2002), 36 C.B.R.(4th) 178; 117 A.C.W.S.(3d) 22 (Ont. C.A.), refd to. [para. 41].

Emms, Re (2003), 127 A.C.W.S.(3d) 397 (Ont. Sup. Ct.), affd. (2003), 127 A.C.W.S.(3d) 397 (Ont. C.A.), refd to. [para. 41].

Real Time Fibre Supply Ltd. (Bankrupt), Re, [2007] B.C.T.C. Uned. 185; 32 C.B.R.(5th) 57; 2007 BCSC 371, refd to. [para. 41].

Authors and Works Noticed:

Snell, E.H.T., Principles of Equity (16th Ed. 1912), pp. 278, 279 [para. 21].

Counsel:

Bryan P. Maruyama, for the Receiver;

Henry K. Mah, for Five Oaks Inc.;

Jeffrey M. Lee, for Father & Son Investments Inc.

This application was heard on October 10, 2007, by Bielby, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following reasons for judgment on November 2, 2007.