Goska Nowak Prof. Corp. v. Robinson, [2016] A.R. TBEd. AU.058

• Judge: Costigan, Paperny and O'Ferrall, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: August 23, 2016
• Jurisdiction: Alberta
• Citations: [2016] A.R. TBEd. AU.058;2016 ABCA 240

Goska Nowak Prof. Corp. v. Robinson, [2016] A.R. TBEd. AU.058

MLB being edited

Currently being edited for A.R. - judgment temporarily in rough form.

Temp. Cite: [2016] A.R. TBEd. AU.058

Goska J. Nowak Professional Corporation (appellant) (plaintiff/defendant by counterclaim) v. Robbie Robinson, R. Robinson Professional Corporation and James E. Reid Professional Corporation (respondents) (defendants/plaintiffs by counterclaim)

(1401-0312-AC; 2016 ABCA 240)

Indexed As: Goska J. Nowak Professional Corp. v. Robinson et al.

Alberta Court of Appeal

Costigan, Paperny and O'Ferrall, JJ.A.

August 23, 2016.

Summary:

In November 2001, a dentist (Nowak) purchased a dental practice (RRPC1) from another dentist (Robinson). Nowak and Robinson both wanted Robinson to continue working at RRPC1, so they created an Associate Agreement between RRPC1, Robinson's new professional corporation (RRPC2), and Robinson personally. The Agreement contained a non-competition restrictive covenant. In September 2002, Nowak had RRPC1 transfer all of its property, including the Associate Agreement, to Nowak's professional corporation (GNPC1) for tax purposes. She did so without notice to or the consent of Robinson, who had a security interest over all of Nowak's assets. RRPC1 was dissolved in 2005. In 2008, Nowak had GNPC1 transfer all of its property to a new professional corporation (GNPC2). She then revived RRPC1 and amalgamated it with GNPC2. Nowak terminated Robinson's employment in 2008. Within a few months, Robinson began working at a different dental practice (Reid PC) in the same building. GNPC2 brought an action to enforce the Associate Agreement against Robinson, RRPC2 and Reid PC. Robinson counterclaimed for damages for wrongful dismissal.

The Alberta Court of Queen's Bench, in a judgment reported at (2014), 595 A.R. 346, dismissed the claim and the counterclaim. Nowak appealed the dismissal of his claim and the costs awards against him.

The Alberta Court of Appeal dismissed the appeal, with the exception of varying the costs award.

Company Law - Topic 9265

Dissolution, surrender or forfeiture of charter - Effect of restoration (after dissolution) of corporate status - Re contracts - [See Contracts - Topic 6803 ].

Contracts - Topic 6803

Assignment - General - What constitutes an assignment (incl. validity of) - In November 2001, a dentist (Nowak) purchased a dental practice (RRPC1) from another dentist (Robinson) - Nowak and Robinson both wanted Robinson to continue working at RRPC1, so they created an Associate Agreement between RRPC1, Robinson's new professional corporation (RRPC2), and Robinson personally - Clause 13 of the Agreement restricted Robinson from working within 5km of RRPC1 for two years following termination of the agreement - In 2002, Nowak had RRPC1 transfer all of its property, including the Agreement, to Nowak's professional corporation (GNPC1) for tax purposes - She did so without notice to or the consent of Robinson, who had a security interest over all of Nowak's assets - RRPC1 was dissolved in 2005 - Nowak terminated Robinson's employment in May 2008 - Robinson began working at a different dental practice in the same building - In 2010, Nowak revived RRPC1 and amalgamated it with GNPC1 and her new professional corporation (GNPC2) - GNPC2 brought an action to enforce the Associate Agreement - The trial judge dismissed the action - By failing to obtain Robinson's consent prior to the assignment in 2002, RRPC1 disavowed its rights under the Agreement - This started the clock running on the two year period in Clause 13 - The Agreement was unenforceable by RRPC1 by the time of its dissolution in 2005 - GNPC2 was never properly the assignee of the Agreement nor a party to it - Reviving a corporation did not have the effect of reviving a contract that had been disavowed years prior to the dissolution - The Alberta Court of Appeal held that the trial judge did not err in finding that the Agreement could not be assigned without Robinson's consent, as it was a personal services contract with a distinct corporate entity - The revival of RRPC1 could not reinstate the clause which no longer bound Robinson - See paragraphs 18 to 27.

Contracts - Topic 6806

Assignment - General - Without notice or consent - [See Contracts - Topic 6803 ].

Practice - Topic 7458

Costs - Solicitor and client costs - Entitlement to solicitor and client costs - Rare, exceptional or complex cases - A trial judge awarded solicitor-and-own client costs against a plaintiff whose claim was devoid of merit and should have been discontinued following discovery - The Alberta Court of Appeal stated that "Solicitor-and-client costs should be awarded only in rare and exceptional circumstances ... Solicitor-and-client costs may be awarded to sanction blameworthy conduct during the course of the litigation. However, such costs are generally warranted only where the conduct has been reprehensible, scandalous or outrageous ... Unsuccessful allegations of fraud or dishonesty can attract solicitor and client costs ... Litigants must be free to allege tortious conduct without fear of extraordinary costs sanctions." - The court set aside the costs award and substituted an award of costs on double column 2 from the date of the defendant's unaccepted offer to settle by discontinuance - The plaintiff's allegations and the conduct of the litigation fell short of what was required for solicitor-and-client or solicitor-and-own client costs - See paragraphs 29 to 32.

Practice - Topic 7803

Costs - Solicitor and his own client costs - Entitlement to - [See Practice - Topic 7458 ].

Counsel:

J.P. Peacock, Q.C., for the appellant;

B.A.E. Brener, for the respondents, Robbie Robinson and R. Robinson Professional Corporation;

P.J. Major, Q.C., and M.E. Scott, for the respondent, James E. Reid Professional Corporation.

This appeal was heard May 10, 2016, before Costigan, Paperny and O'Ferrall, JJ.A., of the Alberta Court of Appeal.

On August 23, 2016, the judgment of the Court of Appeal was delivered and the following memorandums of judgment were filed:

Costigan and Paperny, JJ.A. - see paragraphs 1 to 36;

O'Ferrall, J.A. - see paragraphs 37 to 85.