Hibbs v. Murphy et al., 2015 NSSC 48

Judge:Wright, J.
Court:Supreme Court of Nova Scotia
Case Date:February 18, 2015
Jurisdiction:Nova Scotia
Citations:2015 NSSC 48;(2015), 356 N.S.R.(2d) 166 (SC)
 
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Hibbs v. Murphy (2015), 356 N.S.R.(2d) 166 (SC);

    1126 A.P.R. 166

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Temp. Cite: [2015] N.S.R.(2d) TBEd. FE.032

Jean Hibbs (plaintiff) v. Daniel P. Murphy, Rose Marie Murphy and One Oh One Ltd. in their own capacity and as representatives of all individual persons and corporations carrying on business under the consortium name of Precision Atlantic Media Group (defendants)

(Hfx. No. 406365; 2015 NSSC 48)

Indexed As: Hibbs v. Murphy et al.

Nova Scotia Supreme Court

Wright, J.

February 18, 2015.

Summary:

The plaintiff retired from her employment with PAMG Ltd. She agreed to receive the equivalent of 16 months' salary, paid over three years, starting in March 2011. In December 2011, Murphy, PAMG's principal, and his wife, Rose, created a new company, One Oh One Ltd. Rose was the sole director, officer and shareholder. PAMG went into receivership in January 2012, followed by a bankruptcy. The unpaid balance under the plaintiff's retirement agreement was $48,832. One Oh One entered into an asset purchase agreement with PAMG's receiver and operated the business. The plaintiff sued One Oh One, Murphy and Rose for breach of contract.

The Nova Scotia Supreme Court dismissed the action.

Contracts - Topic 6803

Assignment - General - What constitutes an assignment (incl. validity of) - [See Receivers - Topic 5804 ].

Master and Servant - Topic 303

Nature of relationship - What constitutes an employer-employee relationship - The plaintiff retired from her employment with PAMG Ltd. - She agreed to receive the equivalent of 16 months' salary, paid over three years, starting in March 2011 - In December 2011, Murphy, PAMG's principal, and his wife, Rose, created a new company, One Oh One Ltd. - Rose was the sole director, officer and shareholder - PAMG went into receivership in January 2012, followed by a bankruptcy - The unpaid balance under the plaintiff's retirement agreement was $48,832 - One Oh One entered into an asset purchase agreement with PAMG's receiver and operated the business - The plaintiff sued One Oh One for breach of contract, alleging it to be a common and/or successor employer and, therefore, liable for the amount outstanding under the agreement - The Nova Scotia Supreme Court dismissed the action - One Oh One was not a corporate evolution of PAMG through a reorganization - Rather, it was newly created for the obvious purpose of acquiring the assets of the PAMG business through a receivership - Buying the business assets of PAMG from the receiver as a going concern did not make One Oh One a common employer where it did not carry on any business operation (or even exist) at the same time as the plaintiff's employment with PAMG - Nor was this a true successor employer situation, which applied to protect the rights of existing employees in a business that was sold or transferred - The plaintiff's employment relationship with PAMG had come to an end 10 months before PAMG's assets were sold to One Oh One - See paragraphs 45 to 53.

Practice - Topic 204.4

Persons who can sue and be sued - Corporations - Successor corporations - [See Receivers - Topic 5804 ].

Receivers - Topic 5804

Duties of receiver - General - Respecting existing contracts - The plaintiff retired from her employment with PAMG Ltd. - She agreed to receive the equivalent of 16 months' salary, paid over three years, starting in March 2011 - In December 2011, Murphy, PAMG's principal, and his wife, Rose, created a new company, One Oh One Ltd. - Rose was the sole director, officer and shareholder - PAMG went into receivership in January 2012, followed by a bankruptcy - The unpaid balance under the plaintiff's retirement agreement was $48,832 - One Oh One entered into an asset purchase agreement with PAMG's receiver and operated the business - The plaintiff sued One Oh One for breach of contract, asserting, inter alia, that the agreement was assigned to One Oh One by virtue of the asset purchase agreement - The Nova Scotia Supreme Court dismissed the action - By agreeing to accept deferred payments over a three year period, the plaintiff became an unsecured creditor of PAMG - When PAMG was placed into receivership, the receiver took possession of the charged property in order to recoup the loan to the security holders - Regarding existing contracts, the receiver could complete those that were beneficial to the security holders - The agreement was obviously of no benefit whatsoever to the security holder or to One Oh One - Rather, it was a liability owing to an unsecured creditor - There was no intention by the receiver or One Oh One to assign or assume that indebtedness - One Oh One had not assumed responsibility for the agreement - See paragraphs 36 to 44.

Cases Noticed:

Kerr v. 2463103 Nova Scotia Ltd. (2015), 354 N.S.R.(2d) 327; 1120 A.P.R. 327; 2015 NSCA 7, refd to. [para. 39].

Downtown Eatery (1993) Ltd. v. Ontario et al. (2001), 147 O.A.C. 275 (C.A.), dist. [para. 45].

Authors and Works Noticed:

Bennett on Receiverships (2nd Ed. 1999), pp. 26 to 32 [para. 41].

Counsel:

Bruce Evans, for the plaintiff;

Defendants, self-represented.

This action was heard at Halifax, N.S., on December 2-4, 2014, by Wright, J., of the Nova Scotia Supreme Court, who delivered the following written decision on February 18, 2015.

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