Kay Aviation b.v. v. Rofe, (2000) 194 Nfld. & P.E.I.R. 88 (PEITD)

• Judge: DesRoches, J.
• Case Date: September 05, 2000
• Jurisdiction: Prince Edward Island
• Citations: (2000), 194 Nfld. & P.E.I.R. 88 (PEITD);2000 PESCTD 80

Kay Aviation b.v. v. Rofe (2000), 194 Nfld. & P.E.I.R. 88 (PEITD);

    584 A.P.R. 88

MLB headnote and full text

Temp. Cite: [2000] Nfld. & P.E.I.R. TBEd. OC.013

Kay Aviation b.v. (plaintiff) v. Kevin Rofe (defendant)

(GSC-17797; 2000 PESCTD 80)

Indexed As: Kay Aviation b.v. v. Rofe

Prince Edward Island Supreme Court

Trial Division

DesRoches, J.

October 3, 2000.

Summary:

The plaintiff and the defendant's company were engaged in a joint venture respecting the booking of air transport of goods across the Atlantic. The plaintiff booked transport from west to east. The company booked transport from east to west. They agreed to account for and share revenues and expenses. The plaintiff obtained judgment exceeding $1.6 million (unaccounted for revenue) against the company, which no longer carried on business. The plaintiff then sued the defendant (company's sole shareholder), alleging he was personally liable for, inter alia, breach of fiduciary duty, conversion, breach of trust, breach of duty as agent of the joint venture, misallocation of monies, inducing breach of contract and interference with economic interests. The defendant moved to strike the statement of claim or, alternatively, to dismiss the action.

The Prince Edward Island Supreme Court, Trial Division, dismissed the defendant's motion.

Company Law - Topic 311

Nature of corporations - Lifting the corpor­ate veil - One person company - The plain­tiff and the defendant's company engaged in a joint venture - The plaintiff obtained judgment exceeding $1.6 million (unac­counted for revenue) against the company, which no longer carried on business - The plaintiff then sued the defendant (com­pany's sole shareholder), alleging he was personally liable for, inter alia, breach of fiduciary duty, conversion, breach of trust, breach of duty as agent of the joint ven­ture, misallocation of monies, inducing breach of contract and interference with economic interests - The defendant moved to strike the statement of claim or, alterna­tively, to dismiss the action - The defend­ant alleged, inter alia, that this was not a proper case to pierce the corporate veil - The Prince Edward Island Supreme Court, Trial Division, dismissed the motion - The court stated that "in general, when a third party suffers damage, and there is a prima facie case that the damages are attributable to a wrongdoing of an individual who controls the corporation, then the courts have 'the power, indeed the duty' to ascer­tain whether the corporate structure is being used for improper purposes." - Whether the corporate veil should be pierced was an issue to be determined by the trial judge - See paragraphs 15 to 29.

Company Law - Topic 312

Nature of corporations - Lifting the corpor­ate veil - Principals - "Directing mind and will" of company - The Prince Edward Island Supreme Court, Trial Division, generally discussed circumstances when a court would pierce or lift the corporate veil to find the directing mind or will of the corporation personally liable for the cor­poration's actions - See paragraphs 15 to 29.

Practice - Topic 1956

Pleadings - Particulars - Particulars in specific proceedings - Fraud and misrepre­sentation - Rule 25.06(8) provided that "where fraud, misrepresentation, breach of trust, malice or intent is alleged, the pleading shall contain full particulars ..." - The plaintiff did not specifically plead fraud, but did plead breach of trust, con­version of monies and misallocation and intermingling of monies - The defendant submitted that rule 25.06(8) applied and the plaintiff failed to plead the required specific facts to support the allegations - The Prince Edward Island Supreme Court, Trial Division, stated that to the extent that the pleadings alleged the defendant acted outside the scope of his authority, rule 25.06(8) did not apply - As for the balance of the pleadings, sufficient information was included to meet the bare requirements of rule 25.06(8) - See paragraphs 38 to 43.

Practice - Topic 2230

Pleadings - Striking out pleadings - Grounds - Failure to disclose a cause of action or defence - The plaintiff and the defendant's company engaged in a joint venture - The plaintiff obtained judgment exceeding $1.6 million (unaccounted for revenue) against the company, which no longer carried on business - The plaintiff then sued the defendant (company's sole shareholder), alleging he was personally liable for, inter alia, breach of fiduciary duty, conversion, breach of trust, breach of duty as agent of the joint venture, misallo­cation of monies, inducing breach of con­tract and interference with economic inter­ests - The defendant moved under rule 21.01 to strike the statement of claim on the ground that it failed to disclose a rea­sonable cause of action - The Prince Edward Island Supreme Court, Trial Divi­sion, dismissed the motion, stating that "reading the statement of claim as a whole and as generously as possible, I do not find that it is 'plain and obvious' that the plain­tiff's pleadings disclose no cause of action or that it is 'beyond a reasonable doubt' that this action does not have some chance of success if the action proceeds" - See paragraphs 30 to 37.

Practice - Topic 2231

Pleadings - Striking out pleadings - Grounds - False, frivolous, vexatious or scandalous - The plaintiff and the defen­dant's company engaged in a joint venture - The plaintiff obtained judgment exceed­ing $1.6 million (unaccounted for revenue) against the company, which no longer carried on business - The plaintiff then sued the defendant (company's sole share­holder), alleging he was personally liable for, inter alia, breach of fiduciary duty, conversion, breach of trust, breach of duty as agent of the joint venture, misallocation of monies, inducing breach of contract and interference with economic interests - The defendant applied to dismiss the action on the ground that it was frivolous, vexatious or otherwise an abuse of the court's pro­cess - The defendant alleged that the action was brought solely to harass, annoy and embarrass him - The Prince Edward Island Supreme Court, Trial Division, dismissed the application - See paragraphs 48 to 50.

Cases Noticed:

Salomon v. Salomon & Co., [1897] A.C. 22, refd to. [para. 15].

Littlewoods Mail Order Stores Ltd. v. MacGregor, [1969] 3 All E.R. 855, refd to. [para. 15].

Lockharts Ltd. v. Excalibur Holdings Ltd. (1987), 83 N.S.R.(2d) 181; 210 A.P.R. 181 (S.C.), refd to. [para. 16].

Clarkson Co. v. Zhelka et al. (1967), 64 D.L.R.(2d) 457, refd to. [para. 17].

Nedco v. Clark et al. (1973), 43 D.L.R.(3d) 714 (Sask. C.A.), refd to. [para. 18].

Toronto v. Famous Players Canadian Corp., [1936] 2 D.L.R. 129, refd to. [para. 18].

Kosmopoulos et al. v. Constitution Insur­ance Co. of Canada et al. (1987), 74 N.R. 360; 21 O.A.C. 4; 34 D.L.R.(4th) 208 (S.C.C.), refd to. [para. 19].

Montreal Trust Co. of Canada et al. v. ScotiaMcLeod Inc. et al. (1995), 87 O.A.C. 129; 26 O.R.(3d) 481 (C.A.), refd to. [para. 22].

Normart Management Ltd. v. West Hill Redevelopment Co. et al. (1998), 113 O.A.C. 375; 37 O.R.(3d) 97 (C.A.), refd to. [para. 22].

Serel v. 371487 Ontario Ltd. et al. (1996), 18 O.T.C. 135 (Gen. Div.), refd to. [para. 24].

Fidelity Electronics of Canada Ltd. v. Fuss, [1995] O.J. No. 4319 (Gen. Div.), refd to. [para. 26].

Ayangma v. Prince Edward Island (1998), 168 Nfld. & P.E.I.R. 1; 517 A.P.R. 1 (P.E.I.S.C.), refd to. [para. 32].

Johnston v. Charlottetown Area Develop­ment Corp. et al. (1993), 113 Nfld. & P.E.I.R. 154; 353 A.P.R. 154 (P.E.I.S.C.), refd to. [para. 33].

Pitre et al. v. MacNutt et al. (1994), 123 Nfld. & P.E.I.R. 18; 382 A.P.R. 18 (P.E.I.S.C.), refd to. [para. 34].

Bank Leu AG v. Gaming Lottery Corp. et al. (1997), 37 O.T.C. 389 (Gen. Div.), refd to. [para. 41].

Westland Homes Ltd. et al. v. Schurman (M.F.) Ltd. (1992), 101 Nfld. & P.E.I.R. 122; 321 A.P.R. 122 (P.E.I.C.A.), refd to. [para. 53].

Pizza Pizza Ltd. v. Gillespie, Chicken Chicken Inc. et al. (1990), 75 O.R.(2d) 255 (Gen. Div.), refd to. [para. 53].

Stratford (Town) v. Ellsworth (1997), 157 Nfld. & P.E.I.R. 177; 486 A.P.R. 177 (P.E.I.C.A.), refd to. [para. 54].

Murphy v. Tignish Credit Union Ltd. and Aylward (1997), 147 Nfld. & P.E.I.R. 188; 459 A.P.R. 188 (P.E.I.C.A.), refd to. [para. 55].

Filion v. 689543 Ontario Ltd. (1994), 68 O.A.C. 389 (Div. Ct.), refd to. [para. 56].

Ungermann (Irving) Ltd. et al. v. Galanis et al. (1991), 50 O.A.C. 176; 4 O.R.(3d) 545; 83 D.L.R.(4th) 734 (C.A.), refd to. [para. 56].

Dawson et al. v. Rexcraft Storage and Warehouse Inc. et al. (1998), 111 O.A.C. 201; 164 D.L.R.(4th) 257 (C.A.), refd to. [para. 56].

Statutes Noticed:

Rules of Court (P.E.I.), Supreme Court Rules, rule 20.04(1), rule 20.04(2) [para. 52]; rule 21.01(1) [para. 31]; rule 21.01(3)(d) [para. 48]; rule 25.06(1) [para. 44]; rule 25.06(8) [para. 38]; rule 25.11(b), rule 25.11(c) [para. 48].

Authors and Works Noticed:

Masten, One Man Companies and Their Controlling Shareholders (1936), 14 Can. Bar Rev. 663, generally [para. 17].

Counsel:

Murray L. Murphy, for the moving party/defendant;

James W. Macnutt, Q.C., for the respon­dent/plaintiff.

This motion was heard on September 5, 2000, at Charlottetown, P.E.I., in Chambers before DesRoches, J., of the Prince Edward Island Supreme Court, Trial Division, who delivered the following judgment on October 3, 2000.