Kidder v. Photon Control Inc., 2012 BCCA 327

• Judge: Donald, D. Smith and Hinkson, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: August 07, 2012
• Jurisdiction: British Columbia
• Citations: 2012 BCCA 327;(2012), 326 B.C.A.C. 86 (CA)

Kidder v. Photon Control Inc. (2012), 326 B.C.A.C. 86 (CA);

    554 W.A.C. 86

MLB headnote and full text

Temp. Cite: [2012] B.C.A.C. TBEd. AU.003

Photon Control Inc. (appellant/plaintiff) v. John Kidder (respondent/defendant)

(CA039293)

John Kidder (respondent/plaintiff) v. Photon Control Inc. (appellant/defendant)

(CA039294; 2012 BCCA 327)

Indexed As: Kidder v. Photon Control Inc.

British Columbia Court of Appeal

Donald, D. Smith and Hinkson, JJ.A.

August 7, 2012.

Summary:

Kidder sued Photon Control Inc. for damages for wrongful dismissal (the wrongful dismissal action). In separate proceedings, Photon sued Kidder, in an effort to rescind a loan agreement with Kidder, and to obtain repayment of monies paid pursuant to that loan agreement (the rescission action). Kidder counterclaimed in the rescission action to enforce the full amount of his entitlement pursuant to the loan agreement. The actions were heard together.

The British Columbia Supreme Court, in a decision reported [2011] B.C.T.C. Uned. 1016, allowed Kidder's wrongful dismissal action but dismissed Photon's rescission action. The court allowed Kidder's counterclaim in the rescission action. Photon appealed the orders in both actions.

The British Columbia Court of Appeal dismissed the appeals in both the wrongful dismissal and rescission actions.

Company Law - Topic 4603

Officers and agents - Duty to company - Fiduciary duty - Kidder was chief executive officer of a start-up technology company - He deferred his salary to facilitate company financing - That indebtedness ($340,000 approx.) was accounted for as a debt subordinated to all other obligations of the company - That company later merged with associated companies to become Photon, with Kidder as president - Over the years, the indebtedness to Kidder was accounted for in a number of ways - Eventually, a loan agreement was executed, providing for repayment - Thereafter, when Kidder was not re-elected to the Board, Photon terminated his employment - Kidder sued for damages for wrongful dismissal - Photon ceased making loan payments and sued Kidder alleging rescission based on breaches of fiduciary duty by Kidder during contract negotiations (i.e., lack of disclosure) - The trial judge allowed the wrongful dismissal action, but dismissed the rescission action - The British Columbia Court of Appeal affirmed the decision - The court addressed the fiduciary duty issue where Kidder was both the president of a company and a creditor and discussed the test for wrongful dismissal in these circumstances.

Equity - Topic 3646

Fiduciary or confidential relationships - Breach of fiduciary relationship - By director or officer of company - [See Company Law - Topic 4603 ].

Master and Servant - Topic 7582

Dismissal or discipline of employees - Grounds - Conduct incompatible with employer's interests (incl. breach of fiduciary duty) - [See Company Law - Topic 4603 ].

Cases Noticed:

JEL Investments Ltd. v. Boxer Capital Corp. et al. (2011), 303 B.C.A.C. 79; 512 W.A.C. 79; 18 B.C.L.R.(5th) 75; 2011 BCCA 142, refd to. [para. 38].

Truong v. British Columbia et al. (1999), 128 B.C.A.C. 240; 208 W.A.C. 240; 67 B.C.L.R.(3d) 234; 1999 BCCA 513, refd to. [para. 39].

Sharbern Holding Inc. v. Vancouver Airport Centre Ltd. et al., [2011] 2 S.C.R. 175; 416 N.R. 1; 306 B.C.A.C. 1; 516 W.A.C. 1; 2011 SCC 23, refd to. [para. 40].

Hoban Construction Ltd. et al. v. Alexander (2012), 317 B.C.A.C. 116; 540 W.A.C. 116; 2012 BCCA 75, refd to. [para. 44].

Perez v. Galambos et al., [2009] 3 S.C.R. 247; 394 N.R. 209; 276 B.C.A.C. 272; 468 W.A.C. 272; 2009 SCC 48, refd to. [para. 51].

McInerney v. MacDonald, [1992] 2 S.C.R. 138; 137 N.R. 35; 126 N.B.R.(2d) 271; 317 A.P.R. 271, refd to. [para. 52].

Canson Enterprises Ltd. et al. v. Boughton & Co. et al., [1991] 3 S.C.R. 534; 131 N.R. 321; 6 B.C.A.C. 1; 13 W.A.C. 1, refd to. [para. 52].

Aegon Capital Management Inc. et al. v. BCE Inc. et al., [2008] 3 S.C.R. 560; 383 N.R. 119; 2008 SCC 69, refd to. [para. 53].

BCE Inc. v. 1976 Debentureholders - see Aegon Capital Management Inc. et al. v. BCE Inc. et al.

Radhakrishnan v. University of Calgary Faculty Association et al. (2002), 312 A.R. 143; 281 W.A.C. 143; 215 D.L.R.(4th) 624; 2002 ABCA 182, refd to. [para. 55].

Canadian Aero Service Ltd. v O'Malley, [1974] S.C.R. 592; 40 D.L.R.(3d) 371, refd to. [para. 56].

DeJesus v. Sharif (2010), 284 B.C.A.C. 243; 481 W.A.C. 243; 2010 BCCA 121, refd to. [para. 60].

Felker v. Cunningham et al. (2000), 135 O.A.C. 172; 191 D.L.R.(4th) 734 (C.A.), refd to. [para. 63].

Hodgkinson v. Simms et al., [1994] 3 S.C.R. 377; 171 N.R. 245; 49 B.C.A.C. 1; 80 W.A.C. 1, refd to. [para. 67].

Munro v. Munro Estate et al., [1995] 5 W.W.R. 760; 57 B.C.A.C. 137; 94 W.A.C. 137; 4 B.C.L.R.(3d) 250 (C.A.), refd to. [para. 78].

Baker (Charles) Ltd. v. Baker and Baker, [1954] O.R. 418, refd to. [para. 81].

Human Rights Commission (Ont.) and O'Malley v. Simpsons-Sears, [1985] 2 S.C.R. 536; 64 N.R. 161; 12 O.A.C. 241, refd to. [para. 92].

Jedfro Investments (U.S.A.) Ltd. et al. v. Jacyk Estate et al., [2007] 3 S.C.R. 679; 369 N.R. 329; 232 O.A.C. 385; 2007 SCC 55, refd to. [para. 98].

Barton Insurance Brokers Ltd. v. Irwin et al. (1999), 119 B.C.A.C. 109; 194 W.A.C. 109; 63 B.C.L.R.(3d) 315; 1999 BCCA 73, refd to. [para. 104].

Anderson, Smyth & Kelly Customs Brokers Ltd. v. World Wide Customs Brokers Ltd. et al. (1996), 184 A.R. 81; 122 W.A.C. 81; 39 Alta. L.R.(3d) 411; 1996 ABCA 169, refd to. [para. 107].

Toneguzzo-Norvell et al. v. Savein and Burnaby Hospital, [1994] 1 S.C.R. 114; 162 N.R. 161; 38 B.C.A.C. 193; 62 W.A.C. 193, refd to. [para. 118].

Authors and Works Noticed:

Chitty on Contracts (30th Ed. 2008), vol. 1, pp. 563, 564 [para. 85].

Counsel:

B. Cramer and F. Lamer, for the appellant;

A. MacKay, for the respondent.

These appeals were heard in Vancouver, British Columbia, on March 15 and 16, 2012, before Donald, D. Smith and Hinkson, JJ.A., of the British Columbia Court of Appeal. The decision of the court was delivered on August 7, 2012, by Hinkson, J.A.