Klewchuk et al. v. Switzer et al., 2001 ABQB 316

• Judge: Moore, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: September 14, 2000
• Citations: 2001 ABQB 316;(2001), 292 A.R. 205 (QB)

Klewchuk v. Switzer (2001), 292 A.R. 205 (QB)

MLB headnote and full text

Temp. Cite: [2001] A.R. TBEd. MY.024

Robert Klewchuk, Arkay Financial Holdings Ltd. and Arkay Casino Management and Equipment (1985) Ltd. (plaintiffs/defendants by counterclaim) and Kathy Klewchuk (plaintiff) v. Samuel Switzer (defendant/plaintiff by counterclaim) and Switzer's Investments Ltd. (defendant)

(Action No. 9601-17433; 2001 ABQB 316)

Indexed As: Klewchuk et al. v. Switzer et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

Moore, J.

April 19, 2001.

Summary:

Klewchuk and Switzer operated a casino business together during a 14 year relationship. Switzer carried out a secret plot to expropriate Klewchuk's business and reap all the profits himself. Switzer prepared a Landlord's Distress for Rent and seized all of Klewchuk's gaming equipment and supplies and took over his employees. Klewchuk et al. sued Switzer for damages for breach of fiduciary duty, breach of duty of good faith, conversion of his business and punitive damages. Switzer counterclaimed.

The Alberta Court of Queen's Bench allowed the action and dismissed the counterclaim.

Contracts - Topic 3502

Performance or breach - Obligation to perform - Good faith - Exercise of - Klewchuk and Switzer operated a casino business together during a 14 year relationship - Switzer carried out a secret plot to expropriate Klewchuk's business - He prepared a Landlord's Distress for Rent and seized all of Klewchuk's gaming equipment and supplies and took over his employees - Klewchuk et al. sued Switzer for damages - The Alberta Court of Queen's Bench found that the distress was illegal and the business was converted by Switzer - The relationship was a joint venture - Switzer breached his fiduciary duty to Klewchuk and his duty to contract in good faith - Damages were assessed on the basis of conversion - The court awarded general damages of $2.2M (50% of the projected joint venture revenue for three years) and punitive damages of $100,000 given Switzer's reprehensible conduct and as a deterrent - Given Switzer's refusal to make proper disclosure, the court also awarded prejudgment interest on the general damages at a higher rate - See paragraphs 86 to 146.

Damage Awards - Topic 524

Torts - Injury to goods or personalty - Conversion of business assets - [See Contracts - Topic 3502 ].

Damage Awards - Topic 2017

Exemplary or punitive damages - Illegal distress - [See Contracts - Topic 3502 ].

Damage Awards - Topic 2028

Exemplary or punitive damages - Conversion of business assets - [See Contracts - Topic 3502 ].

Equity - Topic 3650

Fiduciary or confidential relationships - Breach of fiduciary relationship - Joint ventures - [See Contracts - Topic 3502 ].

Interest - Topic 5011

Interest as damages (prejudgment interest) - Interest on nonpecuniary general damages - [See Contracts - Topic 3502 ].

Joint Venture - Topic 5

What constitutes a joint venture - Klewchuk and Switzer operated a casino business together during a 14 year relationship - Klewchuk provided the professional management, professional staff, gaming tables and other equipment - Switzer provided the big room, money delivery, hold-up insurance and advertising - Switzer prepared a Landlord's Distress for Rent and seized all of Klewchuk's gaming equipment and supplies and took over his employees - Klewchuk et al. sued Switzer for damages - The Alberta Court of Queen's Bench held that the distress was illegal - Switzer failed to prove there was a landlord-tenant relationship - The court held that the relationship was a joint venture - While Klewchuk and Switzer did not share profits, each was dependent on the other to have a successful business - See paragraphs 53 to 88.

Landlord and Tenant - Topic 164

The relationship - General - What constitutes - [See Joint Venture - Topic 5 ].

Landlord and Tenant - Topic 8810

Distress - Relief or bars to distress - Wrongful or irregular distress - Damages - [See Contracts - Topic 3502 ].

Torts - Topic 3095

Trespass - To goods - Conversion - What constitutes wrongful seizure and conversion - [See Contracts - Topic 3502 ].

Torts - Topic 3107

Trespass - To goods - Conversion - Damages - [See Contracts - Topic 3502 ].

Cases Noticed:

Street v. Mountford, [1985] 2 All E.R. 289; 61 N.R. 202 (H.L.), refd to. [para. 73].

Southern Music Ltd. v. Warsigmaga et al. (1980), 31 A.R. 441 (Q.B.), refd to. [para. 73].

Baker and Baker v. Gee, [1945] 3 W.W.R. 555 (Alta. C.A.), refd to. [para. 73].

Booker v. Palmer, [1942] 2 All E.R. 674 (C.A.), refd to. [para. 75].

Errington v. Errington, [1952] 1 All E.R. 149 (C.A.), refd to. [para. 76].

Traders Finance Corp. v. Primerano, [1955] O.W.N. 553 (H.C.), refd to. [para. 79].

Able Oil and Gas Installations Ltd. et al. v. Ethnicorp Foods International Inc. (1989), 96 A.R. 152 (Q.B. Master), refd to. [para. 82].

Seibel v. Dwyer Elevator Co., [1923] 2 W.W.R. 1051 (Sask. C.A.), affd. [1924] S.C.R. 530, refd to. [para. 85].

Hemlo Gold Mines Inc. v. Royal Oak Mines Inc. (1993), 52 C.P.R. (3d) 458 (Ont. Gen. Div.), refd to. [para. 92].

Opron Construction Co. v. Alberta (1994), 151 A.R. 241; 14 C.L.R.(2d) 97 (Q.B.), refd to. [para. 95].

Canada Deposit Insurance Corp. v. Canadian Commercial Bank (Liquidation) (1998), 236 A.R. 14 (Q.B.), refd to. [para. 96].

Mesa Operating Limited Partnership v. Amoco Canada Resources Ltd. (1994), 149 A.R. 187; 63 W.A.C. 187; 19 Alta. L.R.(3d) 38 (C.A.), refd to. [para. 97].

Bank of Nova Scotia v. Dunphy Leasing Enterprises Ltd. (1991), 120 A.R. 241; 8 W.A.C. 241 (C.A.), refd to. [para. 104].

Royal Bank of Canada v. Got (W.) & Associates Electric Ltd. et al. (1994), 150 A.R. 93 (Q.B.), affd. (1997), 196 A.R. 241; 141 W.A.C. 241 (C.A.), affd. [1999] 3 S.C.R. 408; 247 N.R. 1; 250 A.R. 1; 213 W.A.C. 1, refd to. [para. 104].

Blue Cove Packing Co. and Smith v. Theodore Landry & M.C. Ltée and Cormier (1981), 35 N.B.R.(2d) 527; 88 A.P.R. 527 (T.D.), affd. (1982), 42 N.B.R.(2d) 337; 110 A.P.R. 337 (C.A.), refd to. [para. 104].

Michaels et al. v. Red Deer College, [1976] 2 S.C.R. 324; 5 N.R. 99, refd to. [para. 127].

Asamera Oil Corp. v. Sea Oil and General Corp. - see Baud Corp. N.V. v. Brook.

Baud Corp. N.V. v. Brook, [1979] 1 S.C.R. 633; 23 N.R. 181; 12 A.R. 271, refd to. [para. 127].

Janiak v. Ippolito, [1985] 1 S.C.R. 146; 57 N.R. 241; 9 O.A.C. 1, refd to. [para. 127].

Costello and Dickhoff v. Calgary (City) (1997), 209 A.R. 1; 160 W.A.C. 1; 53 Alta. L.R.(3d) 15 (C.A.), leave to appeal refused (1998), 227 N.R. 149; 212 A.R. 398; 168 W.A.C. 398 (S.C.C.), refd to. [para. 127].

Vector Energy Inc. v. Pacific Gas and Electric Co., [2000] A.R. Uned. 165 (Q.B.), refd to. [para. 28].

Sylvan Lake Golf & Tennis Club Ltd. v. Performance Industries Ltd. and O'Connor (No. 2) (2000), 255 A.R. 329; 220 W.A.C. 329; 185 D.L.R.(4th) 269 (C.A.), leave to appeal granted (2000), 260 N.R. 392; 261 A.R. 400; 225 W.A.C. 400 (S.C.C.), refd to. [para. 137].

Colborne Capital Corp. et al. v. 542775 Alberta Ltd. et al. (1999), 228 A.R. 201; 188 W.A.C. 201; 69 Alta. L.R.(3d) 265 (C.A.), leave to appeal granted (1999), 249 N.R. 195; 266 A.R. 335; 228 W.A.C. 335 (S.C.C.), refd to. [para. 137].

Kiewit (Peter) and Sons' Co. v. Eakins Construction Ltd., [1960] S.C.R. 361, refd to. [Schedule X].

Davis Contractors Ltd. v. Fareham Urban District Council, [1956] A.C. 696 (H.L.), refd to. [Schedule X].

Petrogas Processing Ltd. v. Westcoast Transmission Co. (1988), 89 A.R. 321; 59 Alta. L.R.(2d) 118 (Q.B.), refd to. [Schedule X].

Petrogas Processing Ltd. v. Westcoast Transmission Co., [1989] 4 W.W.R. 272; 95 A.R. 112 (C.A.), refd to. [Schedule X].

Capital Quality Homes Ltd. v. Colwyn Construction Ltd. (1975), 61 D.L.R.(3d) 385 (Ont. C.A.), refd to. [Schedule X].

111 Niakwa Road Ltd. v. Duraps Corp. (1985), 37 Man.R.(2d) 250 (Q.B.), refd to. [Schedule X].

Mr. Convenience Ltd. v. 040502 N.B. Ltd. (1993), 137 N.B.R.(2d) 305; 351 A.P.R. 305 (C.A.), refd to. [Schedule X].

R.G.O. Office Products Ltd. v. Knoll North America Corp. (1996), 180 A.R. 1; 37 Alta. L.R.(3d) 113 (Q.B.), refd to. [Schedule X].

Central Mortgage and Housing Corp. v. Omega Investments Ltd. (1981), 34 N.B.R.(2d) 291; 85 A.P.R. 291 (C.A.), refd to. [Schedule X].

Ramrakha et al. v. Zinner et al. (1994), 157 A.R. 279; 77 W.A.C. 279; 24 Alta. L.R.(3d) 240 (C.A.), refd to. [Schedule X].

Wonsch Construction Co. v. National Bank of Canada - see Wonsch Construction Co. et al. v. Danzig Enterprises Ltd. et al.

Wonsch Construction Co. et al. v. Danzig Enterprises Ltd. et al. (1990), 42 O.A.C. 195; 75 D.L.R.(4th) 732 (C.A.), refd to. [Schedule X].

Luscar Ltd. and Norcen Energy Resources Ltd. v. Pembina Resources Ltd., [1995] 2 W.W.R. 153; 162 A.R. 35; 83 W.A.C. 35 (C.A.), refd to. [Schedule X].

Poulos v. Caravelle Homes Ltd. et al. (1995), 172 A.R. 211; 32 Alta. L.R.(3d) 76 (Q.B.), refd to. [Schedule X].

Poulos v. Caravelle Homes Ltd. et al. (1997), 196 A.R. 138; 141 W.A.C. 138; 49 Alta. L.R.(3d) 385 (C.A.), refd to. [Schedule X].

Cameron v. Willis (1908), 9 W.L.R. 224, refd to. [Schedule X].

Clarkson Co. v. Consortium Group Ltd. (1983), 40 O.R.(2d) 771 (H.C.), refd to. [Schedule X].

Fawell v. Andrew, [1917] 2 W.W.R. 400 (Sask. C.A.), refd to. [Schedule X].

Hoyes v. Creery, [1918] 1 W.W.R. 873 (B.C.C.A), refd to. [Schedule X].

Financial Collection Agencies Ltd. v. Elgarably and Marsy (1996), 182 A.R. 363; 38 Alta. L.R.(3d) 276 (Q.B. Master), refd to. [Schedule X].

Canadian Imperial Bank of Commerce v. Delta Masonry & Concrete Ltd. and Pfaff (1985), 65 A.R. 377; 41 Alta. L.R.(2d) 48 (Q.B. Master), refd to. [Schedule X].

Stewart v. Industrial Acceptance Corp., [1949] 1 W.W.R. 1154 (B.C.S.C.), refd to. [Schedule X].

Phillips v. 707739 Alberta Ltd. et al., [2000] 6 W.W.R. 280; 259 A.R. 201 (Q.B.), refd to. [Schedule X].

Gilham v. Ulm, [1923] 3 W.W.R. 853 (Sask. C.A.), refd to. [Schedule X].

Saint John River Steamship Co. v. Star Line Steamship Co. (1911), 40 N.B.R. 405 (C.A.), refd to. [Schedule X].

Spasic Estate v. Imperial Tobacco Ltd. et al. (2000), 135 O.A.C. 126 (C.A.), refd to. [Schedule X].

Donison v. Donison and Uncle Bill Foundation Inc. (1984), 35 Sask.R. 183 (C.A.), refd to. [Schedule X].

Wewayakum Indian Band v. Canada and Wawayakai Indian Band (1995), 99 F.T.R. 1 (T.D.), refd to. [Schedule X].

Bank of Nova Scotia v. Lockhart (1987), 75 A.R. 156 (Q.B.), refd to. [Schedule X].

Heriteau v. Capital Storage Co. - see Heriteau v. Morris (W.D.) Realty Ltd.

Heriteau v. Morris (W.D.) Realty Ltd., [1943] O.R. 724 (H.C.), refd to. [Schedule X].

Cross v. Albertson (1923), 25 O.W.N. 421 (H.C.), affd. (1924), 26 O.W.N. 3 (C.A.), refd to. [Schedule X].

Grenn v. Brampton Poultry Co. (1958), 13 D.L.R.(2d) 279 (Ont. H.C.), refd to. [Schedule X].

Whiten v. Pilot Insurance Co. et al. (1999), 117 O.A.C. 201; 42 O.R.(3d) 641 (C.A.), refd to. [Schedule X].

Buckley v. Russell (1884), Trinity Term; 47 Victoria 205, refd to. [Schedule X].

Pegg et al. v. Independent Order of Foresters (1901), 1 O.L.R. 97 (C.A.), refd to. [Schedule X].

C.W. Financial Corp. v. Westworld Computers Ltd., [1986] A.J. No. 1648 (Q.B.), refd to. [Schedule X].

Waisman, Ross & Associates v. Crown Trust Co. (1970), 9 D.L.R.(3d) 733 (S.C.C.), refd to. [Schedule X].

Purschke v. CRD Industries Inc. et al. (1993), 138 A.R. 297 (Q.B.), refd to. [Schedule X].

Khoury Real Estate Services Ltd. et al. v. Maritimes & Northeast Pipeline Management Ltd. (1999), 218 N.B.R.(2d) 58; 558 A.P.R. 58 (T.D.), refd to. [Schedule X].

Richmond Spadina Investments Inc. v. Incorporated Sixth Video et al. (1996), 17 O.T.C. 244; 6 R.P.R.(3d) 236 (Gen. Div.), refd to. [Schedule X].

Statutes Noticed:

Judgment Interest Act, S.A. 1984, c. J-0.5, sect. 2(3) [para. 144].

Authors and Works Noticed:

Bennett, Creditors' and Debtors' Rights, 1987-1988 (1988), c. 5, pp. 59 [Schedule X]; 60 [para. 83, Schedule X]; 61 [Schedule X].

Broom's Legal Maxims (10th Ed. 1939), pp. 637, 638, 639, 640 [Schedule X].

Chitty on Contracts (28th Ed. 1999), vol. 1, p. 1205 [Schedule X].

Cumming, Ronald C.C., and Wood, Roderick J., Alberta Personal Property Security Act Handbook (4th Ed. 1998), pp. 169, 173 [Schedule X].

Digest: Annotated British, Commonwealth and European Cases, Evidence (1988), vol. 22(1), pp. 267, 268, 269 [Schedule X].

Digest: Annotated British Commonwealth and European Cases (2nd Reissue) (1989), vol. 18, pp. 481, 482 [Schedule X].

Dunlop, C.R.B., Creditor-Debtor Law in Canada (1981), pp. 24, 25, 26 [Schedule X].

Dunlop, C.R.B., Creditor-Debtor Law in Canada (2nd Ed. 1995), pp. 286, 287, 288 [Schedule X].

Ellis, Mark Vincent, Fiduciary Duties in Canada (1999), p. 12(1-3) [Schedule X].

Fridman, Gerald Henry Louis, The Law of Contract (4th Ed. 1999), pp. 690, 691, 692 [Schedule X].

Halsbury's Laws of England, Evidence: Special Modes of Proof (4th Ed.), vol. 17, paras. 119, 120, 121 [Schedule X].

Klar et. al., Remedies in Tort (2001), vol. 1, pp. 4-30 [para. 104]; 4-32.2 [para. 137].

McGregor on Damages (14th Ed. 1980), c. 11, pp. 226 to 242 [Schedule X].

Practical Treatise on the Law of Distress for Rent and of Things Damage-feasant (1899), pp. 180, 181, 219, 220 [Schedule X].

Stevenson, W.A., and Côté, J.E., Civil Procedure Guide (1996), p. 1152 [Schedule X].

Williams and Rhodes, Canadian Law of Landlord and Tenant (6th Ed. 1988), vol. 1, pp. 8-85 [para. 85, Schedule X]; 8-91, 8-92 [Schedule X].

Woodfall, Landlord & Tenant (Release 29), paras. 9.135 to 9.142, 9.169 [Schedule X].

Counsel:

K.E. Staroszik, for the plaintiffs;

B.C. Yorke-Slader, for the defendants.

This action and counterclaim were heard on September 14, 2000, by Moore, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following decision on April 19, 2001.