Kulak et al. v. Clark (A.G.) Holdings Ltd. et al., 2013 ABQB 360

• Judge: Verville, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: June 25, 2013
• Citations: 2013 ABQB 360;(2013), 564 A.R. 287 (QB)

Kulak v. Clark (A.G.) Holdings Ltd. (2013), 564 A.R. 287 (QB)

MLB headnote and full text

Temp. Cite: [2013] A.R. TBEd. JL.021

Laird Kulak and DLK Management Services Ltd. (plaintiffs/respondents) v. A.G. Clark Holdings Ltd., Giebelhaus Developments Ltd., and 680262 Alberta Ltd., carrying on business as Clark Builders, formerly known as Clark-Bowler, Clark Bowler and Douglas Cannam (defendants/applicants)

(0003 13312; 2013 ABQB 360)

Indexed As: Kulak et al. v. Clark (A.G.) Holdings Ltd. et al.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Verville, J.

June 25, 2013.

Summary:

The plaintiffs, Laird Kulak (Kulak) and DLK Management Services Ltd. (DLK), brought an action alleging that they held a partnership interest in the corporate partnership of the defendants, A.G. Clark Holdings Ltd., Giebelhaus Developments Ltd., and 680262 Alberta Ltd. (680262) which operated as Clark Builders. The plaintiffs also alleged that the shares of 680262 were held in trust by the defendant Cannam on behalf of DLK and others. At the close of the plaintiffs' case, the defendants applied for a nonsuit.

The Alberta Court of Queen's Bench, in a decision reported at [2012] A.R. Uned. 753, dismissed the application. The trial proceeded.

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

Partnership - Topic 10

General - Partnership - What constitutes - The plaintiffs, Laird Kulak (Kulak) and DLK Management Services Ltd. (DLK), brought an action alleging that they held a partnership interest in the corporate partnership of the defendants, A.G. Clark Holdings Ltd., Giebelhaus Developments Ltd., and 680262 Alberta Ltd. (680262) which operated as Clark Builders - The plaintiffs also alleged that the shares of 680262 were held in trust by the defendant Cannam on behalf of DLK and others - Kulak worked for Clark Builders as a project manager - The plaintiffs led evidence that there were discussions about Kulak and others becoming partners - On September 19, 1996, Clark, as president of Clark Builders, wrote to Deloitte & Touche advising them that Clark Builders was finalizing the admission of Kulak, Cannam (a chartered accountant), and another employee, Hunt, into the partnership of Clark Builders - Organizational documents including share and director documentation for 680262 were sent to Clark Builders - Those documents contemplated that a single share would be issued to each of Cannam, Kulak and Hunt - The corporate documents were never executed by Kulak, nor was the $3 consideration for the shares in 680262 ever paid - The defendants argued that at all material times, Clark and Giebelhaus (through their corporate entities) were the only partners in Clark Builders - They further stated that Clark continued to negotiate with Kulak after a number of the alleged representations were made, speaking with consultants to discuss methods by which to admit potential new partners - These demonstrated that Clark never believed Kulak was a partner - As well, Giebelhaus, who had to agree to the admission of any new partner, was never approached about and never agreed to the admission of either Kulak or DLK - The Alberta Court of Queen's Bench dismissed the action - The "three essential elements of a partnership were: 1) a business, 2) carried on in common, 3) with a view to profit." - Here, the existence of a partnership was not in dispute - The issue was whether Kulak or DLK was one of the partners - The court considered the totality of the circumstances and found that despite the questions raised by Cannam's accounting, Kulak's admissions and the other factors overwhelmingly supported a finding that neither Kulak nor DLK ever became a partner.

Partnership - Topic 11

General - Partner - Who constitutes - [See Partnership - Topic 10 ].

Cases Noticed:

Backman v. Minister of National Revenue, [2001] 1 S.C.R. 367; 266 N.R. 246; 2001 SCC 10, refd to. [para. 69].

Dallin v. Montgomery et al. (2010), 498 A.R. 269; 2010 ABQB 470, refd to. [para. 69].

Prince Albert Co-operative Association Ltd. v. Rybka (2010), 362 Sask.R. 232; 500 W.A.C. 232; 2010 SKCA 144, refd to. [para. 69].

Pen-Bro Holdings Ltd. et al. v. Demchuk et al. (2007), 419 A.R. 313; 2007 ABQB 282 (Master), refd to. [para. 69].

Volzke Construction Ltd. v. Westlock Foods Ltd. (1986), 70 A.R. 300 (C.A.), refd to. [para. 69].

Boychuk v. Boychuk (1975), 55 D.L.R.(3d) 751, refd to. [para. 69].

Prothroe v. Adams et al. (1997), 203 A.R. 321 (Q.B.), refd to. [para. 69].

Radojcic v. Ryall, Walker & Radojcic, [1996] O.J. No. 8 (Gen. Div.), refd to. [para. 69].

Maize v. McFarlane, [1919] O.J. No. 337 (H.C. Div.), refd to. [para. 69].

Devon Canada Corp. v. PE-Pittsfield LLC et al. (2008), 446 A.R. 62; 442 W.A.C. 62; 2008 ABCA 393, refd to. [para. 69].

Counsel:

Roger C. Stephens (Simons & Stephens), for the plaintiffs;

Donald J. Wilson, Patrick Stratton and Alexandra C. Bochinski (Davis LLP), for the defendants.

This action was heard on April 23-26, 2013, by Verville, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following reasons for judgment on June 25, 2013.