Matic et al. v. Waldner et al., 2014 MBQB 238

• Judge: Abra, J.
• Court: Court of Queen's Bench of Manitoba (Canada)
• Case Date: December 05, 2014
• Jurisdiction: Manitoba
• Citations: 2014 MBQB 238;(2014), 312 Man.R.(2d) 43 (QB)

Matic v. Waldner (2014), 312 Man.R.(2d) 43 (QB)

MLB headnote and full text

Temp. Cite: [2015] Man.R.(2d) TBEd. JA.007

Ante Matic and Matic Holdings Inc. (plaintiffs) v. Paul Waldner, William Waldner, Springhill Lumber Wholesale Ltd., Black Forest Holdings Ltd., Prairie Post Frame Construction Ltd., Walcan Holdings Ltd., Canamatic Ventures Ltd. and Can-American Corrugating Co. Ltd. (defendants)

Springhill Lumber Wholesale Ltd. and Black Forest Holdings Ltd. (plaintiffs by counterclaim) v. Ante Matic, Matic Holdings Inc. and Callidus Construction Group Ltd. (defendants by counterclaim)

(CI 12-01-76009; 2014 MBQB 238)

Indexed As: Matic et al. v. Waldner et al.

Manitoba Court of Queen's Bench

Winnipeg Centre

Abra, J.

December 5, 2014.

Summary:

Three actions were consolidated for trial pursuant to Queen's Bench Rule 6.01. In the first action, the plaintiffs, Matic and Matic Holdings, alleged that, as a result of an oral agreement, they were 30% shareholders in Springhill Lumber Wholesale Ltd. and three related companies. They sought a declaration accordingly. In the second action, Springhill claimed $150,000 and interest from Matic as repayment of a loan that it alleged it made to Matic. Matic counterclaimed alleging that he was wrongfully dismissed as general manager of Springhill. He sought general damages, exemplary damages and/or punitive damages. In its defence to the counterclaim, Springhill alleged that, in his capacity as general manager, Matic was not an employee, but that Matic Holdings was an independent contractor. Furthermore, Springhill alleged that it had just cause to dismiss Matic. In the third action, the defendant Can-Am Corrugating claimed $46,658.24 and interest from Matic as payment for materials and equipment that it alleged it sold to him. Matic denied that he owed any money for the materials and equipment.

The Manitoba Court of Queen's Bench dismissed all the claims of Matic and Matic Holdings against the defendants in the shareholder/breach of fiduciary duty action. In that same action, the court dismissed a counterclaim by Springhill and another corporate defendant against the plaintiffs for breach of fiduciary duty by Matic as a director and officer of those companies. In the second action, the court awarded judgment in Springhill's favour against Matic for $150,000 and interest at the rate of 1.5% per annum from August 5, 2011. The court dismissed Matic's counterclaim for wrongful dismissal and for damages in lieu of notice. In the third action, the court awarded judgment in favour of Can-Am Corrugating against Matic for $36,973.90 and interest at the rate of 26.82% from August 5, 2011.

Contracts - Topic 1444

Formation of contract - Agreements which are not contracts - Agreements to agree - The plaintiffs, Matic and Matic Holdings, alleged that, as a result of an oral agreement made at a meeting, they were 30% shareholders in the defendant company, Springhill - The Manitoba Court of Queen's Bench dismissed the action - No agreement was made at that meeting that Matic would become a shareholder - To the contrary, the discussions that took place were very general and non-committal - At most, they resulted in an agreement to agree, which was unenforceable at law - Any decisions that might have been made were on the clear and unequivocal understanding that, before there was any enforceable binding agreement: (a) Springhill's purchase from its present owners had to be completed; and (b) there had to be signed written agreements which had been prepared, reviewed and approved by the lawyers and/or accountants for both Springhill and Matic - It was understood that the written agreements would define the shareholdings in Springhill and Matic's participation as a shareholder and as general manager - The court did not believe Matic's testimony nor did it accept any of the plaintiffs' other evidence, that there was an agreement - Therefore, there was no agreement that the defendants had to disprove - See paragraphs 277 to 348.

Contracts - Topic 3860

Performance or breach - Time for performance - Options - Matic was general manager of Springhill Lumber Wholesale Ltd. - A related company shipped building materials to his home in Kelowna - Matic claimed that they were a gift - According to Waldner, the President of both companies, invoices accompanied the materials and those invoices showed an interest rate of 26.82% per annum - A Genie Lift was also delivered to Matic's home - Matic alleged that it was only given to him on loan and he did not have to pay for it unless he kept it - Waldner testified that it had been sold to Matic - The Manitoba Court of Queen's Bench held that Matic was well aware that he was being charged for the materials - He was also aware of the interest rate that was being charged if he failed to pay - Formal demand for payment was made on August 5, 2011, over three years ago and Matic had paid nothing - Regarding the Genie Lift, whether it was initially given to Matic on loan, with an option to purchase, or whether he bought it outright, had become irrelevant because of the passage of time - He had taken no steps to return it - It was obvious that the price was $25,000, and not $21,000 as Matic alleged, because that was the amount he was invoiced in November 2010 and there was no evidence that he ever raised an objection - The court also found that the interest rate was 26.82%, to be calculated on the principal amount from the date of demand for payment - See paragraphs 413 to 422.

Contracts - Topic 8502

Evidence - General - Proof of contract - [See Contracts - Topic 1444 ].

Damages - Topic 6703

Contracts - Employment relationship or contract - General principles - Wrongful dismissal - Tony Matic was general manager of Springhill Lumber Wholesale Ltd. - Matic claimed that he had been wrongly dismissed - The Manitoba Court of Queen's Bench held that Springhill had just cause to dismiss Matic but provisionally assessed damages - The court stated that "The quantum of damages for lack of reasonable notice can be increased if an employee has been induced to leave other employment for the position from which he or she is being dismissed. Although Tony Matic left his employment at McDiarmid Lumber in June 2010 to join Springhill, he was not induced to do so. By his own admission, he was the one who proposed to Paul Waldner [Springhill's President] that Springhill be purchased and that he work for Springhill. ...  The quantum of damages for wrongful dismissal can also be increased if the employer, in dismissing the employee, acts in bad faith. ...  Springhill did not demonstrate any bad faith towards Tony Matic at the time of or after his dismissal. ...  Another factor to consider in awarding damages for wrongful dismissal is whether the employee has mitigated his or her damage by finding, or attempting to find, alternative employment. Notwithstanding all of Tony Matic's bragging in his testimony about his knowledge and expertise about the lumber business, he gave no evidence about any steps that he took to find other employment after he was dismissed from Springhill. According to [Matic's daughter], Tony Matic was so depressed after his dismissal from Springhill that he did nothing about finding employment, until he joined her in operating the family lumber business almost a year after his dismissal. There was no independent evidence to support that depression and his inability to work. Nor was there any psychiatric or psychological evidence related to Tony Matic's mental health to support such a finding. ...  Tony Matic did not take reasonable steps to mitigate his damages." - The court found that, although Matic only worked at Springhill for nine months and failed to mitigate his damages, based upon his age, his experience and his senior position at Springhill, he would have been entitled to damages greater than those normally awarded for such a short period of employment, specifically six months' damages in lieu of reasonable notice - Nothing in Springhill's treatment of Matic justified a punitive damages award - On the day of his dismissal, it was Matic that caused the spectacle of the police having to be called because Matic would not leave the premises - His actions that day were just another example of his confrontational and belligerent manner - See paragraphs 406 to 412.

Damages - Topic 6753

Contracts - Employment relationship or contract - Breach by employer - Mitigation by employee - [See Damages - Topic 6703 ].

Equity - Topic 3607

Fiduciary or confidential relationships - General principles - Relationships which are not fiduciary - Matic was the general manager of Springhill Lumber Wholesale Ltd. - Callidus Construction Group Ltd. was an incorporated construction company whose shareholders were Matic and his daughter - The Manitoba Court of Queen's Bench held that Matic did not breach his fiduciary duty to Springhill by having Callidus participate in a construction project at Keewaywin First Nation, as it was not satisfied that he had a fiduciary duty to Springhill as it related to construction projects - Notwithstanding that Springhill had participated in construction projects for First Nations bands prior to its purchase, there was insufficient evidence to satisfy the court that Springhill intended to continue to do construction for First Nations bands that were its customers - Waldner, Springhill's President, testified that it would have been nice for Springhill to have made the amount of money that Callidus apparently made on the Keewaywin Project - However, Waldner's interest in that regard did not create a fiduciary duty for Matic - Matic might have had a fiduciary duty if Springhill had embarked upon a program of performing construction projects or had established a construction division after its purchase - See paragraphs 363 to 371.

Equity - Topic 3721

Fiduciary or confidential relationships - The employer-employee relationship - General - [See Equity - Topic 3607 ].

Interest - Topic 5308

Interest as damages (prejudgment interest) - Interest on payment of money or debt withheld - Rate of interest applicable - Matic was general manager of Springhill Lumber Wholesale Ltd. - Springhill loaned Matic $150,000 - At issue was the rate of interest payable on the loan - The Manitoba Court of Queen's Bench rejected Springhill's position that the rate of interest should be 12% per annum because that was the rate that Springhill charged its customers - Apparently the rate of interest was never discussed between Matic and Waldner, Springhill's President - For such a high rate of interest to be charged, there has to be an agreement between the lender and the borrower - Springhill could not unilaterally impose a rate of interest - Similarly, the court rejected the suggestion that the rate of interest should be that which Westoba Credit Union charged Springhill on its line of credit - Although the loan to Matic might have been paid from the line of credit, there was no evidence to support such a finding - The court held that the appropriate rate of interest to be charged was that of the tariff for pre- and post-judgment interest under the Queen's Bench Rules - The court ordered that interest would run from the date of demand, at the rate of 1.5% - See paragraphs 372 to 376.

Interest - Topic 5308

Interest as damages (prejudgment interest) - Interest on payment of money or debt withheld - Rate of interest applicable - [See Contracts - Topic 3860 ].

Master and Servant - Topic 303

Nature of relationship - What constitutes an employer-employee relationship - Matic was general manager of Springhill Lumber Wholesale Ltd. - Matic claimed that he had been wrongly dismissed - Springhill claimed that Matic was not an employee, rather his company was an independent contractor - The Manitoba Court of Queen's Bench held that, although consideration was being given to Matic becoming an independent contractor in the future, he was an employee at the time of his dismissal - As Springhill's general manager, Matic was not taking any financial risk, nor did he have any opportunity for profit in the performance of his duties, in that he was paid a salary without any bonus - He had no responsibility for investment - Although he managed the company on a day to day basis, Springhill's President and the CanAmerican Hutterite Colony, which owned all of the corporate defendants, had the ultimate authority - See paragraphs 377 to 380.

Master and Servant - Topic 343

Fiduciary duty - When owed - [See Equity - Topic 3607 ].

Master and Servant - Topic 1023

Contract of hiring - Employment contract - Parties - Employee - What constitutes - [See Master and Servant - Topic 303 ].

Master and Servant - Topic 7550

Dismissal or discipline of employees - Grounds - Cause or just cause defined - Matic was general manager of Springhill Lumber Wholesale Ltd. - Matic claimed that he had been wrongly dismissed - The Manitoba Court of Queen's Bench held that Springhill had just cause to dismiss Matic because of his abusive and bullying manner in his treatment of employees - Springhill also had grounds to dismiss Matic based on his attempts to entice employees to leave Springhill and join him in starting a competing lumber business - See paragraphs 381 to 405.

Master and Servant - Topic 7553

Dismissal of employees - Grounds - Misconduct or misconduct of business - [See Master and Servant - Topic 7550 ].

Master and Servant - Topic 7582

Dismissal or discipline of employees - Grounds - Conduct incompatible with employer's interests - [See Master and Servant - Topic 7550 ].

Master and Servant - Topic 7585

Dismissal of employees - Grounds - Threatening to open competing business - [See Master and Servant - Topic 7550 ].

Master and Servant - Topic 8000

Dismissal without cause - Notice of dismissal - What constitutes reasonable notice - [See Damages - Topic 6703 ].

Master and Servant - Topic 8064

Dismissal without cause - Damages - Mitigation - [See Damages - Topic 6703 ].

Practice - Topic 2120

Pleadings - Amendment of pleadings - Statement of claim - General - In a statement of claim in a shareholder/breach of fiduciary duty action, the plaintiffs, Tony Matic and Matic Holdings, pleaded that, in the agreement that was reached for Tony Matic to become a 30% shareholder in the defendant Springhill Lumber Wholesale Ltd., there was a term and condition that provided: "Financing of the purchase price of the business and the property would be obtained from Westoba with Tony providing his personal guarantees for 30% of the borrowing." - On the last day of evidence at trial, just before the defence closed its case, the plaintiffs moved to amend the amended statement of claim to add the words "if required" to the paragraph (i.e., "Financing of the purchase price of the business and the property would be obtained from Westoba with Tony providing his personal guarantees, if required , for 30% of the borrowing.") - The defendants opposed the proposed amendment - The Manitoba Court of Queen's Bench allowed the amendment - See paragraphs 48 to 50.

Practice - Topic 2134

Pleadings - Amendment of pleadings - At trial - After evidence taken - [See Practice - Topic 2120 ].

Practice - Topic 3560

Evidence - Exhibits - General - At the commencement of a trial, the parties tendered an Agreed List of Issues that the court should decide - There were 18 issues listed - The Manitoba Court of Queen's Bench ordered that the document not be marked as an exhibit because it was not an evidentiary document - See paragraph 268.

Cases Noticed:

P.P. (Portage) Holdings Inc. v. 346 Portage Avenue Inc. (1999), 138 Man.R.(2d) 217; 202 W.A.C. 217; 177 D.L.R.(4th) 358 (C.A.), refd to. [para. 279].

Rummery et al. v. Matthews et al. (2000), 146 Man.R.(2d) 1; 2000 MBQB 67, varied (2001), 153 Man.R.(2d) 229; 238 W.A.C. 229; 2001 MBCA 32, dist. [para. 332].

Gendis Inc. v. Richardson Oil & Gas Ltd., [1999] Man.R.(2d) Uned. 152; 1999 CarswellMan 533; 1 B.L.R.(3d) 120; 1999 CanLII 14523 (Q.B.), affd. (2000), 148 Man.R.(2d) 19; 224 W.A.C. 19; 2000 MBCA 33, dist. [para. 334].

R. v. CAE Industries Ltd. et al. (1985), 61 N.R. 19; 20 D.L.R.(4th) 347 (F.C.A.), affing. [1983] 2 F.C. 616 (T.D.), dist. [para. 340].

Canadian National Railway Co. v. Huntingdon Real Estate Investment Trust et al. (2010), 257 Man.R.(2d) 54; 2010 MBQB 195, dist. [para. 344].

Cohen v. Jonco Holdings Ltd. et al. (2005), 192 Man.R.(2d) 252; 340 W.A.C. 252; 2005 MBCA 48, refd to. [para. 352].

Canadian Aero Services Ltd. v. O'Malley et al., [1974] S.C.R. 592, refd to. [para. 365].

671122 Ontario Ltd. v. Sagaz Industries Canada Inc. et al., [2001] 2 S.C.R. 983; 274 N.R. 366; 150 O.A.C. 12; 2001 SCC 59, refd to. [para. 379].

Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701; 219 N.R. 161; 123 Man.R.(2d) 1; 159 W.A.C. 1, refd to. [para. 407].

Counsel:

Richard I. Good and Celia C.S. Ferguson, for the plaintiffs and defendants by counterclaim;

Jamie A. Kagan and Bailey J. Harris, for the defendants and plaintiffs by counterclaim.

This case was heard by Abra, J., of the Manitoba Court of Queen's Bench, Winnipeg Centre, who delivered the following decision on December 5, 2014.