Michel v. Lafrentz et al., (1997) 199 A.R. 81 (QB)

JudgePerras, J.
CourtCourt of Queen's Bench of Alberta (Canada)
Case DateFebruary 27, 1997
Citations(1997), 199 A.R. 81 (QB)

Michel v. Lafrentz (1997), 199 A.R. 81 (QB)

MLB headnote and full text

Herbert Michel (plaintiff) v. Helo Lafrentz, Uwe Lafrentz, Siegfried F. Gaida, Hans M. Reich and Lafrentz Road Services Ltd. (defendants)

Helo Lafrentz and Uwe Lafrentz (plaintiffs by counterclaim) v. Herbert Michel (defendant by counterclaim) (Action No. 8403-20696)

Herbert Michel (plaintiff) v. Helo Lafrentz, Uwe Lafrentz, M & L Leasing Ltd., M & L Leasing a Limited Partnership (defendants)

Helo Lafrentz and Uwe Lafrentz (plaintiffs by counterclaim) v. Herbert Michel (defendant by counterclaim)

(Action No. 8503-20409)

Indexed As: Michel v. Lafrentz et al.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Perras, J.

February 27, 1997.

Summary:

Michel sued the Lafrentzs, who were his partners in a road marking business (which was now in receivership) and a farming business, and the accountant and lawyer for the partnerships. Michel sought (1) compen­sation for management services or, alterna­tively, compensation on a quantum merit basis for managing the businesses; (2) dam­ages for lost opportunity to sell the farming business; (3) various declarations relating to the road marking business based on breach of contract or breach of fiduciary duties or, alternatively, a civil conspiracy; (4) an ac­counting of the road marking business; and (5) punitive and exemplary damages and interest on any awards.

The Alberta Court of Queen's Bench allowed the action in part, determined the issues and awarded Michel compensation for managing the farming business and loss of a proportionate share of profits from the road marking business. The court awarded Michel costs at 3.5 times column 6 on schedule "C" with no limiting rule to apply.

Barristers and Solicitors - Topic 1604.3

Relationship with client - Conflict of interest - Acting for partnership - Reich was solicitor for a business operated by a partnership - Reich had also acted as a director for the partnership's general part­ner and the partnership's operating com­pany - Reich became aware that Lafrentz and Michel, the partnership's two main principals, were having serious disputes - Reich sided with Lafrentz and assisted in his endeavours to have Lafrentz's company acquire business pursued by the partner­ship - In allowing Michel's action for damages, the Alberta Court of Queen's Bench held that Reich, by siding with Lafrentz, was in a conflict of interest and breached his fiduciary duties - However, the court refused to award damages against Reich, where he did not materially con­tribute to Michel's losses - The court held Reich jointly responsible for 10% of the Michel's costs.

Damages - Topic 1301.3

Exemplary or punitive damages - Interfer­ence with business - Lafrentz and Michel were limited partners in a partnership - Lafrentz was the majority owner and an equal shareholder in the partnership's general partner - Lafrentz failed to dis­close information to Michel about the partnership's business - Lafrentz caused demand letters to be made against the business and, without Michel's knowledge, met with the business's bank - The meet­ing resulted in the bank (with Lafrentz's consent) placing the partnership's operating company into receivership - Lafrentz did not advise the bank of potential contracts - Lafrentz's own company then moved into the road marking business - The Alberta Court of Queen's Bench concluded that Lafrentz breached the partnership agree­ment by competing with the partnership and breached several fiduciary duties owed to Michel - Michel was entitled to his proportionate share of Lafrentz's company's profits - See paragraphs 125 to 187 - The court denied exemplary and punitive dam­ages - See paragraphs 222 to 224.

Damages - Topic 1305

Exemplary or punitive damages - Breach of contract - [See Damages - Topic 1301.3 ].

Partnership - Topic 10

General - Partnership - What constitutes - Parties entered into a written contract to form a limited partnership for the purpose of operating a business - The partnership was made limited for tax purposes in Germany - The parties did not contem­plate that additional capital would be raised by taking in additional limited part­ners - The parties knew each other from university days and had worked together as managing directors of a company - Together they had successfully undertaken a major construction project - The Alberta Court of Queen's Bench concluded that, notwithstanding the limited partnership contract, the parties' true relationship with respect to the business was that of partners - The relationship was within the defini­tion of partnership under s. 1(d) of the Partnership Act - See paragraph 171.

Partnership - Topic 5006

Relations between partners - General - Duties of partners - Uwe Lafrentz, Helo Lafrentz and Michel were limited partners in a partnership - Uwe agreed to sell his 40% interest to Helo for one deutsche mark - The transaction was not disclosed to Michel - The sale's purpose was to limit Uwe's financial exposure - Michel sued for, inter alia, lost opportunity to acquire Uwe's interest - The Alberta Court of Queen's Bench rejected the claim - Neither the Partnership Act nor the articles of the limited partners required a with­drawing partner to offer his shares to the others in proportion to their interests - If a fiduciary duty existed, the non-disclos­ure did not breach it - Helo remained in the same position, except he had to con­tribute more capital - Although deplorable and, at least, in bad taste, the nondisclosure did not of itself lead to legal liability - See paragraphs 110 to 124.

Partnership - Topic 5009

Relations between partners - General - Partnership agreement - [See Damages - Topic 1301.3 ].

Partnership - Topic 5144

Relations between partners - Right to indemnity - Where transfer of limited partnership interest takes place - [See Partnership - Topic 5006 ].

Partnership - Topic 5163

Relations between partners - Fiduciary duties - Duty of disclosure - [See Dam­ages - Topic 1301.3 and Partnership - Topic 5006 ].

Partnership - Topic 5164

Relations between partners - Fiduciary duties - General partners to limited part­ners - [See Damages - Topic 1301.3 ].

Partnership - Topic 5166

Relations between partners - Fiduciary duties - Between limited partners - [See Damages - Topic 1301.3 and Partnership - Topic 5006 ].

Practice - Topic 7110.1

Costs - Party and party costs - Special orders - Increase in scale of costs - Con­duct of opposite party - A plaintiff obtained judgment against the defendants for various breaches for fiduciary duties relating to the partnership's operating company being placed into receivership - The plaintiff was not successful on all his claims including a claim for damages for civil conspiracy - The Alberta Court of Queen's Bench refused the plaintiff's request for costs on a solicitor and client basis, but awarded costs at 3.5 times col­umn 6 on schedule "C" with no limiting rule to apply - See paragraphs 228, 299.

Professional Occupations - Topic 1588

Accountants - Duty to client - Acting for partnership - Gaida, a chartered accoun­tant, provided accounting services for a limited partnership and its operating com­pany - Gaida was director of both the operating company and the partnership's general partner - In January 1981, Gaida discovered that Lafrentz and Michel, the partnership's two main principals, were having disputes - In March 1981, he resigned his directorships, but continued to provide accounting services - Gaida's services favoured Lafrentz - Lafrentz's company eventually acquired business previously pursued by the partnership - The Alberta Court of Queen's Bench con­cluded that Gaida was in a conflict of interest after January 1981 and had breached his fiduciary duty to Michel - The court refused to award damages against Gaida, where he did not materially contribute to Michel's losses - The court held Reich responsible for 10% of the Michel's costs - See paragraphs 207 to 216.

Torts - Topic 61

Negligence - Causation - Causal connec­tion - [See Barristers and Solicitors - Topic 1604.3 and Professional Occupa­tions - Topic 1588 ].

Torts - Topic 5083

Interference with economic relations - Conspiracy - What constitutes a conspir­acy - A plaintiff partner claimed, in the alternative, that the defendant partners and others conspired against him to deprive him of his interest in the partnership's business - The Alberta Court of Queen's Bench rejected the claim where the plain­tiff had not established either that the defendant had formed, expressly or by implication, a predominate intention or purpose to cause injury to the plaintiff or that the defendants knew that their unlaw­ful conduct would likely harm the plaintiff - See paragraphs 188 to 196.

Cases Noticed:

Hill v. Develcon Electronics Ltd. (No. 2) (1991), 92 Sask.R. 258; 37 C.C.E.L. 19 (Q.B.), refd to. [para. 91].

Frame v. Smith and Smith, [1987] 2 S.C.R. 99; 78 N.R. 40; 23 O.A.C. 84; 42 D.L.R.(4th) 81, appld. [para. 120].

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57; 61 D.L.R.(4th) 14; 35 E.T.R. 1, refd to. [para. 122].

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; 117 D.L.R.(4th) 161; [1994] 9 W.W.R. 609, refd to. [para. 122].

Canadian Aero Service Ltd. v. O'Malley, [1974] S.C.R. 592; 40 D.L.R.(3d) 371, refd to. [para. 173].

155569 Canada Ltd. v. 248524 Alberta Ltd. et al. (1995), 170 A.R. 183 (Q.B.), refd to. [para. 176].

Levy Russell Ltd. v. Tecmotiv Inc. (1994), 13 B.L.R.(2d) 1 (Ont. Gen. Div.), refd to. [para. 181].

Guerin v. Canada, [1984] 2 S.C.R. 335; 55 N.R. 161; 13 D.L.R.(4th) 321, refd to. [para. 185].

Anderson, Smyth & Kelly Customs Bro­kers Ltd. v. World Wide Customs Bro­kers Ltd. et al. (1996), 184 A.R. 81; 122 W.A.C. 81 (C.A.), refd to. [para. 185].

Canada Cement LaFarge Ltd. et al. v. British Columbia Lightweight Aggregate Ltd. et al., [1983] 1 S.C.R. 452; 47 N.R. 191; [1983] 6 W.W.R. 385, refd to. [para. 189].

Ramrakha et al. v. Zinner et al. (1994), 157 A.R. 279; 77 W.A.C. 279 (C.A.), refd to. [para. 206].

Colborne Capital Corp. et al. v. 542775 Alberta Ltd. et al. (1995), 171 A.R. 241 (Q.B.), refd to. [para. 223].

PWA Corp. v. Gemini Group Automated Distribution Systems Inc. et al. (1993), 64 O.A.C. 274; 103 D.L.R.(4th) 609 (C.A.), refd to. [Appendix A].

820099 Ontario Inc. v. Ballard (Harold E.) Ltd. (1991), 3 B.L.R.(2d) 113 (Ont. Div. Ct.), refd to. [Appendix A].

Northern & Central Gas Corp. v. Hillcrest Collieries Ltd., [1976] 1 W.W.R. 481 (Alta. T.D.), refd to. [Appendix A].

Westfair Foods Ltd. v. Watt et al., [1990] 4 W.W.R. 685; 106 A.R. 40 (Q.B.), refd to. [Appendix A].

Chicago Blower Corp. v. 141209 Canada Ltd. and Transregent Holdings Ltd. et al. (1988), 56 Man.R.(2d) 276; 40 B.L.R. 201 (Q.B.), refd to. [Appendix A].

Dusik v. Newton et al. (1985), 62 B.C.L.R. 1 (C.A.), refd to. [Appendix A].

Beamish v. Solnick et al. (1980), 10 B.L.R. 224 (Ont. H.C.), refd to. [Appen­dix A].

Oliver v. Ruge et al. (1989), 46 B.L.R. 50 (Ont. H.C.), refd to. [Appendix A].

Bell and Stewart v. Source Data Control Ltd. and Hood et al. (1988), 29 O.A.C. 134; 40 B.L.R. 10 (C.A.), refd to. [Ap­pendix A].

Davis v. Ouellette (1981), 27 B.C.L.R. 162 (S.C.), refd to. [Appendix A].

Dean v. MacDowell (1878), 8 Ch. D. 345 (C.A.), refd to. [Appendix A].

Cameron v. Willis (1908), 9 W.L.R. 224 (Alta. T.D.), refd to. [Appendix A].

Russell v. Austwick (1826), 1 Sim. 52, refd to. [Appendix A].

Molchan v. Omega Oil & Gas Ltd. et al., [1988] 1 S.C.R. 348; 83 N.R. 25; 87 A.R. 81; 47 D.L.R.(4th) 481, refd to. [Appendix A].

Lapierre v. Young (1980), 117 D.L.R.(3d) 643 (Ont. H.C.), refd to. [Appendix A].

Bickenden v. London Loan & Savings Co. et al., [1934] 3 D.L.R. 465 (P.C.), refd to. [Appendix A].

Commerce Capital Trust Co. v. Berk, Wall, Chadwick et al. (1989), 33 O.A.C. 373; 57 D.L.R.(4th) 759 (C.A.), refd to. [Appendix A].

Bank of Nova Scotia v. Omni Construction Ltd., Telfer Investments Ltd., Schwartz, Bauer and A Solicitor, [1981] 3 W.W.R. 301; 10 Sask.R. 79 (Q.B.), affd. [1981] 4 W.W.R. 577; 22 Sask.R. 161 (C.A.), refd to. [Appendix A].

McGrath and Romau Ventures Ltd. v. Goldman, Kemp et al., [1976] 1 W.W.R. 743 (B.C.S.C.), refd to. [Appendix A].

Jacks v. Davis, [1983] 1 W.W.R. 327 (B.C.C.A.), refd to. [Appendix A].

Blundon et al. v. Storm (1972), 20 D.L.R.(3d) 413 (S.C.C.), refd to. [Ap­pendix A].

Dalton Cartage Co. v. Continental Insur­ance Co. and St. Paul Fire and Marine Insurance Co., [1982] 1 S.C.R. 164; 40 N.R. 135; 131 D.L.R.(3d) 559, refd to. [Appendix A].

Miller (Ed.) Sales and Rentals Ltd. v. Caterpillar Tractor Co. et al. (1994), 151 A.R. 1; 17 Alta. L.R.(3d) 251 (Q.B.), revd. (1996), 187 A.R. 81; 127 W.A.C. 81 (C.A.), refd to. [Appendix A].

Trimac Ltd. v. C-I-L Inc. (1989), 99 A.R. 30; 69 Alta. L.R.(2d) 113 (Q.B.), refd to. [Appendix A].

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; 85 D.L.R.(4th) 129, refd to. [Appendix A].

Penkala v. Lockwood (1991), 118 A.R. 132; 80 Alta. L.R.(2d) 145 (Q.B.), refd to. [Appendix A].

Royal Bank of Canada v. Neher, [1985] 5 W.W.R. 667; 64 A.R. 22 (Q.B. Master), refd to. [Appendix A].

Claiborne Industries Ltd. et al. v. National Bank of Canada et al. (1989), 34 O.A.C. 241; 59 D.L.R.(4th) 533 (C.A.), refd to. [Appendix A].

Capital City Savings and Credit Union Ltd. v. Hadley Mechanical Services Ltd. et al. (1990), 103 A.R. 290 (Q.B. Master), refd to. [Appendix A].

R. v. Warnock Hersey Co. (1959), 30 W.W.R.(N.S.) 193 (Alta. Dist. Ct.), refd to. [Appendix A].

R. v. Graat, [1982] 2 S.C.R. 819; 45 N.R. 451; 2 C.C.C.(3d) 365, refd to. [Appen­dix A].

R. v. Century 21 Ramos Realty Inc. and Ramos (1987), 19 O.A.C. 25; 58 O.R.(2d) 737 (C.A.), refd to. [Appendix A].

Novel Energy (North America) Ltd. v. Glowicki et al. (1994), 148 A.R. 161; 16 Alta. L.R.(3d) 26 (Q.B.), refd to. [Ap­pendix A].

Foss v. Harbottle (1843), 67 E.R. 189, refd to. [Appendix A].

Atkins & Durbow Ltd. v. Bell (1957), 10 D.L.R.(2d) 484 (B.C.C.A.), refd to. [Ap­pendix A].

Authors and Works Noticed:

Gower, L.C.B., Principles of Modern Company Law (4th Ed. 1979), pp. 644, 645, 656 [Appendix A].

Counsel:

Harold W. Veale, Q.C., and Grant S. Dun­lop (Ogilvie and Company), for the plaintiff, Herbert Michel;

J.P. Brumlik, Q.C. (Brumlik Lees), for the defendants, Helo Lafrentz, Uwe Lafrentz and Lafrentz Road Services;

Daniel P. Carroll (Field & Field), for the defendants, Siegfried F. Gaida and Hans M. Reich.

This case was heard before Perras, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following reasons for judgment on February 27, 1997.

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7 practice notes
  • Lafrentz v. M & L Leasing, 2000 ABQB 714
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • June 26, 2000
    ...business; and (5) punitive and exemplary damages and interest on any awards. The Alberta Court of Queen's Bench, in a decision reported 199 A.R. 81, allowed the action in part, determined the issues and awarded Michel compensation for managing the farming business on a quantum meruit basis ......
  • Michel v. Lafrentz, (1998) 219 A.R. 192 (CA)
    • Canada
    • Court of Appeal (Alberta)
    • July 9, 1998
    ...the road marking business and the accountant and lawyer for the partnerships. The Alberta Court of Queen's Bench, in a decision reported 199 A.R. 81, allowed the action in part and found the Lafrentzs liable to Michel. The court ordered an accounting. The Lafrentzs appealed and the accounti......
  • Michel v. Lafrentz et al., (1999) 232 A.R. 62 (CA)
    • Canada
    • Court of Appeal (Alberta)
    • January 25, 1999
    ...business; and (5) punitive and exemplary damages and interest on any awards. The Alberta Court of Queen's Bench, in a decision reported 199 A.R. 81, allowed the action in part, determined the issues and awarded Michel compensation for managing the farming business and loss of a proportionat......
  • Michel v. Lafrentz et al., (1999) 232 A.R. 82 (CA)
    • Canada
    • Court of Appeal (Alberta)
    • January 22, 1999
    ...business; and (5) punitive and exemplary damages and interest on any awards. The Alberta Court of Queen's Bench, in a decision reported 199 A.R. 81, allowed the action in part, determined the issues and awarded Michel compensation for managing the farming business on a quantum meruit basis ......
  • Request a trial to view additional results
7 cases
  • Lafrentz v. M & L Leasing, 2000 ABQB 714
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • June 26, 2000
    ...business; and (5) punitive and exemplary damages and interest on any awards. The Alberta Court of Queen's Bench, in a decision reported 199 A.R. 81, allowed the action in part, determined the issues and awarded Michel compensation for managing the farming business on a quantum meruit basis ......
  • Michel v. Lafrentz, (1998) 219 A.R. 192 (CA)
    • Canada
    • Court of Appeal (Alberta)
    • July 9, 1998
    ...the road marking business and the accountant and lawyer for the partnerships. The Alberta Court of Queen's Bench, in a decision reported 199 A.R. 81, allowed the action in part and found the Lafrentzs liable to Michel. The court ordered an accounting. The Lafrentzs appealed and the accounti......
  • Michel v. Lafrentz et al., (1999) 232 A.R. 62 (CA)
    • Canada
    • Court of Appeal (Alberta)
    • January 25, 1999
    ...business; and (5) punitive and exemplary damages and interest on any awards. The Alberta Court of Queen's Bench, in a decision reported 199 A.R. 81, allowed the action in part, determined the issues and awarded Michel compensation for managing the farming business and loss of a proportionat......
  • Michel v. Lafrentz, (1998) 216 A.R. 317 (CA)
    • Canada
    • Court of Appeal (Alberta)
    • June 26, 1998
    ...business; and (5) punitive and exemplary damages and interest on any awards. The Alberta Court of Queen's Bench, in a decision reported 199 A.R. 81, allowed the action in part, determined the issues and awarded Michel compensation for managing the farming business and loss of a proportionat......
  • Request a trial to view additional results

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