Oraas v. James, (2005) 381 A.R. 128 (QB)

• Judge: Veit, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: July 13, 2005
• Citations: (2005), 381 A.R. 128 (QB);2005 ABQB 539

Oraas v. James (2005), 381 A.R. 128 (QB)

MLB headnote and full text

Temp. Cite: [2005] A.R. TBEd. JL.120

Michael James (appellant/defendant) v. Tracey Oraas (respondent/plaintiff)

(0503 00300; 2005 ABQB 539)

Indexed As: Oraas v. James

Alberta Court of Queen's Bench

Judicial District of Edmonton

Veit, J.

July 13, 2005.

Summary:

The plaintiff placed her vehicle with Westcoast Auto Centre for sale by consignment. Westcoast was a division of 1045710 Alberta Ltd. The plaintiff's vehicle was not returned to her and she never received any payment for it. The plaintiff obtained judgment against Westcoast, 1045710, and two individuals that she had dealt with at Westcoast. She also obtained judgment against James, who had incorporated 1045710 and was a director of that company. The trial judge pierced the corporate veil and found that James aided and abetted a fraud committed by the other defendants. The trial judge also found negligence by James. James appealed from the judgment against him.

The Alberta Court of Queen's Bench allowed the appeal and set aside the judgment against James. The trial judge erred in piercing the corporate veil. There was also no causal link between any negligence by James and the plaintiff's loss.

Company Law - Topic 312

Nature of corporations - Lifting the corporate veil - Principals - "Directing mind and will" of company - The plaintiff placed her vehicle with Westcoast Auto Centre for sale by consignment - Westcoast was a division of 1045710 Alberta Ltd. - The plaintiff's vehicle was not returned to her and she never received any payment for it - The plaintiff obtained judgment against Westcoast, 1045710, and two individuals that she had dealt with at Westcoast - The plaintiff also obtained judgment against James - James had incorporated 1045710 and was a director of that company - The trial judge pierced the corporate veil and found that James aided and abetted a fraud committed by the other defendants - James appealed - The Alberta Court of Queen's Bench allowed the appeal - The trial judge erred in piercing the corporate veil in the absence of evidence that James was the controlling mind of 1045710 - It was not sufficient, in order to impose liability on someone who was not the controlling mind of a corporation, to find that the person provided assistance to a fraudster - It was necessary to find that the person provided "knowing" assistance -There was no evidence that James met that test - This was not a situation where maintenance of the corporate veil was "flagrantly opposed to justice".

Company Law - Topic 314

Nature of corporations - Lifting the corporate veil - Fraudulent conduct, conversion or conveyance by company officers - [See Company Law - Topic 312 ].

Company Law - Topic 315

Nature of corporations - Lifting the corporate veil - Preventing injustices - [See Company Law - Topic 312 ].

Cases Noticed:

Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. et al. (1996), 2 O.T.C. 146 (Gen. Div.), refd to. [para. 3].

Kosmopoulos et al. v. Constitution Insurance Co. of Canada et al., [1987] 1 S.C.R. 2; 74 N.R. 360; 21 O.A.C. 4, refd to. [para. 3].

Saskatchewan Wheat Pool v. Canada, [1983] 1 S.C.R. 205; 45 N.R. 425, refd to. [para. 3].

Palmer v. Van Keulen et al. (2004), 375 A.R. 341; 2005 ABQB 239, refd to. [para. 4].

Maher v. Edmonton Drain Cleaners Ltd., [2004] A.R. Uned. 713; 2004 ABQB 829, refd to. [para. 4].

Ayrton v. PRL Financial (Alta.) Ltd. et al. (2005), 370 A.R. 141; 2005 ABQB 311, refd to. [para. 4].

Barrett v. McClellan et al. (2004), 350 A.R. 385; 2004 ABQB 22, refd to. [para. 4].

Tottrup v. Lund et al. (2000), 255 A.R. 204; 220 W.A.C. 204; 81 Alta. L.R.(3d) 27; 2000 ABCA 121, refd to. [para. 4].

Hunt v. Carey Canada Inc. - see Hunt v. T & N plc et al.

Hunt v. T & N plc et al., [1990] 2 S.C.R. 959; 117 N.R. 321, refd to. [para. 4].

Royplast Ltd. v. Alberta (Treasury Branches), [2003] A.R. Uned. 60; 2003 ABQB 130, refd to. [para. 4].

Phillips v. 707739 Alberta Ltd. et al. (2000), 259 A.R. 201; 2000 ABQB 139, refd to. [para. 4].

Housen v. Nickolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 211 D.L.R.(4th) 577; 2002 SCC 33, refd to. [para. 4].

R. v. Burns (R.H.), [1994] 1 S.C.R. 656; 165 N.R. 374; 42 B.C.A.C. 161; 67 W.A.C. 161, refd to. [para. 4].

Athey v. Leonati et al., [1996] 3 S.C.R. 458; 203 N.R. 36; 81 B.C.A.C. 243; 132 W.A.C. 243; 140 D.L.R.(4th) 235, refd to. [para. 4].

Snell v. Farrell, [1990] 2 S.C.R. 311; 110 N.R. 200; 107 N.B.R.(2d) 94; 267 A.P.R. 94, refd to. [para. 4].

ADGA Systems International Ltd. v. Valcom Ltd. et al. (1999), 117 O.A.C. 39; 43 O.R.(3d) 101 (C.A.), refd to. [para. 4].

Kosmopoulos et al. v. Constitution Insurance Co. of Canada et al., [1987] 1 S.C.R. 2; 74 N.R. 360; 21 O.A.C. 4, refd to. [para. 4].

Blacklaws v. Morrow - see Blacklaws et al. v. 470433 Alberta Ltd.

Blacklaws et al. v. 470433 Alberta Ltd. (2000), 261 A.R. 28; 225 W.A.C. 28; 2000 ABCA 175, refd to. [para. 4].

Zwierschke v. Minister of National Revenue (1991), 92 D.T.C. 1003 (Tax Ct.), refd to. [para. 4].

McFadden v. 481782 Ontario Ltd. et al. (1984), 47 O.R.(2d) 134 (H.C.), refd to. [para. 4].

369413 Alberta Ltd. v. Pocklington - see Gainers Inc. v. Pocklington Holdings Inc.

Gainers Inc. v. Pocklington Holdings Inc. (2000), 271 A.R. 280; 234 W.A.C. 280; 2000 ABCA 307, refd to. [para. 4].

Peoples Department Stores Inc. (Bankrupt) v. Wise (2004), 326 N.R. 267; 244 D.L.R.(4th) 564; 2004 SCC 68, refd to. [para. 4].

Halpern Investments Ltd. v. Sovereign General Insurance Co. (2004), 375 A.R. 394; 2004 ABQB 865, refd to. [para. 4].

BMF Trading, A Partnership v. Abraxis Holdings Ltd. et al., [2002] B.C.T.C. 590; 2002 BCSC 590, refd to. [para. 4].

Oger v. Chiefscope Inc. et al. (1998), 113 O.A.C. 373; 1998 CanLII 7173 (C.A.), refd to. [para. 4].

Salomon v. Salomon & Co., [1897] A.C. 22; [1895-99] All E.R. Rep. 33 (H.L.), refd to. [para. 5].

Woodbine Truck Centre Ltd. v. Jantar Building Systems Inc. et al. (1997), 36 O.T.C. 161 (Gen. Div.), refd to. [para. 5].

Raia v. Transworld Simcoe Inc. (1994), 32 B.L.R.(2d) 81 (Ont. Gen. Div.), refd to. [para. 5].

Universal Property Management Ltd. v. Westmount Windows & Doors Ltd., [1996] N.S.J. No. 570 (S.C.), refd to. [para. 5].

Noel Developments Ltd. v. Metro-Can Construction (HS) Ltd., [1999] B.C.J. No. 2974 (S.C.), refd to. [para. 5].

City Equitable Fire Insurance Co., Re, [1924] All E.R. Rep. 485 (C.A.), refd to. [para. 5].

Counsel:

Bruce E. Mintz (Mintz & Chow), for the appellant;

Tracy Oraas, appeared on her own behalf.

This appeal was heard on June 9 and 23, 2005, before Veit, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following memorandum of decision on July 13, 2005.