Royal Bank of Canada et al. v. Fracmaster Ltd., (2000) 263 A.R. 259 (QB)

• Judge: Paperny, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: January 24, 2000
• Citations: (2000), 263 A.R. 259 (QB)

Royal Bk. v. Fracmaster Ltd. (2000), 263 A.R. 259 (QB)

MLB headnote and full text

Temp. Cite: [2000] A.R. TBEd. MR.050

Royal Bank of Canada and Royal Bank of Canada, as agent for Royal Bank of Canada, Canadian Imperial Bank of Commerce, Bank of Nova Scotia, Hongkong Bank of Canada, Banque Nationale de Paris (Canada) and Crédit Suisse First Boston Canada (plaintiffs) v. Fracmaster Ltd. (defendant)

(Action No. 9901-08246)

Indexed As: Royal Bank of Canada et al. v. Fracmaster Ltd.

Alberta Court of Queen's Bench

Judicial District of Calgary

Paperny, J.

February 22, 2000.

Summary:

Fracmaster benefitted from a stay order under the Companies' Creditors Arrangement Act. During the stay period, Fracmaster's lenders took money (the disputed funds) in partial satisfaction of their security. After the stay period, BJ purchased Fracmaster's assets and claimed that it acquired the disputed funds as a chose in action. BJ applied for the return of the funds and for declarations that Fracmaster's lenders acted contrary to the order under the Act, that BJ had acquired the funds when it acquired Fracmaster's assets and that Fracmaster could not validly con­sent to the transfer of the funds to the lenders.

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

Editor's note: See also 245 A.R. 102; 245 A.R. 138.

Contempt - Topic 3303

Punishment - Rules applicable - When sanctions not appropriate - [See second Creditors and Debtors - Topic 8583.1 ].

Creditors and Debtors - Topic 8583.1

Debtors' relief legislation - Companies' creditors arrangement legislation - Breach of order - Fracmaster benefitted from a stay order under the Companies' Creditors Arrangement Act - During the stay period, Fracmaster's lenders took money (the disputed funds) in partial satisfaction of their security - After the stay period, BJ purchased Fracmaster's assets and claimed that it acquired the disputed funds as a chose in action - BJ sought restitution under replevin or unjust enrichment, alleg­ing, inter alia that the lenders breached the stay order - The Alberta Court of Queen's Bench dismissed the application but held that BJ had standing to bring it - See paragraphs 59 to 62.

Creditors and Debtors - Topic 8583.1

Debtors' relief legislation - Companies' creditors arrangement legislation - Breach of order - Fracmaster benefitted from a stay order under the Companies' Creditors Arrangement Act - During the stay period, Fracmaster's lenders took money (the disputed funds) in partial satisfaction of their security - After the stay period, BJ purchased Fracmaster's assets and claimed that it acquired the disputed funds as a chose in action - BJ sought restitution under replevin or unjust enrichment, alleg­ing, inter alia that the lenders breached the stay order - The Alberta Court of Queen's Bench held that the lenders breached the order but dismissed the application - The court held: (1) the breach had no practical effect as the disputed funds would have gone to the lenders anyway; (2) BJ had not acquired the disputed funds; (3) replevin was not available as ownership of the disputed funds was in issue; (4) unjust enrichment was not applicable because there was a juristic reason for the lenders' enrichment; (5) the lenders were in con­tempt but none of the contempt sanctions were appropriate here.

Replevin - Topic 601

When available - General - [See second Creditors and Debtors - Topic 8583.1 ].

Restitution - Topic 64

Unjust enrichment - General - Juristic reason for enrichment - [See second Cre­ditors and Debtors - Topic 8583.1 ].

Cases Noticed:

Fracmaster Ltd., Re (1999), 245 A.R. 102 (Q.B.), refd to. [para. 11].

Staiman Steel Ltd. v. Commercial & Home Builders Ltd. (1976), 71 D.L.R.(3d) 17 (Ont. H.C.), refd to. [para. 53].

Bank of Montreal v. Pedlar Industries Inc. (1980), 35 C.B.R.(N.S.) 269 (Ont. S.C.), refd to. [para. 60].

British Columbia Development Corp. v. Spun Cast Industries Ltd. et al. (1977), 26 C.B.R.(N.S.) 28 (B.C.S.C.), refd to. [para. 60].

Royal Bank of Canada v. Soundair Corp. et al. (1991), 46 O.A.C. 321; 4 O.R.(3d) 1 (C.A.), refd to. [para. 61].

United Used Auto & Truck Parts Ltd. et al., Re (1999), 22 B.C.T.C. 268 (S.C.), refd to. [para. 78].

Rathwell v. Rathwell, [1978] 2 S.C.R. 436; 19 N.R. 91; 83 D.L.R.(3d) 289; [1978] 2 W.W.R. 101; 1 E.T.R. 307; 1 R.F.L.(2d) 1, refd to. [para. 92].

Becker v. Pettkus, [1980] 2 S.C.R. 834; 34 N.R. 384; 19 R.F.L.(2d) 165; 117 D.L.­R.(3d) 257; 8 E.T.R. 143, refd to. [para. 92].

Sorochan v. Sorochan, [1986] 2 S.C.R. 38; 69 N.R. 81; 74 A.R. 67; [1986] 5 W.W.R. 289; 2 R.F.L.(3d) 225; 46 Alta. L.R.(2d) 97; 29 D.L.R.(4th) 1, refd to. [para. 92].

Air Canada and Pacific Western Airlines Ltd. v. British Columbia, [1989] 1 S.C.R. 1161; 95 N.R. 1; 59 D.L.R.(4th) 161, refd to. [para. 94].

SkyDome Corp. et al., Re, [1999] O.T.C. Uned. 203 (Gen. Div.), refd to. [para. 101].

MacMillan Bloedel Ltd. v. Brown et al. (1994), 44 B.C.A.C. 241; 71 W.A.C. 241; 88 C.C.C.(3d) 148 (C.A.), refd to. [para. 105].

Michel v. Lafrentz et al. (1998), 219 A.R. 192; 179 W.A.C. 192 (C.A.), consd. [para. 106].

Statutes Noticed:

Rules of Court (Alta.), rule 703(1)(a) [para. 104].

Authors and Works Noticed:

Fridman, Gerald Henry Louis, Restitution (2nd Ed. 1992), p. 31 [para. 92].

Miller, Jeffrey, The Law of Contempt in Canada (1997), p. 15 [para. 105].

Counsel:

T.J. Mallett and A.D. Little, for the appli­cants;

F.R. Dearlove and C. Simard, for the plaintiffs;

B.P. O'Leary and A.Z. Campbell, for the receiver.

Paperny, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, heard this application on January 24, 2000, and delivered the following reasons for judgment on February 22, 2000.