Shillingford v. Dalbridge Group Inc. et al., (1996) 197 A.R. 56 (QB)

• Judge: Perras, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: December 02, 1996
• Citations: (1996), 197 A.R. 56 (QB)

Shillingford v. Dalbridge Group Inc. (1996), 197 A.R. 56 (QB)

MLB headnote and full text

Inez Shillingford (plaintiff) v. Dalbridge Group Inc., Werner Hottman and Reiner Hottman (defendants)

(Action No. 8703-05333)

Indexed As: Shillingford v. Dalbridge Group Inc. et al.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Perras, J.

December 2, 1996.

Summary:

DDL, operated by the Hottman brothers, contracted with the plaintiff to build a house. The contract was superseded by a subsequent contract between DGI and the plaintiff. DGI, incorporated a few months before by Reiner Hottman, had never built a house, had $1,000 of capital, no employees and one shareholder. Draws were made against the mortgage, but the project was never com­pleted. The bank foreclosed and the plaintiff lost her deposit and down payment. Con­struction materials were billed to DDL whereas DGI applied for the development application. The bank was advised that DDL was the builder. Monies were deflected into a corporate account controlled by Reiner Hottman. The plaintiff sued DGI and the Hottman brothers for damages for breach of contract and for stress and aggravation. At issue was whether the Hottman brothers were liable in their individual capacities.

The Alberta Court of Queen's Bench held that the Hottman brothers were liable, award­ing the plaintiff $18,000 for breach of contract and $6,000 for mental anguish.

Agency - Topic 4101

Relations between principal and third parties - Principal's liability for contracts by agent - General - DDL, operated by the Hottman brothers, contracted with the plaintiff to build a house - The contract was superseded by a subsequent contract between another Hottman company, DGI, and the plaintiff - DGI had never built a house, had $1,000 of capital and no employees - The Hottman brothers mis­represented to both the plaintiff and the bank which company was the builder and deflected monies for the house into a corporate account controlled by Reiner Hottman - At issue was whether the Hott­man brothers were liable in their individual capacities - The Alberta Court of Queen's Bench found the brothers liable where DGI was nothing more than a corporate agent used to shield the brothers from liability - The plaintiff was awarded $18,000 in damages plus interest - See paragraphs 14 to 29.

Company Law - Topic 310

Nature of corporations - Lifting the cor­porate veil - General - DDL, operated by the Hottman brothers, contracted with the plaintiff to build a house - The contract was superseded by a subsequent contract between another Hottman company, DGI, and the plaintiff - DGI had never built a house, had $1,000 of capital and no employees - The Hottman brothers mis­represented to both the plaintiff and the bank which company was the builder and deflected monies for the house into a corporate account controlled by Reiner Hottman - At issue was whether the Hott­man brothers were liable in their individual capacities - The Alberta Court of Queen's Bench found the brothers liable - The corporations were agents used to shield the brothers from responsibility - This was not a case of lifting the corporate veil - See paragraph 29.

Company Law - Topic 4965

Contracts by companies - Personal liabil­ities of officers - Circumstances when officer liable - [See Agency - Topic 4101 ].

Contracts - Topic 4021

Remedies for breach - Damages - General - [See Damage Awards - Topic 1007 and Agency - Topic 4101 ].

Damage Awards - Topic 1007

Contracts - General - Breach of contract - Injured feelings or emotional upset - A building company failed to complete the plaintiff's house and deflected monies for the officers' personal use - The plaintiff sued for breach of contract and mental anguish - The Alberta Court of Queen's Bench awarded the plaintiff $6,000 for mental anguish - It was reasonably fore­seeable that a deliberate or negligent breach of contract would cause the plain­tiff mental distress where the builder knew the plaintiff had limited means, had bought a lot, sold her condo, moved to an apart­ment and gave notice in anticipation of possession - See paragraphs 31 to 33.

Damage Awards - Topic 1363

Contracts - Building contracts - For a house - General damages - [See Agency - Topic 4101 ].

Damages - Topic 5706

Contracts - Breach of contract - Injured feelings or emotional upset - [See Dam­age Awards - Topic 1007 ].

Damages - Topic 6505

Contracts - Building contracts - Breach by builder - Failure to complete - [See Agency - Topic 4101 ].

Cases Noticed:

Salomon v. Salomon, [1897] A.C. 22 (H.L.), refd to. [para. 29].

Kosmopoulas et al. v. Constitution Insur­ance Co. of Canada et al., [1987] 1 S.C.R. 22; 74 N.R. 360; 21 O.A.C. 4; 34 D.L.R.(4th) 208, refd to. [para. 29].

Sun Sudan Oil Co. et al. v. Methanex Corp. et al. (1992), 134 A.R. 1 (Q.B.), refd to. [para. 29].

Harris v. Nugent et al. (1995), 172 A.R. 309 (Q.B.), refd to. [para. 29].

Tridont Leasing (Canada) Ltd. v. Saskatoon Market Mall Ltd., [1995] 6 W.W.R. 641; 131 Sask.R. 169; 95 W.A.C. 169 (C.A.), refd to. [para. 29].

Kempling v. Hearthstone Manor Corp. (1996), 184 A.R. 321; 122 W.A.C. 321 (C.A.), refd to. [para. 32].

Authors and Works Noticed:

Welling, Bruce L., Corporate Law in Canada: The Governing Principles (2nd Ed. 1991), pp. 127 to 136 [para. 29].

Counsel:

N. McGreer, for the plaintiff;

L. Belzil, for the defendants.

This action was heard before Perras, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following decision on December 2, 1996.