Silverado Oilfield Ventures Ltd. v. Davidson et al., (2015) 604 A.R. 398 (QB)

• Judge: Romaine, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: January 15, 2015
• Citations: (2015), 604 A.R. 398 (QB);2015 ABQB 39

Silverado Oilfield Ventures Ltd. v. Davidson (2015), 604 A.R. 398 (QB)

MLB headnote and full text

Temp. Cite: [2015] A.R. TBEd. JA.162

Silverado Oilfield Ventures Ltd. (plaintiff) v. Shelley Davidson and Richard Davidson and John Doe Corporation (defendants) and Carolyn Parent also known as Carolyn Trenerry, John Doe and ABC Corporation (third party/defendants)

Shelley Davidson (plaintiff by counterclaim) v. Silverado Oilfield Ventures Ltd. (defendant by counterclaim)

(1301 06993; 2015 ABQB 39)

Indexed As: Silverado Oilfield Ventures Ltd. v. Davidson et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

Romaine, J.

January 15, 2015.

Summary:

Silverado Oilfield Ventures Ltd. sued its former employee (Davidson), alleging that she, with the knowledge and acquiescence of her husband, defrauded Silverado of over $1 million during the course of her employment. Davidson denied the allegations and filed a counterclaim for unpaid salary, commissions and work expenses. Davidson also filed a third party claim against Hofer, who was the wife of Silverado's CEO, respecting identity theft and the destruction of records. In May 2013, the Davidsons consented to an interim attachment order. Silverado applied to expand the provisions of the attachment order. In October 2013, Silverado's assets were seized by a receiver, who then negotiated a sale of the assets to 1773907 Alberta Ltd. The principals of 177 were Hofer's parents. In December 2013, Silverado's application for a revised attachment order was stayed pursuant to rule 4.34 of the Alberta Rules of Court, because the action had been transferred to 177 as part of Silverado's assets. Silverado now applied to lift the stay of proceedings and to add 177 as a plaintiff. The Davidsons applied to have the action struck as an abuse of process, alleging that the assignment of the action from Silverado to 177 was tainted by champerty and maintenance.

The Alberta Court of Queen's Bench, in a decision reported at (2014), 587 A.R. 200, allowed the application to lift the stay and to substitute 177 as the new plaintiff. However, the court struck the resulting claim by 177 against the Davidsons as an abuse of process on the basis that the assignment of the action was tainted by champerty and maintenance. Silverado and 177 appealed. The Davidsons requested access to the equity in their home to secure financing of up to $200,000 for the payment of outstanding legal fees.

The Alberta Court of Queen's Bench held that the Davidsons were entitled to secure financing of up to $150,000 on the home.

Injunctions - Topic 2315

Mandatory injunctions - Use of property subject to injunction - [See both Practice - Topic 3381 ].

Practice - Topic 3381

Interim proceedings - Preservation of property - Property under preservation order - Use of - Silverado Oilfield Ventures Ltd. sued its former employee (Davidson) and her husband for fraud - In May 2013, the Davidsons consented to an interim attachment order - In October 2013, Silverado was placed under private receivership and its assets, including the litigation, were sold to 1773907 Alberta Ltd. - The Davidsons successfully applied to have the resulting claim by 177 struck as an abuse of process on the basis that the assignment of the action was tainted by champerty and maintenance - 177 appealed - The Davidsons requested access to the equity in their home to secure financing of up to $200,000 for the payment of outstanding legal fees - The only asset not covered by the attachment order that was available to pay legal expenses was Davidson's RRSP valued at $48,079 - The Alberta Court of Queen's Bench was not satisfied that the RRSP should be collapsed to fund legal fees at this time - Although an RRSP should typically be collapsed prior to the use of other frozen assets, this would be prejudicial from a tax point of view to Davidson, and would produce insufficient funds to make a material difference to the payment of outstanding legal fees - See paragraphs 16 to 18.

Practice - Topic 3381

Interim proceedings - Preservation of property - Property under preservation order - Use of - Silverado Oilfield Ventures Ltd. sued its former employee (Davidson) and her husband for fraud - In May 2013, the Davidsons consented to an interim attachment order - In October 2013, Silverado was placed under private receivership and its assets, including the litigation, were sold to 1773907 Alberta Ltd. - The Davidsons successfully applied to have the resulting claim by 177 struck as an abuse of process on the basis that the assignment of the action was tainted by champerty and maintenance - 177 appealed - The Davidsons requested access to the equity in their home to secure financing of up to $200,000 for the payment of outstanding legal fees - 177 argued that the Davidsons should use other assets caught by the attachment order that were from a source other than funds that might have been misappropriated from Silverado, including (1) a $14,068 savings plan that Mr. Davidson had through his employment, and (2) two vehicles and a travel trailer - The Alberta Court of Queen's Bench held that Mr. Davidson should not be required to collapse his savings plan where the case against him was weak and the savings would be subject to capital gains tax if withdrawn - The court accepted that the vehicles and trailer should be liquidated prior to encumbering the home, which would net about $40,000 - The Davidsons were therefore entitled to secure financing of up to $150,000 on their home in order to pay outstanding and prospective legal fees - See paragraphs 19 to 23.

Cases Noticed:

Toronto-Dominion Bank v. Jaikaran et al. (2004), 356 A.R. 385; 2004 ABQB 297, consd. [para. 8].

Canadian Imperial Bank of Commerce v. Credit Valley Institute of Business and Technology et al., [2003] O.T.C. 7 (Sup. Ct.), refd to. [para. 11].

Counsel:

Matti Lemmens and Locklyn E. Price, for Shelley Davidson and Richard Davidson;

Trevor McDonald and Robert Martz, for Silverado Oilfield Ventures Ltd. and 1773907 Alberta Ltd.

This matter was heard before Romaine, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following reasons for decision on January 15, 2015.