Transportaction Lease Systems Inc. v. Weaver et al., 2007 ABQB 246

• Judge: Murray, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: February 08, 2007
• Citations: 2007 ABQB 246;(2007), 418 A.R. 178 (QB)

Transportaction Lease Systems v. Weaver (2007), 418 A.R. 178 (QB)

MLB headnote and full text

Temp. Cite: [2007] A.R. TBEd. MY.007

Transportaction Lease Systems Inc. (plaintiff) v. Barry Weaver, Irene M. Midgley, Viviane M. Nowotny and Edgestone Mezzanine Capital Fund II Nominee, Inc. (defendants) and Viviane M. Nowotny and Edgestone Mezzanine Capital Fund II Nominee, Inc. (third party)

(0503 06057; 2007 ABQB 246)

Indexed As: Transportaction Lease Systems Inc. v. Weaver et al.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Murray, J.

April 24, 2007.

Summary:

Under two lease agreements, Skyreach Equipment Ltd. rented equipment from the plaintiff. Neither agreement allowed Skyreach to sell the rented equipment. The defendant Weaver, Skyreach's president, executed the first agreement. The defendant Midgley, a member of Skyreach's senior management team, executed the second. During Company Creditors Arrangement Act proceedings, Skyreach's business and assets were sold, including equipment leased from the plaintiff under the second agreement. In an action for recovery of the sale proceeds, the plaintiff alleged causes of action against Midgley including breach of duty under s. 66 of the Personal Property Security Act (PPSA), breach of duty as an "officer" of Skyreach under s. 122(1)(b) of the Business Corporations Act (BCA), oppression under s. 242 of the BCA, intentional interference with contractual relations and negligence. Midgley applied for summary judgment to dismiss the claims against her.

The Alberta Court of Queen's Bench allowed the application regarding the causes of action under s. 66 of the PPSA and of inducement of breach of contract. The court dismissed the application regarding the causes of action in negligence and under ss. 122(1)(b) and 242 of the BCA.

Company Law - Topic 4441

Officers and agents - Appointment - General - During Company Creditors Arrangement Act proceedings, Skyreach Equipment Ltd.'s business and assets were sold, including equipment leased from the plaintiff - The defendant Midgley, a member of Skyreach's senior management team, had executed the lease agreement, which did not permit the sale of the leased equipment - In an action for recovery of the sale proceeds, the plaintiff alleged causes of action against Midgley including breach of duty as an "officer" of Skyreach under s. 122(1)(b) of the Business Corporations Act (BCA) - On Midgley's application for summary judgment to dismiss the claim against her, the Alberta Court of Queen's Bench discussed the question of whether or not Midgley was an officer of Skyreach - She was not a director nor an officer appointed by the directors as contemplated by s. 121 of the BCA - However, she bore the title of Vice President of Finance and Administration - The question might be that, having agreed to accept that title and acting as such, whether Midgley was estopped from denying that she was an officer - This was an issue that the trial judge would have to deal with - See paragraphs 26 and 27.

Company Law - Topic 9761

Actions against corporations and directors - Creditors' actions - General - During Company Creditors Arrangement Act proceedings, Skyreach Equipment Ltd.'s business and assets were sold, including equipment leased from the plaintiff - The defendant Midgley, a member of Skyreach's senior management team, had executed the lease agreement, which did not permit the sale of the leased equipment - In an action for recovery of the sale proceeds, the plaintiff claimed, inter alia, that Midgley, as an "officer" of Skyreach, breached her fiduciary duty under s. 122(1)(b) of the Business Corporations Act - Midgley applied for summary judgment to dismiss the claim - The Alberta Court of Queen's Bench dismissed the application - Because a stakeholder, including a creditor, had no direct action against a director or officer of a corporation for breach of their duties other than under negligence or an oppression remedy, the alleged breach under s. 122(1)(b) did not provide a direct action, but might constitute the standard of conduct owed to creditors in a tort action or an action under s. 242(2)(b) for an oppression remedy - The plaintiff had pled facts to suggest a relationship sufficiently proximate to support an action in negligence - However, the effects of recognizing such a duty of care raised questions that could not be answered at this stage of the litigation - See paragraphs 45 to 54.

Company Law - Topic 9781

Actions against corporations and directors - Action for oppressive conduct - When available (incl. time for) - During Company Creditors Arrangement Act proceedings, Skyreach Equipment Ltd.'s business and assets were sold, including equipment leased from the plaintiff - The defendant Midgley, a member of Skyreach's senior management team, had executed the lease agreement, which did not permit the sale of the leased equipment - In an action for recovery of the sale proceeds, the plaintiff sought, inter alia, judgment against Midgley for oppression under s. 242 of the Business Corporations Act - Midgley applied for summary judgment to dismiss the claim - The Alberta Court of Queen's Bench dismissed the application - Assuming that Midgley was neither a director nor officer of Skyreach, the question under s. 242(2)(b) became whether she had power or authority to affect Skyreach as an employee such that the plaintiff would be entitled to a remedy - This raised questions of mixed fact and law that could not be resolved on this application - See paragraphs 33 to 44.

Personal Property - Topic 6014

Security interests - General - Obligation to act in good faith and a commercially reasonable manner - During Company Creditors Arrangement Act proceedings, Skyreach Equipment Ltd.'s business and assets were sold, including equipment leased from the plaintiff - The defendant Midgley, a member of Skyreach's senior management team, had executed the lease agreement, which did not permit the sale of the leased equipment - In an action for recovery of the sale proceeds, the plaintiff claimed, inter alia, that the lease agreement was a security agreement such that the Personal Property Security Act (PPSA) applied and that Midgley was in breach of the duty to act in good faith and in a commercially-reasonable manner under s. 66 of the PPSA - Midgley applied for summary judgment to dismiss the claim - The Alberta Court of Queen's Bench allowed the application - Assuming that the agreement was a security agreement, Midgley was not a party to it - The lessor was the plaintiff and the lessee was Skyreach - Midgley had no rights, duties or obligations relating to the transaction that created the security interest - See paragraphs 28 to 32.

Practice - Topic 5717

Judgments and orders - Summary judgments - For part of claim - During Company Creditors Arrangement Act proceedings, Skyreach Equipment Ltd.'s business and assets were sold, including equipment leased from the plaintiff - The defendant Midgley, a member of Skyreach's senior management team, had executed the lease agreement, which did not permit the sale of the leased equipment - In an action for recovery of the sale proceeds, the plaintiff alleged causes of action against Midgley including breach of duty under s. 66 of the Personal Property Security Act (PPSA), breach of duty as an "officer" of Skyreach under s. 122(1)(b) of the Business Corporations Act (BCA), oppression under s. 242 of the BCA, intentional interference with contractual relations and negligence - Midgley applied for summary judgment to dismiss the claims against her - The Alberta Court of Queen's Bench allowed the application regarding the causes of action under s. 66 of the PPSA and of inducement of breach of contract - The court dismissed the application regarding the causes of action - The court noted Côté, J.A.'s, caution that partial dismissal could create more harm than good as trials were unpredictable and evidence might arise that could relate to the dismissed causes of action - However, the evidence established that the plaintiff had no chance of success regarding the two causes of action dismissed - See paragraphs 61 to 63.

Practice - Topic 5719

Judgments and orders - Summary judgments - To dismiss action - [See Practice - Topic 5717 ].

Torts - Topic 5208

Interference with economic relations - Contracts - Inducing or procuring breach of contract - During Company Creditors Arrangement Act proceedings, Skyreach Equipment Ltd.'s business and assets were sold, including equipment leased from the plaintiff - The defendant Midgley, a member of Skyreach's senior management team, had executed the lease agreement, which did not permit the sale of the leased equipment - In an action for recovery of the sale proceeds, the plaintiff alleged, inter alia, interference with contractual relations and/or intentional interference with economic relations by Midgley - Midgley applied for summary judgment to dismiss the claim - The Alberta Court of Queen's Bench allowed the application - Of the elements necessary to establish the cause of action, the only one at issue was whether Midgley induced Skyreach to breach the lease agreement with the plaintiff - While Midgley had adduced evidence that clearly negated any intentional or non-justifiable acts by her to induce a breach of the agreement, the plaintiff had adduced no evidence - The issue was capable of only one resolution, which was that Midgley had not induced a breach of contract - See paragraphs 57 to 60.

Cases Noticed:

De Shazo v. Nations Energy Co. et al. (2005), 367 A.R. 267; 346 W.A.C. 267; 48 Alta. L.R.(4th) 25 (C.A.), refd to. [para. 11].

V.A.H. v. Lynch et al. (2000), 255 A.R. 359; 220 W.A.C. 359; 184 D.L.R.(4th) 658 (C.A.), refd to. [para. 11].

Murphy Oil Co. et al. v. Predator Corp. et al. (2004), 365 A.R. 326 (Q.B.), affd. (2006), 384 A.R. 251; 367 W.A.C. 251; 55 Alta. L.R.(4th) 1 (C.A.), refd to. [para. 11].

Franche v. Locklynn Todd Craig et al., [1998] A.R. Uned. 5; 1998 ABCA 3, refd to. [para. 12].

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. 13].

Jason Developments Corp. et al. v. Rorbertoria Properties Ltd. (1980), 42 A.R. 369 (Q.B. Master), refd to. [para. 14].

Royal Bank of Canada v. Facto Homes Ltd. et al. (1983), 54 A.R. 228 (Q.B. Master), refd to. [para. 13].

Silver Recovery Systems of Canada Ltd. v. WMJ Metals Ltd. (1989), 103 A.R. 252 (Q.B. Master), refd to. [para. 13].

Western Canadian Place Ltd. et al. v. Con-Force Products Ltd. et al. (1997), 208 A.R. 179 (Q.B.), refd to. [para. 14].

Medicine Hat (City) v. Wilson et al. (2000), 271 A.R. 96; 234 W.A.C. 96 (C.A.), refd to. [para. 14].

Suncor Inc. v. Canada Wire & Cable Ltd. (1993), 7 Alta. L.R.(3d) 182 (Q.B.), refd to. [para. 14].

Royal Bank of Canada v. McLean (1997), 211 A.R. 297 (Q.B.), affd. (1998), 216 A.R. 172; 175 W.A.C. 172 (C.A.), refd to. [para. 14].

Alberta v. Wenley Enterprises & Sales Ltd. et al. (1985), 66 A.R. 232 (Q.B. Master), refd to. [para. 14].

First Edmonton Place Ltd. v. 315888 Alberta Ltd., [1988] A.J. No. 511 (Q.B.), refd to. [para. 38].

Mazurenko v. Mazurenko (1981), 30 A.R. 34; 124 D.L.R.(3d) 406 (C.A.),

Ferguson v. Imax Systems Corp. (1980), 12 B.L.R. 209 (Ont. H.C.), refd to. [para. 39].

Canada Business Corporations Act (Director) v. Royal Trustco Ltd. (1981), 14 B.L.R. 307 (Ont. H.C.), refd to. [para. 40].

Abraham v. Inter Wide Investments Ltd. et al. (1985), 51 O.R.(2d) 460 (H.C.), varied (1988), 66 O.R.(2d) 684 (H.C.), refd to. [para. 41].

Peoples Department Stores Inc. (Bankrupt) v. Wise, [2004] 3 S.C.R. 461; 326 N.R. 267, refd to. [para. 43].

Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.), refd to. [para. 52].

Cooper v. Hobart - see Cooper v. Registrar of Mortgage Brokers (B.C.) et al.

Cooper v. Registrar of Mortgage Brokers (B.C.) et al., [2001] 3 S.C.R. 537; 277 N.R. 113; 160 B.C.A.C. 268; 261 W.A.C. 268; 2001 SCC 79, refd to. [para. 52].

Hercules Management Ltd. et al. v. Ernst & Young et al., [1997] 2 S.C.R. 165; 211 N.R. 352; 115 Man.R.(2d) 241; 139 W.A.C. 241; 146 D.L.R.(4th) 577, refd to. [para. 53].

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; 88 Alta. L.R.(3d) 209; 2000 ABCA 307, refd to. [para. 57].

Western Canadian Place Ltd. et al. v. Con-Force Products Ltd. et al. (1997), 208 A.R. 179 (Q.B.), refd to. [para. 60].

Lameman et al. v. Canada (Attorney General) et al. (2007), 404 A.R. 349; 394 W.A.C. 349; 2006 ABCA 392; 2007 ABCA 180, refd to. [para. 63].

Authors and Works Noticed:

Alberta, Institute of Law Research and Reform, Report on Proposals for a New Alberta Business Corporations Act, Report No. 36 (1980), vol. 1, p. 144 [para. 37].

Counsel:

Darren R. Bieganek, for the plaintiff;

P. Daryl Wilson, Q.C., for the defendant, Midgley.

This application was heard on February 8, 2007, by Murray, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following reasons for judgment on April 24, 2007.