Western Finance Co. and Rannard v. Tasker Enterprises Ltd. and Tasker, (1979) 1 Man.R.(2d) 338 (CA)

JudgeFreedman, C.J.M., Matas and Huband, JJ.A.
CourtCourt of Appeal (Manitoba)
Case DateOctober 10, 1979
JurisdictionManitoba
Citations(1979), 1 Man.R.(2d) 338 (CA)

Western Finance Co. v. Tasker Ent. (1979), 1 Man.R.(2d) 338 (CA)

MLB headnote and full text

Western Finance Company Ltd. and Rannard v. Tasker Enterprises Ltd. and Tasker

Indexed As: Western Finance Co. and Rannard v. Tasker Enterprises Ltd. and Tasker

Manitoba Court of Appeal

Freedman, C.J.M., Matas and Huband, JJ.A.

October 10, 1979.

Summary:

This case arose out of an action by Western Finance Company Ltd. and one of its creditors, Rannard, against the defendants, Tasker and Tasker Enterprises Ltd., for damages for fraud, negligence and breach of fiduciary duty. Tasker and Slocomb were long-time business associates and were the sole owners of Western Finance Company and Red River Road Builders Ltd., a construction company. Western Finance loaned funds to Red River, which through bad luck got into financial difficulties. In an effort to assist Red River Tasker agreed to form another company, Tasker Enterprises Ltd., to purchase heavy equipment and lease it to Red River for use in its construction business. Notwithstanding the assistance rendered to Red River by the leasing arrangement, Red River failed. Western Finance, as a creditor of Red River, and Rannard, who loaned funds to Western Finance, brought an action against Tasker and Tasker Enterprises for damages for fraud, negligence and breach of fiduciary duty and claimed an accounting respecting the leasing agreement.

The Manitoba Court of Queen's Bench in a judgment unreported in this series of reports dismissed the action. The plaintiffs appealed on the issues of liability and costs.

The Manitoba Court of Appeal dismissed the appeal on liability, but varied the trial judge's award of party and party costs with regard to witness fees and preparation for trial. The Court of Appeal held that plaintiffs had no right of action against the defendants, because the fiduciary duty owed by Tasker to Red River as one of its directors did not extend to the plaintiffs as creditors of Red River. The Court of Appeal held in any event that Red River through Slocomb was aware of and approved of the leasing arrangements, so that Tasker probably need not account even to Red River.

Company Law - Topic 4262

Directors - Duties - Fiduciary duty - The Manitoba Court of Appeal held that the director of a company is in a fiduciary relationship with the company and has a duty to use his skill and knowledge for its benefit - See paragraphs 17 to 33.

Company Law - Topic 4306

Directors - Duty to company and shareholders - Duty to account - The director of a construction company, who was one of the two owners of the company, agreed to buy heavy equipment and lease it to the company in an effort to assist the company in a difficult financial period - Unfortunately, the company failed anyway - A finance company, which was a creditor of the construction company, and a creditor of the finance company brought an action against the director claiming an accounting respecting the leasing arrangements with the construction company - The Manitoba Court of Appeal set out and explained the fiduciary duty of a director to his company and dismissed the action, because the director owned a duty to account only to his company and not to creditors of the company - The Court of Appeal held that the director had a fiduciary relationship with his company, but owed no fiduciary duty to the company's shareholders - Further, the Court of Appeal stated that the director would not owe a duty to account to the construction company, because the company was aware of and approved of the lease agreement and its purposes - See paragraphs 17 to 33.

Fraud and Misrepresentation - Topic 2743

Misrepresentation - Negligent advice - What constitutes - A woman went to the offices of a finance company to lend money to the finance company for investment in loans to its customers - While she was in the office, she met one of two owners of the finance company, who told her that the company was experiencing some financial difficulties, but that he hoped the situation would improve shortly - It was alleged that the owner was negligent in not warning her that a major borrower from the finance company was in perilous financial condition, which in turn imperilled the finance company - The Manitoba Court of Appeal held that the owner made no misrepresentation and that in any event the lender was not induced by the conversation to make the loan and did not rely upon what was said in making the loan - See paragraphs 14 to 16.

Practice - Topic 7061

Costs - Party and party costs - Counsel fee - Increased fee - Court of Queen's Bench Rules, Rule 630(1) - The defendants were successful after a 17 day trial of a substantial claim with complex issues - The Manitoba Court of Appeal reduced the counsel fee to the defendants from $7,762.50 to $5,000.00 - The Court of Appeal generally discussed the considerations in granting an increased counsel fee over the Tariff - See paragraphs 61 to 70 - The Court of Appeal held that the trial judge erroneously included in the counsel fee an allowance in an unspecified amount for the services of an accountant, which allowance was one which should have been made for preparation expenses under Rule 620A - See paragraph 56.

Practice - Topic 7063

Costs - Party and party costs - Counsel fee - Employment of special counsel - The defendants employed additional counsel to deal with a particular issue at trial, on which the defendants were unsuccessful - The trial judge refused to allow the fees of additional counsel as taxable costs of the trial preparation, because the issue on which additional counsel worked was irrelevant and unnecessary - The Manitoba Court of Appeal upheld the disallowance of fees to additional counsel, but for a different reason - The Court of Appeal held that, whether the issue on which additional counsel worked was meritorious or not, the fees should have been considered in setting an appropriate counsel fee and not in costs for the preparation expenses under Rule 620A - See paragraph 57.

Practice - Topic 7084

Costs - Party and party costs - Witness fees - Preparation for trial - Court of Queen's Bench Rules, Rule 620A - The successful defendants in a lengthy and complicated trial called as an expert witness an accountant, who also assisted the defendants' counsel in preparation for trial - In addition the defendants called as nonexpert witnesses five men, including a lawyer, an accountant and a banker, to testify about facts, because they were involved with the parties - The five witnesses submitted substantial bills for their services, because they spent considerable time in preparation for giving testimony - The trial judge made a substantial allowance to the defendants under Rule 620A for the witnesses' fees as part of the costs of preparation for trial - The Manitoba Court of Appeal held that an allowance for a portion of the fees of the accountant called as an expert witness was properly made, but no allowance should have been made with regard to the other five witnesses, who as nonexpert witnesses, were merely entitled to the $6.00 per diem rate for witness fees - The Court of Appeal explained the operation of Rule 620A in determining the expenses of which may be included as costs of preparation for trial - See paragraphs 42 to 60.

Cases Noticed:

Hedley Bryne and Co. v. Heller and Partners Ltd., [1963] 2 All E.R. 575, dist. [para. 14].

Keech v. Sandford (1726), Sel. Cas. Ch. 61, appld. [para. 18].

Ex p. James (1803), 8 Ves. 327, appld. [para. 18].

Regal (Hastings) Ltd. v. Gulliver, [1942] 1 All E.R. 380, appld. [para. 23].

Parker v. McKenna (1874), 10 Ch. App. 96, consd. [para. 26].

Western Bakeries Ltd. v. Baker Perkins Inc. and Canadian Oven Company Limited (1960), 31 W.W.R.(N.S.) 200, consd. affd. 35 W.W.R.(N.S.) 576 (S.C.C.) [para. 44].

Marlborough Hotel Company Limited v. Parkmaster (Canada) Limited (1962), 38 W.W.R.(N.S.) 308, appld. [para. 49].

Badry et al. v. Alberta Bakery Edmonton Limited and Sheckter, [1947] 2 W.W.R. 475, consd. [para. 52].

Barry v. Stuart, 18 Man. R. 614, appld. [para. 59].

Ripstein v. Winnipeg, [1919] 3 W.W.R. 730, appld. [para. 59].

Clarke v. A.G. of Ontario, [1967] 2 O.R. 393, refd to. [para. 71].

Statutes Noticed:

Court of Queen's Bench Rules (Man.), rule 620A [para. 48]; rule 230(1) [para. 61]; rule 638(3) [para. 50].

Queen's Bench Act, C.C.S.M., c. C-280, sect. 102(1) [para. 45].

Court of Appeal Act, C.C.S.M., c. C-240, sect. 30(1) [para. 72].

Authors and Works Noticed:

Maston and Fraser, Company Law of Canada (4th Ed.), pp. 580 [para. 21]; 582 [para. 22].

Palmer, Company Law (21st Ed.), pp. 523 [para. 19]; 526 [para. 20].

Counsel:

S. Breen, Q.C. and H.D. Breen, for the plaintiffs/appellants;

G.M. Dennehy and B.M. Hamilton, for the defendants/respondents.

This case was heard on May 17, 18 and 22, 1979, at Winnipeg, Manitoba, before FREEDMAN, C.J.M., MATAS and HUBAND, JJ.A., of the Manitoba Court of Appeal.

On October 10, 1979, HUBAND, J.A., delivered the following judgment for the Court of Appeal:

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9 practice notes
  • MacCabe v. Board of Education of Westlock (Roman Catholic Separate) School District No. 110 et al., (1999) 243 A.R. 280 (QB)
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • 23 d5 Abril d5 1999
    ...19 N.R. 552 (S.C.C.), refd to. [para. 81]. Western Finance Co. and Rannard v. Tasker Enterprises Ltd. and Tasker, [1980] 1 W.W.R. 323; 1 Man.R.(2d) 338 (C.A.), refd to. [para. 87]. Anderson et al. v. Ball et al. (1997), 214 A.R. 332 (Q.B.), agreed with [para. 108]. Logozar v. Golder (1992),......
  • United Canso Oil & Gas Ltd. v. Washoe Northern Inc. et al., (1991) 121 A.R. 1 (QB)
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • 18 d1 Novembro d1 1991
    ...the parties and the fiduciary becomes a constructive trustee. ( West. Fin. Co. v. Tasker Ent. , [1980] 1 W.W.R. 323; 106 D.L.R.(3d) 81; 1 Man.R.(2d) 338 (C.A.)) "The law with respect to constructive trustees was discussed by the Supreme Court of Canada in Pettkus v. Becker , [1980] 2 S.C.R.......
  • White Resource Management Ltd. v. Durish, (1998) 230 A.R. 201 (QB)
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • 25 d5 Setembro d5 1998
    ...2), Re, [1977] Ch. 106, refd to. [para. 93]. Western Finance Co. and Rannard v. Tasker Enterprises Ltd. and Tasker, [1980] 1 W.W.R. 323; 1 Man.R.(2d) 338 (C.A.), refd to. [para. MacMillan Bloedel Ltd. v. Binstead (1980), 22 B.L.R. 255 (B.C.S.C.), refd to. [para. 124]. Canadian Aero Service ......
  • Matthews Investments Ltd. et al. v. Assiniboine Medical Holdings Ltd. et al., 2008 MBQB 52
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    • Manitoba Court of Queen's Bench of Manitoba (Canada)
    • 14 d4 Fevereiro d4 2008
    ...B.L.R. 65 (Ont. H.C.), refd to. [para. 124]. Western Finance Co. and Rannard v. Tasker Enterprises Ltd. and Tasker, [1980] 1 W.W.R. 323; 1 Man.R.(2d) 338 (C.A.), refd to. [para. 138]. Jaska v. Jaska (1996), 141 D.L.R.(4th) 385 (Man. C.A.), refd to. [para. 142]. Cohen v. Jonco Holdings Ltd. ......
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9 cases
  • MacCabe v. Board of Education of Westlock (Roman Catholic Separate) School District No. 110 et al., (1999) 243 A.R. 280 (QB)
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • 23 d5 Abril d5 1999
    ...19 N.R. 552 (S.C.C.), refd to. [para. 81]. Western Finance Co. and Rannard v. Tasker Enterprises Ltd. and Tasker, [1980] 1 W.W.R. 323; 1 Man.R.(2d) 338 (C.A.), refd to. [para. 87]. Anderson et al. v. Ball et al. (1997), 214 A.R. 332 (Q.B.), agreed with [para. 108]. Logozar v. Golder (1992),......
  • United Canso Oil & Gas Ltd. v. Washoe Northern Inc. et al., (1991) 121 A.R. 1 (QB)
    • Canada
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    • 18 d1 Novembro d1 1991
    ...the parties and the fiduciary becomes a constructive trustee. ( West. Fin. Co. v. Tasker Ent. , [1980] 1 W.W.R. 323; 106 D.L.R.(3d) 81; 1 Man.R.(2d) 338 (C.A.)) "The law with respect to constructive trustees was discussed by the Supreme Court of Canada in Pettkus v. Becker , [1980] 2 S.C.R.......
  • White Resource Management Ltd. v. Durish, (1998) 230 A.R. 201 (QB)
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • 25 d5 Setembro d5 1998
    ...2), Re, [1977] Ch. 106, refd to. [para. 93]. Western Finance Co. and Rannard v. Tasker Enterprises Ltd. and Tasker, [1980] 1 W.W.R. 323; 1 Man.R.(2d) 338 (C.A.), refd to. [para. MacMillan Bloedel Ltd. v. Binstead (1980), 22 B.L.R. 255 (B.C.S.C.), refd to. [para. 124]. Canadian Aero Service ......
  • Matthews Investments Ltd. et al. v. Assiniboine Medical Holdings Ltd. et al., 2008 MBQB 52
    • Canada
    • Manitoba Court of Queen's Bench of Manitoba (Canada)
    • 14 d4 Fevereiro d4 2008
    ...B.L.R. 65 (Ont. H.C.), refd to. [para. 124]. Western Finance Co. and Rannard v. Tasker Enterprises Ltd. and Tasker, [1980] 1 W.W.R. 323; 1 Man.R.(2d) 338 (C.A.), refd to. [para. 138]. Jaska v. Jaska (1996), 141 D.L.R.(4th) 385 (Man. C.A.), refd to. [para. 142]. Cohen v. Jonco Holdings Ltd. ......
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