



COURT OF APPEAL FOR BRITISH COLUMBIA




Citation:



1043325 Ontario Ltd. v. CSA Building Sciences Western
  Ltd.,









2017 BCCA 13




Date: 20170111

Docket: CA41993

Between:

1043325 Ontario
Ltd.

Appellant

(Petitioner)

And

CSA Building
Sciences Western Ltd.,
Ralph Jeck and Maria Jeck

Respondents

(Respondents)




Before:



The Honourable Madam Justice Newbury

The Honourable Mr. Justice Groberman

The Honourable Mr. Justice Willcock




Application to re-open
the order (not yet filed) of the Court of Appeal, made for reasons dated June
15, 2016 (
1043325 Ontario Ltd. v. CSA Building Sciences Western Ltd.
, 2016
BCCA 258).




Counsel for the Appellant:



R.S. Fleming





Counsel for the Respondent:



M.B. Morgan





Place and Date of Hearing:



Vancouver, British
  Columbia

January 4, 2017





Place and Date of Judgment:



Vancouver, British
  Columbia

January 11, 2017









Written Reasons of the Court








Summary:

Application to re-open appeal
dismissed.

Written Reasons for Judgment
of the Court:

[1]

The appellant applies to re-open its appeal. The application was made
following a series of written communications between counsel and this division
of the Court dealing with various matters; but the proposed re-opening would
relate only to the position of Mrs. Jeck, a defendant in this proceeding. She
is the wife of the defendant Mr. Jeck, who was the sole director of the defendant
CSA Building Sciences Western Ltd. (CSA). He was found to have engaged in
oppressive and prejudicial conduct in causing CSA to pay to himself excessive
management fees over several years

to the exclusion of the appellant, which as the minority shareholder
could reasonably have expected to participate to some extent in CSAs financial
success. In allowing the appeal, this court determined that 44% of the excess
fees, or $249,065, should have been paid out by CSA as dividends to the
appellant.

[2]

At the close of our reasons, we requested that counsel provide written
submissions no later than June 30, 2016 as to any order they might propose as a
tax-efficient alternative to an order that Mr. Jeck simply pay $249,065 to the
appellant. Counsel have not been able to agree on any such alternative order
that this court could properly make. Thus the default order would simply
direct that Mr.

Jeck pay the full amount.

[3]

In its application, the appellant seeks an order that Mrs. Jeck be
jointly and severally liable with Mr. Jeck for the payment of the $249,065 to
the appellant.

[4]

It is certainly true that Mrs. Jeck was a defendant and that the
appellant pleaded that Mr. and Mrs. Jeck had invested and obtained profits
from the $2,069,455
that Ralph Jeck took
from [CSA] without authority
[our emphasis] and that the two had received other benefits as a result of the
oppressive conduct. A reference was made at para. 65 of the amended petition to
unjust enrichment on the part of both. The wrongful conduct, however, was the
conduct of Mr. Jeck as the majority shareholder and sole director of CSA. There
was no allegation that Mrs.

Jeck (who
apparently acted as CSAs office manager) had participated in the oppression;
nor did the trial judge, Mr. Justice Sigurdson, make any such finding. At para.
149 of his reasons, he stated:

having reviewed the evidence, I
think that the remuneration that Mr. Jeck receives should be taken to
include monies that he subsequently said should be treated as payments to
Mrs. Jeck.  I do that because I think that his initial statement of
his income in his earlier affidavit is more likely to be accurate and I was not
persuaded on the evidence that the payment by the company to Mrs. Jeck was
other than for income splitting purposes.

We read this as indicating that the judge was skeptical of
the affidavit evidence of Mr.

Jeck that he
had paid, or caused CSA to pay, to his wife some of the fees he had previously
deposed had been paid to himself. The judge resolved the doubt by simply treating
the entire amount of management fees shown in CSAs financial statements as
having been paid to Mr. Jeck. He made no finding that Mrs. Jeck had participated
in the wrongdoing, and he dismissed the action as against her. The appellant
did not apply to the trial judge to re-open this or any other aspect of the
trial judgment.

[5]

The appellants grounds of appeal were set out at para. 40 of this
courts reasons. They did not include any challenge to the trial judges
inclusion of funds allegedly paid to Mrs. Jeck, in the amount of management fees
received by her husband.

[6]

The appellant now submits that Mrs. Jeck received what funds she did
(assuming she did) without justification and that this court overlooked or
ignored that fact. When questioned as to the legal basis of the claim asserted
against Mrs.

Jeck, counsel for the appellant
suggested that because the oppression remedy is broad and in some respects similar
to that of an equitable remedy, an order of joint and several liability can and
should be made to do justice.

[7]

The fact remains, however, that no cause of action was proven against
Mrs.

Jeck. She was not a director of CSA
and no evidence was brought to our attention that she knew or should have known
that the appellants reasonable expectations were being wrongly thwarted by Mr.
Jeck. There was no evidence, and no finding, of a conspiracy among the
defendants or knowing assistance on her part that might support any kind of
claim in Equity. No tracing of funds to her from another was sought and no
fraudulent conveyance was alleged. As far as unjust enrichment is concerned, Mrs.
Jeck might well have had an argument that there was a juristic reason for any
benefit she received
 that
the
funds were a gift from her husband (albeit for tax reasons), for example, or
that CSA was remunerating her for her services. Again, however, it appears this
was not pursued at trial, or if it was, the trial judge did not find that it
had been proven.

[8]

We conclude that it is not appropriate at this stage, on the pleadings,
on the evidence, or on the findings of fact made below, to attribute Mr.

Jecks conduct to his wife or to order that she is
jointly and severally liable with him to the appellant.

[9]

Our previous comments made to counsel in writing concerning dividends or
the tax treatment thereof, and concerning the estoppel/limitation issue remain
unchanged.

[10]

In the result, we dismiss the application to re-open this matter and
urge counsel to attend to the filing of an order reflecting our reasons of June
15, 2016.

The
Honourable Madam Justice Newbury

The
Honourable Mr. Justice Groberman

The
Honourable Mr. Justice Willcock


