Focus On

CORPORATIONS - Liquidation and dissolution - Revival

Wednesday, July 31, 2019 @ 10:02 AM  


Lexis Advance® Quicklaw®
Appeal by the Province from an order restoring Inter Coast Towing Limited as a British Columbia corporation on a without prejudice basis. Inter Coast owned the Chilcotin Princess vessel. In January 2014, the company was dissolved for failure to file annual returns and the vessel vested in the Crown. The vessel was moored for several years and was not maintained. Approximately six months after the company’s dissolution, the vessel began listing and slowly sinking. Following extensive inspection and communication, the Coast Guard arranged for the vessel to be towed and dismantled in 2015. The Coast Guard presented a claim to the Ship-source Oil Pollution Fund for compensation of the associated costs, approximately $150,000. The Administrator of the Fund paid the claim and sought reimbursement from the Province. The Province denied the claim, thus leading to litigation in 2017. The Province filed a statement of defence and applied to the Registrar of Companies to restore Inter Coast as a company. The chambers judge ordered restoration without prejudice to rights acquired by the Administrator post-dissolution. The Province appealed on the basis restoration should have been ordered on terms that prejudiced the Administrator’s rights, thus making Inter Coast rather than the Province liable for the cleanup costs.
 
HELD: Appeal dismissed. The chambers judge correctly concluded that a legitimate claim arose in the relevant post-dissolution and pre-restoration interval involving Inter Coast. The judge did not err in declining to exercise the discretion to prejudice that claim in this instance. The chambers judge accurately described the purpose of the without prejudice restoration provision in the Business Corporations Act as preserving legitimate claims of third parties. The chambers judge correctly rejected the Province’s contention that the Marine Liability Act established a “polluter pays” regime, justifying restoration on a with prejudice basis. Under the Act, liability based on ownership at the time cleanup expenses were incurred was consistent with the statutory objective of preventing and minimizing oil pollution damage. The order did not involve the taking of an unfair tactical advantage of the dissolution by the Administrator. The Administrator's statutory claim arose from post-dissolution expenses rather than the dissolution itself. The restoration, in this case, did not revive a right of or claim against Inter Coast that existed prior to dissolution. To accept the Province's position would allow it to avoid liability for pollution during a time when it was the legal owner of the vessel.

British Columbia v. Ship-source Oil Pollution Fund, [2019] B.C.J. No. 1176, British Columbia Court of Appeal, P.M. Willcock, G. Dickson and G.J. Fitch JJ.A., June 26, 2019. Digest No. TLD-July292019007