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PRE-JUDGMENT REMEDIES - Absconding debtors - Attachment order

Friday, December 13, 2019 @ 6:25 AM  

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Appeal by the defendants, Henuset and Paradise Petroleums, from a judgment issuing an attachment order in favour of the plaintiffs, the Campbells and their company, Corporate Drilling Consultants. Paradise acquired certain shares and working interests in a company called Relative Resources. The plaintiffs sought payment in connection with the transaction. The defendants disputed that the transaction was validly completed. It subsequently ensued that funds from the sale of Paradise assets to a partnership, Tundra Oil & Gas, were distributed as dividends to Paradise shareholders, including Henuset. The plaintiffs alleged the distribution left no assets within Paradise from which they could recover the purchase price for the Relative transaction. The plaintiffs consequently applied for an attachment order directing that $512,000 from the Tundra transaction be held in trust by Paradise's counsel. The chambers judge concluded that there was a reasonable likelihood that the proceeds received from the Tundra transaction represented the sale of substantially all of Paradise's assets and would be dissipated without any allowance for the plaintiffs' claim. The attachment order was thus granted. The defendants appealed.

HELD: Appeal dismissed. The chambers judge did not err in the consideration of s. 118(5) of the Business Corporations Act (BCA) to an attachment application under s. 17 of the Civil Enforcement Act, as such consideration occurred in the context of determining the reasonable likelihood of the claim for the discrete purpose of that application. No final determination of the s. 118 BCA issue was required for the issuance of the attachment order. It was therefore not erroneous to utilize reasoning applicable to interim, as opposed to final, relief. Similarly, the issue of part performance and the Statute of Frauds was only required to be considered in the context of reasonable likelihood of the claim. There was ample evidence to justify an inference of the functional equivalent of part performance. The relief granted did not result from overriding errors related to material factual findings.

Campbell v. Paradise Petroleums Ltd., [2019] A.J. No. 1435, Alberta Court of Appeal, J. Watson, B.L. Veldhuis and M.G. Crighton JJ.A., October 28, 2019. Digest No. TLD-December92019013