Turner v. Turner, 2012 ABQB 176

Court of Queen ’ s Bench of Alberta Citation: Turner v. Turner, 2012 ABQB 176 Date: 20120314 Docket: 0903 02223, 0803 04515 Registry: Edmonton Docket: 0903 02223 Between: Doyle Thomas Turner, Doyle Turner Family Trust, 661254 Alberta Ltd. carrying on business as Noremac Industrial Coatings, and Noremac Industrial Coatings Plaintiffs - and - Stacey William Turner, Stacey Turner Family Trust and 724849 Alberta Ltd.

Defendants Docket: 0803 04515 and Between: Stacey William Turner and Stacey Turner Family Trust Applicants - and - Doyle Thomas Turner, Doyle Turner Family Trust , Stewart John Cameron, Stewart Cameron Family Trust and 724849 Alberta Ltd. Respondents _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice J.B. Veit

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Summary [1] Invoking immunity under the Limitations Act, Stacey Turner applies for

summary judgment dismissing part of theStatement of Claim issued by his son, Doyle Turner. The part of the claim which is the subject of this special chambers application isDoyle Turner’s request for a declaration that Stacey Turner holds all, or some, of the shares of 724849 Alberta Ltd. registered inStacey’s name in trust for Doyle Turner. Stacey Turner alleges that Doyle is out of time for, and therefore statute barred from, bringingthese claims.

In particular, Stacey Turner states that his son has known, since 1997, that Stacey owned 50% of the shares of 724, andindeed that Doyle was involved in giving instructions to that effect. Stacey observes that this knowledge was emphasized in 2005 whenDoyle Turner confirmed his father’s shareholding in the context of obtaining tax advice. Alternatively, argues Stacey, in 2006 whenDoyle initially wanted to have the “[share] situation corrected or straightened out”, he chose instead to accept advice to do nothing.

In theresult, asserts Stacey, Doyle is out of time to sue for a change in the share structure of 724 to reflect Doyle’s assertion that his father’slegal ownership of 50% of 724 was in fact merely a trust arrangement: his claim was barred on March 2, 2001, i.e. two years and a dayafter the Limitations Act came into effect. Indeed, Stacey claims that Doyle’s claim is barred by the ten year ultimate limitation period.Moreover, Stacey claims that Doyle’s claim based on beneficial ownership is barred as result of his inaction in 2006.

Finally, Staceyclaims that Doyle’s claim is declaratory in form only since, in order to get a larger share of the money produced as a result of the sale ofthe property, Doyle requires a form of coercive relief, such as the correction of the share registry and the issuance of new securities. [2] Doyle Turner contests the application on the basis that ss. 2 and 3 of the Limitations Act do not apply here because hisStatement of Claim seeks declaratory relief only, not executory relief.

Also, Doyle Turner maintains that he suffered no injury untilStacey Turner and 724 overtly denied the existence of any trust. [3] Stacey Turner’s application is denied. [4] For the purposes of this application, the court accepts Stacey Turner’s argument that Doyle Turner’s claim in theseproceedings is not merely for declaratory relief; Doyle’s request for the correction of the share register and for the issuance of shares toreflect his version of ownership establishes that Doyle Turner seeks executory relief.

Therefore, Doyle Turner’s statement of claim issubject to the Limitations Act. [5] However, the mere fact that Doyle Turner has known, since 1997, that 50% of the shares of 724 were in Stacey Turner’sname does not mean that Doyle’s cause of action for a declaration about the beneficial ownership of those shares arose in 1997: Doyle’scause of action arose when he knew that Stacey was opposing or rejecting Doyle’s equitable claim to the shares legally registered inStacey’s name. Neither do the events of 2006 speak directly to the issue of beneficial ownership of the shares.

Indeed, the facts aboutwhen Stacey Turner knew that his claim for a trust arrangement was being contested are very much in dispute. Because the parties arerelated, one cannot expect to find the same kind of evidence of intention that could be expected in commercial relationships. Theestablishment of the determinative facts require a trial. Stacey Turner has failed to meet the high threshold of establishing that DoyleTurner’s action must fail.

Cases and authority cited [6] By Stacey Turner and Stacey Turner Family Trust: Yellowbird v Samson Cree Nation No. 444, 2006 ABQB 434;Chwyl v Zimmerman 2009 ABQB 686. [7] By Doyle Thomas Turner and Doyle Thomas Turner Family Trust: : Rules of Court, Rules 7.2 and 7.3; Limitations Act,RSA 2000, c. L-12; Manufacturers Life Insurance Co. v. Executive Centre at Manulife Place Inc., 2011 ABQB 189; Kwan v SuperflyInc., 2011 ABQB 343; Alberta (A.G.) v United Food and Commercial Workers Union, Local No. 401, 2010 ABQB 777; Manson Insulation Products Ltd. v Crossroads C. & I.

Distributors, 2011 ABQB 51; De Shazo v Nations Energy Co. (2005), 48 Alta. L.R (4th ) 25 (C.A.); Boudreault v Barrett, 1998 ABCA 232; Goldencare Holdings Ltd. v Manu Chugh Architect Ltd., 2006 ABQB 696; Shuchuk v Wolfert, 2003 ABCA 109; Liu v Tangirala, 2004 ABCA 171; Prefontaine v Veale, 2003 ABCA 367; Holnam WestMaterials Ltd. v Canadian Concrete Products Ltd. (1993), (AB KB), 13 Alta. L.R (3d) 378 (Q.B. Master); aff'd(1993), (AB KB), 15 Alta. L.R (3d) 121; Condominium Plan 9421549 v Main Street Developments Ltd., 2006

ABCA 194; Richards v Gammell, 2004 ABCA 289; Alberta Law Reform Institute, Report No. 55: Limitations (December 1989); Milavsky v Milavsky, 2011 ABCA 231; Dallaire v Dale, 2003 ABQB 984; Peleshok v Peleshok, 2011 ONSC 3156; Brennenstuhl vTrynchy, [2002] A.J. No. 582; Yellowbird v Samson Cree Nation, [2003] A.J.

No. 582 (Q.B.); Murdoch v Murdoch(SCC), [1975] 1 S.C.R. 423. [8] By the Receiver: Manufacturers Life Insurance Company v Executive Centre at Manulife Place Inc. 2011 ABQB 189;Murphy Oil Company Ltd. v Predator Corporation Ltd. 2004 ABQB 688; Milne v Alberta (Workers’ Compensation Board) 2008ABQB 710. [9] By the court: Cameron v Turner 2007 ABQB 304; Yellowbird v Samson Cree Nation No. 444, 2008 ABCA 270, [2008]A.J. No. 818. Appendix A: Extract from Doyle Turner’s Statement of Claim 1. Background [10] The general background to this litigation was outlined in Cameron v Turner, see above.

For the purposes of this application,it is sufficient to note that, in 1997, Doyle Turner, Stacey Turner and Stewart Cameron became the initial shareholders of 724849Alberta Ltd., 724.

That shelf company was used to purchase industrial land in Fort McMurray; that land, which became very valuable, isin the process of being sold as part of the liquidation of 724. [11] Prior to 1997, Stacey Turner operated an unincorporated business on that land; the business was called “The Partsfinder”.Also prior to 1997, 6611254 Alberta Ltd., a company controlled in part by Doyle Turner, operated a business on the same industrialproperty; that business is called “Noremac Industrial Coatings”. [12] Doyle Turner acknowledges that, in 1997, he was involved in giving instructions to a lawyer to the effect that, of the 100initial shares in 724, 50 were to be placed in Stacey’s name, and 25 each were to be placed in the names of Doyle Turner and StewartCameron.

Doyle Turner acknowledges that he knew, at the time, that the lawyer had carried out those instructions. [13] A different lawyer assisted 724 in acquiring the industrial property which is the main asset of the company. The writtencontract for the purchase of the property originally showed Stacey, Doyle and Stewart as purchasers; that document was eventuallychanged to show 724 as the purchaser. [14] In 2005, Davis LLP, a different law firm from the two firms first mentioned, was engaged to provide legal services andadvice to 724 and its shareholders.

Doyle was involved in giving information and instructions to that law firm. Part of the informationgiven by Doyle to Davis LLP was that Stacey held 50% of the shares of 724; when he gave that information to Davis LLP, in his ownmind Doyle considered that Stacey was not the true owner of all 50 of those shares. By December 2005, Doyle knew that the lands inquestion were worth millions of dollars. [15] Georges Brosseau, an Edmonton lawyer, also did legal work for 724 for many years. In August 2006, in line with taxplanning that was being done with the assistance of MNP, Mr.

Brosseau organized family trusts for each of the shareholders. DoyleTurner Family Trust, DTFT, Stacey Turner Family Trust, STFT, and Stewart Cameron Family Trust, SCFT, were all created; theshareholdings of the trusts mirrored the initial shareholdings. For ease of reference, unless the context requires otherwise, a reference toany one of the initial shareholders, e.g. Stewart Cameron, should be understood to incorporate a reference to that shareholder’s familytrust. Before the completion of the re-organization, Doyle told Mr. Brosseau that Stacey did not really own all of the shares in hisname.

Indeed, Doyle asserts that he told the tax advisers, MNP, that he wanted the share structure straightened out; he states that hereceived advice that, for tax purposes, it would be better to retain the existing structure. Doyle Turner then executed many documents,including for example a USA, which continued to reflect the initial shareholding, including Stacey’s ownership of 50% of the shares. [16] Doyle eventually consulted a different lawyer about the share structure of 724; there is no evidence on this motion about thedate on which Doyle Turner first consulted Brock Dagenais about the share structure in 724.

However, on April 27, 2007, Doyle Turnerand Stewart Cameron commenced an action against Stacey Turner; in their originating notice, the plaintiffs/applicants sought adeclaration that all or some of the shares of 724 registered in Stacey Turner’s name were actually held in trust for Doyle Turner and

Stewart Cameron. In that litigation, Stacey Turner explicitly disagreed with Doyle Turner ’ s representation concerning the true ownership structure of the company. That originating notice was dismissed on May 9, 2007: see Cameron v Turner , citation above. [ 17 ] In the 2007 proceedings, the court made a liquidation order in relation to 724 and Grant Thornton Limited (formerly Alger & Associates Inc.) was appointed liquidator of the property of 724.

On October 12, 2011, an Order Approving Sale was made in the liquidation proceedings which authorized the liquidator to complete a specific sale of the lands; that order provides that the net proceeds of the sale stand in place of the lands and that all rights and claims against the lands are deemed to be rights and claims against the proceeds. [ 18 ] The present action was commenced by Statement of Claim on February 12, 2009.

In this litigation, Doyle Turner seeks a declaration that 724 holds the lands in trust for Noremac and The Partsfinder or a declaration that Stacey Turner holds the shares of which he is the registered owner in trust for The Partsfinder, and for related relief, including, for example, an order correcting the register of 724 by causing the transfer of 50% of the issued and outstanding shares registered to Stacey Turner to Doyle Turner.

An extract from the Statement of Claim is attached as Appendix A. [ 19 ] In their Statement of Defence to this action, Stacey and STFT plead immunity pursuant to the Limitations Act . [ 20 ] None of the lawyers or accountants who gave professional advice to any of the parties from 1997 onward have provided evidence on this application. [ 21 ] In this application Stacey Turner and STFT acknowledge that Doyle Turner and the other plaintiffs are entitled to go to trial on their oppression claim. [ 22 ] Stewart Cameron and SCFT have chosen not to make submissions on this motion. 2. What is the test for

summary judgment? [ 23 ] The court agrees with Stacey Turner ’ s argument that Gammell is not authority for the broad proposition that a dispute based on the Limitations Act cannot be decided in a

summary application. In that decision, by using the language “ on this record ” , our Court of Appeal emphasized that they were dealing with the specific facts of that case rather than a general principle. The general test for

summary judgment is set out in para. 13 of Gammell : “ The test for

summary judgment devolves to whether there is a genuine issue for trial. ” In other words, whether one is dealing with a limitations dispute or any other kind of dispute, the test for deciding whether the dispute can be disposed of summarily is whether there is a genuine issue for trial. [ 24 ] The court also agrees with Stacey Turner ’ s suggestion that the Court of Appeal ’ s somewhat later formulation in De Shazo is a more practical guide to determining whether there is a genuine issue for trial: “ The test to be applied on a

summary judgment application is whether it is plain and obvious that the action cannot succeed. To justify deciding the matter without a trial, the pleadings and evidence on the motion must show that the claim has no reasonable prospect of success. ” [ 25 ] Finally, I also agree with the liquidator ’ s submission that there is no substantial difference in the treatment of the test for obtaining

summary judgment between the current Rule and the former Rule so that the jurisprudence that was developed under the old Rule continues to inform us: Manufacturers Life Insurance Co. [ 26 ] In the result, Stacey Turner ’ s motion can only succeed if it is plain and obvious that Doyle Turner ’ s claim must fail. 3. Is Doyle Turner ’ s current action subject to the Limitations Act ?

[ 27 ] For the purpose of this application, the court concludes that Doyle Turner ’ s statement of claim, as currently framed, is not only for declaratory relief, but also for executory relief; therefore, Doyle Turner ’ s action is subject to the Limitations Act . [ 28 ] In coming to that conclusion, I begin with Slatter J ’ s., as he then was, enunciation and application of the law relating to statutory limitation and declaratory and executory claims in Yellowbird.

Our Court of Appeal upheld that enunciation which . . . ensures that appropriate limitations are not avoided by the technique of attaching remedial claims to claims for declarations. [ 29 ] Justice Slatter ’ s test incorporated the wording of the Alberta Law Reform Institute ’ s Report on Limitations, and can be found at para. 35 of his decision: 35 The cases show that plaintiffs faced with a limitations problem will sometimes seek a declaration that the defendant has violated a right or owes a duty, in an attempt to avoid openly seeking a remedial order.

To date the cases have not identified a satisfactory test on this issue. In my respectful view, an attempt to define the boundary between remedial orders and declaratory orders by searching for the "thrust of the claim" is unproductive. This test is too vague to be helpful, and will lead to results-oriented jurisprudence. The statutory test is whether the relief requires the defendant to comply with a duty or pay damages for violating a right. The coercive nature of a remedial order is captured in the words "requiring a defendant to comply".

A helpful test to determine if the relief is truly declaratory, or only declaratory in form, is: If the Court granted the declaration, and the defendant resisted the implementation of the declaration, could the plaintiff "leave the court in peace" and enjoy the benefits of the declaration "without further resort to the judicial process"? This is the wording used by the Institute, supra, para. 23.

If the fruits of the "declaration" cannot be enjoyed without further legal execution or intervention (by garnishee, seizure, appointment of a receiver, or other enforcement mechanism), then the supposed declaratory order is really remedial in nature. [ 30 ] Here, if a commonsense analysis of Doyle Turner ’ s claim, in the context of tens of millions of dollars being at stake, were insufficient to characterize his claim as executory, the very wording of Doyle Turner ’ s chosen legal framework for his claim, as shown in Appendix A hereto, establishes that Doyle Turner is not aiming at a declaration, but is looking for money.

Doyle Turner ’ s action is remedial in nature. 4. Did Doyle Turner ’ s cause of action arise more than two years prior to the filing of his statement of claim on February 12, 2009? [ 31 ] On this application, Stacey Turner has not proved that Doyle Turner ’ s action arose more than two years prior to February 12, 2009, the date on which Doyle ’ s statement of claim was filed. Therefore, he has not proved that Doyle Turner ’ s action must fail. Therefore, he has not proved that he is entitled to a

summary judgment striking down that part of Doyle Turner ’ s statement of claim relating to an alleged beneficial holding of Stacey Turner ’ s shareholding in 724. [ 32 ] In coming to this conclusion, I turn first to Stacey Turner ’ s claim that Doyle Turner ’ s cause of action arose in 1997, when the latter knowingly permitted 724 to acquire sole legal title of the lands in question and knowingly permitted Stacey Turner to acquire legal title to 50% of the shares of 724. With respect, that position has no merit: it has been clear from the outset that the nature of Doyle Turner ’ s claim is equitable, not legal.

By agreeing that 50% of the shares in 724 were to be placed in Stacey ’ s name, Doyle was not putting those shares “ out of his reach ” . Doyle Turner has always acknowledged the deliberate placing of legal ownership of 50% of the shares of 724 in his father ’ s name. Doyle ’ s claim is for an equitable imprint to be placed on the legal shareholding. [ 33 ] Next, Stacey Turner claims that, at the latest, Doyle Turner ’ s cause of action arose in 2006 when Doyle wanted to have the share structure “ straightened out ” , but accepted advice not to change the share structure.

With respect, given the very high threshold which Stacey has to meet on this application, Stacey ’ s claim that Doyle ’ s claim arose, at the latest, in 2006 has not been made out. While there is evidence that Doyle Turner was thinking of having the share ownership issue “ straightened out ” in 2006, but decided at that time not to pursue any changes to the ownership structure, there is no evidence about what Doyle Turner understood to be the effect of a tax

re-structuring. It is not impossible, for example, to imagine that he was told, or believed, that the family trust structure that was being adopted was, in fact, no more determinative of beneficial and trust arrangements than was the original share structure. [ 34 ] Doyle Turner argues that his cause of action arose only when Stacey Turner refused to acknowledge that he was holding shares in some type of beneficial capacity.

He points to the evidence Stacey Turner gave on cross-examination to the effect that he did not have any recollection or information about whether any issue ever arose between the parties in relation to the true ownership of the shares prior to the commencement of the initial litigation on April 27, 2007; Stacey ’ s evidence on that point was, “ I don ’ t know ” , “ I can ’ t say one way or another ” , “ I have no idea ” . [ 35 ] Doyle Turner may be wrong in stating that his cause of action arose only when Stacey Turner overtly denied any beneficial ownership in the shares that were nominally his.

Perhaps the test that should be applied requires a determination about when Doyle knew or even when he should have known that Stacey Turner was not recognizing any beneficial interest in Stacey Turner or Noremac. If there were any such legal issue about the test to determine when Doyle Turner ’ s action arose, that would be a dispute about the governing law and that dispute would itself be a basis for denying

summary judgment. [ 36 ] More obviously however than any dispute on the applicable law is the dispute about the applicable facts: it is not clear at this stage of the proceedings exactly when Doyle knew that Stacey Turner was rejecting any claim to the shares in Stacey ’ s name by either Doyle or Noremac.

For example, the mere fact that Stacey Turner was injecting himself into the negotiations with a potential purchaser of the industrial lands does not prove anything about whether Stacey rejected any claim by Doyle to at least some of Stacey ’ s nominal shareholding: so long as he had some shareholding in 724, no matter how minor, Stacey might have felt entitled to take a hand in the negotiations. [ 37 ] In the result, Stacey has not proved that Doyle ’ s claim must fail because it is clearly brought out of time.

Rather, a trial will have to be held to determine the genuine issues of fact and law about when Doyle ’ s cause of action arose. Therefore, Stacey ’ s application must be denied. 5. Costs [ 38 ] If the parties are not agreed on costs, I may be spoken to within 30 days of the release of this decision. Heard on the 13 th day of December, 2011. Dated at the City of Edmonton, Alberta this 13 th day of March, 2012.

J.B. Veit J.C.Q.B.A. Appearances: James R. Vaage, Emery Jamieson LLP for Stacey Turner and Stacey Turner Family Trust W. J. Kenny, Q.C., Miller Thomson LLP for Doyle Turner and Doyle Turner Family Trust Brock I. Dagenais, for Stewart Cameron and Stewart Cameron Family Trust Lorena K. Harris, Fraser Milner Casgrain LLP for Grant Thornton Limited (Liquidator) Appendix A 17. In or about May, 1997, the Regional Municipality of Wood Buffalo as Power of Attorney for Alberta Social Housing Corporation agreed to sell, and NOREMAC and the Partsfinder agreed to purchase the Lands, jointly.

To effect the purchase, the parties caused 724849 Alberta Ltd. to be incorporated and to act as Trustee for the parties in holding title to the Lands as to an undivided one-half interest for each. 18. For convenience, 50 Class “ A ” shares in the Authorized Capital of 724 were registered to the Defendant, Stacey Turner, in 1997, and 25 Class “ A ” Shares in the Authorized Capital of 724 were registered to each of the Plaintiff, Doyle Turner, and Stewart Cameron.

19. By subsequent corporate re-organization . . . the shares issued to each of the Plaintiff, Doyle Turner, and the Defendant, Stacey Turner, and Stewart Cameron in 1997 were cancelled and the shares referred to in paragraphs 5 and 6 above were issued to those parties, and the additional non-voting shares issued to each of the Family Trusts referred to in paragraphs 5 and 6 above. 7.

The Defendant, Stacey William Turner ( “ Stacey Turner ” ) resides in the City of Fort McMurray, in the Province of Alberta, and is the registered holder of 1000 Class “ G ” preferred voting shares and 50 Class “ F ” preferred voting shares, and the Defendant, Stacey Turner Family Trust is the registered holder of 25 Class “ C ” common non-voting shares, in the Authorized Capital of 724. 8.

The Plaintiff, Doyle Turner, and Stewart Cameron are each registered holders of 500 Glass “ G ” preferred voting shares, 25 Class “ F ” preferred voting shares and 500 Class “ E ” preferred voting shares, all in the Authorized Capital of 724. The Plaintiff, Doyle Turner Family Trust, is the registered holder of 25 Class “ C ” common non-voting shares in the Authorized Capital of 724. The Stewart Cameron Family Trust is the registered holder of 25 Class “ C ” common non-voting shares in the Authorized Capital of 724. 24.

The Plaintiffs seek a declaration that 724 holds the Lands in trust for NOREMAC and the Partsfinder as to each an undivided 50% interest, or a declaration that the Defendant, Stacey Turner, and the Defendant, Stacey Turner Family Trust, hold shares of which they are the registered holder in 724 in trust for the Partsfinder and an order correcting the register of 724 by causing the transfer of 50% of the issued and outstanding shares registered to Stacey Turner and Stacey Turner Family Trust to Doyle Turner or Doyle Turner Family Trust, as may be appropriate. 27.

Further, or in the alternative, 724 holds the Lands as trustee for NOREMAC and the Partsfinder of which the Plaintiff, Doyle Turner, is a 50% owner. WHEREFORE THE PLAINTIFFS CLAIM AGAINST THE DEFENDANTS: . . . (

e) An order correcting the registry and issuing such securities as appropriate in the capital stock of 724;