2007 Decision Lewis vs Terrace Tourism Society

IN THE SUPREME COURT OF BRITISH COLUMBIA Lewis v. Terrace Tourism Society, 2007 BCSC 1456 Date: 20070928 Docket: 15766 Registry: Terrace Between: Jennifer Lewis Plaintiff And Terrace Tourism Society Defendant

Before: The Honourable Mr. Justice Halfyard

Reasons for Judgment Counsel for the plaintiff: Counsel for the defendant: Date and Place of Trial/Hearing:

S. Reda B. Jordan September 21, 2007 Terrace, B.C.

2007 BCSC 1456 (CanLII)

Citation:

Lewis v. Terrace Tourism Society

Page 2

The Application This is an application by the plaintiff to restrain the defendant from further

disposing of any of its assets until the trial of the action has been completed and judgment has been given. A limited-time order was made by Mr. Justice Burnyeat on July 23, 2007, which restrained the defendant, until August 31, 2007, “from any further disposal of its assets unless leave of the court is granted.” By consent, that order was later extended to September 31, 2007 (which would have to be October 1, 2007).

Background Facts [2]

An outline of the background facts is necessary to provide the context in

which this application is being made. The following facts are either agreed or not contested.

[3]

In or about May 2004, the plaintiff commenced employment with the

defendant Terrace Tourism Society, as executive director, at a salary of $42,000 per annum. The defendant was a non-profit society which received funding from the City of Terrace and from the Regional District of Kitimat – Stikine. At some point in time during 2006, the City of Terrace ceased providing any funding to the defendant.

The defendant continued to receive money from the Regional District. That money was raised by way of a 2% hotel room tax which was imposed by Provincial Regulation. The Regional District had enacted Bylaw No. 510, 2004, on or about May 1, 2004, which stated (at paragraph 3):

2007 BCSC 1456 (CanLII)

[1]

Lewis v. Terrace Tourism Society

Page 3

[4]

In the fall of 2006, the plaintiff was the only paid employee of the defendant.

On or about December 31, 2006, the plaintiff went on maternity leave.

[5]

Before the end of 2006, the business operations of the defendant were not in

good order, in the sense that the projects that needed to be completed by the spring of 2007 were behind schedule. In January 2007, the directors of the society resigned their positions. At a general meeting of the society on February 19, 2007, it was agreed that Terrace Tourism Society would be dissolved. A committee was elected or appointed to preside over the dissolution.

[6]

In a letter dated February 20, 2007, David Pernarowski, committee chairman,

asked the Regional District to have the City of Terrace redirect the 2% hotel room tax money to Kermodei Tourism.

[7]

The defendant went out of business in February of 2007. It no longer had an

office, but left its office furniture and some of its equipment on the premises, and allowed the next renter to use the furniture and equipment. Other office equipment, such as computers, was stored in another location. At the instance of the defendant (or at least with its consent), Kermodei Tourism took over the preparation and production of the 2007 Guidebook, and the operation of the web site that had been operated by the defendant.

2007 BCSC 1456 (CanLII)

The funds paid to the Regional District of Kitimat – Stikine under the provisions of the regulation shall be remitted to the Terrace Tourism Society to be applied to tourism marketing and development for the Terrace area.

Lewis v. Terrace Tourism Society [8]

Page 4

The plaintiff learned that her employer was going out of business. She made

some inquiries directed to committee members, about what severance benefit she

19, 2007, the plaintiff commenced action against the defendant in Small Claims court at Terrace, claiming damages of $25,000 for wrongful dismissal. The defence to that action was, in substance, that the plaintiff had not been terminated as of the time she commenced action, and that her action provided the defendant with just cause to dismiss her, which it allegedly did on April 27, 2007.

[9]

On May 25, 2007, the Regional District approved Bylaw No. 535, 2007, which

would amend Bylaw No. 510, 2004. Paragraph 3 of that previous Bylaw was changed so as to read: The funds paid to the Regional District of Kitimat – Stikine under the provisions of the regulation shall be remitted to the City of Terrace for use by a non-profit society established for the purposes of tourism marketing programs and projects in the Terrace area.

[10]

Bylaw No. 535, 2007 became effective as of June 22, 2007. The Regional

District seems first to have taken the position that the new Bylaw operated retroactively, and that it authorized the Regional District to send all of the hotel room tax money collected since January 15, 2007 to the City of Terrace. The amount of tax collected each month varied, but appears to have been averaging approximately $7,000 to $8,000 per month.

[11]

On June 29, 2007, on the application of the plaintiff, a judge of the Small

Claims court transferred the plaintiff’s action to the Supreme Court, apparently on

2007 BCSC 1456 (CanLII)

would receive, but she was not satisfied with the answers she was given. On March

Lewis v. Terrace Tourism Society

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the grounds that she wished to add a claim for damages for defamation, and that

[12]

On July 19, 2007, the plaintiff commenced this action in Supreme Court at

Terrace, claiming damages for wrongful dismissal and damages for defamation alleged to have been uttered by David Pernarowski, the committee chairman. On the principle in Wallace v. United Grain Growers, the plaintiff claimed aggravated damages for alleged bad faith conduct by the defendant in the manner in which it dismissed her.

[13]

The Regional District sent a cheque to the City of Terrace dated July 31,

2007, for $41,506. It was said that this cheque was being paid to cover expenses incurred by Kermodei Tourism in producing the Terrace Travel Guide. This cheque has not yet been cashed.

The Grounds of this Application [14]

The plaintiff alleges that the 2% hotel room tax money collected by the

Regional District between November 2006 and June 22, 2007, is an asset of Terrace Tourism Society. In a separate action, the plaintiff has applied to restrain the Regional District and the City of Terrace from any further dealing with that money.

On the present application, the plaintiff seeks to restrain Terrace Tourism Society from any further disposition of its assets, pending the trial of her action for wrongful dismissal and defamation.

2007 BCSC 1456 (CanLII)

she might seek to restrain the defendant from disposing of its assets.

Lewis v. Terrace Tourism Society

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Argument Counsel for the plaintiff submits that the injunction being sought should not be

characterized as a Mareva injunction, because it would have no effect on the business operations of the defendant, since the defendant is no longer in business.

Counsel argued that, in any event, there is a real risk that, unless restrained, the defendant will dispose of the assets which remain in its possession and control. It is contended that, if the plaintiff succeeds at trial, she will not be able to recover the damages awarded to her, from the defendant, if an injunction is not granted.

Counsel submits that this is tantamount to irreparable harm, and that the balance of convenience clearly favours the granting of an injunction.

Issues [16]

The issues are: 1.

Is the plaintiff claiming a Mareva injunction?

2.

In any event, has the plaintiff met the legal test for the granting of the injunction that she seeks?

Issue No. 1: Is the plaintiff claiming a Mareva injunction?

[17]

In my opinion, the injunction sought by the plaintiff is in the nature of a

Mareva injunction, because it seeks to restrain the defendant from disposing of its assets before trial, and when the assets in question are not the subject of the lawsuit.

2007 BCSC 1456 (CanLII)

[15]

Lewis v. Terrace Tourism Society

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Issue No. 2: In any event, has the plaintiff met the legal test for the granting of the

[18]

The facts that must be shown by an applicant for a Mareva injunction were

set out in Aetna Finance Services Ltd. v. Feigelman, [1985] 1 S.C.R. 2. Speaking for the court, Mr. Justice Estey said, in effect, that “a Mareva injunction should not be granted unless the applicant has demonstrated a strong prima facie case and that there is a real risk that the defendant will dissipate his assets to avoid the possibility of a judgment.� (paragraph 30).

Application of the Law to the Facts [19]

Although the evidence is far from being overwhelming, I am persuaded that

the plaintiff has shown a strong prima facie case with respect to her cause of action for damages for wrongful dismissal. Since the defendant is no longer in business, I think it can also be said that there is a real risk that the defendant will dispose of its assets if not restrained. Moreover, if that was done, the plaintiff would be left with a dry judgment, if she succeeds at trial. I think the real issue is whether a fraudulent intent must be shown in every case. If so, the plaintiff must fail on this application, because in my opinion there is no evidence capable of supporting an inference of fraud.

[20]

As I read Silver Standard Resources Inc. v. Joint Stock Co. Geolog

(1998), 59 B.C.L.R. (3d) 196 (C.A.), there is no hard and fast rule that a plaintiff must prove an intention on the part of the defendant to defeat judgment, as a condition for obtaining a Mareva injunction (see in particular paragraph 20).

2007 BCSC 1456 (CanLII)

injunction that she seeks?

Lewis v. Terrace Tourism Society [21]

Page 8

In this case, it is apparent that, if the defendant disposed of any of its assets,

it could not be said that it would be done in the ordinary course of its business. The

which remain in its possession or control are necessary to satisfy debts that have been previously incurred in the ordinary course of its business. That being the situation, it has not been shown that the defendant will suffer harm if an injunction is granted. In my opinion, the balance of convenience favours the granting of an injunction in this case.

[22]

It has been stated that, in every case, the ultimate question “is whether the

granting of an injunction is just and equitable in all the circumstances of the case.�

See Attorney General of B.C. v. Whale (1986), 9 B.C.L.R. (2d) 333 (C.A.) at 346.

In this case, I think that this question should be answered in the affirmative.

[23]

Accordingly, I order that the defendant, Terrace Tourism Society, by itself, its

agents, servants or otherwise, be restrained from further disposing of any of its assets without leave of the court, until the conclusion of this action by trial or settlement. These assets will include any money actually received from the Regional District of Kitimat-Stikine which remains unspent, and in the possession or control of the defendant.

[24]

The costs of this application will be in the cause.

_____________________ Mr. Justice D.A. Halfyard

2007 BCSC 1456 (CanLII)

defendant has not presented any evidence to show that the disposal of the assets