Applicants did not disclose breach of distinct legal obligation or distinct injury

Supreme court | Civil Practice and Procedure | Parties | Standing

Applicants were trustees of FM, which was sole shareholder of holding company that controlled various corporations comprising of GM Inc.. GM Inc. owned, renovated and operated seniors’ residences. GM Inc.’s vice-president had committed fraud worth $1.8 million against its corporations. In 2009, Revenu Québec issued unexpected notice of assessment against several of GM Inc.’s corporations, which resulted in collection action and then bankruptcy of most of GM Inc.’s corporations. This in turned caused total loss of value of FM because it was comprised exclusively of shares from holding company. Applicants brought action to recover lost value of FM’s patrimony from group of lawyers and accountants on basis of professional misconduct. Professionals successfully brought motion to dismiss action for lack of sufficient interest under art. 165(3) of the Code of Civil Procedure. Applicants appealed. Appeal dismissed. Applicants failed to demonstrate that FM had independent cause of action in civil liability against professionals and personal interest in damages claim. Applicants did not disclose breach of distinct legal obligation, nor did they disclose distinct injury from that suffered by corporations of GM Inc.. Alleged facts referred to legal obligations owed to corporations of GM Inc., not to FM and did not suffice to give FM independent right of action as they did not disclose breach of independent legal obligation owed to FM. FM’s alleged injury caused by professionals was suffered by corporations of GM Inc, not directly by FM. Residences belonged to GM Inc.’s corporations and not to FM and loss of value from trust corresponded to net value of seniors’ residences.

Brunette v. Legault Joly Thiffault, s.e.n.c.r.l. (2018), 2018 CarswellQue 11029, 2018 CarswellQue 11030, 2018 SCC 55, 2018 CSC 55, Wagner C.J.C., Abella J., Moldaver J., Karakatsanis J., Gascon J., Côté J., Brown J., Rowe J., and Martin J. (S.C.C.); affirmed (2017), 2017 CarswellQue 1511, 2017 QCCA 391, Bich J.C.A., Morissette J.C.A., and Hogue J.C.A. (C.A. Que.).

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