Just When I Thought I Was Out' | Parks V McAvoy

• Published date: 17 July 2023
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Professional Negligence
• Law Firm: CLC (Canadian Litigation Counsel)
• Author: Mr Drew Wilson ( Brownlee LLP) and Sarah Rhydderch (Brownlee LLP)

In Parks v McAvoy, 2023 ABCA 211, the Alberta Court of Appeal overturned the lower court's decision to summarily dismiss personal claims in negligence against the director of the defendant company related to the construction of a residential house.

Background

In 2010, the Plaintiff hired the defendant company, Woodparke Homes, to construct a residential house. The defendant, Steve McAvoy, was the majority shareholder and sole director of Woodparke.

The house was completed in 2014 but the Plaintiff allegedly later discovered numerous defects in the house including mold and structural issues. The Plaintiff sued Mr. McAvoy and Woodparke (as well as other entities) seeking $6.5 million in damages for negligently constructing the house, breach of contract, breach of fiduciary duty and fraud.

Mr. McAvoy filed a summary judgment application to dismiss all claims against him personally on the basis that he bore no personal liability as he was separate from the Woodparke corporate entity. The Plaintiff also filed an application for summary judgment in his favour but that application was dismissed on the basis that the evidentiary record did not allow for a fair disposition in a summary fashion.

The lower court categorized the claims against Mr. McAvoy into two groups: those related to deficient construction and those related to accounting issues. The lower court dismissed claims related to deficient construction as Mr. McAvoy was not a party to the oral agreement, had no personal liability for the construction of the house, and did not personally owe a fiduciary duty for the construction of a habitable home. The claims related to accounting issues were partly dismissed due to time limitations, but claims of misappropriation and charging for non-existent items were allowed.

The Plaintiff only appealed the dismissal of the personal claims against Mr. McAvoy related to the construction of the house.

Appeal

The Court of Appeal largely concurred with the lower court's reasoning and agreed Mr. McAvoy could not be personally liable for a breach of contract on the basis that all invoices and payments were made between the Plaintiff and Woodparke.

Further, the Court of Appeal agreed Mr. McAvoy did not owe the Plaintiff a fiduciary duty for the construction of a habitable home. It should be noted the claims against Mr. McAvoy related to the misappropriation and charging for non-existent items were not summarily dismissed and those allegations include a breach of a fiduciary...