Phillips v. Avena, 2005 ABCA 342 (CanLII)
Date:
2005-10-11
File number:
0501-0028-AC; 0501-0134-AC
Citation:
Phillips v. Avena, 2005 ABCA 342 (CanLII), <http://canlii.ca/t/1lrgb>, retrieved on 2019-07-10
In the Court of Appeal of Alberta
Citation: Phillips v. Avena, 2005 ABCA 342
Date: 20051011
Docket: 0501-0028-AC
0501-0134-AC
Registry: Calgary
Between:
Marion R. Phillips, Herbert D. Wyman, Q.C. and
Allan J. McKinnon, C.A.
Respondents
(Plaintiffs)
- and -
Michelle Phillips, Denise Phillips, Patricia Ann Phillips,
Joseph Albert Phillips, II and Lana Phillips
Respondents
(Defendants)
Sherry Avena
Appellant
(Defendant)
AND BETWEEN:
Lana Phillips
Respondent
(Plaintiff by Counterclaim/Defendant)
- and -
Marion R. Phillips, Herbert D. Wyman, Q.C. and
Allan J. McKinnon, C.A., Personal Representatives
of the Estate of Joseph Albert Phillips, Deceased,
Michelle Phillips, Denise Phillips, Patricia Ann Phillips,
Joseph Albert Phillips, II and Lana Phillips
Respondents
(Defendants by Counterclaim/Plaintiffs/Defendants)
The Honourable Mr. Justice Elizabeth McFadyen
_______________________________________________________
Application on behalf of Frobisher S.A.
for Intervenor Standing
_______________________________________________________
_______________________________________________________
[1] The litigation in this matter arises out of the probate of a will and codicil executed by Joseph Albert Phillips, deceased, and the administration of his estate. At issue on the appeal is the ownership of the shares of a Panamanian corporation, Frobisher S.A., and the jurisdiction of the Alberta courts to deal with that issue. The appellant, Sherry Avena, claims to be the corporation’s sole shareholder and maintains that the Alberta courts have no jurisdiction to decide issues which deal with the status of the corporation. Frobisher S.A., as represented by directors appointed by Ms. Avena (the “Panamanian Directors”), seeks in this application to intervene in the appeal.
[2] The personal representatives of the estate and counsel for Frobisher S.A., as represented by a different group of directors, those appointed by thedeceased as the sole shareholder (the “Alberta Directors”), take the position on the appeal that the Alberta court has jurisdiction to decide on the ownership of the shares. They oppose this application of the Panamanian Directors of Frobisher S.A. to intervene.
[3] Mr. Phillips died in Alberta on August 19, 2003. By the terms of his will, his assets were to be divided among his children. He made no provision for the appellant, Ms. Avena, who claimed to be his spouse.
[4] On September 4, 2003, the deceased’s personal representatives applied for probate of his estate. His assets included a share certificate for 5000 bearer shares of a Panamanian corporation, Toulouse-Lautrec S.A., which had assets in excess of $7 million U.S. in Guernsey and real estate in the United Kingdom. On the direction of the deceased, the issued Toulouse-Lautrec share certificate was held by the Royal Bank of Canada (Channel Islands) in Guernsey. The name of the corporation was changed to Frobisher S.A. at a meeting held on April 23, 1984. Blank, unissued share certificates of Frobisher S.A. were held by the deceased’s business agent in the United Kingdom, David Jones, and subsequently by Richard Jones. Mr. Jones later received the Toulouse-Lautrec bearer shares from RBC.
[5] Ms. Avena advised the personal representatives of her relationship with the deceased and her interest in the estate at an early date. Initially, she acknowledged the deceased’s ownership of the Frobisher S.A. shares and sought to make claims against his estate in her capacity as his common law spouse. Ms Avena retained counsel in Alberta, and steps were taken in various Alberta court proceedings to resolve Ms. Avena’s claims under the Dependent Relief Act and for division of matrimonial property. Ms. Avena subsequently alleged that she had been married to the deceasedin a secret Mexican ceremony, but never produced any proof of that marriage.
[6] In September 2004, Ms. Avena claimed that she owned a 50% share in the corporation. She later maintained that she owned all the shares of the corporation and apparently took steps in Panama to change the directors of the corporationand have new shares issued to her. This was done without notice to the then directors of the corporation (the Alberta Directors) and without notice to the personal representatives.
[7] The personal representatives of the deceased’s estate were also directors of Frobisher S.A. at the time legal proceedings were commenced in Alberta. Those directors did not request that Frobisher S.A. be joined in the proceedings. Ms. Avena and the Panamanian directors appointed by her took no steps to intervene in the Alberta proceedings, although she personally participated in those proceedings up to a time just before the commencement of the trial.
[8] On the date the trial was scheduled to commence, Ms. Avena informed counsel for the estate that she would not be appearing at the trial as she now took the position that the entire matter should be decided by the Panamanian courts. Her counsel sought to withdraw. The trial judge would not permit her counsel to withdraw. The trial proceeded in Ms. Avena’s absence. The trial judge held that the Alberta court had jurisdiction to decide the question of the validity of the shares and their ownership. She decided that the certificate for the 5000 shares of Toulouse-Lautrec S.A. held by the deceased represented the only valid shares of the corporation. On the basis of the evidence before her, the trial judge found that the share certificates on which the appellant purported to rely were forgeries. Ms. Avena appeals that decision, largely on the ground that the Alberta court had no jurisdiction to deal with issues involving the Panamanian corporation.
[9] Following oral reasons for judgment but before full reasons were issued, counsel for the personal representatives discovered that a few days prior to the commencement of the Alberta trial Ms. Avena obtained an order from the Panamanian court declaring her to be the sole shareholder of Frobisher S.A. No notice had been given to the respondents or the Alberta Directors.
[10] On July 14, 2005, Fruman J.A., on an application by the respondents for security for costs and directions, directed that Ms. Avena’s appeal be heard on December 9, 2005. She set a schedule for the filing of the appeal books and the factums of the appellant and respondent. Counsel represented the appellant. No application was brought at that time requesting that Frobisher S.A. be permitted to intervene. In August, Ms. Avena retained new counsel. In a concurrent application, Ms. Avena’s new counsel sought leave to file new evidence, an extension of time to file the appellant’s factum and an adjournment of the appeal. While I granted additional time for the filing of the appellant’s factum, I refused to adjourn the appeal.
[11] I have dismissed the application for intervention by the Panamanian Directors of Frobisher S.A. and indicated that I would provide reasons. Intervention at the appellate level is not routinely granted. The order is discretionary. Having regard to all the circumstances, including the late stage at which this application is made, and the doubt as to who represents the corporation, I am not prepared to grant the order.
[12] While Frobisher S.A. never received formal notice of the legal proceedings in the Alberta courts, its Alberta Directors at the relevant times and the appellant, who claims to be its sole shareholder, were fully aware of the nature of the proceedings and the issues involved. Frobisher S.A. did not ask to be joined in the action at the time of trial, nor did it seek to challenge the jurisdiction of the trial court. The proceedings in the Alberta courts were commenced because of Ms. Avena’s intervention and her request for proof of the will in solemn form and an order directing that she share in the estate. In due course this came to involve an issue relating to the ownership of shares that represent a large portion of the assets of the estate. At the last minute, Ms. Avena refused to appear at the trial to put forward a position challenging the court’s jurisdiction, refused to comply with orders that she produce certain documents, and refused to provide the court with evidence that might assist in determining the issues.
[13] Two separate Boards of Directors purport to be entitled to represent Frobisher S.A., further complicating the situation. The very issue in the litigation seeks to determine who owns the shares of Frobisher S.A. and who is therefore entitled to appoint the Board of Directors. That is not a matter I can determine on the evidence presented in support of this application.
[14] Counsel for the respondents argue that the trial judge did not make any decision which affects the status of Frobisher S.A. and that Frobisher S.A. is not directly affected by the decision. They submit that the trial judge only decided who owned the shares of Frobisher, which are personal property situate in Alberta. They do not suggest that the trial judge had any jurisdiction to make any order which affects the status of Frobisher nor that the court could issue orders affecting the internal governance of a foreign corporation. Whether the trial judge went beyond the acknowledged limits of the court’s jurisdiction will have to be determined by the court on the hearing of the appeal.
[15] The only issue which could be raised by the Panamanian Directors of Frobisher is that relating to the jurisdiction of the court to grant the orders. This is the very issue raised by the appellant. While the corporation is a separate legal entity, the interests represented by the Panamanian Directorsare identical to those of the appellant, who maintains that she is its sole shareholder. The intervention is not necessary for the proper determination of the appeal. The application for intervention is dismissed.
[16] Applications for intervention are usually heard by a panel of this Court. All counsel agreed that I have the jurisdiction to deal with the issue, and requested that I make the decision to prevent further delay and a possible loss of a fixed appeal hearing date. In these unusual circumstances, I agreed to do so.
Application heard on October 5, 2005
Reasons filed at Calgary, Alberta
this 11th day of October, 2005
McFadyen J.A.
Appearances:
Robert W. Calvert, Q.C.
for the Appellant, Sherry Avena
Thomas H. Ferguson, Q.C.
for Frobisher S.A.
Grant N. Stapon
for the Personal Representatives
Daniel J. McDonald, Q.C.
for the Beneficiaries
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