IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
Park v. Canada Korea Foundation, |
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2017 BCSC 1454 |
Date: 20170817
Docket: S123023
Registry: Vancouver
Between:
John Park
Plaintiff
And
Canada Korea Foundation, Doo Ho Shin and Charles Kim
Defendants
Before: The Honourable Mr. Justice Bowden
Reasons for Judgment
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Counsel for the Plaintiff: |
G. Allen |
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Counsel for Canada Korea Foundation: |
E. Allan |
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Counsel for Doo Ho Shin and Charles Kim: |
S. Chang |
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Place and Date of Hearing: |
Vancouver, B.C. August 10, 2017 |
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Place and Date of Judgment: |
Vancouver, B.C. August 17, 2017 |
[1] The plaintiff/applicant was unsuccessful in proceedings against all defendants and they were awarded costs at Scale B. The reasons for judgment are reported at Park v. Canada Korea Foundation, 2014 BCSC 1382.
[2] The applicant now seeks an order disallowing the costs claimed by the Canada Korea Foundation, (“Foundation”), because it has been dissolved.
[3] The defendant, Charles Kim, asserts that if the Foundation is found not to be entitled to costs then he is entitled to them because the board of directors had previously authorized the Foundation to reimburse him for all legal expenses incurred by him on behalf of the Foundation.
[4] The applicant seeks an order that Mr. Kim has no entitlement to such costs because the Foundation did not assign its claim for costs to him. As a defendant, Mr. Kim was awarded costs personally against the applicant.
[5] The Foundation was incorporated on March 12, 2011 under Part II of the Canada Corporations Act, R.S.C. 1970 c. C-32, (“CCA”).
[6] Early in 2016, Corporations Canada notified the directors of the Foundation that it would be dissolved if it did not transition from the CCA to the Canada Not-for-Profit Corporations Act, SC 2009, c 23 (“CNFPCA”).
[7] Subsection 297(5) of the CNFPCA provides:
(5) Despite any provision of the Canada Corporations Act, the Director may, in accordance with section 222, dissolve a body corporate referred to in subsection (1) that does not apply for a certificate of continuance under section 211 within three years after the day on which this subsection comes into force.
[8] Subsection 297(5) came into force on October 17, 2011.
[9] The Foundation was a corporation to which section 297(5) applied and it has never applied for a certificate of continuance under section 211 of the CNFPCA.
[10] On October 8, 2016, a Certificate of Dissolution was issued to the Foundation by the Director stating:
I HEREBY CERTIFY that the above-named corporation is dissolved pursuant to section 222 of the Canada Not-for-profit Corporations Act.
[11] Subsection 239(2) of the CNFPCA provides:
239(2) Despite the dissolution of a corporation under this Act,
(a) any civil, criminal or administrative action or proceeding commenced by or against the dissolved corporation before its dissolution may be continued as if the corporation had not been dissolved;
(b) any civil, criminal or administrative action or proceeding may be brought against the dissolved corporation within two years after its dissolution as if the corporation had not been dissolved; and
(c) any property that would have been available to satisfy any judgment or order if the corporation had not been dissolved remains available for that purpose.
[12] If a corporation is dissolved under either the CNFPCA or the CCA any interested person may apply to have the dissolved corporation revived as a corporation under subsection 219(1) of the CNFPCA. Neither the Foundation nor any of its previous directors have made such an application and at the time of this hearing the Foundation remained dissolved.
[13] The applicant argues that as the Foundation never applied for a “certificate of continuance” under section 211 of the CNFPCA it is not an entity to which that statute applies.
[14] The applicant says that his position is consistent with the definition of “corporation” under section 2(1) of the CNFPCA which provides:
…corporation means a body corporate incorporated or continued under this Act and not discontinued under this Act.
[15] The applicant submits as the Foundation was not incorporated under the CNFPCA nor continued under that statute, it cannot rely on section 239 as a basis for its standing to pursue its costs claim despite having been dissolved.
[16] In order to pursue its claim for costs, the applicant argues, the Foundation must apply to be revived under subsection 219(1) of the CNFPCA.
[17] The respondent submits that as the Foundation was dissolved under s. 222 of the CNFPCA, it may rely on s. 239(2) (a) of that statute to continue its claim for costs against the applicant.
[18] The respondent argues that it is clear that s. 239 of the CNFPCA contemplates that when an entity is dissolved under that statute it will still have rights including the right to pursue an award for costs in its favor which arose before the dissolution.
[19] Mr. Kim argues that as the applicant has agreed to the bill of costs and does not dispute the Foundation’s entitlement to costs if it were revived under the CNFPCA, the applicant is relying upon a technicality and his claim is not proportional to the amount in dispute.
[20] If the Foundation does not have standing Mr. Kim argues that by virtue of the resolution of the directors of the Foundation authorizing the reimbursement of his legal expenses in defending any claims against the Foundation, he should be entitled to the costs payable to the Foundation.
[21] In a similar vein, Mr. Kim argues that by virtue of the indemnity to directors provided in Part 19 of the bylaws of the Foundation he is also entitled to the costs awarded to the Foundation.
[22] It is clear from the Certificate of Dissolution that the Foundation was dissolved under s. 222 of the CNFPCA. Section 222(1) provides:
222 (1) Subject to subsections (2) and (3), the Director may
(a) dissolve a corporation by issuing a certificate of dissolution under this section if the corporation
(i) has not commenced its activities within the prescribed period after the date shown in its certificate of incorporation,
(ii) has not carried on its activities for the prescribed period,
(iii) is in default for a prescribed period in sending to the Director any fee, notice or other document required by this Act, or
(iv) does not have any directors or is in the situation described in subsection 130(4); or
(b) apply to a court for an order dissolving the corporation, in which case section 227 applies.
[23] While it does not appear that s. 222 contemplates a dissolution when a corporation has not applied for continuance under subsection 297(5) (although para. (iii) of subsection 222(a) (iii) might apply), subsection 297(5) makes it clear that the Director may dissolve a corporation in those circumstances in accordance with s. 222.
[24] In my view that renders subsection 239(2) applicable notwithstanding that the Foundation was not a corporation as defined in s. 2 of the CNFPCA.
[25] The applicant argues that if subsection 239(2) does apply it only allows proceedings to continue however the Foundation is not able to participate in any such proceedings because it does not exist. For example, the Foundation is not able to give instructions to counsel as to how to proceed or participate. To participate in the proceedings, the applicant argues, the Foundation must apply to be revived.
[26] The Foundation submits that it would be absurd to require a dissolved corporation to apply to be reinstated when there is a specific statutory provision allowing proceedings by or against a dissolved corporation to continue as if it has not been dissolved.
[27] I have concluded that on a plain reading of subsection 239(2) of the CNFPCA the claim by the Foundation should be allowed to proceed “…as if the [Foundation] had not been dissolved” that is to say as if the Foundation was not dissolved and still exists. In my view, the Foundation does have standing to proceed with its claim for costs against the applicant.
[28] While not necessary for my decision, for the purpose of these proceedings, I will comment on my view of some of the implications of the Foundation being deemed in law to continue to exist as if it had not been dissolved. In order for the Foundation to participate in these proceedings, the status of its officers and directors as of the date of its dissolution will continue such that the person who would have instructed counsel on behalf of the Foundation at that time will continue to do so until these proceedings are concluded. I understand that the Foundation has a current bank account and that account may be used to receive any payment of costs from the applicant. It would then be necessary that any funds so received must be distributed in accordance with the bylaws of the Foundation as they applied at the time of dissolution.
[29] In view of my decision regarding the standing of the Foundation it is not necessary to address Mr. Kim’s alternative submission.
[30] The application is dismissed with costs to the Foundation at Scale B with respect to the costs of this application as well as the application for costs before the Registrar on April 5, 2017.
“Bowden, J.”