Jonathan Charland

The appellants, a corporation and its sole shareholder, appealed a Small Claims Court judgment holding them jointly and severally liable for unpaid legal fees owed to the respondent law firm.

The Divisional Court dismissed the appeal, finding that the individual appellant had personally retained the firm through his conduct.

The court also upheld the trial judge's decision to pierce the corporate veil due to the corporation's undercapitalization and found that the respondent was entitled to an oppression remedy as a creditor whose reasonable expectation of payment was unfairly disregarded.

The award of damages in Canadian dollars, despite an initial agreement to pay in barter dollars, was upheld based on evidence of a 1:1 equivalency.

The debtor executed an irrevocable direction instructing its law firm to disburse an anticipated tax refund to three creditors, including the law firm itself.

A judgment creditor subsequently served a notice of garnishment on the law firm in respect of the tax refund.

The law firm disbursed the funds according to the irrevocable direction rather than paying the judgment creditor.

The motion judge found the law firm should have followed the garnishment procedure.

The Court of Appeal allowed the appeal, holding that the tax refund was not a garnishable debt owed by the law firm to the debtor, and therefore the notice of garnishment had no effect.