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Digest of the Week – “Beneficial Owner” Should be Broadly Interpreted

Digest of the Week – “Beneficial Owner” Should be Broadly Interpreted

The term “beneficial owner” should be broadly interpreted.

Wennekers v. Gunn
2016 CarswellAlta 1222
Alberta Court of Queen’s Bench

Remedies --- Damages — Damages in contract — Partnership or joint venture

HW, DG and JQ entered joint undertaking — HW, DG and JQ were appointed directors of FEI — FEI entered into joint venture agreement and became beneficial owner of 40 percent interest in petroleum and natural gas rights — DG and JQ engaged SEA to market FEI's assets or its shares — DG and JQ entered into share purchase agreement with BLE for sale of all of shares of FEI — DG and JQ asserted HW never became entitled to any equity interest in FEI because he never fulfilled requirements for entitlement — DG and JQ asserted no agreement was reached as to issuance of FEI shares to WH or as to terms for him becoming FEI employee — DG offered HW chance to leave his employment with HOO and join FEI on full-time basis in exchange for one-third of FEI shares — HW did not leave his employment with HOO and did not bring prospects to FEI — Email correspondence contained no discussion of two alleged conditions precedent or of terms of HW's full-time employment with FEI — Email correspondence did not reveal dissatisfaction with quality of HW's work — HW asserted claim for one-third of consideration received for sale of FEI shares — HW brought action for breach of s. 242 of Business Corporations Act (Alta.) ("ABCA"), unjust enrichment, and for fraudulent conveyance to convert HW's interest in FEI to DG and JQ — Action allowed — HW was entitled to one-third shares of FEI under terms of contract among parties — Parties agreed that they would each share equally in equity of FEI — Terms of agreement were sufficiently certain to render agreement enforceable contract — There was agreement that each party would contribute his efforts and expertise to joint undertaking and that they would share equally in fruits of that undertaking — HW was to contribute work product, technical and business advice and would receive 1/3 of equity of FEI — Work of all three parties contributed to sale — DG's and JQ's assertions that HW contributed nothing to joint venture agreement were not credible — All of parties were necessary to success of joint undertaking — DG and JQ sought HW's expertise in formation of geological structures to ensure that they were maximally efficient in identifying plays to be pursued with limited resources — Email correspondence revealed sustained effort by HW — Email correspondence clearly showed that HW was responding to requests for work product, offering technical advice, commenting on business strategy and generally backing DG's and JQ's efforts to successfully conclude joint venture agreement — DG and JQ were enriched by HW's efforts, HW suffered deprivation and there was no justification for enrichment — HW was entitled to relief under oppression provisions of s. 424 of ABCA.
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