Charlebois v. Delap

Charlebois v. Delap

A consent judgment obtained by a company ordinarily binds the company as fully as a contested judgment and cannot be set aside merely because the underlying contract was ultra vires; however, where part of the judgment was obtained by manifest fraud for the sole benefit of a director/third party (the sum of $173,133 payable to Codd), equity will set aside or exclude that part. The consent judgment was therefore varied: the fraudulently included sum was excluded and a reduced judgment substituted subject to account for non‑completion.

Citation
(1896) 26 SCR 221
Parties
Appellants (defendants): Alphonse Charlebois and Others; Respondents (plaintiffs): J.B. Delap and Others; Plaintiff (co‑plaintiff): Great North-west Central Railway Company
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
28 March 1896
Procedural Posture
Appeal / On Appeal to the Supreme Court of Canada From the Court of Appeal for Ontario
Outcome
Appeal allowed in part; consent judgment varied and vacated pro tanto for the amount representing fraud; reduced judgment to be entered nunc pro tunc and reference to master ordered for unfinished work; cross‑appeal dismissed.
Legal Topics
Ultra Vires, Consent Judgment, Setting Aside Judgment, Corporate Powers, Fraud, Collusion, Lien and Charges
Source Language
English
Commercial Law Company Law Equity Ultra Vires Consent Judgment Setting Aside Judgment Corporate Powers Fraud +2 more

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Parties

Alphonse Charlebois and Others

Appellants (defendants)

J.B. Delap and Others

Respondents (plaintiffs)

Great North-west Central Railway Company

Plaintiff (co‑plaintiff)

Procedural Posture

Appeal / On Appeal to the Supreme Court of Canada From the Court of Appeal for Ontario

Legal Issues

  1. 1 Whether a company may be bound by a consent judgment enforcing a contract that was ultra vires
  2. 2 Whether a consent judgment can be set aside on grounds that the underlying transaction was ultra vires absent fraud or collusion
  3. 3 Whether specific items included in the contract price (payment to Codd) constituted a fraud upon the company and therefore should be excluded from recovery

Ratio Decidendi

A consent judgment obtained by a company ordinarily binds the company as fully as a contested judgment and cannot be set aside merely because the underlying contract was ultra vires; however, where part of the judgment was obtained by manifest fraud for the sole benefit of a director/third party (the sum of $173,133 payable to Codd), equity will set aside or exclude that part. The consent judgment was therefore varied: the fraudulently included sum was excluded and a reduced judgment substituted subject to account for non‑completion.

Court Disposition

Appeal allowed in part; consent judgment varied and vacated pro tanto for the amount representing fraud; reduced judgment to be entered nunc pro tunc and reference to master ordered for unfinished work; cross‑appeal dismissed.

Orders

  • Consent judgment of $622,226 vacated and annulled so far as it included $173,133 paid for the sole benefit of J.A. Codd (fraudulent item)
  • Declare defendant Charlebois entitled to judgment for $427,093 plus proportionate interest attributable to that sum, less any sum chargeable for non‑completion as found by the master; refer to master to take account of non‑completion and apportion interest; enter judgment nunc pro tunc as of the date of the consent...