3.44: When third party claim may be filed

Case Summary

The Plaintiffs, brothers, claimed an equitable interest in the shares of the corporate Defendant, controlled by the individual Defendant, arising from an agreement between the individual Defendants and their father. The Defendants unsuccessfully applied to add the father as a Third Party.

The Court articulated the test as “whether the facts as alleged in the Third Party Claim, if proved, would result in a finding that the alleged third party was liable to the defendants”. Gates J. found that there was no air of reality to the Third Party allegations. Even if there was, the allegations would defeat the Plaintiffs’ Claim, rather than entitle recovery against the Third Party. There were additional allegations that the alleged Third Party owed a duty to the Defendants, however, the Court found that no facts were pleaded to support the Claim.

Finally, the Court took issue with the Defendants’ claim as to damages. Gates J. found that if the Plaintiffs were successful the Defendants would not suffer a loss, rather they would be required to return to holding trust property as required by the agreement.

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