In Sickinger v. Krek,2016 ONCA 459 the action arises from an oil spill in Muskoka over 26 years ago. Oil that leaked from a tank located on Krek’s property which it is alleged contaminated various adjacent properties. The Sickinger’s sued Krek for the leak. Krek brought in B.T. Petroleum, the supplier of the oil. As a third party, B.T. Petroleum filed a Statement of Defence but dissolved thereafter.
The complex facts in the main action resulted in considerable delay. On 2015, B.T. Petroleum moved to dismiss the third party claim for delay. Justice Wood granted the motion. Krek appealed and argued that Justice Wood erred in , among others, concluding that a dissolved corporation had the capacity to bring its motion to dismiss.The Court of Appeal dismissed the appeal, finding:
“A dissolved corporation has the capacity to defend a motion, bring its own motion, and proceed with a counterclaim… The right to defend must include the right to take whatever reasonable action counsel for a dissolved corporation deems advisable to further his or her client’s interest”
The Court of Appeal upheld Justice Wood’s findings, which relied on Malamas v. Crerar Properties Corp. (2009), 65 B.L.R. (4th) 277 (Ont. S.C.) (“Malamas”), and Tomken Kamato (V) Ltd. v. 752458 Ontario Ltd., 2014 ONSC 4484 (“Tomken”), which held that a dissolved corporation can defend an action brought against it.
The Court’s approach was consistent with section 242 of the Business Corporations Act, R.S.O. 1990, c. B-16, which states that a dissolved corporation remains capable of taking certain actions after it is dissolved, without first being revived, and does not cease to exist for all purposes upon dissolution. Nothing in section 242 requires that a corporation be revived before an action can be continued. The court found that had it been intended for a corporation to be revived before taking steps, then the legislation would have provided for it: International Display & Lighting Group Ltd. v. R.A.E. Industrial Electronics Ltd. (1993), 15 C.P.C. (3d) 165 (Ont. S.C.).
Ultimately, the case confirms that it will not always be necessary to revive a dissolved corporation in order to effectively continue or defend a claim brought by it before dissolution. In claims for indemnity in the insurance context, this case confirms that a claim can still be launched against a dissolved corporate defendant because its dissolution does not prevent it from answering a claim. At the same time, a party should be prepared for a dissolved corporate defendant to exercise its right to defend the claim including moving to have the said claim dismissed.