Giffin v. Soontiens et al., (2012) 313 N.S.R.(2d) 34 (SC)

• Judge: Moir, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: January 03, 2012
• Jurisdiction: Nova Scotia
• Citations: (2012), 313 N.S.R.(2d) 34 (SC);2012 NSSC 2

Giffin v. Soontiens (2012), 313 N.S.R.(2d) 34 (SC);

    990 A.P.R. 34

MLB headnote and full text

Temp. Cite: [2012] N.S.R.(2d) TBEd. JA.005

Gordon Giffin (plaintiff) v. Nicole Soontiens, Ilona MacAlpine, XL Electric Limited, a body corporate, Huntec Limited, a body corporate, and CNCA Holdings Limited, a body corporate (defendants)

(Hfx. No. 292594; 2012 NSSC 2)

Indexed As: Giffin v. Soontiens et al.

Nova Scotia Supreme Court

Moir, J.

January 3, 2012.

Summary:

Giffin and the defendants, MacAlpine and Soontiens, started the defendant company, XL Electric Ltd. Giffin subsequently left the company. He brought an action, alleging shareholder oppression, estoppel, misrepresentation and breach of fiduciary duties.

The Nova Scotia Supreme Court, in a decision reported at (2011), 310 N.S.R.(2d) 81; 983 A.P.R. 81, held that various actions taken by the company amounted to shareholder oppression and Giffin was entitled to remedies to redress the oppression. The court ordered that the defendants cause the equity in XL to be valued by a chartered business valuer and that the defendants purchase Giffin's shares for a price determined as set out by the court. The other causes of action alleged were not established.

The Nova Scotia Supreme Court issued a supplementary decision addressing various outstanding issues, including prejudgment interest.

Company Law - Topic 2170.1

Shareholders (incl. stakeholders) - Shareholders rights (incl. stakeholders' rights) - Oppressive acts - Remedies - [See Company Law - Topic 9797 ].

Company Law - Topic 9797

Actions against corporations and directors - Action for oppressive conduct - Remedies - The Nova Scotia Supreme Court held that various actions taken by the defendant company, including a declaration of grossly unequal dividends, amounted to shareholder oppression and the plaintiff (Giffin) was entitled to remedies to redress the oppression - The court ordered that the defendants cause the equity in the company to be valued by a chartered business valuer and that the defendants purchase Giffin's shares for a price determined as set out by the court - The court issued a supplementary decision addressing various outstanding issues - Giffin wanted the distribution of profits equalized - The court stated that "The defendants submit firstly that 'there is no such remedy provided for in [the main] decision' and 'the terms of the order can only reflect the contents of [the] written decision'. I disagree. I believe that a decision is only an opinion. It may be added to, or otherwise changed, until the order is issued. Secondly, the defendants see the plaintiff's claim for equalization as a kind of double recovery. 'The Plaintiff should be entitled to a remedy for the oppressive conduct, or a reversal of the oppressive conduct, but not both.' Respectfully, the two are not mutually exclusive. I would compensate for the unequal treatment and consider ordering the purchase of the shares as well, if the unequal payments were the foundation for the finding of oppression. The oppressive conduct did not consist merely in the making of the unequal payments. Indeed, Mr. Giffin acquiesced in them. The oppressive conduct consisted in a broader set of findings. ... The correct remedy is not to equalize payments when the unequal payments were, however grudgingly, authorized by Mr. Giffin and the other directors and shareholders. The correct remedy for the oppressive conduct is one that lets him leave the company, and the oppression, behind but with the fair value of his shares" - See paragraphs 19 to 28.

Interest - Topic 5009

Interest as damages (prejudgment interest) - General principles - Prejudgment interest - Calculation of (incl. rate) - An action brought by the plaintiff (Giffin) alleging shareholder oppression was successful - The court ordered that the defendants cause the equity in the company to be valued by a chartered business valuer and that the defendants purchase Giffin's shares for a price determined as set out by the court - Giffin sought interest at 5 percent on the monetary award, the value of his shares - His counsel referred to rule 70.07, which established a rate and calculation for liquidated claims, "five percent a year calculated simply" - The Nova Scotia Supreme Court stated that "Mr. Giffin's is not a liquidated claim. Counsel argues '... there is no principled reason to distinguish the pre-judgment interest rates which accrue to liquidated claims from those which accrue to unliquidated claims.' I disagree. Rule 70.07 is part of Rule 70 - Assessment of Damages. The presumptive rate avoids the need for a hearing to assess interest on a liquidated claim, which usually requires no elaborate assessment. See also, Rules 8.06(b) and 8.07(1)(d). An unliquidated claim requires an assessment of damages. If the principal is to be assessed, the interest can efficiently be assessed at the same time. So, a presumptive rate serves a purpose for liquidated claims, avoiding an assessment hearing, that would not be available for unliquidated claims. There is no presumptive rate for damages on an unliquidated claim" - See paragraphs 29 to 33.

Interest - Topic 5009

Interest as damages (prejudgment interest) - General principles - Prejudgment interest - Calculation of (incl. rate) - The Nova Scotia Supreme Court stated that "Before the Practice Memorandums under the 1972 Rule elapsed, Practice Memorandum No. 7 applied to set rates for prejudgment interest. It referred to consent in para. 2(a), presumptive rates in para. 2(b), and the practice of a judge selecting a rate without consent or evidence in para. 3. Paragraph 2(b) of the practice memorandum called for evidence about 'the prevailing rates of interest for the relevant period of time'. It 'suggested' parties prove a table 'showing the average rates of interest for one (1) year or two (2) year term deposits or treasury bills'. ... In my opinion, the practice memorandum ought not to be a guide in cases that are primarily litigated after the new Rules were made in June of 2008. Those Rules did not incorporate the practice memorandum, or the preference for deposit rates" - See paragraphs 35 to 39.

Interest - Topic 5009

Interest as damages (prejudgment interest) - General principles - Prejudgment interest - Calculation of (incl. rate) - Giffin's action alleging shareholder oppression was successful - The court ordered that the defendants cause the equity in the company to be valued by a chartered business valuer and that the defendants purchase Giffin's shares for a price determined as set out by the court - Giffin sought interest at 5 percent on the monetary award, the value of his shares - The Nova Scotia Supreme Court stated that "Mr. Giffin's financial circumstances are such that two percent would not adequately compensate for the wait. The money, if paid at termination, would not have gone entirely to savings. Depending on the principal amount, perhaps none would have gone to savings. A fit rate of interest in the circumstances of this case is one that weighs between savings rates and borrowing rates. Four percent should accomplish that objective. I allow prejudgment interest on the payment for Mr. Giffin's shares at four percent a year calculated simply" - See paragraphs 40 to 42.

Practice - Topic 6926

Costs - General principles - Time to award costs - The plaintiff's action alleging shareholder oppression was successful - The court ordered that the defendants cause the equity in the company to be valued by a chartered business valuer and that the defendants purchase the plaintiff's shares for a price determined as set out by the court - The defendants proposed that the court wait for the valuation to finish submissions on costs - The plaintiff made a submission for solicitor and client costs, and he wanted the issue determined then - The Nova Scotia Supreme Court stated that "the valuation is necessary to assessing one aspect of the claim for full indemnification and it will be helpful to the overall assessment. ... Finally, the valuation will be helpful to assessment of party and party costs, if the claim for full indemnification fails. Otherwise, I will have to speculate about 'the amount involved' in arriving at tariff costs either for the purpose of awarding a tariff amount or for the purpose of abandoning the tariffs to achieve partial but substantial indemnification. Therefore, I will wait for the valuation before setting deadlines for any further evidence and submissions on costs" - See paragraphs 12 to 18.

Cases Noticed:

Brant Investments Ltd. et al. v. KeepRite Inc. et al. (1991), 45 O.A.C. 320; 3 O.R.(3d) 289 (C.A.), refd to. [para. 8].

Yeadon v. Gauthier (1981), 47 N.S.R.(2d) 165; 90 A.P.R. 165 (S.C.), refd to. [para. 35].

Awan v. Cumberland Health Authority et al. (2009), 283 N.S.R.(2d) 107; 900 A.P.R. 107; 2009 NSSC 295, affd. (2010), 291 N.S.R.(2d) 292; 922 A.P.R. 292; 2010 NSCA 50, refd to. [para. 37].

Statutes Noticed:

Rules of Civil Procedure (N.S.), 2009, rule 70.07 [para. 30].

Counsel:

John A. Keith, for the plaintiff;

George W. MacDonald, Q.C., for the defendants.

These matters were determined by Moir, J., of the Nova Scotia Supreme Court, based on written submissions. Moir, J., delivered the following decision on January 3, 2012.