Maurice v. Alles et al., (2016) 348 O.A.C. 35 (CA)

• Judge: Epstein, van Rensburg and Hourigan, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: November 10, 2015
• Jurisdiction: Ontario
• Citations: (2016), 348 O.A.C. 35 (CA);2016 ONCA 287

Maurice v. Alles (2016), 348 O.A.C. 35 (CA)

MLB headnote and full text

Temp. Cite: [2016] O.A.C. TBEd. AP.033

Robert Maurice (applicant/appellant) v. Lorraine Alles, Diane Pomorski, Carol MacDonald, Donald Maurice, George Alles and Kirby-Maurice Company Limited

Lorraine Alles, Diane Pomorski, Carold MacDonald, and Donald Maurice (applicants/respondents) v. Robert Maurice (respondents/respondents)

(C60269; 2016 ONCA 287)

Indexed As: Maurice v. Alles et al.

Ontario Court of Appeal

Epstein, van Rensburg and Hourigan, JJ.A.

April 21, 2016.

Summary:

Maurice owned an interest in a company (Tasco) through his holding company (Kirby-Maurice). Marlba Investments owned the land on which Tasco operated. Marlba was owned equally by Kirby-Maurice and another holding company owned by Maurice and Maurice's business partner (Sayer). Maurice restructured Tasco by giving equal interests in Tasco to each of his six children and to Sayer's six children, preserving voting control for his family by causing the issuance of 54 percent of Tasco's voting preferred shares to Kirby-Maurice. Litigation between the Maurice and Sayer families concerning Tasco and Marlba concluded with a settlement agreement that provided for the ownership structure of the two companies. It also required the two families to enter into unanimous shareholder agreements (USAs) to govern the business and affairs of each company. Although the USAs were never executed, the parties governed themselves according to provisions set out in the settlement agreement, which were to be contained in the USAs. The Maurice siblings entered into a USA concerning their interests in Kirby-Maurice. The Kiry-Maurice USA required a shareholder selling their shares in Tasco and Marlba to also sell, at a fair value to be determined by a valuator, his or her shares in Kirby-Maurice. On May 13, 1996, one of the Maurice siblings (Robert) exercised his right to sell his shares in Tasco and Marlba. In accordance with the Kirby-Maurice USA, he offered to sell his shares in Kirby-Maurice at the same time. The sale of his shares in Tasco and Marlba did not close until March 23, 2007. Negotiations between Robert's siblings and a prospective purchaser led to Tasco and Marlba shareholders (including Robert's siblings and Kirby-Maurice) receiving a letter of intent from a third party with an interest in acquiring their shares in June 2007. Robert, who remained a shareholder and director of Kirby-Maurice, learned of the potential purchased in October 2007. He expressed his view that Kirby-Maurice's 54 percent of the voting preferred shares in Tasco should fetch a premium. At a shareholders meeting in July 2008, Robert was advised that, inter alia, his siblings had sold their shares in Tasco and Marlba and that Kirby-Maurice's preferred shares in Tasco were being sold for redemption at face value. Roberts opposed the sale. After Robert left the meeting, his siblings approved the sale of Kirby-Maurice's shares in Tasco and Marlba. Thereafter, Robert requested a valuation of his shares in Kirby-Maurice and, on numerous occasions, requested information relating to how Kirby-Maurice's preferred shares in Tasco were valued for the purposes of their sale. The requests were either ignored or refused by Robert's siblings. On May 13, 2013, Robert's siblings applied for the appointment of a valuator to value the issued and outstanding shares of Kirby-Maurice. Robert cross-applied against two of his siblings, alleging breach of both the settlement agreement and the Kirby-Maurice USA, and seeking an oppression remedy. The parties brought cross-motions.

The Ontario Superior Court, in a decision reported at [2013] O.T.C. Uned. 6046, ordered Robert's cross-application to be determined as a mini-trial before the application to appoint a valuator. Robert's siblings moved for summary judgement to dismiss the claims in the cross-application as being statute barred and for the appointment of a valuator. Robert moved to have his siblings reimburse Kirby-Maurice for legal fees that Kirby-Maurice paid on his siblings' behalf in connection with the ongoing disputes with him from 2008 onward.

The Ontario Superior Court, in a decision with neutral citation 2015 ONSC 1671, granted Robert's siblings summary judgment on the basis that Robert's claims were statute barred. Robert appealed, limiting his arguments to the dismissal of the oppression remedy claim. The issues to be determined were whether the motion judge erred in (1) granting summary judgment in the context of an application; and (2) finding that the limitation period applicable to the claim of oppression had expired.

The Ontario Court of Appeal allowed the appeal. A motion for summary judgment under rule 20 of the Rules of Civil Procedure was not available to adjudicate issues raised on an application under rule 14 unless the application was converted into an action. However, the court refused to interfere with the motion judge's decision on this basis where the use of rule 20 was a procedural defect. Roberts had an obligation to commence his oppression claim based on his siblings' failure to produce the information regarding the share transaction within two years of his discovery in 2008 that they would not produce the information to him. However, the motion judge erred in concluding that the claim was out of time as another discrete potentially oppressive act occurred when Robert's siblings commenced their May 13, 2013 application, which in effect sought a valuation process and payout to Robert that did not take into account their earlier alleged oppressive conduct.

Company Law - Topic 2170

Shareholders - Shareholders' rights - To rectify oppressive or unfairly prejudicial acts - Robert Maurice and his siblings were equal shareholders in a corporation (Kirby-Maurice) - At a shareholders meeting in July 2008, Robert learned that his siblings had entered into an agreement that would result in shares held by Kirby-Maurice in a company (Tasco) being sold for redemption at face value - Roberts opposed the sale - He asserted that proceeding without the unanimous consent of the shareholders would breach a unanimous shareholders agreement and that his siblings should obtain a valuation before selling the Tasco shares - After Robert left the meeting, his siblings approved the sale of Kirby-Maurice's Tasco shares - Thereafter, Robert requested a valuation of his shares in Kirby-Maurice and, on numerous occasions, requested information relating to how Kirby-Maurice's Tasco shares were valued for the purposes of their sale - The requests were either ignored or refused by Robert's siblings - On May 13, 2013, Robert's siblings applied for the appointment of a valuator to value the issued and outstanding shares of Kirby-Maurice - Roberts cross-applied for, inter alia, relief from oppression - Roberts's application proceeded as a mini-trial - His siblings obtained summary judgment dismissing Roberts' claims on the basis that they were statute barred - The Ontario Court of Appeal allowed Robert's appeal - Roberts had an obligation to commence his oppression claim based on his siblings' failure to produce the requested information within two years of his discovery in 2008 that they would not produce the information to him - This was not a case of ongoing oppression claims - However, the motion judge erred in concluding that the claim was out of time as another discrete potentially oppressive act occurred when Robert's siblings commenced their May 13, 2013 application, which in effect sought a valuation process and payout to Robert that did not take into account their earlier alleged oppressive conduct - See paragraphs 43 to 55.

Company Law - Topic 9781

Actions against corporations and directors - Actions for oppressive conduct - When available - Time for - [See Company Law - Topic 2170 ].

Limitation of Actions - Topic 4403

Statutory causes of actions - When time begins to run - [See Company Law - Topic 2170 ].

Limitation of Actions - Topic 4405

Statutory causes of action - Oppression action - [See Company Law - Topic 2170 ].

Practice - Topic 9

General principles and definitions - Dispensing with compliance with rules - Robert Maurice and his siblings were equal shareholders in a corporation (Kirby-Maurice) - At a shareholders meeting in July 2008, Robert learned that his siblings had entered into an agreement that would result in shares held by Kirby-Maurice in a company (Tasco) being sold for redemption at face value - Roberts opposed the sale - He asserted that proceeding without the unanimous consent of the shareholders would breach a unanimous shareholders agreement and that his siblings should obtain a valuation before selling their shares in Tasco - After Robert left the meeting, his siblings approved the sale of Kirby-Maurice's Tasco shares - Thereafter, Robert requested a valuation of his shares in Kirby-Maurice and, on numerous occasions, requested information relating to how Kirby-Maurice's Tasco shares were valued for the purposes of their sale - The requests were either ignored or refused by Robert's siblings - In 2013, Robert's siblings applied for the appointment of a valuator to value the issued and outstanding shares of Kirby-Maurice - Robert cross-applied, against two of his siblings, alleging breach of contract and oppression - Newbould, J., ordered Robert's application to proceed as a mini-trial - Robert's siblings obtained summary judgement dismissing Robert's claims on the basis that they were statute barred - The Ontario Court of Appeal held that summary judgment was not available in an application commenced under Rule 14 ("Originating Process") of the Rules of Civil Procedure unless the application was converted into an action - Although Newbould, J., did not explicitly direct that the application proceed to trial, he had authority to make such an order under rule 38.10(1)(b) - Considering that neither party objected to the use of summary judgment procedure and that both fully participated in the motion, any error in disposing of the limitation period issue by way of a motion for summary judgment was a procedural defect that caused no prejudice to the parties - The court would not interfere with the decision on a procedural basis raised by Robert in oral argument - See paragraphs 24 to 35.

Practice - Topic 5702

Judgments and orders - Summary judgments - Jurisdiction or when available or when appropriate - [See Company Law - Topic 2170 and Practice - Topic 9 ].

Counsel:

Peter Griffin and Nadia Campion, for the appellant;

Richard Worsfold, for the respondents.

This appeal was heard on November 10, 2015, by Epstein, van Rensburg and Hourigan, JJ.A., of the Ontario Court of Appeal. Hourigan, J.A., released the following judgment for the Court on April 21, 2016.