John M. Picone

This endorsement addresses three motions in an oppression action concerning the Paramount Group, a food services business facing shareholder deadlock.

The plaintiffs (Mohamad Fakih et al.) moved to strike portions of the defendants' counterclaim alleging fraudulent misrepresentation and for security for costs.

The defendants (AHM Investments Corporation et al.) moved for compliance with financial disclosure and the appointment of an auditor.

The court partially granted the motion to strike due to insufficient particulars of fraud.

The motion for security for costs was dismissed, as the counterclaim was inextricably linked to the defence and, at its core, an oppression remedy claim, which is exempt from security for costs under the OBCA.

The defendants' motion for financial disclosure and the appointment of an auditor was granted, affirming shareholders' mandatory right to audited financial statements, with the Paramount Group responsible for the audit fees.

This decision concerns the costs arising from the dismissal of the plaintiff's motion for leave to commence a secondary market securities class action and to certify the action.

The defendants sought substantial indemnity costs, while the plaintiff argued for partial indemnity and a discount due to the alleged novel and public interest nature of the litigation.

The court awarded partial indemnity costs of $693,805.39, finding no basis for substantial indemnity as there was no reprehensible conduct or unproven fraud allegations.

The court also rejected the argument for a discount under s. 31(1) of the Class Proceedings Act, concluding that the issues were not novel or of broad public interest, particularly as they had been previously litigated.

A minor deduction was made for online research disbursements.

The applicant parents and respondent son brought competing applications under the Partition Act regarding the ownership of a residential property.

The parents claimed 100% beneficial ownership based on a resulting or constructive trust, while the son claimed 100% beneficial ownership based on monetary gifts and his legal title.

The court found that the property was purchased as part of a family real estate joint venture.

The court declared the parties to be 50:50 owners, subject to a resulting trust recognizing the parents' financial contributions, and ordered the partition and sale of the property with the net proceeds to be divided equally.

The plaintiff sought leave to bring a statutory secondary market misrepresentation claim under the Securities Act and to certify a class action for both statutory and common law negligent misrepresentation claims.

The claims arose from the defendant mining company's alleged failure to immediately disclose a pit wall instability and subsequent rock slide at its Chilean copper mine.

The court dismissed the motion for leave, finding no reasonable possibility of success that the events constituted a 'change' to the company's business, operations, or capital, as they were inherent mining risks managed in the ordinary course.

The court also dismissed the certification motion for the common law claim, holding that individual issues of reliance made a class proceeding unmanageable and not the preferable procedure.

The applicants sought a declaration regarding the interpretation of the 'Outside Date' in a restructuring support agreement.

The respondent, a cannabis company, argued that any extension of the Outside Date required its initiation or consent.

The court found that the plain and ordinary meaning of the agreement allowed the lenders to automatically extend the Outside Date upon their written consent, acting reasonably, without the need for the respondent's consent.

The court granted the declaration sought by the applicants.

Wilks Brothers, LLC applied for a review of a decision by TSX Inc. granting exemptive relief to Calfrac Well Services Ltd. The relief allowed Calfrac to retroactively correct a shareholder vote related to its recapitalization, in which votes from an ineligible shareholder (AIMCo) were inadvertently included.

The Commission found that Wilks had standing to bring the application as it was directly affected by the TSX decision.

However, the Commission dismissed the application on the merits, finding that the TSX did not consider irrelevant grounds, did not impose an illegal condition, did not overlook material evidence, and appropriately considered the public interest.

The Commission concluded that the agreement to rescind AIMCo's subscription was not an issuer bid under NI 62-104.

The proposed intervener, a shareholder of the respondent corporation and leader of an investor group, brought a motion for leave to intervene as an added party in an application concerning the extension of an outside date for a recapitalization transaction.

The court dismissed the motion, finding that the proposed intervener's financial interest in the outcome did not constitute a direct interest in the subject matter of the private commercial dispute.

Furthermore, the court held that the proposed intervener's intended evidence regarding foreign regulatory law would not make a useful contribution to the resolution of the proceeding.

The Investigative Receiver sought various forms of relief, including a sealing order over asset valuations and an order requiring the respondent and his wife to disclose the use of proceeds from a $2.4 million mortgage on their family home.

The court granted the sealing order, finding it met the requirements of Sherman Estate.

The court also ordered the disclosure of the mortgage proceeds, finding the respondent's claim of ignorance regarding the funds to be not credible and determining that the information fell within the Receiver's investigative mandate.

The applicant brought an ex parte initial application for an interim order relating to a proposed plan of arrangement under the Business Corporations Act.

The court granted the interim order but issued this endorsement to provide directions to the bar regarding the information that should be included in factums for such applications.

The court emphasized that while the purpose of an interim motion is not to assess the ultimate fairness of the plan, the court still requires concrete qualitative and quantitative explanations of fairness to determine appropriate terms of service and meeting parameters.

Staff and the respondents agreed to adjourn the start of a complex insider trading merits hearing to allow Staff to present investigator evidence by affidavit, reducing the number of hearing days required.

The Commission held that while a formal motion for an adjournment was not required in these circumstances, the parties still had to establish 'exceptional circumstances' under Rule 29(1) despite their agreement.

The Commission found that the pandemic and the efficient use of affidavit evidence to eliminate eight days of live testimony constituted exceptional circumstances.

The adjournment was granted.

The moving parties, respondents in an insider trading and tipping enforcement proceeding, brought a motion seeking further documentary disclosure from Staff of the Ontario Securities Commission.

They requested all relevant, non-privileged investigator notes, internal communications, and a log of privileged documents.

The Commission dismissed the motion, finding that the requested documents, including investigator notes and internal emails, constituted internal analysis, commentary, or opinion, which have no probative value and are therefore irrelevant.

The Commission also declined to order Staff to conduct a document-by-document relevance review or provide a privilege log, as no documents were withheld on the basis of privilege.

Staff of the Ontario Securities Commission alleged that a reporting issuer and seven of its former officers and directors contravened Ontario securities law by making materially misleading disclosures regarding copper production and financial performance, failing to maintain adequate internal controls, and providing inadequate risk disclosure.

The respondents admitted to the contraventions and to conduct contrary to the public interest.

The Commission approved a settlement agreement requiring the corporate respondent to make a $28.5 million voluntary payment and pay $1.5 million in costs, while the individual respondents agreed to pay administrative penalties ranging from $350,000 to $2.45 million, pay $50,000 each in costs, and be subject to director and officer bans.

The Commission found the settlement fell within a range of reasonable outcomes and was in the public interest.

Following the dismissal of the plaintiff's class action on a summary judgment motion, the successful defendant sought partial indemnity costs of $275,000.

The plaintiff argued the amount was unreasonable and duplicative of costs from an earlier certification motion, suggesting $50,000 was appropriate.

The court reviewed the principles of costs in class actions, noting the 'bet the company' nature of the litigation justified significant costs, but reduced the claimed amount due to excessive hours billed for preparation and cross-examination.

The court found no duplication and fixed costs at $215,000.

The plaintiff, representing a class of non-golfing and non-member shareholders of a golf and country club, brought a motion for summary judgment alleging that the club's board of directors engaged in oppressive conduct by selling treasury shares at reduced prices to attract new members.

The plaintiff argued this diluted shareholder equity and violated their reasonable expectations.

The Superior Court of Justice dismissed the class action, finding that the board's decision was a reasonable exercise of business judgment aimed at ensuring the club's financial viability.

The court held that the shareholders did not have a reasonable expectation that shares would only be sold at a specific minimum price, and the board fairly considered the interests of all stakeholders.

The plaintiff sought to certify a class action against a mining corporation, its executives, and its underwriters for misrepresentations in a short form prospectus related to a secondary public offering.

The corporate defendants consented to certification of the statutory misrepresentation claims.

However, the underwriters opposed certification of the common law negligent misrepresentation and negligence claims against them.

The court certified the action against the corporate defendants but dismissed the certification motion against the underwriters, finding that a class proceeding was not the preferable procedure due to the inevitability of individual trials on reliance and damages, and that the negligence claim failed to disclose a reasonable cause of action as it was subsumed by the negligent misrepresentation claim and did not establish a novel duty of care.

The applicants, dissident shareholders engaged in a proxy contest, sought a hearing and review of a Toronto Stock Exchange (TSX) decision that conditionally approved the issuance of shares by Eco Oro Minerals Corp. to certain shareholders without requiring a shareholder vote.

The TSX permitted an accelerated closing of the share issuance just days before the record date for a requisitioned shareholder meeting.

The Ontario Securities Commission conducted a de novo review, finding that the TSX overlooked material evidence regarding the proxy contest and erred in its interpretation of 'materially affect control.' The Commission set aside the TSX decision, concluding that the share issuance materially affected control and required shareholder approval.

To remedy the improper issuance, the Commission ordered Eco Oro to hold a shareholder vote to either ratify or reverse the share issuance, cease-traded the new shares pending the vote, and prohibited the new shares from being voted at the upcoming meeting.

The appellant, trustee of a profit sharing plan, sued the respondents for misappropriation of funds and breach of fiduciary duty.

The appellant alleged that money earmarked for a specific fund was diverted to third-party companies connected to the respondents and not repaid.

The respondents sought to stay the action based on a choice of forum clause in a subscription agreement requiring disputes to be resolved in the Cayman Islands.

The motion judge dismissed the summary judgment motion and stayed the action.

The Court of Appeal allowed the appeal, finding that the action as pleaded did not arise from the subscription agreement or the purchase of shares, but rather from the respondents' misappropriation of funds and breach of fiduciary duty.

Summary judgment was granted in favor of the appellant.

The plaintiff brought a motion to add Toronto Hydro-Electric System Limited as a defendant to a slip and fall action after the expiry of the presumptive two-year limitation period.

The plaintiff fell on an uneven grate but was not informed by the City of Toronto that Hydro owned the grate until three years after the incident.

The court applied the discoverability principle and found the plaintiff provided a reasonable explanation for the delay, as there was no basis to investigate other defendants until the City clarified ownership.

The motion to add Hydro as a defendant was granted.

The appellants, former employees whose employment was terminated following a corporate restructuring, appealed the dismissal of their application for supplementary retirement benefits under a supplementary executive retirement plan (SERP).

Following a partial wind-up of the registered pension plan, the appellants became entitled to statutory 'grow-in' benefits, allowing them to retire at age 55 with unreduced pensions.

The dispute centered on whether the SERP's formula required excluding these grow-in benefits when calculating their supplementary entitlement.

The Court of Appeal upheld the application judge's interpretation, which relied on expert actuarial evidence to conclude that the SERP's proviso mandated the exclusion of grow-in benefits from the base calculation but not from the deduction of earned registered benefits, resulting in a nil supplementary entitlement.

The plaintiff, a Texas-based pension fund, brought a motion for summary judgment against the defendants, directors of a Cayman Islands investment fund, seeking a refund of a $1 million USD investment.

The investment was earmarked for Facebook shares that were never acquired, triggering a refund clause in the Subscription Agreement.

The defendants did not contest the facts but argued that Ontario was not the proper jurisdiction due to an exclusive forum selection clause in the Subscription Agreement designating the Cayman Islands.

The plaintiff argued the claim was for breach of fiduciary duty, not contract, and against individuals served in Ontario.

The court upheld the forum selection clause, finding it broad enough to cover the claim, regardless of how it was framed.

The motion for summary judgment was dismissed, and the action was stayed, with a caveat that the stay could be lifted if Cayman Islands courts declined jurisdiction.

Costs were not awarded due to the plaintiff representing pensioners who had already suffered losses.