Court File and Parties
COURT FILE NO.: CV-14-10688-00CL DIVISIONAL COURT FILE NO.: 590/15 COURT FILE NO.: CV-15-10949-00CL DIVISIONAL COURT FILE NO.: 591/15
SUPERIOR COURT OF JUSTICE – ONTARIO DIVISIONAL COURT
RE: DAVID BRENNER, Applicant (Respondent) AND: uri saks and aharon kalderon, Respondents (Appellant)
AND RE: DAVID BRENNER, Applicant (Respondent) AND: JEREMY SAKS and 523910 ONTARIO LTD., Respondent (Appellant)
BEFORE: J. Wilson J.
COUNSEL: Irving Marks, for the Applicant (Respondent) David A. Taub, for the Respondent (Appellant)
HEARD at Toronto: January 5, 2016
ENDORSEMENT
The Motion for a Stay and Admission of Fresh Evidence
1The Appellants, Jeremy Saks and Uri Saks (Jeremy and Uri), seek a stay from the judgments of Justice Pattillo, dated October 26, 2015, pending the appeal from the decisions.
2They also seek leave to file fresh evidence before me and before the panel of the Divisional Court.
3Jeremy and Uri are shareholders in two corporations with the Respondent, David Brenner (David). The main asset of each corporation is real estate.
4Pattillo, J., sitting in the Commercial Court, made an order for the winding up of each of the corporations owned by the parties, pursuant to s. 207 of the Business Corporations Act (Ontario), R.S.O. 1990, c. B.16 (OBCA).
5There is no dispute that the parties have been hopelessly deadlocked for years. The situation was untenable. David wants to sell the assets of the corporations and wind up the companies. Uri purports to be interested in buying out David’s interests, but has for years stalled and avoided attempts to sell the corporate assets.
6Jeremy (holding in trust for Uri) has a 50% interest in 1170057 Ontario Inc. and David owns the other 50%. Pattillo, J. ordered that the major asset of the 1170057 Ontario Inc. be sold. He granted Uri a time limited option to purchase this property in accordance with the offer made by the tenant car dealership. If Uri chose not to purchase, the property could be sold to the tenant in accordance with the terms contained in the tenant’s offer.
7Uri is a 2/3 shareholder of 523910 Ontario Ltd., and David owns 1/3 of the shares. Pattillo, J. ordered that the major asset consisting of commercial condominiums be sold in a tender process to third parties, but allowing Uri to participate in the tender process. The real estate will be sold to the highest bidder.
8As Uri and Jeremy allege prior misappropriation by David, all funds are to be held in trust until the issues between the shareholders are resolved.
9Pattillo, J. was not seized of these matters, but had prior involvement with the parties in the winding up application, namely, various attendances to facilitate the hearing of the winding up application including rescheduling the cross-examination of Uri. Other judges also had involvement to ensure that the application date would proceed as scheduled.
The Appeal
10In their factum, the Appellants raise two grounds of appeal before the Divisional Court: first, whether Uri and Jeremy received a fair hearing in light of the motion judge’s decision to proceed with the application without an adjournment to allow for cross-examination; and second, questioning whether the Judgments are just and equitable.
11In oral argument, counsel for Uri and Jeremy also raised an objection to the time lines provided to Uri to purchase the interests of David as being too short. The order for financial disclosure is also being appealed.
Motion for Leave to File Fresh Evidence
12The criteria for the admission of fresh evidence were set out by the Supreme Court of Canada in R. v. Palmer, 1979 8 (SCC), [1980] 1 S.C.R. 759, at p.775:
The evidence should generally not be admitted if, by due diligence, it could have been adduced at trial provided that this general principle will not be applied as strictly in a criminal case as in civil cases: see McMartin v. The Queen.
The evidence must be relevant in the sense that it bears upon a decisive or potentially decisive issue in the trial.
The evidence must be credible in the sense that it is reasonably capable of belief, and
It must be such that if believed it could reasonably, when taken with the other evidence adduced at trial, be expected to have affected the result.
13Uri seeks to file fresh evidence before me and before the panel of the Divisional Court hearing the appeal. He files an affidavit based upon information and belief about what transpired in the hearing before Pattillo, J. This affidavit is based upon what he was told by his lawyer. He was not present, and his former counsel, who is no longer acting, did not file an affidavit.
14The motion for fresh evidence is dismissed, as being irrelevant to the proceeding based on the factual concessions made by counsel before me.
15Counsel acknowledged before me that at no time did either counsel object to the view of the application judge that the matter should not be adjourned. It is conceded that counsel for Uri and Jeremy did not seek an adjournment.
16The scheduled cross-examinations initially did not take place as Uri refused to proceed with the cross-examinations in the presence of David, and he wanted disclosure of the books and records of the corporations to be provided.
17Pattillo, J. ordered Uri to re-attend to be cross-examined prior to the scheduled motion date. Uri and his counsel failed to attend the second appointment for cross-examination, as apparently counsel’s hearing in the Divisional Court went longer than expected and then counsel had to leave for vacation.
18It is clear that the reason the cross-examinations did not occur was a result of conduct of Uri and his counsel.
19In any event, it is conceded that neither counsel requested an adjournment or objected to the application proceeding without cross-examination.
20If a matter such as an adjournment request or a concern about proceeding without cross-examinations is not raised before the motions court judge, it certainly cannot be raised to ground an appeal.
21For this reason, the proposed fresh evidence about the adjournment issue and what happened before Pattillo, J. is inadmissible as irrelevant given that no objection was raised by Uri and Jeremy’s counsel to the matter proceeding. As well, it is of questionable weight, as the affiant was not present when the matter was argued.
22I turn now to consider the request advanced by Uri and Jeremy for a stay of the judgments of the motions judge.
Test for a Stay
23The Divisional Court has jurisdiction to hear the appeal, and has jurisdiction to grant a stay pending the appeal. A judgment is not stayed unless an order is made pursuant to Rule 63.02 of the Rules of Civil Procedure.
24A court must decide whether the interests of justice call for a stay. A strong case to justify a stay must be made out. The merits of the proposed appeal are very relevant. The test for a stay is the same as is applied for granting an interlocutory injunction as confirmed in RJR-MacDonald Inc. v. Canada (Attorney General) (1994), 1994 117 (SCC), 111 D.L.R. (4th) 385 (S.C.C.), including:
- Is there a serious issue to be decided?
- Would compliance with the judgment cause irreparable harm?
- What is the balance of convenience?
Denial of Request for a Stay
25I decline to grant a stay.
26I find that the grounds for the proposed appeal do not raise a serious issue for determination. Enforcing the judgments would not cause irreparable harm, as each shareholder will receive his fair share of the equity owned and the deadlock will end. In assessing the balance of convenience, I note that Uri has had ample time to purchase David’s interests if he was serious.
27The merits of the appeal are weak, as counsel cannot raise the failure to grant an adjournment as a valid ground for appeal (due to failure to cross-examine) if the request for the adjournment and insistence on the importance of cross-examination is not argued before the application judge.
28The judgments of Pattillo, J. are discretionary, weighing the obvious need for separation between the parties, the sale requested by David to end the dead lock, and Uri’s expressed interest to purchase the properties. The funds from any sale of the properties owned by the corporations are to be held in trust until all outstanding issues are resolved, or further order of the court.
29In oral argument, counsel for Uri raised the inadequate time lines provided by the motions judge for a potential buy out by Uri. Even though the motions judge imposed short time lines in the option for Uri to purchase, it is conceded that no objection to the proposed time lines was made before the applications judge during argument. If the time lines were too short, and there was a genuine interest by Uri to purchase, the appropriate remedy would be to seek an extension of time before the applications judge.
30For these reasons, I decline to grant a stay. The merits of the appeal are questionable and there is no prejudice to the Appellants because funds will be held in trust until all matters are resolved. The balance of convenience also favours David.
31During argument I encouraged the parties to find a practical solution to their differences.
32The parties agree that they will attend a settlement conference before Speigel, J. on January 14, 2016 at 10:30 am. If the matter is not resolved, they have agreed to a timetable for the exchange of the appeal factums. The appeal date is set for March 8, 2016 for two hours.
Costs
33I reviewed the bill of costs submitted by all parties and heard submissions. The quantum of costs requested is in my view excessive, given comparable motions in the Divisional Court.
34If the matter is not resolved before Speigel, J. and if this appeal proceeds, the Appellants shall pay costs of this unsuccessful motion for the introduction of fresh evidence and for a stay of the judgment of the motions judge in the amount of $5000.00, inclusive of HST and disbursements for each of the appeals (for a total payment of $10,000.00 payable to the Respondent).
J. Wilson J.
Date: January 12, 2016