Kafouf v. Kramerica Industries Ltd., 2018 ONSC 7810

CITATION: Kafouf v. Kramerica Industries Ltd., 2018 ONSC 7810

DIVISIONAL COURT FILE NO.: 18-924, 18-925

DATE: 20181101

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: SALTI KAFOUF, Applicant/Appellant

AND:

KRAMERICA INDUSTRIES LTD. et al, Respondents

BEFORE: Heeney, Conway & Sutherland JJ.

COUNSEL: S. Gill, for Appellant, for the Applicant /Appellant Salti Kafouf

B. Marshall, for Sameer Kafouf and Samadi Investments Inc.

M. Karabus, for the Respondents Kramerica Industries Ltd. and Sealink

HEARD: November 1, 2018 at Hamilton

ENDORSEMENT

[1] Salti Kafouf (“Salti”) and Sameer Kafouf (“Sameer”) are brothers. They are the sole shareholders of Samadi Investments Inc. (“Samadi”). Salti has brought an application for oppression against Sameer, alleging that his proposed sale of Samadi's real estate property was, inter alia, not authorized by Salti as a shareholder. The transaction with Kramerica Industries Ltd. (“Kramerica”) was for a sale of that property for $1.2 million, with a lease-back to Samadi at $13,000 per month. In his evidence, Salti admits that he was content with the sale of the property and the sale price and that the sole issue he has with the transaction is the rent on the lease-back, which he says should be $4,000 less per month.

[2] Lofchik J., on September 5, 2017, dismissed Salti's claim for a CPL [certificate of pending litigation], finding that the application was primarily a dispute between shareholders, did not involve an interest in land, and should be addressed by way of an injunction motion. Salti submits that the motions judge erred in failing to follow the approach in Chilian v. Augdome Corp. 1991 7335 (ON CA), [1991] O.J. No. 414 (C.A.), where a CPL had been granted. We note that the grant of a CPL in Chilian was premised on its unique fact situation. We see no error on the part of the motions judge in distinguishing Chilian from the case at bar, after his extensive review of the authorities. We cannot see how Salti's claim in this shareholder dispute can give rise to any reasonable claim to an interest in land, which is owned by the corporation: see the comments of Morawetz J. reproduced in paragraph 18 of the motions judge's reasons. We see no basis, without piercing the corporate veil, to grant a CPL in favour of Salti. The appeal from the motions judge's decision is dismissed.

[3] Carpenter-Gunn J. denied the injunction on November 15, 2017 as she found that it failed each of the 3 parts of the RJR – MacDonald test and that Salti had given a hollow undertaking as to damages. Her findings, which were for purposes of that motion only, ground her conclusions. We find no palpable and overriding error in her factual findings. Specifically, she found that Salti was aware of the agreement of purchase and sale with Kramerica, agreed to the sale of the property and, significantly, that his only objection was to the amount of rent payable. She also found that Kramerica had no knowledge of the shareholder dispute, at the time the agreement was entered into, that would disentitle it from relying on the indoor management rule in s.19 of the OBCA (which applies notwithstanding non-compliance with s.184(3) of the OBCA). These findings anchored her conclusion that there was no serious issue to be tried with respect to the sale proceeding, that Salti's claim was readily quantifiable in damages and that the Respondents Kramerica and Samadi would suffer far more harm if the sale did not proceed than would Salti if it did. We note that Salti's oppression claim can still proceed with the protection afforded to Salti by Carpenter-Gunn J. by requiring payment into court of the net proceeds of sale that can be applied towards his claim for damages. We are not persuaded that she made any error in her application of the RJR MacDonald test. The appeal of her order is dismissed.

[4] On agreement of the parties, costs of these appeals are payable by Salti to Sameer/Samadi in the total amount of $18,000, all inclusive, and to Kramerica/Sealink in the total amount of $18,000, all inclusive.

Heeney J.

Conway J.

Sutherland J.

Date: November 1, 2018