Court of Appeal for Ontario
Date: 2017-04-12 Docket: C62204
Judges: LaForme, Pepall and Pardu JJ.A.
Parties
Between
Mildred McMurtry Plaintiff (Respondent)
and
John McMurtry and Mic Mac Realty (Ottawa) Ltd. Defendants (Appellant)
And Between
John McMurtry Plaintiff
and
Jim McMurtry Defendant
And Between
Jim McMurtry Plaintiff by Counterclaim
and
John McMurtry, Brenda McMurtry, Barry Coons, Bouris Wilson LLP and Mic Mac Realty (Ottawa) Defendants by Counterclaim
Counsel
Jeff G. Saikaley, for the appellant
Mark W. Smith, for the respondent
Heard: February 21, 2017
On appeal from: the judgment of Justice Sylvia Corthorn of the Superior Court of Justice, dated April 29, 2016, with reasons reported at 2016 ONSC 2853.
Endorsement
[1] This case involves a dispute concerning the control of a family company, Mic Mac Realty (Ottawa) Ltd. ("MMR").
[2] Mildred McMurtry and Keith McMurtry were married and had six children. After buying out his co-founder, Keith McMurtry was the sole owner of MMR. Out of a total of 22 shares, he gave four shares to each of his three sons, John (the appellant), Jim and Michael. Keith retained the remaining ten shares.
[3] After Michael died in 1983, Jim and John each received half of Michael's shares; each then had six shares as of August 1984.
[4] Keith died in 1998. Under his will, Mildred was the residuary beneficiary of Keith's estate. The will made no mention of Keith's ten shares (the "Disputed Shares").
[5] Mildred and John each claim ownership of the Disputed Shares. Mildred claims they are hers as the residuary beneficiary of her husband's estate. John claims that his father gifted the shares to him before he died.
[6] The dispute over the shares has given rise to two actions. In 2011, John brought an action against Jim, seeking a declaration of ownership of the Disputed Shares and various oppression remedies. In response, Jim filed a defence and a counterclaim against various parties including John and his wife Brenda. His pleading asserts that he and John each own six shares and Mildred owns ten shares of MMR. In 2012, Mildred sued John, seeking a declaration of ownership of the Disputed Shares. She is also seeking an oppression remedy and related relief. The trial judge is presiding over both John's and Mildred's actions.
[7] A case management master ordered that Mildred's action be tried first. Before her trial began, the parties agreed that the only aspect of the claims made on behalf of Mildred to be decided at this stage was the request for declaratory relief with respect to ownership of the Disputed Shares. That determination was to be binding on the parties to the companion action. In essence, the matter proceeded as a trial of the issue of share ownership.
[8] This issue was tried over eight days. John argued that Keith had given him the Disputed Shares inter vivos, or had an intention to give the Disputed Shares to John that persisted until Keith's death, and his executors had subsequently completed the gift. He also submitted that Mildred's claim for a declaration was statute barred.
[9] The trial judge ruled that there had been no gift to John. In addition, Mildred's claim to the declaration of ownership was not statute barred. Accordingly, Mildred was the beneficial owner of the Disputed Shares as the residuary beneficiary of Keith's estate. The trial judge went on to hold that because of certain statements made by Mildred, she held the shares in a constructive trust for John. [1]
[10] John appeals from the April 29, 2016 judgment declaring that Mildred is the beneficial owner of the shares. He does not raise the constructive trust issue that is also the subject matter of that judgment and Mildred does not advance any cross-appeal of that portion of the judgment.
[11] In light of the unusual procedure agreed to by the parties and their positions, we are addressing the appeal of the April 29, 2016 judgment in the absence of any additional judgment.
Analysis
[12] We see no reason for this court to interfere with the trial judge's conclusion that the Disputed Shares were not gifted to John.
[13] On our review of the record, including the trial transcripts, the trial judge's finding that there was insufficient evidence of a gift is entirely reasonable. For instance, the "Declaration of Transmission" that John executed on December 15, 1999 stated that the Disputed Shares remained vested in Keith's estate as of that date and that John was the "beneficiar[y] properly entitled by law to receive the shares." The trial judge found that the declaration was intended to identify John as the beneficiary of the Disputed Shares pursuant to the will and not the owner by virtue of an inter vivos gift. Since John knew the contents of the will, he swore a document he knew to be untrue, which hurt his credibility.
[14] It follows from the finding that the Disputed Shares were not gifted to John that Mildred became the beneficial owner of the shares as the residuary beneficiary under the terms of the will.
[15] John also submits the trial judge erred in finding that Mildred's claim was not statute barred. In our view, for the purposes of the trial of the issue of share ownership, it was unnecessary for Mildred to seek a formal declaration of ownership and as such, the limitation period was not relevant.
[16] In the circumstances, what was necessary was a factual determination as to whether the Disputed Shares had been gifted to John. A factual determination that the shares were not gifted (and the legal conclusion flowing from that determination that the shares thus fell into the residue of the estate making Mildred the beneficial owner under the terms of the will) would have been sufficient to establish Mildred's status as a shareholder for the purposes of any action against John.
[17] In essence, a declaration was not required. Declaration or no declaration the finding of no gift is now res judicata and binding in any further proceedings.
[18] That said, it has yet to be decided whether Mildred's other claims are statute barred. As noted, the parties agreed that the only issue to be decided at this stage was the claim for declaratory relief. Whether Mildred's other claims are statute barred remains to be decided.
Disposition
[19] The appeal is dismissed. Mildred is awarded her costs of the appeal in the amount of $12,000 inclusive of disbursements and HST as agreed to by the parties.
"H.S. LaForme J.A."
"S.E. Pepall J.A."
"G. Pardu J.A."
Footnote
[1] On its face, the trial judge's formal judgment appears contradictory. She declares that Mildred is the beneficial owner of the Disputed Shares and she declares that Mildred has held them in a constructive trust for John since January 1999. However, the parties say that the trial judge will subsequently determine whether all, or only part of, the shares are held in constructive trust.