COURT OF APPEAL FOR ONTARIO

CITATION: Mann v. Saini, 2014 ONCA 27

DATE: 20140114

DOCKET: C55761

Rouleau, van Rensburg and Benotto JJ.A.

BETWEEN

Gurdev Singh Mann

Appellant (Plaintiff)

and

Gurpal Singh Saini, Joseph Stanford and Karl Stanford

Respondents (Defendants)

Joseph Markin, for the appellant

James S.G. MacDonald, for the respondent Gurpal Saini

E. Anthony Ross Q.C., for the respondents Joseph and Karl Stanford

Heard: January 6, 2014

On appeal from the judgment of Justice Carole J. Brown of the Superior Court of Justice, dated June 13, 2012.

ENDORSEMENT

[1] At trial, the appellant made numerous claims regarding deals with the respondents involving two businesses, CCSI and CASI. The appellant first acquired a 35% interest in both businesses from the respondents sometime in 2003 or early 2004. The appellant also became the President and CEO of both companies. The respondents Saini and Karl Stanford each maintained equal 32.5% interests in the companies (Karl Stanford held the 32.5% interest in trust for his father Joseph), and Joseph Stanford became the head of Customer Service.

[2] A Shareholders’ Agreement was signed in February of 2004. That agreement contained a detailed process for the purchase and sale of the interests held by the appellant, Saini, and Karl Stanford.

[3] In July of 2004, Joseph Stanford resigned as an employee. His son Karl did not relinquish his shares in the companies. However, the appellant and Saini treated their interests in the companies as 50% each. They did not seek any legal advice regarding the effect of Joseph Stanford’s resignation on the ownership of the business.

[4] Soon after, it was agreed that the appellant would purchase Saini’s shares in the companies for $100,000. A preamble in the share purchase agreement between them states that each of the appellant and Saini owned 50% of the shares, even though Karl Stanford continued to hold a 32.5% interest in the companies as trustee for his father Joseph. Neither Karl nor Joseph Stanford was a party to the share purchase agreement between the appellant and Saini. By the time of trial, the appellant had paid only $50,000 of the money due to Saini pursuant to this share purchase agreement.

[5] Thereafter, the appellant continued to operate both companies. By December 2004, however, CCSI was having financial difficulties. CASI continued to operate successfully and provided income to the appellant until 2009, when CASI was dissolved. At that time, the appellant took all the remaining capital, which he estimated at $250,000.

[6] The appellant sued the respondents for alleged misrepresentations made to him when he initially purchased an interest in the companies. Saini counterclaimed for the outstanding balance of $50,000 on the share purchase agreement he concluded with the appellant. The Stanfords alleged that they were wrongfully deprived of their interests in the businesses and counterclaimed for extensive relief, including damages for lost profits, harassment, emotional distress, and punitive damages.

[7] The trial judge made findings of fact based on her assessment of the parties’ credibility. She dismissed the appellant’s action and allowed the counterclaims in part. She awarded Saini the outstanding funds of $50,000, and awarded Karl Stanford $50,000 flowing from his interest in CASI.

[8] The appellant appeals the dismissal of his action based on the alleged misrepresentations and also appeals the judgment on the counterclaims.

Appellant’s Claim for Misrepresentation

[9] The appellant contests most of the factual findings made by the trial judge. The appellant argues that this court should not show deference to the findings of the trial judge and that numerous factual errors rendered the trial judge’s reasons inadequate. The appellant, however, has been unable to point to any error in the trial judge’s reasons. All of the trial judge’s findings are well supported in the record. This case was largely based on credibility. The trial judge correctly identified and applied the relevant legal principles relating to credibility assessments. She appropriately considered the evidence in assessing credibility and identified the contradictions in the appellant’s evidence. Her finding that the appellant’s evidence was inconsistent, contradictory, improbable, and evasive was well supported in the evidence. The trial judge’s credibility findings are entitled to deference, and we see no basis to interfere.

Counterclaim of Saini

[10] The appellant argues that there was no basis for the trial judge to award Saini the remainder of the money owed pursuant to the share purchase agreement between them. He argues that Saini represented to him that Saini was selling 50% of the companies, which would make the appellant an owner of 100% of the shares. The appellant argues that because the trial judge determined that Karl Stanford still owned 32.5% of the companies, Saini was purporting to sell something he did not own and was therefore in breach of the share purchase agreement.

[11] We would not give effect to this submission. The trial judge noted the recital in the share purchase document indicating that each of the appellant and Saini were owners of 50% of the company. She preferred and accepted Saini’s evidence regarding the share purchase agreement and that he was advised by the appellant that they each owned 50% of the businesses after Stanford’s resignation. Saini simply accepted the appellant’s advice in that regard and proceeded to sell his shares to the appellant. There was no misrepresentation by Saini. Both parties understood that Saini was selling his interest in the companies to the appellant. This is what the appellant received.

Counterclaim of Stanford

[12] The appellant argues that it was an error for the trial judge to award Karl Stanford $50,000. He argues that the award is a forced purchase of Karl Stanford’s shares. In the appellant’s submission, the reasons of the trial judge make it plain that she dismissed all of the claims that were advanced in the Stanfords’ counterclaim. Moreover, as the statement of defence and counterclaim of the Stanfords did not seek to compel the appellant to purchase Karl Stanford’s interest in the companies, it stands to reason that the trial judge could not make the award she did.

[13] We disagree. Joseph Stanford has never been paid for his interest in the businesses nor did he receive any dividends or return of capital before CASI was dissolved. She found that Karl Stanford maintained his interests in the companies after his father Joseph’s resignation in 2004. The trial judge also found that the appellant operated CASI profitably until 2009 without any consideration of the Stanfords’ ownership interest. The appellant then dissolved CASI in 2009, withdrawing about $250,000 in capital. Although the trial judge rejected the Stanfords’ claim for $434,702 in lost profits as lacking in detail and supporting documents, she did not dismiss all of the Stanfords’ claims.

[14] The Stanfords’ defence and counterclaim does not seek a forced purchase of Karl Stanford’s shares in CASI by the appellant. However, it contains a broad claim for relief and damages. The Stanfords allege that the appellant falsely represented that Joseph Stanford had abandoned his interests in CASI, and that the effect of the appellant’s actions was to “illegally deprive the Stanfords of their financial and equitable interests in the businesses in issue.”

[15] Based on the trial judge’s findings that Karl Stanford maintained an interest in CASI after his father’s resignation, and that the appellant operated CASI profitably and provided no accounting to the Stanfords upon dissolving the company in 2009, it was open to the trial judge to make an award to Karl Stanford flowing from his ownership interest. In our view, the trial judge did not, as the appellant suggests, order a buyout of Karl Stanford’s shares. She simply used the value ascribed to Saini’s interest in CASI at the time of the share purchase agreement between the appellant and Saini as a guide in arriving at the $50,000 award to Karl Stanford.

[16] It was within her discretion to make the award she did.

Summary

[17] For these reasons, the appeal is dismissed. Costs are fixed at $7,000 inclusive of disbursements and applicable taxes payable by the appellant to each of the respondents for a total of $14,000.

“Paul Rouleau J.A.”

“K. van Rensburg J.A.”

“M.L. Benotto J.A.”