Court of Appeal for Ontario

Date: 2018-03-09

Docket: C64357 & C64358

Judges: Epstein, van Rensburg and Brown JJ.A.

Between

Growthworks Commercialization Fund Ltd. Applicant/Respondent by counter-application (Respondent)

and

Growthworks WV Management Ltd. Respondent/Applicant by counter-application (Appellant)

Counsel

Melvyn Solmon and Cameron Wetmore, for the appellant

Geoff R. Hall and Emily M. MacKinnon, for the respondent

Heard and Released

Heard and released orally: March 7, 2018

On appeal from the judgment of Justice Ruth E. Mesbur of the Superior Court of Justice, dated August 23, 2017, with reasons reported at 2017 ONSC 5009.

Reasons for Decision

[1] This case involves the interpretation of the appellant's management agreement for the respondent's investment fund and that part of the fund's restated articles of incorporation concerning the rights attached to the Class C shares.

[2] Both parties agree that the applicable standard of review is the deferential standard set out in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633. This court will not interfere with the application judge's decision absent a palpable and overriding error or extricable error in law.

[3] We are of the view that the application judge made no such errors in concluding that the payment the appellant made to itself was an undeclared performance dividend that was unauthorized and illegitimate. The application judge's interpretation that nothing in the fund's articles converts the performance dividend into debt is a reasonable one. In addition, we are not persuaded that the application judge failed to read the provisions regarding the Class C shares as a whole, or that she failed to give effect to any term in s. 4.7, the operable provision.

[4] The appeal is therefore dismissed. Costs are awarded to the respondent on a partial indemnity basis fixed in the amount of $20,000 all-inclusive.

Gloria Epstein J.A.

K. van Rensburg J.A.

David Brown J.A.