TriDelta Investment Counsel Inc. et al. v. GTA Mixed-Use Developments GP Inc. et al.
[Indexed as: TriDelta Investment Counsel Inc. v. GTA Mixed-Use Developments GP Inc.]
Ontario Reports Court of Appeal for Ontario Doherty, Juriansz and Paciocco JJ.A. May 11, 2020 151 O.R. (3d) 33 | 2020 ONCA 294
Case Summary
Civil procedure — Application — Judgments and orders — Limited partners seeking production of information from general partners regarding their real estate developments — Application judge ordering production and directing that certain information be included in annual and semi-annual reports prepared by general partners — General partners could not credibly claim that they had no opportunity to make their case regarding particulars — Application judge's order did not impose requirements going beyond what was agreed to in the limited partnership agreements — Limited Partnerships Act, R.S.O. 1990, c. L.16, s. 10.
Partnership — Limited Partnership — Limited partners seeking production of information from general partners regarding their real estate developments — Application judge ordering production and directing that certain information be included in annual and semi-annual reports prepared by general partners — General partners could not credibly claim that they had no opportunity to make their case regarding particulars — Application judge's order did not impose requirements going beyond what was agreed to in the limited partnership agreements — Limited Partnerships Act, R.S.O. 1990, c. L.16, s. 10.
The respondents were limited partners in three limited partnerships. The appellants were the general partners. The partnerships were formed to acquire interests in various real estate development projects. When the appellants came under new management, the working relationship between the parties began to break down. The respondents applied for an order requiring the appellants to produce certain documentation and information referable to the limited partnerships and the real estate development projects. The application judge ordered the appellants to produce most of the material sought, and also directed that the annual reports and semi-annual reports prepared by the appellants contain certain material and information specified in his order. The appellants appealed on the grounds that the application judge erred by making orders in respect of an issue not properly before him, and by imposing requirements going beyond those agreed upon by the parties in their limited partnership agreements ("LPA").
Held, the appeal should be dismissed.
The appellants did not establish a lack of procedural unfairness. The record demonstrated that the parties were operating on the basis that the annual and semi-annual reports could provide the vehicle for production of at least some of the material sought by the respondents. The respondents' position as to exactly what information and material they sought to include in the annual report might not have crystallized until shortly before argument. However, well before the application was heard, the parties had joined issue on what the appellants should be required to produce and the contents of the annual report in light of any production requirements imposed on the application. The appellants had ample notice and a full opportunity to make their case in respect of the particulars of any order to be made mandating the contents of the annual report.
The application judge did not err with respect to the terms of the LPA. It was open to the judge to conclude that the information sought by the respondents affected the limited partnership and to determine the means by which the requested disclosure should be made. There was no prejudice to the appellants by the direction that the material be included in the annual and semi-annual reports. The appellants could not point to any specific material or information beyond the statutory production requirements. None of the terms of the judge's order were so vague or overly broad on their face as to justify varying it.
Statutes Referred To
Limited Partnerships Act, R.S.O. 1990, c. L.16, s. 10
Appeal Details
APPEAL from an order imposed by Penny J. of the Superior Court of Justice dated May 27, 2019 regarding the disclosure under limited partnership agreements.
Counsel: Simon Bieber and Michael Darcy, for appellants. Christopher Naudie and Lauren Tomasich, for respondents.
Reasons for Judgment
[1] BY THE COURT: -- This appeal comes to the court from the commercial list. The respondents ("TriDelta") are limited partners in three limited partnerships. The appellants are the general partners.
[2] The partnerships were formed to acquire interests in various real estate development projects. The limited partnerships acquired those interests through "project companies" controlled by the limited partnerships and managed by the same person who controls all of the shares of the general partners.
[3] TriDelta does not have a direct interest in the project companies or their assets. TriDelta holds units in the limited partnership. Under the limited partnership agreements ("LPA"), TriDelta's investment in the limited partnerships is to be recouped from the profits, if any, earned through the development of the projects.
[4] The working relationship between TriDelta and the appellants began to break down in early 2018, when the appellants came under new management. Since that time, as observed by the application judge, both parties have engaged in conduct giving rise to animosity, suspicion and lack of trust.
[5] The breakdown in their relationship has fuelled this application and the cross-application. On the application, TriDelta sought an order requiring the appellants to produce certain documentation and information referable to the limited partnerships and the real estate development projects.
[6] The parties were able to agree the appellants would provide much of the information and documentation sought by TriDelta. The disputed issues went before Penny J.
[7] In his endorsement, Penny J. ordered the appellants to produce most of the material sought by TriDelta. He also directed that the annual reports and semi-annual reports prepared by the appellants contain certain material and information specified in his order. TriDelta's cross-application did not proceed.
[8] The appellants raised two grounds of appeal:
- Did the application judge err in making orders in respect of an issue that was not properly raised before him?
- Did the application judge err in imposing requirements on the contents of the annual report going beyond the requirements agreed upon by the parties in the LPA?
[9] The first ground of appeal alleges a failure of procedural fairness. The appellants argue they did not have adequate notice the application judge would be asked to make an order detailing the contents of the annual report. They submit that TriDelta sought production of certain information and documentation, but did not, until very shortly before the hearing, seek an order directing that the information requested be included in the annual report. The appellants contend, without adequate notice, they did not have a fair opportunity to respond to this issue and place relevant material before the application judge.
[10] It is not clear from the record whether this argument was put to Penny J. Counsel made written and oral argument. Penny J., in his endorsement, makes no reference to any submission that he should not entertain parts of TriDelta's application because of inadequate notice. Nor do the facta filed on appeal make any reference to such arguments.
[11] The appellants acknowledge they knew that TriDelta would be seeking orders in respect of the contents of the annual report, although they claim to have been made aware of this only days before the argument. In these circumstances, if the appellants did not raise this issue before the application judge, it is difficult to give it any credence on appeal. In any event, we are satisfied that it cannot succeed.
[12] This application generated a sizable record. The parties went back and forth on what the appellants should and should not be obliged to produce to TriDelta. The material demonstrates, well before the hearing, both parties were operating on the basis that the annual and semi-annual reports could provide the vehicle for production of at least some of the material sought by TriDelta.
[13] TriDelta's initial application did not refer to the content of the annual report. This is explained by the timing of the application. When the application was launched, the annual report was not due for several months. By the time the application was heard, the annual report for the fiscal year 2018 was late. It is understandable that TriDelta would look to the pending annual report as a means of providing the necessary disclosure.
[14] A review of the cross-application filed by the appellants, the cross-examination of the representative of the appellants and proposals made to resolve the application while it was pending demonstrates both parties were addressing TriDelta's demand for production of materials and information, in part, in the context of the appellants' acknowledged obligation under the LPA to provide annual and semi-annual reports. It may be that TriDelta's position as to exactly what information and material it sought included in the annual report did not crystallize until shortly before argument. However, well before the application was heard, the parties had joined issue on what the appellants should be required to produce and the contents of the annual report in light of any production requirements imposed on the application. The appellants had ample notice and a full opportunity to make their case in respect of the particulars of any order to be made mandating the contents of the annual report.
[15] The second argument made by the appellant engages the intersection of the terms of the LPA and the provisions of the Limited Partnerships Act, R.S.O. 1990, c. L.16 (the "Act").
[16] The appellants submit the contents of the annual and semi-annual reports were agreed upon by the parties and fixed by the terms of the LPA. They contend that Penny J. could not alter those contractual arrangements and place additional obligations on the appellants in respect of the annual reports by reliance on the provisions in the Act giving limited partners certain rights to the production of information and material relating to the partnership.
[17] Section 10 of the Act provides:
- A limited partner has the same right as a general partner, ( a ) to inspect and make copies of or take extracts from the limited partnership books at all times; ( b ) to be given, on demand, true and full information concerning all matters affecting the limited partnership, and to be given a complete and formal account of the partnership affairs[.]
[18] Section 10 gives limited partners very broad rights to information "concerning all matters affecting the limited partnership". It was open to Penny J. to conclude the information and material sought by TriDelta "affected the limited partnership". It was also open to him to determine the means by which the required disclosure should be made. We see no prejudice to the appellants by the direction that the material be included in the annual and semi-annual reports. Penny J. could have ordered the material disclosed to TriDelta on an annual or semi-annual basis in a separate document to be enclosed in the same envelope as the annual or semi-annual report. There is no substantive difference between this hypothetical order and the one actually made.
[19] The appellants also argue that by requiring the material be placed in the annual report, Penny J. relieved TriDelta of having to demonstrate the need for the information and material on an annual basis. Instead, the order places the obligation on the appellants to provide the information on an annual basis.
[20] This argument is not persuasive. Obviously, TriDelta wants the information to which it is entitled under the Act on an ongoing basis. As long as the partnership operates, there is no reason to think that TriDelta will not require the information to which it is entitled. There is no point in making TriDelta return to the court on an annual, or worse yet semi-annual, basis to make repeated applications for the same relief.
[21] The appellants next argue that some of the information ordered produced goes beyond "information concerning all matters affecting the limited partnership", and may extend to information not available to the appellants. This submission raises issues which are, at this point in time, hypothetical. The appellants do not point to any specific material or information which they claim is beyond the production requirements under the Act. Nor do they refer to material or information to which they do not have access. Instead, the appellants argue there is no evidence they have the information.
[22] This argument provides no basis for varying the order of Penny J. At best, it points to the possibility of the need to vary the order in the future. If a dispute should develop over the applicability of the order to certain specific information, or should TriDelta seek information that the appellants claim they do not have and cannot get, those issues may have to be litigated in the commercial court, unless the parties can resolve them on their own.
[23] Finally, the appellants in their supplementary written submissions contend that parts of the order are so vague or so broadly framed as to make compliance all but impossible. We think this argument must also be addressed in the context of any specific issue that may arise in the course of the partnership and the appellants' attempts to comply with the order of the application judge. None of the terms are so vague or overly broad on their face as to justify varying the order. Whether one or more of the terms may prove to be unworkable due to vagueness or overbreadth will only become apparent in circumstances which may or may not arise as the order is implemented.
[24] The appeal is dismissed. Costs of the appeal to TriDelta in the amount of $7,000, inclusive of disbursements and relevant taxes.
[25] In their supplementary written argument, the appellants requested an opportunity to make additional oral submissions. The panel is satisfied that no further submissions are necessary.
Appeal dismissed.
End of Document