Ontario Supreme Court
MacDonald v. Master Cartage Inc.
Date: 2000-09-12
John MacDonald, Plaintiff (Respondent)
and
Master Cartage Inc., Master Trucking Inc., David Bruce Tate, Bruce David Tate and David Sparks, Defendants (Appellants)
Ontario Superior Court of Justice (Divisional Court) O’Driscoll, Whalen, J.W. Quinn JJ.
Heard: September 12, 2000
Judgment: September 12, 2000
Docket: 823/99
Marc Koplowitz, for Appellants/Defendants.
John P. Conway, for Respondent/Plaintiff.
The judgment of the court was delivered by O’Driscoll J. (orally):
I. Nature of the Proceedings
(1) The Appellants/Defendants appeal to this court under the provisions of s.255 of the Ontario Business Corporations Act R.S.O. 1990, c. B.16. (OBCA), from the judgment of Mr. Justice Farley, dated June 2, 1999.
An appeal lies to the Divisional Court from any order made by the court under this Act. The appeal fails.
II. Background
(1) On July 13. 1998, MacDonald commenced an oppression remedy application under ss. 207 and 248 of the OBCA and Rule 14.05 of the Rules of Civil Procedure. The matter was placed on the Commercial List at Toronto. A trial of issues was ordered, pleadings were exchanged including a counter-claim by the defendants.
(2) The matter was heard by Farley J. on June 21, 22, 23, 24, 25, 28, 29 and 30, and again on July 2 and 23, 1999. On the last day mentioned, Mr. Justice Farley gave oral reasons over some 23 pages.
(3) Farley J. faced conflicting evidence regarding the origin of the business carried on by the corporate defendants and the roles of the principal players, MacDonald and David Bruce Tate (“Tate Sr.”).
(4) MacDonald’s version was that in 1971 the business was that of a part-time moving and beer delivery. In that year, Tate Sr., just retired from CP Express and MacDonald, Tate Sr.’s new son-in-law and a recent graduate from Ryerson Polytechnical Institute, agreed, as equal partners, to turn the business into a full-time cartage business.
(5) MacDonald’s version further contended that in 1983 when the business was incorporated as Master Cartage Inc., he and Tate Sr. agreed that Tate Sr.’s son-in-law, David Sparks, and Tate Sr.’s son, Bruce David Tate (“Tate Jr.”) would be equal 25% shareholders
(6) MacDonald’s version further contended that when Master Trucking Inc. was incorporated in 1991, the 25% identical shareholder arrangements were repeated. Master Trucking Inc. was incorporated to take over the cartage operation because Master Cartage Inc. had acquired significant real estate assets.
(7) In contrast to MacDonald’s version, Tate Sr. and his witnesses contented that Tate Sr. began the business in the late 1940’s and made it a full-time business in the mid-1960’s. Tate Sr. contended that MacDonald never was a partner and that he, Tate Sr., never agreed that anyone other than himself would be a shareholder in either corporate appellant.
(8) David Sparks’ evidence supported the evidence of Tate Sr. However, Sparks acknowledged that from at least 1988, MacDonald had been asking for share certificates to which MacDonald believed he was entitled.
(9) Matters came to ahead when MacDonald was dismissed as an employee on July 2, 1998. This OBCA oppression application was commenced on July 13, 1998.
III. Findings of the Trial Judge
(1) Farley J. stated,
The family and family-related witnesses were very partisan and biased and therefore inherently unreliable as to their testimony. That is in respect of both sides.
(2) On the basis of independent evidence supplied by Ms Miriam Isenberg, solicitor, and her corporate assistant, Ms Adriana Curci-Sparr, and the resolution prepared by the law firm of Russell and Russell and signed by Tate Sr. showing MacDonald as a shareholder, Farley J. found that MacDonald was a 25% shareholder in each corporate appellant.
(3) Farley J. found that the shareholder loan account set up by BDO Dunwoody in 1992 regarding the financial statements for Master Cartage Inc. for 1987-1991 was a “balancing entry,” that the so-called shareholder loan account was a “make weight” and there was no loan by Tate Sr. to the corporation. Farley J., in his reasons, said,
Peter Campbell, with BDO Dunwoody, testified to his attempting to regularize matters in the most expedient of ways which was to bring a fresh start. But while cutting the Gordian knot may have been efficient, it was not something to be relied upon. The shareholder loan, particularly when the corporation is paying back the money on the property acquisition, was a misnomer. There was no shareholder loan.
(4) Farley J. found oppression. At page 29, he wrote:
By virtue of the plaintiff’s equity interest being denied and his status as an officer and director disputed, by the very nature of this, there is oppression—he was designated, in effect, a non-person in this organization. His termination as an employee and manager was merely icing on the cake with respect to that matter.
(5) Farley J. found that MacDonald was not a partner of Tate Sr. from 1971 to 1983.
(6) As to MacDonald’s claim for wrongful dismissal, Farley J. said:
I note that any claim for damages regarding wrongful dismissal has been abandoned as, to his credit, MacDonald went out forthwith and replaced his employment income stream by alternate employment to the full amount.
(7) As to remedy, Farley J. stated at page 29,
What is the remedy that is appropriate, using a scalpel, not a battle-axe? MacDonald asserts that it is a windup. Technically, it is possible. By why it would be persisted in is questionable. Windup is the most draconian of remedies, even when it is determined to be just and equitable to do so under section 207 of the Business Corporations Act of Ontario. I find that is just and equitable to do so.
However, section 207 goes on to point out that section 248 remedies are available in such a situation so as to allow a less draconian remedy to be granted. Certainly there would be a loss of goodwill on any windup.
At page 30, Farley J. said,
Therefore, it appears that the appropriate remedy would be for Tate, with or without the assistance of those allied to him in this matter, to buy out the plaintiff at market value of his interest. This should he accomplished on the basis of an independent evaluation without discount for minority interest—or, of course, premium.
(8) As to costs, after reasons were delivered by Farley J., counsel for MacDonald handed to Farley J. an Offer of Settlement that had been made on April 20, 1999 by counsel for MacDonald. Counsel for MacDonald submitted to Farley J. that the Offer “practically mirrors what your judgment has been” (Appeal Book: page 37).
At page 37 of the Appeal Book, Farley J. said:
Re costs, the plaintiff is to have his party-and-party costs to April 20, 1999 and solicitor-and-clients costs thereafter. The assessment officer is to give careful scrutiny to the amounts claimed to avoid duplication, but otherwise the amounts claimed are justified.
(9) The formal judgment of Farley J. reads:
- THIS COURT ORDERS that the defendants pay to the plaintiff his party-party costs of this action (including the application) and the counterclaim to April 20, 1999 and his solicitor-and-client costs thereafter.
(10) Counsel for the appellants submitted that Farley J. erred in ordering any costs against Tate Jr. and/or David Sparks because they were, in his words, “passive litigants”. However, it will be remembered that all defendants participated in a counterclaim.
IV. Standard of Review
(1) An appellant court should not interfere with the trial judge’s findings of fact unless the trial judge disregarded, misapprehended or failed to appreciate relevant evidence or made a finding not reasonably supported by the evidence or drew an unreasonable inference from the evidence. See: Re Equity Waste Management of Canada Corp. v. Halton Hills (Town) (1997), 1997 2742 (ON CA), 35 O.R. (3d) 321 (Ont. C.A.), 336.
(2) Costs are within the discretion of the trial judge. The Courts of Justice Act R.S.O. 1990, c. 43:
(a) S.131(1)
Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.
(b) s. 133
No appeal lies without leave of the court to which the appeal is to be taken,
(a) from an order made with the consent of the parties; or
(b) where the appeal is only as to costs that are in the discretion of the court that made the order for costs.
(3) There was some mention in the factum about there being no reference to the question of costs in the Notice of Appeal. Rule 61.03(1) (7) deals with leave to appeal costs. That issue was not pursued, as far as I know, so I will not deal it.
(4) The discretion of the trial judge as to costs should not be interfered with unless the discretion was not exercised judicially or the matter was decided on a wrong principle of law. See: Axelrod v. Beth Jacob, 1943 366 (ON SC), [1943] O.W.N. 80 (Ont. H.C.)
V. Conclusions
(1) The appellant’s factum and the submissions of counsel for the appellants is, in effect, an open invitation to the court to (a) retry the case (b) reverse findings of fact made by the trial judge, and (c) adjust the programme and timetable laid out by Farley J. in order to implement the buyout that was ordered by him.
In our view it cannot be said that the findings of fact made by the trial judge are unreasonable nor can we say that the remedy devised shows any error in principle.
On the contrary, in our view, with respect, Farley J., with great skill, precision and expedition separated the wheal from the chaff, made findings of credibility and then found the facts based on the credible evidence. Then, the trial judge applied the correct law to the facts as found.
We find no unreasonableness regarding the findings of fact and no error in principles of law applied.
(2) As to the question of costs awarded by the trial judge, we would repeat s. 131(1) of the Courts of Justice Act (above) and state that we cannot say that the trial judge did not exercise his discretion as to costs in a judicial manner, or that he did so on any wrong principle.
If leave to appeal be required, leave is granted but the appeal as to costs is dismissed.
VI. Result
(1) The appeal, in all its facets, is dismissed. We have heard submissions with regard to costs. I have consulted with my colleagues. With their concurrence, I have endorsed the back of the appeal book as follows: This appeal is dismissed for the oral reasons given for the court by O’Driscoll J. Costs, including the costs of the motion before the Court of Appeal on November 18, 1999, are hereby fixed at $6,500.00 payable by all appellants/defendants to the respondent/plaintiff.
Appeal dismissed.