Keselman v. Marktech Services Inc., 2020 ONSC 487

CITATION: Keselman v. Marktech Services Inc., 2020 ONSC 487

DIVISIONAL COURT FILE NO.: 19/364

DATE: 20200127

SUPERIOR COURT OF JUSTICE - ONTARIO

(DIVISIONAL COURT)

RE: IGOR KESELMAN and 2264632 ONTARIO INC. v. MARKTECH SERVICES INC., DATAGENIX INC., SELF CARE CATALYSTS INC., GRACE CASTILLO-SOYAO, MARKTECH SERVICES U.S. INC., MEDI-PROMOTIONS INC. O/A MEDISCRIPTS and MEDISOLUTIONS (USA), PRINT PAD (2009) INC., MEDISOLUTIONS GROUP LLC, MSR U.S. INC., HOORAY HEALTH LLC, QUREMEDY LP, MOBILUS TECHNOLOGIES LLC, INTEL-SCRIPTS LLC, PROSOFT DEVELOPMENT INC., PROSOFT INTERNATIONAL INC., SCRIPTS INTERNATIONAL CORPORATION, MEDI SCRIPTS GROUP HOLDINGS, JOSHUA LAPSKER, as TRUSTEE OF THE JEL (JOSHUA AND EREZ LAPSKER) TRUST, EREZ LAPSKER, as TRUSTEE OF THE JEL (JOSHUA AND EREZ LAPSKER) TRUST and JOHN DOE, as TRUSTEE OF THE JEL (JOSHUA AND EREZ LAPSKER) TRUST

BEFORE: Justice Swinton

COUNSEL: Matthew Diskin, for Medi-Promotions Inc. o/a Mediscripts and Medisolutions (USA) and Print Pad (2009) Inc., Defendants (Appellants)

Michael Mazzuca and Broghan Masters, for the Plaintiffs (Respondents)

HEARD AT TORONTO: January 22, 2020

E N D O R S E M E N T

Swinton J.

[1] The appellants Medi-Promotions ("MPI") and Print Pad, defendants in a civil action, appeal from an order of Master Sugunasiri, dated May 16, 2019, in which she rejected their motion to stay or dismiss the action as against them on the basis that the Ontario courts lack territorial jurisdiction. The appellants have also brought a motion to stay or dismiss the claim against them on the basis that relief under s. 248 of the Ontario Business Corporations Act ("OBCA") cannot be sought as against them, because the Ontario Superior Court has no subject matter jurisdiction. I will address that motion in a separate endorsement issued in my capacity as a Superior Court judge (see 2020 ONSC 488).

[2] The appellants' only ground of appeal is that the Master failed to properly identify the dispute between the parties and, therefore, she could not properly assess whether the dispute is sufficiently connected to Ontario. Essentially, the appellants take the position that the Master erred in focusing on a claim in contract, because they say that the cause of action against them is grounded in oppression under s. 248 of the OBCA.

[3] The appellants are both American corporations. The Master describes some of the allegations against them in paras. 11 and 12 of her reasons:

[11] Keselman and the Corporate Plaintiff alleged that MPI, Print Pad, PDI and other defendants except for Marktech form a group of companies referred to as the "Medi Companies" who are involved in the sales, advertisement, and promotion of pharmaceutical, healthcare and related products. According to the Plaintiffs, that these companies are part of a sophisticated corporate organizational arrangement with common management, common ownership and common assets with Joshua Lapsker at the helm.

[12] Mr. Lapsker is alleged to be the director and controlling mind of Marktech, MPI and Print Pad and operates these companies out of the [sic] Concord, Ontario. The Corporate Plaintiff claims that it is entitled to 5% ownership interest promised to it by Joshua Lapsker for additional consulting services to the group.

[4] The standard of review of a Master's order is correctness on a question of law. However, the determination of whether there is territorial jurisdiction in this case turns on a consideration of the Statement of Claim and the evidence. The finding of a real and substantial connection is one of mixed fact and law, and an appellate court should not intervene absent palpable and overriding error (Machado v. The Catalyst Capital Group Inc., 2016 ONSC 6719 (Div. Ct.) at para. 2).

[5] The Master set out the correct legal principles in her reasons (at paras. 18-19). She had to determine whether there was a real and substantial connection between the dispute and Ontario. To do so, she first had to determine whether there is a presumptive connecting factor tying the dispute to Ontario (Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572 at paras. 80-81). The standard of proof to establish a connecting factor is a "good arguable case" (Shah v. LG Chem Ltd., 2015 ONSC 2628 (S.C.J.) at para. 61).

[6] The Master considered the Statement of Claim and the evidence and concluded that there was a presumptive connecting factor, because the respondents pleaded that there was a verbal agreement between them and the appellants made in Ontario. The agreement arose as a result of promises made by Mr. Lapsker on behalf of the Medi companies, as defined, which includes the appellants. He is alleged to have promised, in his capacity as chairman and directing mind of those companies, and on numerous occasions, that the respondents would receive a 5% ownership in those companies for work done that was additional to the work under a Consulting Agreement with Prosoft Development Inc. The shares were never provided.

[7] The Master characterized the dispute against the appellants as one about a proprietary interest promised by Mr. Lapsker. She concluded that the Ownership Agreement was formed in Ontario and breached in Ontario. She found that consideration had been pleaded (at para. 32). Given the pleading and the evidence, she concluded that the respondents met their onus of demonstrating a good arguable case that there is a connecting factor - a contract made in Ontario - and that the appellants had not met their onus of rebutting the presumption of connection to Ontario.

[8] The appellants, in this appeal, submit that the Master made a palpable and overriding error in finding that the dispute between the respondents and the appellants revolves around a separate Ownership Agreement. They rely on what they say is an admission from Mr. Keselman on cross-examination that the promise of shares arose from the Consulting Agreement, which includes an entire agreement clause. The appellants are not parties to that agreement.

[9] I do not see any palpable and overriding error in the finding of the Master. The pleading claims an oral contract was made in Ontario on behalf of the appellants and other Medi corporations. Mr. Keselman gave evidence of the multiple promises of Mr. Lapsker, and work done in reliance on the promises in Ontario. The appellants led no evidence from Mr. Lapsker to refute this.

[10] The so called "admission" is not a clear one, when the answer is read in context. At that point in the cross-examination, Mr. Keselman was being asked about his claims against PDI, not the appellants. Later he explained the claims that were made against the appellants, referencing the promises made by Mr. Lapsker as the basis for the claims.

[11] The task at this stage of proceedings is not to determine whether there was a contract or not, as the Master was well aware. Given that the test is a "good arguable case" that there is jurisdiction in Ontario, I see no error by the Master.

[12] In particular, she did not err in her characterization of the dispute. While there is an oppression claim, the respondents also claim damages for breach of the Ownership Agreement and a tracing remedy against the appellants.

[13] Accordingly, the appeal is dismissed. If the parties cannot agree on costs of the appeal and the motion, they may make brief written submissions on costs of this appeal and costs of the subject matter jurisdiction motion through the Divisional Court office, sent to my attention: the respondents within 21 days of this decision; the appellants within 15 days thereafter.

Swinton J.

DATE: January 27, 2020