Court File and Parties
CITATION: Dr. Dalios et al v. Dr. Price et al, 2024 ONSC 6716
Divisional Court File No.: DC-24-2860
Date: 2024/12/02
Ontario Superior Court of Justice Divisional Court
Before: J.A. Ramsay, Leiper, and S. O’Brien JJ.
Between:
Dr. Demetrius Dalios Dr. Mahmood Khedmatgozar Appellants
– and –
Dr. Dana Price Dr. Dana Price Dentistry Professional Corporation Respondents
Counsel: Ian B. Houle James Thorlakson
Heard: at Ottawa (by videoconference): November 14, 2024
Reasons for Judgment
By J.A. Ramsay J. (orally):
[1] This is an appeal under s.255 of the Business Corporations Act, RSO 1990 c.B16. The three dentists agreed to the purchase of a 1/3 interest each in a dental corporation. Dr. Khedmatgozar failed to meet the conditions of the agreement and Dr. Dalios and Dr. Price agreed to proceed with a 50% interest each. In order to do so they both had to increase their personal guarantees to the bank. They were prepared to wait some time for Dr. Khedmatgozar to join them until Dr. Price heard about a significant judgment against him in the Superior Court.
[2] Dr. Dalios and others made a series of offers to buy the entire corporation or to buy Dr. Price’s interest therein, which she declined to accept. She offered to buy out Dr. Dalios: he declined to accept. The terms of a shareholders’ agreement which dealt with termination of the relationship had not been agreed upon.
In an application under s. 248 of the Act, Labrosse J. ruled as follows:
a. There was no partnership among the parties. They never carried on business in common with a view to a profit.
b. There was an agreement for Dr. Khedmatgozar to become an equal shareholder of a dental corporation, but Dr. Khedmatgozar failed to meet his obligations. The agreement was instead made between Dr. Dalios and Dr. Price. The complete shareholders’ agreement was never signed.
c. There was no oppressive conduct by Dr. Price against Dr. Dalios or Dr. Khedmatgozar. With respect to Dr. Dalios, it was not oppressive for Dr. Price to refuse the terms of an offer which would have either made her an employee of third parties whom she did not want to work for or would have made her part of a conglomerate which she did not want to join.
d. There is no unjust enrichment of Dr. Price because she paid a price for Dr. Khedmatgozar’s third share by increasing her guarantee to the bank and the juristic reason for it was the agreement.
e. The dental corporation is in a deadlock between Dr. Dalios and Dr. Price. The corporation would be wound up under s.207 of the Act essentially in terms of the buyout provisions in section 7 of the draft shareholder’s agreement. The court would hear submissions on any further conditions that are necessary to prevent prejudice to either party.
The parties are scheduled to appear before Labrosse J. on December 16, 2024.
Dr. Dalios appeals. He complains:
a. Labrosse J. misapprehended the evidence with respect to the parties’ intention to apply section 6.2 of the draft shareholders’ agreement.
b. He failed to deal with the relief sought, which was an order that Dr. Dalios be allowed to sell at the highest price he can get, whether from a third party or from Dr. Price.
Misapprehension of evidence
[3] The judge’s rulings were based on the communications between the parties, most of which were in writing. The finding that the parties did not intend section 6.2 to apply was open to him. The shareholders’ agreement was not signed. When the last draft was discussed, there was some disagreement with the right of first refusal mentioned in section 6 because Dr. Price, among other things, wanted an overriding option to purchase.
Misapprehension of relief sought
[4] Before the application judge the focus of the parties was the treatment of Dr. Khedmatgozar. The focus of the appellant’s submissions before us was whether Dr. Dalios could sell his shares. But the issue of Dr. Dalios’ selling his shares was put squarely before the judge in the applicants’ amended factum of September 8, 2023. The judge did not misunderstand Dr. Dalios’ position. At paragraph 71, the judge mentioned the offer by MCA to buy Dr. Dalios’ 50% interest. He noted that Dr. Dalios was a minority shareholder in MCA. The judge found at paragraph 75 that Dr. Price did not want to be part of a larger dental conglomerate. He found no fault with that.
[5] The parties knew that Dr. Price would be the working dentist and that she would be putting more value into the corporation. The judge took that into account in fashioning a remedy. In ordering a buy-sell along the lines of the shareholder agreement, he left open the possibility of a restrictive covenant which takes Dr. Dalios’ rights into account.
[6] This was a reasonable exercise of discretion, and it was not the product of an error of law or fact.
[7] Dr. Dalios moves for leave to present fresh evidence. The fresh evidence consists of a letter of intent by another dentist to make an offer to purchase Dr. Dalios’s 50% shares in the corporation. It is not necessary to deal with the issues on appeal. It is not in the interest of justice to admit this evidence. It can be considered by Labrosse J. on the return of the application when he fashions a result that is fair to both parties. If the parties are not satisfied, they can appeal. They may well be satisfied by whatever order is made.
[8] The appeal is dismissed with costs to the respondent in the agreed amount of $20,000.
J.A. Ramsay J.
Leiper J.
O’Brien J.
Released: December 2, 2024
CITATION: Dr. Dalios et al v. Dr. Price et al, 2024 ONSC 6716
Divisional Court File No.: DC-24-2860
Date: 2024/12/02
Ontario Superior Court of Justice Divisional Court
Before: J.A Ramsay, Leiper., and S. O’Brien JJ.
Between:
Dr. Demetrius Dalios Dr. Mahmood Khedmatgozar Appellants
– and –
Dr Dana Price and Dr. Dana Price Professional Dentistry Corporation Respondents
Reasons for Judgment
Released: December 2, 2024