Court File and Parties

Court File No.: CV-09-891-00
Date: 20121115
Superior Court of Justice - Ontario

Re: GARY GRANT, Applicant/Moving Party

And: URI SAKS and 3780 14 TH AVENUE HOLDINGS INC., Respondents/Responding Party

Before: THE HON. MADAM JUSTICE S.E. HEALEY

Counsel:
Applicant, Self-represented
H. Rubin, for the Respondents

Heard: November 14, 2012

Endorsement

[ 1 ] The Applicant brings this motion for the following relief:

(1) An order compelling the Respondent Saks to forthwith pay off the Laurentian Bank first mortgage in the amount of $2,064,805.00, plus any other ancillary costs claimed by the bank;

(2) An order that, if the above relief is granted and the Respondent fails to comply, that Saks shall forfeit fifty percent of his shares in the company forthwith to the Applicant, and the company trustee be ordered to issue the share change;

(3) An order that the court provide such other remedy as it feels the equity of the case demands;

(4) An order preventing the Respondents from appealing any decision made at this motion;

(5) Leave to bring this motion if required; and

(6) Costs of the motion.

[ 2 ] This motion, the Applicant advised at the outset, was brought within the context of action 09-0891. This is significant because the claims made in that action have been tried, and were determined by judgment of Mullins, J. released on May 18, 2012. That judgment has now been appealed and the parties have advised that the Court of Appeal has agreed to hear the appeal on an expedited basis once the transcripts become available.

[ 3 ] Mr. Grant has also commenced a new application, not before the court today, in which he seeks an order under the OBCA directing a “shotgun” procedure for either party to buy out the other party’s shares. By order of Salmers, J. dated October 23, 2012 that application is scheduled to be heard during the trial sittings commencing November 19, 2012.

[ 4 ] The Respondents bring a cross-motion today for an order staying that application.

[ 5 ] Salmers, J. determined on October 23, 2012 that neither party had satisfied him that an order is warranted declaring the other to be a frivolous and vexatious litigant. No steps have been taken since that order other than the motions that are before me today. Accordingly, I find this issue to be res judicata . As this was the basis upon which Mr. Grant seeks an order preventing the Respondent from appealing any decision made at this motion, that claim for relief is dismissed.

[ 6 ] In the event that this motion is brought within the context of the former action, as Mr. Grant submits is the case, then it is clear that the relief sought is res judicata . Res judicata is the doctrine that prevents matters from being re-litigated that have been previously determined. Further, it applies to prevent the attempt by a party to litigate, at a later time, those issues that were known and could have been raised in the prior proceeding, but through a failure of the litigant were not advanced.

[ 7 ] Mr. Grant has known throughout the life of the action that the Laurentian Bank mortgage was for a two-year term and that this very issue would arise in the event that the bank called in the loan. A full hearing with respect to the rights and obligations of the parties under both the Minutes of Settlement and with respect to their joint venture were canvassed before Mullins, J. at the trial. Yet Mr. Grant did not seek the remedy, at that time, that he seeks today. Accordingly, on the basis of res judicata , the motion is dismissed.

[ 8 ] In any event, I would have dismissed this motion if it had been brought within the context of the current applicant for the following reasons:

(1) The remedies available to the shareholders in the event that a lender calls in a loan are those set out in the Shareholder Agreement at Article 4.1. Mr. Grant is wrong in interpreting this provision as requiring Mr. Saks to personally pay the Laurentian Bank mortgage;

(2) Mr. Grant has no jurisdiction under the guarantee executed by Mr. Saks to force Mr. Saks to perform under that guarantee, and the bank has yet to begin any enforcement measures;

(3) The facts of this case do not give rise to an impression remedy under s.248 of the OBCA , nor does it call into play any equitable remedy. Mr. Grant and Mr. Saks failed to delineate, within any agreement that they entered into, the obligations of the other, or the corporation, at the end of the term of the Laurentian Bank mortgage;

(4) It is not commercially reasonable to expect that Mr. Saks would be required to pay the discharge amount of $2,064,805.00 to the Laurentian Bank from his own personal funds, which would result in Mr. Grant receiving, under the decision of the trial judge, a thirty per cent share of the increased equity in the shares resulting from that payout;

(5) The applicant cannot meet the test for obtaining mandatory relief. There is firstly, no triable issue, as the buy-sell agreement is addressed in the Shareholder Agreement. There is further no irreparable harm if Laurentian begins power of sale proceedings that cannot be compensated for by damages;

(6) The issues raised on this motion overlap with the appeal and it would be inappropriate to make determinations that may conflict with the decisions that could be made on appeal. In particular, the decision of Mullins, J. to set aside the second mortgage of 3780 14 th Avenue Holdings, and to treat the $1.4 million advance as equity, had the effect of giving the applicant $420,000.00, as a result of the thirty percent corresponding share increase. Again, this is one of the bases of the respondent’s appeal, and to impose an order on Saks requiring him to increase the equity by a further $2.2 million simply compounds the issue under appeal.

[ 9 ] With respect to the respondent’s motion to stay the application, it is hereby granted until after the hearing of the appeal. It would be impossible for a trial judge to determine the issues raised in the application without the accounting issues being fully determined by Mullins, J. as required by paragraphs 104 and 105 of her Reasons for Judgment. The parties advised that Mullins J. is outlining a process by which the parties are to engage in their accounting exercise. Further, those numbers may be further affected by the outcome of the appeal, if it ultimately changes the 70/30 ownership interest determined by Mullins, J.. Again, the application appears to be redundant given the provisions in the shareholder agreement, but further, an order compelling one party to purchase the shares of the other is of questionable use when their share ownership remains an issue under appeal. Accordingly, the motion is granted and the application is stayed.

[ 10 ] As the respondent has been successful with respect to both motions, costs of the appearance on November 13 and 14 are awarded on a partial indemnity basis, payable by the applicant to the respondent and fixed in the amount of $8,000.00, payable within 30 days.

HEALEY J.

Date: November 15, 2012