COURT FILE AND PARTIES

COURT FILE NO.: CV-12-9610-00CL

DATE: 20130411

SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

RE: MOHAN ROOPCHAND, MEJJ ENTERPRISES INC and MONDAY’S CHOICE MANAGEMENT CORPORATION

Plaintiffs, Defendants by Counterclaim

AND:

KIM CHAU and CENTURY 21 LEADING EDGE REALTY INC.

Defendants, Plaintiffs by Counterclaim

BEFORE: Newbould J.

COUNSEL: Ronald G. Chapman, for the Plaintiffs, Defendants by Counterclaim

Chad Kopach, for the Defendants, Plaintiffs by Counterclaim

HEARD: April 8, 2013

ENDORSEMENT

[1] On March 5, 2012 after a trial I released my reasons for judgment in which I held that a shareholders’ agreement between Mr. Roopchand and Mr. Chau was validly signed by Mr. Roopchand and binding and that Mr. Chau was the owner of 20% of the shares of MEJJ Enterprises Inc. and Monday’s Choice Management Corporation. I also ordered that the plaintiffs and defendants by counterclaim were to forthwith cause to be issued and delivered to Mr. Chau share certificates in each of MEJJ Enterprises Inc. and Monday's Choice Management Corporation representing 20% of the outstanding shares of each corporation. I understand that a certificate has been delivered to Mr. Chau for MEJJ Enterprises Inc. but not for Monday's Choice Management Corporation. Mr. Chapman stated in court that it was an oversight that a certificate for Monday's Choice Management Corporation had not been given to Mr. Chau and that it would be done right away.

[2] In my reasons I ordered in paragraph 44(vi) that the plaintiffs and defendants by counterclaim purchase Mr. Chau's interest in MEJJ Enterprises Inc. and Monday's Choice Management Corporation at fair market value, to be determined by independent valuators once full financial information had been made available to Mr. Chau and his advisors. Mr. Roopchand now takes the position that it was an error on my part to have made a buyout order as such an order was not requested at the trial. Mr. Chau takes the position that it was not an error to have made a buyout order but that I erred in requiring a valuation process because the parties had agreed on the value of the property in question and because of a provision in the shareholders’ agreement.

[3] The relief in question that I ordered was pursuant to a claim under section 248 of the OBCA that was pleaded in the statement of claim. However, at a pre-trial conference before Campbell J. the parties agreed in writing (i) that the value of the property owned by the two corporations was $2.8 million and (ii) that the remaining issue for trial was whether Mr. Roopchand signed the shareholders’ agreement that purported to bear his signature and that if the answer was yes, Mr. Chau was entitled to receive 20% of the shares of the two corporations.

[4] At the opening of trial, Mr. Roopchand stated that the sole issue was whether he signed the shareholders’ agreement and Mr. Kopach for Mr. Chau confirmed that was the real issue. At the conclusion of the evidence, my notes indicate that Mr. Kopach asked for an order declaring that Mr. Chau was a 20% shareholder in both corporations and directing that the shares be issued to him. It is agreed that he did not ask for a buy-out order and that there were no submissions as to how the shares would be valued if there were to be a buy-out order.

[5] Mr. Kopach now contends that the only change that should be made to the relief that I ordered is that instead of a valuation process for the amount to be paid to Mr. Chau for the shares, Mr. Chau should be paid $640,000, being 20% of the agreed value of $3.2 million of the land owned by the two corporations. This would mean that Mr. Chau would receive 20% of the total value of the property without regard to the outstanding mortgage obtained to acquire the property or any other issues, if any, that might affect the value of the shares. Mr. Roopchand had contributed $800,000 towards the purchase price of the property and the balance of approximately $2.4 million was raised by a mortgage loan on the property.

[6] This argument on behalf of Mr. Chau is based on paragraph 5 of the shareholders’ agreement that provides that the shares have been allocated to Mr. Chau free of all encumbrances and that Mr. Roopchand indemnifies Mr. Chau from “all past, present or future indebtedness, liabilities and expenditures” related to the corporations and its ownership of the property, including “the costs …associated with …mortgages…”.

[7] Mr. Roopchand takes the position that the provisions in the relief ordered in my earlier reasons should simply be taken out as that relief was not requested at the trial and was not an issue. Alternatively, he takes the position that the interpretation of the shareholders’ agreement contended for by Mr. Chau would result in a commercial absurdity, the result of which should be avoided. There is some support for this, it is contended, in the finding I made as to the reason Mr. Chau and Mr. Roopchand agreed on Mr. Chau obtaining 20% of the corporations. That figure was based on the forgone broker’s commission for Mr. Chau being about 20% of the cash down payment that would be needed to be put in by Mr. Roopchand. See paragraphs 10 and 20 of my reasons for judgment. It was not based on the forgone commission being 20% of the total purchase price of the property.

[8] It is clear that in appropriate circumstances a judgment may be reconsidered and withdrawn, altered or modified by a judge on a motion by a party before the judgment has been issued and entered. A judge should be reluctant to do so, absent exceptional circumstances, where the issue in respect of which the variance is sought was fully argued at trial and dealt with in the reasons for judgment. See National Trust Co. v. Taks [1995] O.J. No. 853 per Borins J. (as he then was) and the authorities referred to. See also Gore Mutual Insurance Co. v. 1443249 Ontario Limited [2004] O.J. No. 1896 per Karakatsanis J. (as she then was).

[9] Mr. Kopach contends that I erred in not considering the effects of the shareholders' agreement and the parties’ agreement regarding the value of the land and that the error can be corrected by removing the requirement for a valuation process to value Mr. Chau's shares and replacing it with a direction that he be paid $640,000. He contends that the buyout order requiring Mr. Roopchand to buy Mr. Chau's shares can stand, notwithstanding that this was not asked for during the trial, because it was claimed in the statement of claim.

[10] It seems to me that either the entire relief regarding a buyout of Mr. Chau's shares by Mr. Roopchand should be dealt with in the same way and either the relief should stand or it should be set aside. If, as Mr. Kopach contends, the direction regarding a valuation process to value the shares should be set aside, the same reasoning would require the entire buyout to be set aside at this stage.

[11] Regarding the contention that the shares should be valued at $640,000 based upon a provision in the shareholders’ agreement, it would be unfair to Mr. Roopchand to have that ordered at this stage without giving him a chance to respond to the argument with evidence on the point. There was evidence filed in the agreed exhibit book at the trial of communications between Mr. Chau and his lawyer regarding a draft of the shareholders’ agreement that arguably is inconsistent with his being paid for 20% of the shares based upon a gross rather than net value of the property. On this motion Mr. Chau filed an affidavit in which he offered an explanation for the provision in the shareholders’ agreement relied upon by him. Such evidence was not given by him at the trial. He was cross-examined on his affidavit and refused to answer any questions regarding the discussions that he had with his lawyer regarding the draft shareholders’ agreement. It is true that at the trial Mr. Roopchand, acting for himself, raised on his cross-examination of Mr. Chau the correspondence between Mr. Chau and his lawyer, but the issue of a buyout and the value to be paid on a buyout was not an issue.

[12] I am not prepared on the state of the evidence before me on this motion to make any final determination as to what would be the proper amount to be paid by Mr. Roopchand to buy out Mr Chau's shares.

[13] While it is the case that the relief I ordered was covered by the relief claimed under section 248 of the OBCA in the statement of claim, I think it a fair criticism that the buyout and the method of valuing the shares should not have been contained in the relief that I ordered in light of the fact that it was not argued by either side and was effectively taken off the table at the outset of the trial. In the circumstances, I vary my reasons for judgment of March 5, 2012 by deleting paragraph 44 (vi).

[14] Mr. Kopach in argument said that the mortgagee has now served a notice of power of sale and that Mr. Chau has concerns regarding that and what role, if any, Mr. Roopchand has played in causing the notice to have been served by the mortgagee. It was raised in support of the argument that the order requiring Mr. Roopchand to buyout Mr. Chow should be maintained.

[15] It would be open to Mr. Chow to now commence a new application claiming an order under section 248 of the OBCA requiring Mr. Roopchand to buy him out and claiming the basis upon which the sale price should be set. It seems to me, however, that the preferable course is to permit the continuation of the present proceedings without having a new application filed, on the following basis:

(i) Mr. Chau is to deliver a brief pleading claiming the relief he seeks, including the basis upon which he claims the purchase price for his shares should be set, and any affidavit he deems fit in support of that relief.

(ii) Mr. Roopchand is to deliver a brief pleading denying the relief sought by Mr. Chau and any affidavit he deems fit in support of his denial.

(iii) No affidavit by either side is to be delivered which contains any evidence that can be used to attack any finding of fact or conclusions contained in my reasons for judgment of March 5, 2012. This includes my decision that Mr. Roopchand may not assert that his wife and daughter are shareholders of Monday’s Choice Management Corporation.

(iv) A 9:30 a.m. appointment is to be taken out to discuss whether the issue should be determined on the basis of prior evidence and any new affidavits and any cross-examinations thereon, or whether oral trial testimony is required.

[16] Mr. Roopchand has requested an order striking out paragraph 44 (iv) of my reasons for judgment which ordered the Mr. Chau and his financial and legal advisors be given full access to the books and records of the companies, including bank records, and to arrange for Mr. Chau and his financial and legal advisors to meet with the accountants for the corporations. Mr. Chapman says that the records in question have been provided to Mr. Chau and that although no arrangements have been made to meet with the accountants for the companies, that will be arranged if requested. I am not prepared to strike out paragraph 44 (iv) in light of my finding in paragraph 41 of my reasons for judgment that the actions of Mr. Roopchand in failing to provide any financial information of the operations of the business to Mr. Chau have been oppressive and have unfairly disregarded the interests of Mr. Chau. In any event, this order now appears not to be an issue.

[17] Mr. Roopchand has also requested an order striking out paragraph 44 (v) of my reasons for judgment requiring an accounting of the operation of the business to take place before a Master and that any amounts properly payable to Mr. Chau be paid to him. In light of the fact that this was not requested at the trial, I think it's fair to strike out paragraph 44 (v) on the basis that if Mr. Chau wishes to pursue that remedy, it can be included in the brief statement of claim referred to in paragraph 14 of this endorsement.

[18] Mr. Roopchand made a preliminary objection to Mr. Chau’s motion proceeding on the basis of the need to further cross-examine Mr. Chau for his refusal to answer questions and the need to examine Mr. Muyal who was Mr. Roopchand's most recent lawyer. Mr. Roopchand says that he did not authorize Mr. Muyal to agree prior to trial to a valuation of the property at $3.2 million. So far as Mr. Chau is concerned, I think he should have answered the questions regarding his discussions with his lawyer, but in light of my conclusion as to what should take place, the issue is one for another day. So far as examining Mr. Muyal is concerned, I do not think it relevant that he may not have been instructed by Mr. Roopchand to make the agreement he did with Mr. Kopach and present it to Justice Campbell on the pretrial hearing. That would be a matter between Mr. Roopchand and Mr. Muyal.

[19] I therefore order:

(a) Paragraph 44 (vi) of the reasons for judgment of March 5, 2012 is set aside.

(b) If Mr. Chau wishes to pursue the remedies referred to in paragraphs 15 or 17 of this endorsement, the procedure set out in paragraph 15 will be applied. Mr. Chau is to provide notice to Mr. Roopchand within 10 days if he wishes to pursue this remedy.

[20] Neither side has been completely successful and, in the circumstances, there should be no costs.

Newbould

Date: April 11, 2013