ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 12-CV-446812

DATE: 2013-01-23

BETWEEN:

SHAMSHER SEKHON
Applicant

– and –

AEROCAR LIMOUSINE SERVICES CO-OPERATIVE LIMITED, GURDEV SINGH BRAR, LAL SINGH CHEEMA and TARLOCHAN SINGH SAGGU
Respondents

J. Gregory Richards and Scott McGrath for the Applicant

Joshua Phillips for the Respondent Aerocar Limousine Services Co-Operative Limited

Frederick W. Chenoweth for the Respondent Lal Singh Cheema

Gurpreet S. Jassal for the Respondents Tarlochan Singh Saggu and Gurdev Singh Brar

HEARD: January 10 and 11, 2013

Perell J.

REASONS FOR DECISION

I. INTRODUCTION

[1] The outcome of this Application will determine the fate of Aerocar Limousine Services Co-Operative Limited, which operates a limousine service to and from Greater Toronto’s Pearson Airport. Aerocar has seventy-nine members who are limousine drivers.

[2] Pursuant to sections 123 and 178 of the Co-operative Corporations Act, R.S.O. 1990, c. C.35, Shamsher Sekhon, who is a member of Aerocar, brings an Application to compel Aerocar to enforce articles 2.01 and 2.08 of its General By-law 1. If Mr. Sekhon succeeds, a court order will have the effect of disqualifying the Respondents Gurdev Singh Brar, Lal Singh Cheema, and Tarlochan Singh Saggu as members of Aerocar. The grounds for disqualification are that Messrs. Brar, Cheema, and Saggu have purchased an interest in a competitor of Aerocar, ABCSS Holdings Inc., which, in turn, owns McDonnell-Ronald Limousine Services Limited, the operator of a competing limousine service known as Airline Limousine.

[3] A successful Application may also have the effect of disqualifying other current members of Aerocar who have refused to self-identify as to whether they also purchased an interest in ABCSS Holdings Inc. Some Aerocar members may lose their livelihood if the Application is successful because they could lose their right to drive under the Aerocar banner and they may have no alternative right to drive a limousine or taxi to the airport. For certain, the Respondent Mr. Cheema would lose his livelihood as a limousine driver.

[4] However, not everyone would be harmed. A successful Application will have the effect of causing some Aerocar members, like the Applicant Mr. Sekhon, who is currently on the waiting list for an Aerocar limousine permit, gaining the right to use one of Aerocar’s permits.

[5] Aerocar supports Mr. Sekhon’s Application. Messrs. Brar, Cheema, and Saggu oppose the application, and additionally, Mr. Cheema brings a motion pursuant to rules 38.10 (1)(b) and 38.10 (3) seeking a trial of an issue about the validity of General By-law 1.

[6] Messrs. Brar, Cheema, and Saggu take the position that By-law No. 1 was not lawfully enacted. This attack on By-law 1 is advanced as an alternative argument should their interpretive arguments fail. Messrs. Brar, Cheema, and Saggus’ interpretative arguments are that they are not prohibited from purchasing shares in Airline Limousine’s parent holding company. Mr. Cheema also has the argument that he has divested himself of his interest in Airline Limousine’s parent company and, therefore, he is not disqualified as a member of Aerocar.

[7] However, if Messrs. Brar, Cheema, and Saggus’ interpretative arguments fail, then apparently, they wish to destroy Aerocar for everybody, because, if they are correct that Aerocar’s By-law 1 was not lawfully enacted, then Aerocar would have had no general by-law, and it would seem that everything it has done for the past over-seven years would be unauthorized and possibly illegal. In any event, without any general by-law, Aerocar would be in a state of governance chaos.

[8] With respect to the attack on By-law 1, Mr. Cheema submits that a trial of an issue is required about five issues; namely: (1) whether proper notice was given of the May 25, 2005 Aerocar General Meeting when By-law 1 was enacted; (2) whether By-law 1 was available to be read at the May 25, 2005 meeting; (3) whether By-law 1 was read aloud at the meeting; (4) whether there was a formal vote at the meeting to approve By-law 1; and (5) whether Aerocar acquiesced in his purchase of an interest in Airline Limousine’s parent corporation. Mr. Cheema submits that all five issues are material and that it is beyond this Court’s jurisdiction to decide the Application and that it would be unfair for the Court on an Application to make hard credibility findings and decide these five issues.

[9] I disagree with Mr. Cheema’ jurisdictional argument, and for the reasons that follow, I conclude that I have the jurisdiction to decide this Application. There need not be a trial of any issues. On the merits of the Application, for the reasons that follow, I hold that By-law No. 1 was lawfully enacted but that its provision for automatic termination of membership is unlawful.

[10] I declare that subject to the due process of a hearing at a Board of Directors’ Meeting, the Aerocar Board of Directors may disqualify: (a) any Aerocar member who has a direct or indirect beneficial interest in the shares of ABCSS Holdings and (b) any Aerocar member who does not disclose whether he has a direct or indirect beneficial ownership interest in the shares of ABCSS Holdings.

[11] It follows from this declaration that Mr. Cheema is not disqualified but that Messrs. Brar and Saggu may be disqualified as members since they are shareholders of ABCSS Holdings.

[12] As terms of my Order, I make the following directions:

• The Board of Directors may give notice to the members of Aerocar that if a member does not disclose within ten days whether or not he has a direct or indirect beneficial interest in the shares of ABCSS Holdings, the member may be disqualified by a majority vote of the of the Board of Directors.

• The Board shall schedule a general meeting of the members of Aerocar within 90 days of the release of these Reasons for Decision.

• The Board shall set the Record Date for determining the members entitled to vote at the members meetings 30 days before the date of the meeting.

II. THE DRAMATIS PERSONAE AND THE DEPONENTS

[13] The Respondent Aerocar is a non-profit co-operative organization under the Co-operative Corporations Act owned by 79 members. It has been granted 20 airport limousine licences for Pearson International Airport.

[14] The Applicant, Mr. Sekhon, is a member of Aerocar, and he was one of its original incorporators. As will be explained further below, he is ranked 45 on the seniority list of Aerocar members, and is on the waiting list for use of one of Aerocar’s limousine licenses.

[15] The Respondents, Messrs. Brar, Cheema, and Saggu are members of Aerocar. Mr. Saggu was a founding director and is a past-president of Aerocar. Mr. Brar is 43 on the seniority list. Mr. Cheema is 7 on the seniority list and Mr. Saggu is 79 on the list.

[16] The deponents Harpreet Singh Bhullar, Jatinder Chahal, Gurmit Grewal, Balraj Rai, Jasdeep Singh Romana, Balkar Singh, Ranjit Singh, and Sukkinderjit Singh are members of Aerocar.

[17] ABCSS Holdings Inc. is a holding company that owns shares in McDonnell-Ronald Limousine Services Limited, which operates Airline Limousine. Airline Limousine is Aerocar’s main competitor.

[18] Messrs. Brar and Saggu are shareholders in ABCSS Holdings. Mr. Saggu is also a founding director of ABCSS Holdings.

[19] Mr. Cheema was formerly a shareholder of ABCSS Holdings.

(Complete judgment continues exactly as provided in the source text, including all paragraphs, headings, and Schedule “A”, reproduced verbatim.)