COURT FILE NO.: 11-50312 and 12-56265
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Mildred McMurtry
Marc W. Smith, for the Plaintiff, Mildred McMurtry
Plaintiff
-and-
John McMurtry and Mic Mac Realty (Ottawa) Limited
Defendants
AND BETWEEN:
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
John McMurtry
Plaintiff
-and-
Jim McMurtry
Jeff G. Saikaley, Richard Léger, for the Plaintiff and Defendants by Counterclaim, John McMurtry, Brenda McMurtry and Mic Mac Realty (Ottawa) Limited
Jeff G.Saikaley, Richard Léger for the Plaintiff and Defendants by Counterclaim
Daniel Mayo, for the Defendant and Plaintiff by Counterclaim, Jim McMurtry
Defendant
AND BETWEEN:
Jim McMurtry
Plaintiff by Counterclaim
-and-
John McMurtry, Brenda McMurtry, Barry Coons, Mic Mac Realty (Ottawa) Limited, Bouris Wilson LLP
Defendants by Counterclaim
HEARD: November 21, 2013
Daniel Mayo, for the Defendant and Plaintiff by Counterclaim, Jim McMurty
Jeff G. Saikaley, Richard Léger for the Plaintiff and Defendants by Counterclaim, John McMurtry
Christopher Hluchan, for the Defendants by Counterclaim, Barry Coons and Bouris Wilson LLP
REASONS for decision
MARANGER J.
Introduction:
[1] Jim and John McMurtry are brothers. They are the sons of Mildred McMurtry and the late Keith McMurtry. In the 1960s Keith McMurtry founded a real estate holding company called Mic Mac. Keith McMurtry died in 1998. The main business of the company was and is landholding; and to a lesser extent commercial leasing. John McMurtry is a shareholder in the company as is Jim McMurtry. It is undisputed that Jim McMurtry owns 27% of the shares in the company. The remaining ownership is disputed; John McMurtry either owns 27% with Mildred owning 45% or he owns the remaining 73% of the shares in the company.
[2] In any event John McMurtry along with his wife Brenda and more recently their daughter Emily have been running the company for about the last 30 years.
[3] The brothers had a falling out over the sale of a property located on Queensdale Avenue. Their dispute concerns the distribution of the proceeds of sale from this property. There is currently $547,444.98 in trust from this sale. John McMurtry initiated an action against Jim McMurtry and Jim McMurtry counterclaimed. They both seek oppression remedies against the other as shareholders in Mic Mac.
Motions and issues to be determined:
[4] The court heard the following motions: a motion brought by Jim McMurtry for an order appointing an interlocutory receiver to oversee the operations and management of MicMac; a motion brought by John McMurtry for a summary judgment dismissing the claim by Mildred McMurtry respecting her ownership of shares in MicMac; a motion by John McMurtry for the disbursement of funds presently held in trust from the sale of the Queensdale Avenue property. Finally depending on the outcome of these motions counsel were seeking directions from the court concerning what can be done to have the matter proceed expeditiously to trial.
The appointment of a receiver:
[5] In Anderson v. Hunking, 2010 ONSC 4008 at para. 15, Justice Strathy summarized the governing principles respecting the appointment of a receiver-manager in the following manner:
a) the appointment of a receiver to preserve assets for the purposes of execution is extraordinary relief, which prejudges the conduct of a litigant, and should be granted sparingly…
b) The appointment of receiver for this purpose is effectively execution before judgment and to justify the appointment there must be strong evidence that the plaintiff’s right to recovery is in serious jeopardy…
c) The appointment of a receiver is very intrusive and should only be used sparingly, with due consideration for the effect on the parties as well as consideration of the conduct of the parties…
d) In deciding whether to appoint a receiver, the court must have regard to all the circumstances, but in particular the nature of the property and the rights and interests of all parties in relation thereto…
e) The test for the appointment of an interlocutory receiver is comparable to the test for interlocutory injunctive relief:
i. a preliminary assessment must be made of the merits of the case to ensure that there is a serious issue to be tried.
ii. It must be determined that the moving party would suffer “irreparable harm if the motion is refused, and irreparable harm refers to the nature of the harm suffered rather than its magnitude, evidence of irreparable harm must be clear and not speculative.
iii. An assessment must be made to determine which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits- that is “the balance of convenience.”
f) where the plaintiff’s claim is based in fraud, a strong case of fraud coupled with evidence that the plaintiff’s right of recovery is in serious jeopardy, will support the appointment of a receiver of the defendant’s assets.
[6] After considering all of the material filed by counsel, including the affidavits and the transcripts of the cross- examinations on the affidavits, I come to the conclusion that this is not an appropriate case for the appointment of a receiver- manager and for the following reasons:
• John McMurtry and Brenda McMurtry have been running the company for 30 years. Regardless of whether or not they have mismanaged the company, or extracted payments from the company inappropriately, the company has a conservative value of over $6 million and liabilities of perhaps $1.5 million.
• There is nothing in the evidence to support the proposition that any mismanagement, whether real or imaginary, could not be rectified after a trial by a payment to the aggrieved party out of the assets of the company.
• There was virtually no evidence of irreparable harm that could befall the moving party in this case. The only evidence presented was speculative evidence relating to the potential tax liabilities of MicMac. No actual liabilities were put forward, nor was there any tangible evidence that disclosed a real liability in the future, only the prospect of the liability.
• The cost of a receiver manager is an expense the company does not need. The only substantial contentious issue that has arisen here concerns the sale of one specific piece of property namely the Stoke Lacey property valued at $4,050,000.00.
• MicMac is first and foremost a landholding company. Stoke Lacey is its biggest asset. The balance of the day-to-day operations consists of the management of commercial properties that are currently being leased. The biggest complaint in that regard is that the municipal taxes on these properties are in arrears and should be paid directly from monthly rental revenues.
[7] Therefore, the motion to appoint a receiver is dismissed.
Summary judgment motion:
[8] Rule 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 stipulates that a defendant may, after delivering his or her statement of defence, move with appropriate affidavit material or other evidence for summary judgment dismissing all or part of the claim in the statement of claim. The court is mandated to grant summary judgment if it is satisfied that there is no genuine issue requiring a trial respecting a claim or defence.
Rule 20.04 (2.1) provides that:
In determining under clause (2) (a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:
Weighing the evidence.
Evaluating the credibility of a deponent.
Drawing any reasonable inference from the evidence.
[9] In the decision of Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764, 108 O.R. (3d) 1, the Ontario Court of Appeal set out the following principles applicable to the determination of Rule 20 summary judgment motions:
• The amended rule permits the motion judge to decide the action where he or she is satisfied that by exercising the powers that are now available on a motion for summary judgment, there is no factual or legal issue raised by the parties that requires a trial for its fair and just resolution. (At para. 37).
• In deciding if the powers under rule 20 should be used to weed out a claim as having no chance of success or be used to resolve all or part of an action, the motion judge must ask the following question: can the full appreciation of the evidence and issues that is required to make dispositive findings be achieved by way of summary judgment, or can this full appreciation only be achieved by way of trial? (at para. 50).
• In cases that call for multiple findings of fact on the basis of conflicting evidence emanating from a number of witnesses and found in a voluminous record, a summary judgment motion cannot serve as an adequate substitute for the trial process. Generally speaking, the motion judge simply cannot achieve the full appreciation of the evidence and issues that is required to make dispositive findings. Accordingly, the full appreciation test is not met and the “interests of justice” requires a trial (at para. 51).
• In contrast, in document-driven cases with limited testimonial evidence, a motion judge would be able to achieve the full appreciation of the evidence and issues that is required to make dispositive findings. Similarly, the full appreciation test may be met in cases with limited contentious factual issues. The full appreciation test may also be met in cases where the record can be supplemented to the requisite degree at the motion judge’s direction by hearing oral evidence on discrete issues (at para. 52).
[8] In this case the motion is brought by John McMurtry who seeks a summary judgment dismissing Mildred McMurtry’s claim for declaratory relief concerning the ownership of shares in MicMac. The thrust of the moving parties’ claim is twofold: they assert that there is a letter written by Mildred McMurtry which discloses that prior to the death of Keith McMurtry a further 45% of the shares in the company were transferred to John McMurtry; furthermore, they assert that the limitation period has long been prescribed in the circumstances of this case.
[9] After reviewing the material filed including the affidavits and the transcripts of the cross examinations on the affidavits I would dismiss the summary judgment motion and for the following reasons:
• While the letter written by Mildred McMurtry may be compelling evidence of the possibility that 45% of the shares were at one time transferred to John McMurtry, it is not unequivocal evidence that a proper and legal transfer of shares ever took place. There are no minute books showing the transfer. Furthermore, Jim McMurtry’s evidence is that he never attended at a meeting of the Board of Directors to witness a legal transfer of shares.
• There is other documentary evidence including but not limited to the following: a letter from the accountant dated August 6, 1999, a sworn declaration of transmission dated December 8, 1999, and an income tax return dated 1997. These documents either contradict or confuse the notion of the transfer of 45% of the shares in MicMac.
• The cross-examination of John McMurtry discloses that his evidence as to the when, why and what of the transfer of 45% of the shares is far from clear.
• While I agree that Mildred McMurtry’s evidence seems at times contradictory and certainly can be argued to be a shifting in position late in the day to benefit Jim McMurtry, it seems to me that this is one of those cases where credibility will be front and center for the trier of fact to determine.
• With respect to the limitation period argument, I agree with counsel representing Mildred McMurtry that a limitation period doesn’t start to run without evidence that there has been a transfer of the shares; without a transfer of the shares the will operates to give Mildred McMurtry 45% of the shares. In other words she is not suing for the return of the shares, or for money she says she is entitled to. She is suing for a declaration that a transfer never took place.
• This is a layered and complex case. The issue of the share ownership should go to trial.
[10] Therefore, the summary judgment motion is dismissed.
Money in trust:
[11] John McMurtry moved to have the $547,444.98 presently being held in trust by the solicitors who acted on the Queensdale property sale released to him as part of the continued operations of MicMac. This motion was dismissed, however, for reasons given orally at the hearing; it is ordered that from these trust funds, there shall be direct payments to the relevant municipal authorities for the purposes of extinguishing any municipal tax arrears on properties owned by MicMac.
[13] The method of disbursement shall be approved by counsel representing each of the parties in this case; failing which an appointment can be made with the court for specific directions. The remaining trust funds shall continue to be held pending completion of this litigation.
Directions going forward:
[12] This matter should proceed to trial in an expedited fashion, the cross-examinations that have already taken place on the various affidavits filed should and can be utilized as partial-examinations for discovery. If any further discovery is required a pre-trial should be conducted in the next 90 days. The matter should be listed for trial within the next 120 days.
Costs:
[13] I have cost outlines that were given to me at the completion of the motions from all counsel. I will accept written submissions of no more than two pages in length concerning what the appropriate disposition should be with respect to costs. I will accept these written submissions within 15 days of the release of this decision failing which there will be no order as to costs.
Maranger J.
Released: December 10, 2013
COURT FILE NO.: 11-50312 and 12-56265
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Mildred McMurtry
Marc W. Smith, for the Plaintiff, Mildred McMurtry
Plaintiff
-and-
John McMurtry and Mic Mac Realty (Ottawa) Limited
Defendants
AND BETWEEN:
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
John McMurtry
Plaintiff
-and-
Jim McMurtry
Jeff G. Saikaley, Richard Léger, for the Plaintiff and Defendants by Counterclaim, John McMurtry, Brenda McMurtry and Mic Mac Realty (Ottawa) Limited
Jeff G. Saikaley, Richard Léger for the Plaintiff and Defendants by Counterclaim
Daniel Mayo, for the Defendant and Plaintiff by Counterclaim, Jim McMurtry
Defendant
AND BETWEEN:
Jim McMurtry
Plaintiff by Counterclaim
-and-
John McMurtry, Brenda McMurtry, Barry Coons, Mic Mac Realty (Ottawa) Limited, Bouris Wilson LLP
Defendants by Counterclaim
HEARD: November 21, 2013
Daniel Mayo, for the Defendant and Plaintiff by Counterclaim, Jim McMurtry
Jeff G. Saikaley, Richard Léger for the Plaintiff and Defendants by Counterclaim, John McMurtry
Christopher Hluchan, for the Defendants by Counterclaim, Barry Coons and Bouris Wilson LLP
Release date: December 10, 2013 Maranger J.