SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-13-481428
DATE: 20140627

RE: Rosalie Farb, Applicant

AND:

969866 Ontario Limited and Irving Garten, Respondents

BEFORE: Mr. Justice Graeme Mew

COUNSEL:
John Ormston, for the Applicant

D. Milosevic and A. Lau, for the Respondent Irving Garten

HEARD: 26 June 2014

ENDORSEMENT

[1] Further difficulties have arisen giving effect to the court’s order of 30 January 2014 (in which the court ordered, inter alia, that the shares of 969866 Ontario Limited should be valued and that thereafter, based upon such valuation, Irving Garten would have 120 days to purchase Rosalie Farb’s shares in the company (the order went on to deal with what would happen if Mr Garten elected not to purchase Ms. Farb’s shares).

[2] Having now appointed a business valuer and an appraiser (the principal assets of the company being certain real estate holdings) to value the company and its assets, a dispute has arisen over whether the appraiser should be given copies of all offers made to purchase the subject property. Because some of those offers are conditional, or made by non-arm’s length parties (or both), it is said that the offers might improperly influence the valuation of the properties arrived at by the appraiser.

[3] Also raised at this time is whether the current process of valuing the company and giving first Mr. Garten the option to purchase the company and then, if he declines to do so, Ms. Farb, should be replaced by a “buy/sell” process.

[4] Finally the parties dispute whether the applicant should be entitled to retain and rely upon a personal net worth statement of Mr. Garten prepared in connection with family law proceedings and said to have been inadvertently released to the applicant’s lawyer.

Information Provided to Appraiser/Valuer

[5] The appraiser is a professional whose function is to critically review and evaluate all information bearing on the value of the subject properties. The appraiser will consider whether or not an offer is at arm’s length or conditional and will exercise judgment as to the extent to which, if at all, any given offer will influence the valuation. The appraiser has been appointed by court order and, while the appraiser may take into account the interests or views of the parties, he or she should exercise his or her judgment independently of them.

[6] Provided that each party is at liberty to provide the appraiser with any information that they consider to be relevant, I would not be prescriptive about what is given to the appraiser.

Variance of Previous Order

[7] The applicant sought an order for a buy/sell arrangement when the matter was heard in January 2014. In the event, a different arrangement was ordered. Ms. Farb renews her request for a buy/sell at this time.

[8] The court may in appropriate circumstances, vary an earlier order or make an order for relief other than originally awarded, pursuant to Rule 59.06(2). However, I am not persuaded that it would be appropriate for me to do so now.

[9] The principal ground advanced in support of substituting the process established by the 30 January 2014 order with a buy/sell process is that it will now take too long for the process originally ordered to be completed.

[10] In fact, it seems likely that the valuation process can be completed by the end of August, which would mean a delay of four months compared with the schedule anticipated in the January order.

[11] There being no evidence of significant prejudice to the parties resulting from such a delay, I would not order the substitution of a buy-sell arrangement in place of the process that has previously been ordered.

[12] I would vary the order of 30 January 2014 to provide that the appraisal process should be completed by 29 August 2014 and that the previously ordered time limits for one party to buy out the other (or failing that for the company to be liquidated) should be adjusted accordingly to run from the date that the valuation report is released to the parties. I would also direct that any information which the parties wish to provide to the appraiser or valuator should be conveyed by no later than 15th July 2014.

Privilege Issue

[13] I would exclude Mr. Garten’s net worth statement. It was created in connection with matrimonial proceedings and, as such, is privileged. It was inadvertently released. Under the circumstances it should remain privileged.

Costs

[14] Success on the motion was divided, with Mr. Garten having the edge. However a motion of some sort was almost inevitable, given the continued lack of trust or cooperation between the parties. There will, accordingly, be no order as to costs of this motion.

Mew J

Date: 27 June 2014