CITATION: Maurice v. Alles et al., 2015 ONSC 1671

COURT FILE NOS.: CV- 13-CL-010263
CV-13-486487
CV-14-10412-00CL

DATE: 20150313

ONTARIO

SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

BETWEEN:

ROBERT MAURICE

Applicant

– and –

LORRAINE ALLES, DIANE POMORSKI, CAROL MACDONALD, DONALD MAURICE, GEORGE ALLES and KIRBY-MAURICE COMPANY LIMITED

Respondents

AND BETWEEN:

LORRAINE ALLES, DIANE POMORSKI, CAROLD MACDONALD, and DONALD MAURICE

Applicants

Jamie J. W. Spotswood, for the Applicant, Respondent

Richard J. Worsfold, for the Respondents, Moving Parties

– and –

ROBERT MAURICE

Respondent

HEARD: September 24, 2014

L. A. PATTILLO J.:

Introduction

[1] On May 13, 2013, Lorraine Alles (“Lorraine”), Diane Pomorski (“Diane”), Carol MacDonald (“Carol”), and Donald Maurice (“Donald”), (the “Applicants”) commenced an application against Robert Maurice (“Robert”) to appoint Errol Soriano as a valuator to determine the fair value of the issued and outstanding shares of Kirby-Maurice Company Limited (“Kirby-Maurice”) as of February 28, 2007, in accordance with the unanimous shareholders agreement between the parties dated January 18, 1993 (the “Kirby-Maurice USA”) (the “Application”).

[2] The Applicants and Robert are siblings and are equal shareholders in Kirby-Maurice. Kirby-Maurice owned interests in Television Antenna & Service Co. (“Tasco”), a very successful appliance store in Toronto and in Marlba Investments Limited (“Marlba”) which owned the real estate Tasco operated out of.

[3] On August 18, 2013, Robert commenced a cross-application against the Applicants (also referred to as the “Respondent Shareholders”) along with George Alles (“George”) and Kirby-Maurice (collectively the “Respondents”) claiming breach of contract and oppression pursuant to s. 248 of the Business Corporations Act, R.S.O. 1990, B. c. 16 (the “OBCA”) arising out of the sale by Kirby-Maurice of its preference shares in Tasco and its Class A shares in Marlba in July 2008 (the “Cross-Application”).

[4] On October 1, 2013, Newbould J. ordered, among other things, that the Cross-Application be dealt with before a valuator was appointed pursuant to the Application.

[5] The parties have brought two motions before the court.

[6] First, the Respondents bring a motion for summary judgment dismissing the Cross-Application in its entirety on the ground that the claims asserted by Robert in the Cross-Application are statute barred pursuant to the Limitations Act, 2002, S.O. 2002, c. 24 (the “Limitations Act”).

[7] As part of the Respondents motion, they also seek an order appointing Mr. Soriano as a valuator to determine the fair value of the issued and outstanding shares of Kirby-Maurice as of February 28, 2007, in accordance with the provisions of the “Kirby-Maurice USA”.

[8] Finally, Robert brings a motion in the Cross-Application for an order requiring the Respondent Shareholders to reimburse Kirby-Maurice for legal fees paid by it on their behalf in connection with the various proceedings that have taken place between the parties from 2008 and after (the “Fee Issue”) and setting a trial date for the Cross-Application.

[9] For the reasons that follow, I have concluded that the Respondents’ summary judgment motion in the Cross-Application should be allowed in part and the Cross-Application should be dismissed save and except for the claim concerning the Fee Issue.

[10] In light of that determination, all that will subsequently remain of the Cross-Application is Robert’s oppression claim concerning the Fee Issue. Accordingly, the Individual Shareholders’ motion for appointment of Mr. Soriano as the valuator is allowed.

[11] Finally, Robert’s motion concerning the Fee Issue is dismissed without prejudice to it being brought back on in the Cross-Application following completion of the valuation of the shares of Kirby-Maurice and the purchase of Robert’s shares in Kirby-Maurice.

Background

[12] The facts leading up to the motions are largely undisputed.

1) Tasco and Marlba

[13] The Applicants’ and Robert’s father was a businessman and entrepreneur who, starting in the 1950’s, owned an interest in Tasco through Kirby-Maurice, his holding company. Tasco became very successful. At some point, Mike Sayer, who was an employee of Tasco, acquired an interest in the company and was involved in its subsequent success. Along the way, Mr. Maurice and Mr. Sayer incorporated Marlba, which owned the land upon which Tasco operated. Marlba was owned equally by Kirby-Maurice and Mr. Sayer’s holding company.

[14] In the late 1970’s, in anticipation of retirement, Mr. Maurice wound up most of his businesses with the exception of Tasco, which he restructured by gifting equal interests to each of his children (six) and Mr. Sayer’s six children (Mr. Sayer had died in the mid-1970’s). However, he preserved voting control for his family by causing the issuance of 54% of Tasco’s voting preferred shares to Kirby-Maurice. Mr. Maurice died in the mid-1980’s.

2) The Settlement Agreement

[15] In 1991, the Maurice and Sayer families became involved in litigation concerning Tasco and Marlba. The litigation was settled pursuant to a court-approved settlement agreement dated July 22, 1992 (the “Settlement Agreement”). As part of the settlement, one Maurice and one Sayer child ceased to have any interest or involvement in the ownership and operation of Tasco and Marlba. The five remaining children in each family, including Robert and the Respondent Shareholders retained their ownership interests in Tasco and Marlba.

[16] At the time of the Settlement Agreement, the ownership structure of Tasco and Marlba was divided between the Maurice and Sayer families as follows:

a) The Maurice family owned 54% of Tasco’s voting preferred shares through Kirby-Maurice;

b) The Sayer family owned 46% of Tasco’s voting preferred shares through their holding company;

c) Kirby-Maurice and the Sayer holding company each held 100 non-voting Class A shares of Marlba; and

d) The common shares of Tasco and Marlba were divided equally between the Maurice and the Sayer families in that each of the remaining children owned 25 common shares in each of Tasco and Marlba, with the result that each family held a combined 50% interest in each company.

[17] The Settlement Agreement stipulated that the two families would enter unanimous shareholder agreements to govern the business and affairs of both Tasco and Marlba. While such agreements were never entered into, the Settlement Agreement set out the essential provisions that were to be included in the unanimous shareholders agreements and by which the parties subsequently governed themselves, including, among other provisions:

a) All resolutions of common shareholders require the affirmative vote specified in the OBCA and, in addition, require the affirmative vote of a majority of the common shares held by the Maurice family shareholders and of a majority of the common shares held by the Sayer family shareholders (section 7(1));

b) The preferred shares of Tasco would not be voted at any meeting of its shareholders (section 7(m));

c) Transfers of shares are only permissible between members of the Maurice family shareholders and between members of the Sayer family shareholders to other shareholders who are members of the same family. Transfers of shares are otherwise prohibited (section 7(o));

d) All individual shareholders are entitled to require the corporation to purchase their common shares for cancellation at fair value, without a minority discount (the “Section 7(r) Right”), subject to an arbitration clause with respect to valuation (at Tasco’s expense) (section 7(r)); and

e) Shareholders who are family members of the shareholder invoking the Section 7(r) Right have a right of first refusal with respect to the shares in question (section 7(r)).

3) The Kirby-Maurice USA

[18] The five Maurice siblings each own 20% of Kirby Maurice. Approximately six months after the Settlement Agreement was signed, they all entered into the Kirby-Maurice USA.

[19] The Kirby-Maurice USA contains a number of provisions governing the process to be used when a shareholder sells his or her common shares of Tasco and Marlba pursuant to their Section 7(r) Right under the Shareholders Agreement. In particular,

a) A “Selling Shareholder”, prior to exercising his or her Section 7(r) Right, must first offer to sell his or her shares in Tasco and Marlba to Kirby-Maurice and to other Kirby-Maurice shareholders stating the price at which the Selling Shareholder wishes to sell his or her shares of Tasco and Marlba (Article 9.1);

b) If an offer to sell is made, the other Kirby-Maurice shareholders must hold a meeting to consider the offer no later than 35 days after the offer is received and at which they must decide whether Kirby-Maurice will accept the offer. (Article 9.2);

c) If Kirby-Maurice decides not to accept the offer, the non-selling shareholders may purchase the shares on a pro-rata basis in proportion to their shareholdings in Tasco and Marlba (Article 9.3); and

d) If neither Kirby-Maurice nor the other shareholders agree to purchase the shares owned by the Selling Shareholder within 45 days from receipt of the offer, then the Selling Shareholder may proceed with his Section 7(r) Right and sell his shares back to Tasco and Marlba for cancellation (Article 9.4).

[20] Article 9.6 of the Kirby-Maurice USA provides that where a Selling Shareholder sells his or her shares in Tasco and Marlba, the Selling Shareholder must also sell his or her shares in Kirby-Maurice at a price to be determined in accordance with the Kirby-Maurice USA.

[21] Articles 11.1 and 11.2 of the Kirby-Maurice USA provide that a valuator is to be appointed to determine the value of the Kirby-Maurice shares. The price for the sale is to be the fair value of the shares owned as of the last day of the month preceding the month in which the sale of the Tasco and Marlba shares occurred.

[22] Article 11.3 of the Kirby-Maurice USA provides that if the shareholders fail to agree upon an independent business valuator, the business valuator is to be chosen by a Judge of the Ontario Court of Justice (General Division) on application of any party.

4) Robert Sells His Shares in Tasco and Marlba

[23] On May 13, 1996, Robert elected to exercise his Section 7(r) Right in the Settlement Agreement and sell his shares in Tasco and Marlba. At the same time and in accordance with Article 9.6 of the Kirby-Maurice USA, Robert also offered to sell his shares in Kirby-Maurice.

[24] The sale of Robert’s shares in Tasco and Marlba did not close until March 23, 2007. At that time, Robert reveived $2,300,000 in total, comprised of $1,966,700 for his shares in Tasco and $308,300 for his shares in Marlba. The price was based on a valuation as at July 31, 2005 done by PriceWaterhouseCooper.

5) Kirby-Maurice’s sale of its Shares in Tasco and Marlba

[25] In June 2007, the shareholders of Tasco and Marlba, including the Respondent Shareholders, received a Letter of Intent from a third party concerning the purchase of their shares. A revised Letter of Intent was received on September 24, 2007. Robert was made aware of a potential purchase in October 2007 and expressed his view that Kirby-Maurice’s preference shares in Tasco, because they represented control of Tasco in the hands of a third party, should command a premium in any sale.

[26] The shareholders of Tasco and Marlba reached an agreement to sell their shares to a third party in July 2008. On July 15, 2008, notice was sent to Robert of a shareholders’ meeting of Kirby-Maurice on July 25, 2008 to discuss the proposed sale and to consider the passing of resolutions to complete it, including the sale by Kirby-Maurice of its preference shares of Tasco and its Class A shares in Marlba.

[27] Robert attended the meeting on July 25, 2008. He was advised that the Respondent Shareholders had sold their shares in Tasco and Marlba. When he asked for particulars of the transaction, including the terms and sale price, he was advised that the purchaser was a third party numbered company, 2171394 Ontario Inc.; that the owner of the company was unknown; that Kirby-Maurice’s prefered shares in Tasco were being sold for redemption at face value ($2,341.20); and that Kirby-Maurice’s nominees to Tasco and Marlba’s boards were resigning. The Respondent Shareholders refused to disclose any further information.

[28] Robert opposed the sale. He took the position that proceeding with the sale without the unanimous consent of all the shareholders of Kirby-Maurice was a breach of the Kirby-Maurice USA. He also took the position that the Respondent Shareholders should not be selling their shares in Tasco and Marlba without first obtaining a valuation. After stating his position, he left the meeting. The sale of Kirby-Maurice’s shares in both Tasco and Marlba was subsequently approved by the Respondent Shareholders.

[29] Following the completion of the sale of the shares in Tasco and Marlba, there was no communication between Robert and the Respondent Shareholders until just before the March 11, 2009 shareholders meeting of Kirby-Maurice when Robert’s lawyer raised the requirement of Kirby-Maurice to purchase Robert’s shares and to appoint a valuator to determine price. Thereafter, there was sporatic communication concerning the purchase of Robert’s shares but the valuation process did not move forward.

[30] On January 22, 2010, a shareholders meeting of Kirby-Maurice was held for the purpose of voting to wind up Kirby-Maurice and distribute all its assets and dividends. Robert requested information concerning how the preferred shares in Tasco were valued for the purpose of their redemption which was refused. Robert objected to the winding up of Kirby-Maurice which, in the end, did not proceed.

[31] Subsequent to the July 25, 2008 shareholders meeting, Robert has made repeated requests for disclosure of the terms upon which the Respondent Shareholders sold their shares in Tasco and Marlba. On each occaision his request was either ignored or refused.

6) The Litigation

[32] Following the commencement of the Application and the Cross-Application, both parties brought cross-motions which came before Newbould J. in September 2013. Robert sought the appointment of an arbitrator pursuant to the the arbitration clause in the Kirby-Maurice USA to resolve the issues raised in the Cross-Application or alternatively to have the issues raised in both the Application and Cross-Application heard in this Court. The Respondent Shareholders sought the appointment of Mr. Soriano pursuant to the Application to value the interest of Robert in Kirby-Maurice as provided in the Kirby-Maurice USA.

[33] In his endorsement dated October 1, 2013, (2013 ONSC 6046), Justice Newbould held, among other things, that because the Cross-Application included George who was a non-party to the Kirby-Maurice USA, the issues raised by the Cross-Application could not be resolved in accordance with the arbitration provision in that agreement. Further, and in light of the the oppression and breach of contract issues raised by Robert, there was little point to appointing a valuator until those issues were resolved.

[34] In concluding his reasons, Justice Newbould stated, at para. 38:

38. In the circumstances, the appropriate order is that the oppression and breach of contract claims in Robert’s application be dealt with before any valuator is appointed. These claims should be dealt with quickly. The parties should work towards having a quick mini-trial process undertaken towards that end. Directions from the Court can be given if requested.

Further Information

[35] Subsequent to the decision of Newbould J., and as as part of their productions in the Cross-Application, the respondents provided to Robert, for the first time, a copy of the August 1, 2008 share purchase agreement that the Respondent Shareholders executed in their personal capacity and on behalf of Kirby-Maurice dealing with the sale of their shares in Tasco and Marlba. Robert also learned that the negotiations with the prospective purchaser lasted more than a year; that the purchase price increased over the period of the negotiations; that each Respondent Shareholder (other than Donald) received $2,980,025 for their shares in Tasco and Marlba; and that the individual respondents considered the issue of whether Kirby-Maurice’s preferred shares in Tasco should be valued at more than face value, given that in the hands of a third party, not bound by the provisions of the Settlement Agreement, they represented control of Tasco.

Positions of the Parties

[36] The respondents/moving parties submit that Robert’s claims as raised in the Cross-Application were commenced more that two years after they were discovered and accordingly are statute barred pursuant to s. 4 of the Limitations Act.

[37] They submit that the claims relate to the sale by Kirby-Maurice of its shares in Tasco which was dealt with by all of Kirby-Maurice’s shareholders at the July 28, 2008 shareholders meeting. At that meeting, Robert was provided with information concerning the sale of the Kirby-Maurice shares in Tasco, took the position that the respondents were proceeding in breach of the Kirby-Maurice USA, objected to the sale of the shares and did nothing further, despite being represented by a lawyer, to assert the claims now being asserted in the Cross-Application.

[38] The respondents/moving parties further submit that given Robert sold his shares in Tasco and Marlba on March 23, 2007, the provisions of the Kirby-Maurice USA require Robert to sell his shares at their fair value as at February 28, 2007. As the parties have been unable to agree on a value, the Application should be allowed and Mr. Sorriano appointed as the valuator as provided by the terms of the Kirby-Maurice USA.

[39] In response, Robert submits that the claims asserted in the Cross-Application are not statue barred and there is a genuine issue to be tried in respect of the oppression claim. Robert asserts that the oppression claim is ongoing and particularly relies on the information recently disclosed concerning the Respondent Shareholders’ sale of their shares in Tasco and Marlba in 2008. Finally, Robert relies on the order of Newbould J. requiring his oppression claim to be tried before the Application seeking the appointment of a valuator.

Analysis

[40] Section 4 of the Limitations Act provides that unless otherwise stated in the Act, “a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.”

[41] Section 5(1) of the Limitations Act provides that a claim is discovered on the earlier of

a) the day on which the person with the claim first knew,

i. that the injury, loss or damage had occurred,

ii. that the injury, loss or damage was caused by or contributed to by an act or omission,

iii. that the act or omission was that of the person against whom the claim is made, and

iv. that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

[42] Section 5(2) provides that:

A person with a claim shall be presumed to have known of the matters referred to in Clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.

[43] In a motion to dismiss based on the expiry of a limitation period, the onus is on the respondent, in this case Robert, to show that the Cross-Application was commenced within the applicable limitation period: McSween v. Louis, 2000 CanLII 5744 (ON CA), [2000] O.J. No. 2076 (C.A.) at para. 76.

[44] It is a question of fact when a person has information that has reached the stage where a reasonably prudent person would have determined that he or she had prima facie grounds for a claim.

[45] Further, a party is not permitted to sit by and ignore the facts. A party is required to act with due diligence in acquiring facts in order to be fully apprised of the material facts. See: Super v. Southcott (1998), 1998 CanLII 5359 (ON CA), 39 O.R. (3d) 737 (Ont. C.A.).

a) Breach of Contract

[46] In the Cross-Application, as expanded in his factum on this motion, Robert asserts, among other things, that the individual respondent shareholders breached the Kirby-Maurice USA and the Settlement Agreement in a number of ways. In particular he claims that they breached:

a) Article 7.6 of the Kirby-Maurice USA by refusing to disclose further information concerning the sale of their shares in Tasco and Marlba and the sale of Kirby-Maurice’s shares in Tasco and Marlba;

b) Article 6.3 of the Kirby-Maurice USA by failing to disclose the voting on any resolution of Tasco and Marlba which in the circumstances would have been necessary to effect a transfer or sale of their common shares in Tasco and Marlba and the sale of Kirby-Maurice’s preferred shares in Tasco and Class A shares in Marlba;

c) Article 8.1 of the Kirby-Maurice USA requiring them to obtain the written consent of Robert for the sale of their common shares in Tasco and Marlba;

d) Article 8.1 of the Kirby-Maurice USA requiring them to first offer to sell their common shares in Tasco and Marlba to Robert;

e) Article 5.8 of the Kirby-Maurice USA requiring them to obtain the unanimous consent of all the shareholders of Kirby-Maurice for the sale of Kirby-Maurice’s preferred shares in Tasco and Class A shares in Marlba.

f) Section 7(r) of the Settlement Agreement and Part IX.A of the Kirby-Maurice USA requiring them to obtain a valuation of the fair market value of their common shares; and

g) Section 7(o) of the Settlement Agreement prohibiting the sale of Tasco and Marlba common shares to anyone or any entity that is not a member of the family of the selling shareholder.

[47] In my view, the evidence establishes and I find that Robert was clearly aware by the time he walked out of the Kirby-Maurice shareholders meeting on July 25, 2008, that by selling their shares in Tasco and Marlba to a third party his siblings were in breach of the above provisions of the Kirby-Maurice USA and the Settlement Agreement concerning such sale.

[48] Section 4(2) and (3) of the minutes of the July 25, 2008 meeting provide:

Robert indicated that the other shareholders should not be selling their shares of Marlba or Tasco without first obtaining a valuation of Marlba and Tasco. During this discussion, the other shareholders indicated that they were satisfied to proceed to sell their shares of Tasco and Marlba without requiring a valuation; and

Robert stated that, in his view, the proposed matter should not be proceeded with without unanimous consent of all the shareholders of the Corporation and to do so would be a breach of the Shareholders’ Agreement relating to the Corporation.

[49] During Robert’s cross-examination on his affidavits filed on the motions, he confirmed that he was aware at the shareholders meeting of July 25, 2008 that his siblings were in breach of the Kirby-Maurice USA by selling their shares in Tasco and Marlba without first obtaining a valuation or the unanimous consent of the shareholders.

[50] Further, Robert clearly knew that, apart from some general information concerning the sale, that his siblings had not provided him with any information behind the sale; that they were selling their shares in Tasco and Marlba to an entity that was not a member of the Maurice family; that they had not offered their shares in Tasco and Marlba to him; they had not obtained his written consent to the sale; they had not obtained unanimous consent of all shareholders; and they had not obtained a valuation of their common shares.

[51] In summary, Robert had sufficient information concerning the essential elements of all of his breach of contract claims on July 25, 2008 such that the limitation period would have started to run at that time. As more than two years passed before the commencement of those claims in the Cross-Application, they are statute barred.

b) Oppression

[52] Robert’s primary position on this motion is that his rights as a shareholder of Kirby-Maurice have been unfairly disregarded by the actions of his siblings selling their shares in Tasco and Marlba and causing Kirby-Maurice to redeem its preference shares in Tasco for the redemption value and accordingly his oppression claim is not statute barred due to the passage of time. In that regard, Robert submits that the act of oppression is ongoing and therefore the limitation period did not begin to run prior to the commencement of the Cross-Application.

[53] In support of his submission that while an oppressive act is ongoing, the limitation period does not begin to run, Robert relies the following excerpt from Markus Koehnen, Oppression and Related Remedies, 2004 at pp. 49-50:

A shareholder who sold his shares at a discount because of oppressive conduct, continues to be oppressed. The loss he suffered because of the defendants’ conduct is a continuing one. Similarly, where false financial statements were issued or where money was taken wrongfully from the corporation, the oppression continues until the financial statements have been re-issued or the funds have been repaid. Courts following this approach have been willing to provide relief for conduct committed in the past even though the plaintiff did not object at the time. This recognizes that the failure to complain may simply be evidence of a relationship of trust and confidence.

[54] In Fracassi v. Cascioli, 2011 ONSC 178 (Ont. S.C.), Pepall J., as she then was, held that pursuant to the Limitations Act, the applicable limitation period for an oppression claim begins two years after the day on which the claim for oppression was discovered. In reaching that conclusion, the learned judge relied on the following passage from Professor Koehnen’s text at p. 57:

Ordinarily, limitation periods begin from the time the plaintiff knows or ought to know of his cause of action. The fact that certain types of oppression continue until they are rectified has given rise to unusual results with respect to limitation periods. In Hart Estate v. Legacy Farms Inc., [1999] B.C.J. No. 312, the plaintiff complained of oppression in respect of a share issue that was completed more than six years before the action was commenced. The plaintiff knew about the share issue when it occurred. The British Columbia Supreme Court held that the claim was not caught by the Limitations Act because oppression continues until it is rectified. Manitoba courts have reached the opposite conclusion and have held that limitation periods do apply even to continuing conduct. This is generally the preferable approach. The concept that the limitation period does not begin to run until the oppression is remedied is counter-intuitive. Limitation periods begin when the cause of action arises, not when it is remedied. A limitation period for a breach of contract begins when the contract is breached, not when the breach is corrected. The idea that limitation periods begin to run when the oppression stops makes even less sense given the requirement of some courts that the oppression continue until the action is commenced. The combination of these two rules would result in an absurd situation. In essence, the limitation period does not begin to run until the oppression stops. But once the oppression stops, the plaintiff has no cause of action.

[55] While at first blush, the above two excerpts from Professor Koehnen’s text appear contradictory, in my view they are not. The examples in the excerpt relied upon by Robert presuppose that the aggrieved shareholder was not aware of the oppressive conduct giving rise to the damage until sometime later. In that regard, the conduct is continuing. While the act of oppression may be ongoing, I agree with Pepall J. that such continuation does not operate to extend the limitation period beyond the time of two years from discovery.

[56] There is no question that there are cases where the court has referred to the “ongoing” or “continuing” nature of the conduct to defeat a limitation period argument. See: Waxman v. Waxman, 2004 ONCA 39040 (C.A.) at paras. 534-536; Metcalfe v. Anobile, 2010 ONSC 5087 (Ont. S.C.). When the facts of those cases are viewed closely, however, it is discoverability that is the key factor in determining when the limitation period begins to run.

[57] A claim for oppression can arise from many different factual situations. It is not until the plaintiff becomes aware of the material facts upon which a claim for oppression can be based that the limitation period will begin to run in respect of that claim. Similarly, if at some later point the plaintiff learns of other oppressive conduct that he or she was not otherwise aware of, the limitation period in respect of a claim for oppression relating to that conduct would only begin to run from the time the material facts giving rise to that claim became known.

[58] In the present case and to the extent that Robert’s oppression claim is based on his siblings breaches of the Kirby-Maurice USA, for the reasons already stated, in my view those claims are statute barred. Robert clearly knew about the facts giving rise to those breaches from July 25, 2008.

[59] Robert’s primary oppression claim is that by agreeing to the sale of the Kirby-Maurice preference shares in Tasco for a value less than their fair market value, the individual respondent shareholders engaged in conduct that unfairly disregarded his interests as a shareholder of Kirby-Maurice. The reduced value of the preference shares in turn reduced the value of his shares in Kirby-Maurice.

[60] In addition, Robert asserts that the subsequent refusal of the Respondent Shareholders’ to provide the basis upon which Kirby-Maurice’s preferred shares in Tasco were valued for the purposes of redemption and the attempt to wind-up Kirby-Maurice in 2010 constituted additional acts of oppression in respect of Robert’s ongoing efforts to determine the value of his shares.

[61] From the time he first became aware of the proposed sale of Kirby-Maurice’s preferred shares in Tasco, it was Robert’s position that because the shares represented voting control of Tasco to a third party who was not bound by the Shareholders Agreement, the sale of the shares for their redemption value of $1.20 a share was less than fair market value.

[62] Further, part of Robert’s oppression claim alleges that by agreeing to sell Kirby-Maurice’s preferred shares in Tasco for their redemption value, the Respondent Shareholders were able to extract a higher price for their common shares in Tasco and Marlba and/or negotiate a generous retirement package for George who was the General Manager of Tasco at the time.

[63] It is clear from the evidence that Robert held this view from the time of the sale. In his affidavit in support of the Cross-Application sworn August 8, 2013, at paragraph 60, Robert states: “I believe that in selling the preferred shares for less than fair market value, the respondents were either able to extract a higher price for their common shares in Tasco and Marlba, or alternatively negotiate a generous retirement package for George Alles, my brother-in-law, with the Sayer family. George was, at the time, the General Manager of Tasco.”

[64] Robert’s oppression claim is also based in part on the information produced by the respondents following the decision of Newbould J. on October 1, 2013 concerning the sale of their shares. In my view, however, the information provided concerning the sale does not assist Robert in maintaining his oppression claim. The information does not support a new claim of oppression regarding the sale of the shares. At best, it confirms his belief of the oppressive conduct he complains of.

[65] Further, Robert’s position from July 25, 2008 has been that he was entitled to obtain the information under the terms of the Kirby-Maurice USA. Yet he took no steps, beyond a few demand letters, to obtain the information prior to commencement of the Cross-Application. In my view, he cannot sit by for almost five years and then when the information is later produced, rely on its production to support a limitation defence.

[66] For the above reasons therefore, I conclude that Robert’s oppression claim relating to Kirby-Maurice’s sale of its preferred shares in Tasco was commenced outside the limitation period and is therefore statute barred.

c) The Fee Issue

[67] The Cross-Application claims, among other things, an order pursuant to s. 248 of the OBCA compelling the individual respondents to reimburse Kirby-Maurice for all the legal fees and disbursements paid on behalf of individual respondents in connection with the proceedings arising out of his obligation to sell his Kirby-Maurice shares (The Fee Issue).

[68] Robert has brought a motion in the Cross-Application seeking, among other things, an order requiring the Respondent Shareholders to forthwith reimburse Kirby-Maurice the legal fees it paid on their behalf in connection with the 2008 Sale Transaction and the current proceedings.

[69] In my view, Robert’s oppression claim concerning the Fee Issue is not statute barred. It is clear from Robert’s evidence that he only became aware of the factual underpinnings concerning the Fee Issue as a result of the recent production of information in 2014. In such circumstances, the limitation period in respect of the Fee Issue has not expired.

[70] Article 11 of the Kirby-Maurice USA provides for the valuation of, among other things, the Kirby-Maurice shares. Article 11.2 provides that where the Selling Shareholder and the remaining shareholders are unable to agree on the fair market value of the shares, an independent business valuator shall determine the fair value of all the issued and outstanding shares of, in this case, Kirby-Maurice on the “Valuation Date”, defined as “the last day of the month preceding the month in which the event giving rise to the transaction of purchase and sale in question occurs”.

[71] In his reasons for decision of October 1, 2013, (paragraph 26), Newbould J. held that the event giving rise to the transaction of purchase and sale of Robert’s shares in Kirby-Maurice took place on March 23, 2007 when Robert sold his shares of Tasco and Marlba, thereby triggering the obligation to sell his shares in Kirby-Maurice pursuant to Article 9.6 of the Kirby-Maurice USA. Accordingly, Newbould J. held the valuation date in respect of the sale of Robert’s shares in Kirby-Maurice is February 28, 2007.

[72] As the Fee Issue involves only fees paid after February 28, 2007, in my view it only becomes unfair or prejudicial to Robert if, following the valuation, Kirby-Maurice does not have sufficient funds to purchase his shares at the price determined by the valuator.

[73] Given that I have found that Robert’s claims for breach of contract and oppression in the Cross-Application are statute barred and cannot proceed, save and except for the Fee Issue, the substance of the Cross-Application as considered by Newbould J. has changed in that the only claim remaining in the Cross-Application is Robert’s claim for oppression involving the Fee Issue.

[74] As a result, in my view, the most expeditious way forward is to have the valuation of Robert’s shares in Kirby-Maurice proceed and be completed prior to Robert’s oppression claim in respect of the Fee Issue proceeding. Once the valuation and purchase of Robert’s shares in Kirby-Maurice has been completed, Robert can then assess whether he wishes to continue the Cross-Application.

Conclusion

[75] The respondents/moving parties summary judgment motion in the Cross- Application is therefore allowed in part. Robert’s breach of contract claims are dismissed as statute barred. Further, Robert’s claim for oppression arising from the sale by the Respondent Shareholders of their shares in Tasco and Marlba in 2008 and the corresponding sale by Kirby-Maurice of its shares in Tasco and Marlba is also dismissed for the same reason. However, Robert’s oppression claim concerning the Fee Issue remains.

[76] The Respondents motion to appoint Errol Soriano as a valuator to determine the fair value of the issued and outstanding shares of Kirby-Maurice as of February 28, 2007 in accordance with the terms of the Kirby-Maurice USA is also allowed.

[77] Because the Fee Issue still remains, I will remain seized of the Cross-Application. Counsel are directed no later than one month from the date of Mr. Soriano’s valuation decision, to shall arrange a 9:30 a.m. appointment with me through the Commercial List office to finalize a timetable for the Fee Issue to proceed.

[78] The parties shall submit brief cost submissions of no more than three pages plus cost outlines, within 30 days.

L. A. Pattillo J.

Released: March 13, 2015

CITATION: Maurice v. Alles et al., 2015 ONSC 1671

COURT FILE NOS.: CV- 13-CL-010263
CV-13-486487
CV-14-10412-00CL

DATE: 20150313

ONTARIO

SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

BETWEEN:

ROBERT MAURICE

Applicant

– and –

LORRAINE ALLES, DIANE POMORSKI, CAROL MACDONALD, DONALD MAURICE, GEORGE ALLES and KIRBY-MAURICE COMPANY LIMITED

Respondents

AND BETWEEN:

LORRAINE ALLES, DIANE POMORSKI, CAROLD MACDONALD, and DONALD MAURICE

Applicants

– and –

ROBERT MAURICE

Respondent

REASONS FOR JUDGMENT

PATTILLO J.

Released: March 13, 2015