CITATION: Cordero-Barnett v. Breslau Holdings, 2016 ONSC 1173
COURT FILE NO.: C-734-13
DATE: 2016-02-18
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Sadiq James Jason Cordero-Barnett and
Charlotte Cordero-Barnett, Plaintiffs
AND:
Breslau Holdings Inc., Breadner Trailer Sales Amalgamated Ltd.,
Robert Brunnenmeir, Flightpath Charter Airways Inc., 2308383
Ontario Limited, Robert Breadner and Cornelius Weyers, Defendants
BEFORE: The Honourable Mr. Justice R.D. Reilly
COUNSEL: John P. Ormston, Counsel for the Plaintiffs/Moving Parties
Clarke L. Melville, Counsel for the Defendants/Responding Parties
HEARD: January 28, 2016
RULING on A motion
[1] The request for relief in the original action is somewhat complex, as is the background of this litigation. This background has been set out in some detail by the material filed on the motion. I would note in particular the notice of motion itself, together with the affidavits of the plaintiff, Mr. Cordero-Barnett (sworn 27 February 2015) and the defendant, Mr. Robert Breadner (sworn 5 May 2015).
[2] Though, as I noted above, the issues in the principal litigation are somewhat complex, and may well require a trial to resolve issues of credibility and reliability between the parties, the issues raised by the motion are more focused.
[3] I shall only summarize the background for the purposes of this ruling. The defendant, Flightpath Charter Airways Inc., operates an aircraft charter and leasing business at Waterloo Regional Airport.
[4] Flightpath Charter Airways Inc. (Flightpath) was incorporated by Mr. Cordero-Barnett and by Robert Brunnenmeir on August 16, 2006, with one aircraft, a Chieftan. The company continued with one managed aircraft, a Cessna 421. They later subcontracted a turbo-prop and a jet aircraft to fulfill demand. Further companies were incorporated, which involved Mr. Breadner.
[5] On or about 13 April 2012, several of the defendants entered into a priorities agreement (paragraph 20, plaintiffs’ factum).
[6] On March 1, 2012, the various parties entered in a share-subscription agreement and a unanimous shareholder agreement. The respective interests in Flightpath, Breslau Holdings Inc. and 2308383 Ontario Limited are set out in the factum of the plaintiffs/moving parties, at paragraph 19.
[7] On or about 13 April 2012, some of the parties allegedly entered into a priorities agreement.
[8] Costs of the operation continued to mount. One of the principal concerns of the plaintiffs is that the defendant, Mr. Breadner, provided company aircraft (including the jet Phenom) at discount rates, diminishing (say the plaintiffs) the revenue of the companies. Mr. Breadner disputes these claims. These issues can only be resolved, if not by compromise by the parties, by a trial, based on the credibility and reliability of witnesses. I note that Mr. Breadner’s position is that he was entitled to the use of some of the corporate aircraft at a “discount” rate, and that the plaintiffs suffered no financial detriment in any event.
[9] What was once apparently a collegial undertaking changed significantly. On March 22, 2013, at a board meeting, Mr. Cordero-Barnett was terminated from his position as pilot and from his role in sales and business development. Mr. Breadner continued to use aircraft at a preferred rate.
[10] Failing settlement, only a trial will determine whether the conduct of the defendants amounts to “oppression”, “unfair prejudice” or “unfair disregard” of the interests or the rights of the plaintiffs (sec. 248(2) OBCA).
[11] The plaintiffs/moving parties seek three interim forms of relief pending trial. They seek first that the respondents restrain the lease (or use) of all aircraft owned or controlled by the defendants at or below market rate until completion of this action.
[12] They seek second that a maintenance reserve be established for the aircraft known as the King Air until completion of the action.
[13] Thirdly, they seek an order that the defendants produce all information, including financial information and flight logs of the defendants, Breslau, 2308383 Ontario Limited and Flightpath, to the plaintiffs on a monthly basis.
[14] I shall deal with each of the requests in order.
The Injunctive Relief Claimed
[15] For this relief, even on an interim basis, the claimant must establish:
That an interim order is necessary to preserve the rights of the claimant.
That the claimant has a strong prima facie case that the respondents have oppressed the claimant.
That the claimant will suffer irreparable harm if the relief is not granted, harm not adequately compensable in damages. and
That the balance of convenience lies in favour of granting the relief sought.
[16] After carefully considering the material filed on the motion, I conclude that the plaintiffs/moving parties should not be entitled, on an interim basis, to the relief to which they claim. Based on their claims in the principal action, they may be entitled to such relief. The rights of the plaintiffs will however, remain through the trial, whether interim relief is granted or not.
[17] The trial will determine whether Mr. Breadner, as a result of contract or otherwise, has a right to use or rent the aircraft at a preferred rate. There is contradictory evidence as to whether this practice is prejudicial to the respondents. This question will be resolved, if necessary, at trial.
[18] Based on the affidavit evidence permeated by the plaintiffs, it could be said they have a strong prima facie case, justifying some relief. That is not to say that such evidence demonstrates that the defendants have conducted themselves in such a way that oppresses the plaintiffs. Again, failing settlement, only a trial will resolve this issue.
[19] I am not satisfied that if the relief requested does not issue, that irreparable harm will be suffered by the plaintiffs, harm that might not be adequately compensable in damages.
[20] I might say, finally, that the balance of convenience does not lie in favour of granting the relief sought. The plaintiffs, by this motion, seek to obtain relief which interferes with the administrative decisions and control of the defendant corporations. This is a role the court should be reluctant to adopt.
[21] All parties will be aware that this action is on the brink of trial. Those responsible for making what are in essence “business” decisions, will be aware that their decisions may be subject to judicial review at trial.
The Maintenance Reserve for the King Air
[22] The King Air was purchased as a “used” aircraft. The Phenom was purchased as a “new” aircraft and as such is on a maintenance contract which provides for certain funds to be set aside on a monthly or hourly use basis to cover the costs of future maintenance.
[23] Whether a maintenance reserve should be set aside for the King Air is an administrative decision for those responsible for the defendants. It is not for the court to make that decision on an interim basis. This may as well be determined at trial. Such a decision may be sensible, but it all depends on the evidence to be called.
[24] I decline to grant the relief requested by paragraph 2 of the notice of motion, for the defendants to establish a maintenance reserve for the King Air, until the completion of this action.
Production of all Financial Information of the Defendant Corporations on a Monthly Basis
[25] The plaintiff has received substantial disclosure already with respect to the defendant corporations. Given the status of the plaintiffs, such disclosure is, in effect, mandated by the OBCA (at least in large part). As I understand the position of the parties, they agree that such disclosure is appropriate, at least on a reasonable basis.
[26] Therefore, effectively on consent, I am prepared to direct an order that the plaintiffs shall receive, on a quarterly basis, full information with respect to the operations, including financial operations and flight logs of the defendants, Breslau Holdings Inc., 2308383 Ontario Limited and Flightpath Charter Airways Inc. pending trial of this action.
Disposition of the Court
[27] For the reasons given above:
I dismiss the request of the plaintiffs for injunctive relief. There shall be no order restricting use or lease of the subject aircraft below market rates pending trial.
I dismiss the request of the plaintiffs for an order for a maintenance reserve for the aircraft known as the King Air pending trial.
On consent, an order is directed that the defendants shall produce, on a quarterly basis, all financial and other relevant information with respect to flight operations and flight logs including maintenance of the defendants, Breslau Holdings Inc., 2308383 Ontario Limited and Flightpath Charter Airways Inc., to the plaintiffs.
[28] I express the hope that the collegial intention of the parties when they began this commendable enterprise may result in a resolution of the differences that now separate them. Otherwise, a trial may now be necessary.
[29] If the parties are unable to agree on costs of this motion, they may address the court with brief written submissions (no more than 5 pages, double spaced) within 30 days of publication of this ruling.
R.D. Reilly J.
Date: February 18, 2016