Court File and Parties
CITATION: 2293611 Ontario Inc. v. JSegal Holdings Limited, 2016 ONSC 7577
COURT FILE NO.: CV-16-551453
DATE: 20161220
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 2293611 Ontario Inc. and Niv Slama, Claimants (Appellants on the Appeal)
AND:
JSegal Holdings Limited and Jonathan Segal, Respondents (Respondents on the Appeal)
BEFORE: Madam Justice Kristjanson
COUNSEL: Melvyn L. Solmon and Rajiv Joshi, for the Claimants (Appellants on Appeal)
Jonathan Lisus, Andrew Winton and Niklas Holmberg, Respondents (Respondents on Appeal)
HEARD: September 22, 2016
ENDORSEMENT
[1] This is an appeal from an arbitration decision which dismissed a claim for rectification of a unanimous shareholders’ agreement. Niv Slama, through his holding company2293611 Ontario Inc., or “229” signed a unanimous shareholder’s agreement with Jonathan Segal, through his holding company JSegal Holdings, dated September 16, 2011. The agreement relates to AEB Liberty Village Inc., a company operating an Aroma Espresso Bar franchise in the Liberty Village neighborhood in Toronto.
[2] 229 was a 50% shareholder in AEB Liberty Village; Niv and his wife, Anat each own 50% of the shares of 229. JSegal Holdings also owns 50% of the shares in AEB Liberty Village; Jonathan owns the shares in JSegal Holdings. The arbitration concerned Article VII of the shareholders’ agreement, entitled “Right of First Refusal.”
[3] Niv/229 made an offer under Article VII of the Agreement to sell his entire 50% interest in AEB Liberty Village. Jonathan/JSegal Holdings took up only five of the 50 shares which were offered. Niv/229 then sought an arbitration seeking to rectify the shareholder’s agreement to remove certain words in section 7 that allowed a partial take-up of shares, so that a tender of shares would require Jonathan/JSegal Holdings to either buy all of the shares or none of them. Essentially, Niv/229 argue rectification on the grounds of common or mutual error.
[4] After a ten day arbitration before a jointly selected arbitrator, the arbitrator dismissed a claim for rectification of a unanimous shareholders agreement. The arbitration agreement provides for an appeal on a question of law. I dismiss the appeal.
The Arbitration
[5] The parties mutually selected Joel Richler, an experienced commercial litigator, as the arbitrator. The arbitration took eight days. Mr. Richler heard the evidence of ten witnesses, including three experts, and reviewed 120 documents. He received written submissions and heard oral argument. He found as a fact that there was no prior common intention which the parties failed to carry into the written agreement, and declined to direct rectification of Article 7.1 in the unanimous shareholders’ agreement.
[6] Mr. Richler’s decision is 47 single spaced pages in length. It thoroughly set outs the legal issues, makes findings of facts, and applies the law to the facts. I set out the key facts found by the arbitrator below.
[7] Jonathan and Niv jointly retained a lawyer, Laila Parvez, to draft the shareholder’s agreement. In the first meeting with Ms. Parvez on June 14, 2011, Niv, Anat and Jonathan discussed options for the disposal of shares, including a shot-gun option, a call option, a put option and a right of first refusal. The parties initially agreed to use a right of first refusal (“ROFR”) if they wanted to sell their shares.
[8] Ms. Parvez delivered the first draft of the shareholders’ agreement on August 9, 2011. Article VII was entitled “Right of First Refusal”. It provided that where a selling shareholder wished to sell its shares pursuant to an offer from a third party, it was required to give five days’ notice, giving the non-selling shareholder the right to purchase the offered shares at the same price and on the same conditions as the third party offer. The arbitrator found that the original draft made no provision for a partial take-up of shares by the non-selling shareholder, although the draft right of first refusal included a note to draft by Ms. Parvez which provided:
[NTD: Consider whether the Right of First Refusal should apply only when a Shareholder wishes to sell ALL of its shares or whether it should apply even if the Shareholder only wishes to sell SOME of its shares]
[9] On August 16th, Ms. Parvez discussed the draft shareholders’ agreement with Jonathan and his father Dori. Dori suggested that the right of first refusal be replaced by a right of first offer (“ROFO”), since it enabled the exit provision to be triggered without the selling shareholder first having to secure a third party buyer. Ms. Parvez testified that the change made the exit provision “more commercially expedient and useful as a tool for either shareholder to exit the corporation.”
[10] On August 16th, Ms. Parvez e-mailed Dori, Jonathan, Niv and his wife Anat to summarize issues. The wording is important, since at the arbitration, Niv argued that the contract should be rectified to incorporate the August 16th concept of a right of first offer. Ms. Parvez wrote:
Article 7. Amend the Right of First Refusal to a Right of First Offer. Essentially this means if either shareholder wanted to sell its shares in the corporation, rather than finding a third party buyer first and arranging the terms and conditions of the sale BEFORE offering the same deal to the other shareholder, the shareholder who wants to sell would FIRST offer its shares to the other shareholder at a fixed price. The other shareholder would then have the right to buy the selling shareholder’s shares at the offered price. If the other shareholder does not accept the offer, then the selling shareholder shall be free to sell its shares to any third party on terms and conditions no more favourable (including price) than those offered to the other shareholders. [Emphasis added by the arbitrator, para. 58]
[11] The arbitrator found that this e-mail did not mention or create a right of partial take-up of shares. However, he found as a fact that the words used by Ms. Parvez, taken together with the context in which the e-mail was written, compels a finding that the e-mail was an explanation of what a right of first offer is (as argued by Jonathan) and not a proposed contractual term (as argued by Niv). The arbitrator found support for this in the testimony of Dori and Ms. Parvez. He specifically accepted Ms. Parvez’ evidence that “she did not intend to include all of the terms of a right of first offer” in this e-mail, and she intended to include a fully functional clause in the next draft. He accepted the evidence of Niv and Anat that they did not think the terms of the right of first offer were settled in the August 16th e-mail (see paras. 62-67 and 163). These are findings of fact which are not subject to appeal.
[12] On September 12, 2011, Ms. Parvez e-mailed a substantially amended black-lined draft of the shareholders’ agreement including changes to Article 7 to provide a right of first offer. Ms. Parvez indicated in her cover e-mail that changes she made were based upon her discussions with Anat. The clean September 12th version, which is contained in the final signed agreement, provided:
7.1 Right of First Offer
(a) If any one or more Shareholders (the “Selling Shareholder”) wishes to sell its Shares to any person that is not a Permitted Transferee, the Selling Shareholder must first offer its Shares to the other Shareholders (the “Offer”). The Offer must be for all but not less than all of the Shares owned by the Selling Shareholder (the “Sale Shares”). The Offer must be made by notice in writing and specify the consideration per Sale Share. The Offer is not revocable except with the unanimous consent of the Shareholders.
(b) Each non-Selling Shareholder may accept the Offer for its Proportionate Percentage of the Sale Shares or any other number of Sale Shares. This right may be exercised by delivering an irrevocable and unconditional acceptance notice to the Selling Shareholder (the “Offer Acceptance Notice”) within fifteen (15) days from the date the Offer is delivered (the “Offer Period”). The Offer Acceptance Notice must specify whether the Shareholder is accepting the Offer for its Proportionate Interest, and if not, the maximum number of Sale Shares the Shareholder is prepared to acquire.
(c) If a Shareholder fails to deliver an Offer Acceptance Notice within the Offer Period, then any right of such Shareholder to acquire any of the Sale Shares is extinguished. If all fo [sic] the Shareholders fail to deliver an Offer Acceptance Notice for all of the Share Shares, the Selling Shareholder may sell or transfer all Sale Shares which were not the subject of an Offer Acceptance Notice to a third party on terms no more favourable than those contained in the Offer for a period of one hundred and twenty (120) days after the expiry of the Offer Period. If the sale is not completed within such one hundred and twenty day (120) period, the provisions of this Section 7.1 shall apply again to any proposed transfer of the Sale Shares.
(d) Notwithstanding the foregoing, no disposition of the Sale Shares to a third party shall be valid or effective until the acquirer of the Sale Shares shall have agreed to be bound by all of the provisions hereof as if he/she/it was an original signatory hereto pursuant to an agreement in writing, in the form and substance attached hereto as Schedule “A”.
[13] In his decision, the arbitrator spent seven pages reviewing the evidence and making findings of fact and dealing with credibility determinations regarding the drafting of the September 12th version of the right of first offer contained in section 7.1 (paras. 71-95). It was not disputed that there was a September 12th conversation between Ms. Parvez and Anat. The arbitrator found that after the conversation with Anat, Ms. Parvez revised the shareholders’ agreement. The arbitrator specifically found as a fact that: “Having given this particular issue a great deal of consideration, I find that on a balance of probabilities, Anat did on September 12th instruct Ms. Parvez to include the partial pick-up language in section 7.1 of the draft agreement and that it was on the basis of that instruction that section 7.1 was written as it was.” (para. 81). The arbitrator carefully reviewed all the evidence on this point. He specifically found that Ms. Parvez was truthful in her testimony.
[14] There were no further comments by the parties on Article VII or section 7.1, and they executed the agreement which contained the version of section 7.1 as contained in the September 12, 2011 e-mail.
[15] As tensions emerged, Niv and Anat decided to sell the shares AEB Liberty Village held by 229. Niv obtained an offer from a third party buyer for all 50 shares owned by Niv/229, at a value of $8,500 per share, for a purchase price of $425,000. He gave notice to Jonathan on May 1, 2015. On May 16, 2015, Jonathan agreed to purchase only 5 of the offered shares at a price of $8,500 per share, for the sum of $42,500.
[16] The arbitrator considered subsequent conduct on the rectification claim to determine whether a prior agreement or continuing mutual intention existed (paras. 97-141). He made findings of fact that there was no allegation of rectification or prior agreement raised by Niv and Anat with their own lawyers, or communicated to the other side through the lawyers, in the period from May 15 until October 26, 2015. He accepted that the “failures on the part of Niv and Anat to tell their lawyers about the alleged prior inconsistent agreement after May 15, 2015 supports my conclusion that there was no agreement.”
[17] The arbitrator considered the evidence of one expert witness called by Niv/229 and two expert witnesses called by Jonathan/JSegal Holdings. He accepted the evidence of the two experts called by Jonathan/JSegal Holdings, that section 7.1 is neither commercially absurd nor unreasonable in providing for a right of partial pick-up. He also noted that Niv/229’s expert substantially agreed, “when he opined that parties could, in fact, agree to a clause with a right of partial pick-up, depending on their objectives and the circumstances of the transaction.”
[18] The arbitrator found that Niv/229 had not proved the requisite prior agreement or continuing common intention to include a right of first refusal that would have required a party to sell all, rather than a part, of its shares, holding that “an objective observer would not have come to that conclusion.”
[19] He found as a fact that Anat instructed Ms. Parvez to include the partial pick-up language in section 7.1, which he found would negate any prior mutual agreement that would have provided otherwise. He also found that Jonathan’s evidence that he read the August 16th black-lined version of section 7.1 constituted a further ground for finding that there was no mutual intention that there would be no right of partial pick-up.
[20] The arbitrator’s decision, as noted, was based on significant oral and documentary evidence; all ten witnesses were cross-examined. The arbitrator made findings of fact based on his assessments of credibility and review of the documentary evidence. He found, on a balance of probabilities that the parties did not enter into a different agreement with respect to a partial pick-up of shares on the right of first offer.
[21] The arbitrator relied on Justice D. Brown’s decision in Kanji v. Canada (Attorney General), 2013 ONSC 781, [2013] O.J. No. 504 with respect to the standard of proof in rectification cases. At para. 17, Justice D. Brown approved of the following statement from Thomas Bates & Son Ltd. V. Wyndham (Lingerie) Ltd., [1981] 1 All E.R. 1077 (C.A.) at p. 1090, that when a party seeks to contradict a written instrument:
…convincing proof is required in order to counteract the cogent evidence of the parties’ intention displayed by the instrument itself. It is not, I think, the standard of proof which is high, so differing from the normal civil standard, but the evidential requirement needed to contradict the inherent probability that the written instrument truly represents the parties’ intention because it is a document signed by the parties.
[22] The arbitrator applied this standard to the evidence before him. He found that Niv/229 had failed to adduce sufficient evidence to contradict the written intention of the parties in the unanimous shareholders’ agreement.
[23] The parties agree that the arbitrator properly set out the law of rectification based on common intention.
Issues
[24] There is only one question for the Court to consider on this appeal: did the arbitrator commit an error of law? Specific issues raised by Niv/229 with respect to the overriding question are:
Did palpable and overriding errors of fact regarding the finding of common intention raise issues of law on this appeal?
Did the arbitrator err in law in failing to find that the intention of the mutually retained lawyer constituted the intention of the parties?
Did the arbitrator err in law by failing to apply the proper standard of review to the evidence on a claim of rectification, namely the standard of a reasonable objective observer?
Did the arbitrator err in law in making findings on the basis of no evidence?, and
Did the arbitrator err in law in finding that to support a claim for rectification the proponent is required to provide the precise words of the clause agreed to in principle but incorrectly recorded?
Question of Law
[25] The parties agreed in the arbitration agreement that appeals are limited to questions of law only. As a result, the Court does not have the jurisdiction to consider questions of fact or mixed fact and law.
[26] In Housen v Nikolaisen, 2002 SCC 33, at paras. 15-18 the Supreme Court of Canada explained the purposes of deferring to a trial judge on questions of fact: to limit the number, length and cost of appeals, to promote the autonomy and integrity of trial proceedings, and to recognize the trial judge’s extensive exposure to the evidence and familiarity with the case as a whole. Similar deference is required for inferences from facts (para. 25). These considerations apply equally to an arbitrator’s findings of fact where the arbitration agreement limits appeals to questions of law.
[27] The purpose of the distinction between questions of law and those of mixed fact and law for the purposes of appeal was explained recently by the Supreme Court of Canada in Sattva Capital Corp v Creston Moly, 2014 SCC 53 at para. 51, which also involved an appeal from an arbitrator’s award:
One central purpose of drawing a distinction between questions of law and those of mixed fact and law is to limit the intervention of appellate courts to cases where the results can be expected to have an impact beyond the parties to the particular dispute. It reflects the role of courts of appeal in ensuring the consistency of the law, rather than in providing a new forum for parties to continue their private litigation.
[28] Disputes over the interpretation of words in an alleged contract, or concerning the weight given to relevant considerations, are questions of fact.
[29] In Ledore Investments Ltd v Ellis-Don Construction, Justice Leach applied Sattva in a motion for leave to appeal pursuant to section 45(1) of the Arbitration Act. The threshold issue was whether the errors allegedly made by the arbitrator were errors of law or errors of mixed fact and law. Justice Leach summarized the following general principles from Sattva (para.21):
• Historically, the determination of legal rights and obligations of parties under a written contract was considered a question of law. However, that historical approach has now been abandoned in favour of recognition that contractual interpretation involves issues of mixed fact and law. It is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix.
• One central purpose of drawing a distinction between questions of law and those of mixed fact and law, (highlighted by provisions such as those restricting possible appeals from arbitration decisions to questions of law), is to limit the intervention of appellate courts to cases where the results can be expected to have an impact beyond the parties to the particular dispute. It reflects the role of courts of appeal in ensuring the consistency of the law, rather than providing a new forum for parties to continue their private litigation.
• Bearing in mind that central purpose, the key difference between “questions of law” and “questions of mixed fact and law” will be the degree of generality or “precedential value” involved.
• In that regard, it is not easy to say precisely where the line should be drawn between cases where a proposed appeal involves a dispute over a general proposition that might qualify as a principle of law, or a dispute over a very particular set of circumstances that is not apt to be of much interest to judges and lawyers in the future. However, as the level of generality of a challenged proposition becomes more narrow and particular, it inherently loses its precedential value, (e.g., of clarifying what the correct legal test is), and approaches what is really pure application, (e.g., of applying an established legal standard to a set of facts).
• The legal obligations arising from a particular contract are, in most cases, limited to the interest of the particular parties to that contract. Moreover, the goal of contractual interpretation, (to ascertain the objective intentions of the parties), is inherently fact specific. Determinations of contractual interpretation therefore generally will be treated as involving questions of mixed fact and law.
• In rare cases, it may be possible to identify an “extricable question of law” from within what was initially characterized as a question of mixed fact and law. For example, in the course of contractual interpretation, a legal error may have been made through “application of an incorrect principle”, “failure to consider a required element of a legal test”, and/or “failure to consider a relevant factor”.
• However, courts should be cautious in identifying extricable questions of law in disputes over contractual interpretation, bearing in mind the legislative intention to restrict such appeals, and the reality that the applicant for leave and its counsel will seek to frame any alleged errors as questions of law. Again, the circumstances in which a question of law can be extricated from the interpretation process will be rare. Where the legal principle is not “readily extricable”, then the matter should be treated as one of “mixed fact and law”, in respect of which an appeal from the arbitrator’s decision is not permitted.
Issue #1: Palpable and Overriding Errors of Fact
[30] In order to succeed, Niv/229 must demonstrate “extricable questions of law.” In their original factum, Niv/229 argued that the arbitrator made a number of palpable and overriding errors in determining that Article VII reflected the common intention of the parties. The arbitrator’s challenged findings were made on the evidence as a whole. The allegedly “palpable and overriding errors” of fact do not raise extricable questions of law. Given the terms of the arbitration agreement, this court has no jurisdiction to review errors of fact. As a result, I reject these grounds of appeal.
Issue #2: A Jointly-Retained Lawyer’s Intentions are those of the Parties
[31] The parties jointly retained Ms. Parvez. Niv/229 submit as a matter of law the common intention of a jointly retained lawyer is presumed to be the common intention of the clients for whom she acts, and it was an error of law for the arbitrator to fail to so find. They submit that if a jointly-retained lawyer drafts a document in error that does not reflect the common intention of the parties, that error is a mutual mistake because the lawyer represents both parties. Niv/229 submit that if Ms. Parvez’ intention was not to allow the non-selling shareholder to prevent the other shareholder from leaving AEB Liberty Village, and if Article VII permits the non-selling shareholder to do that, then it is drafted in error and is “a mutual mistake made by Ms. Parvez, acting on behalf of both clients.”
[32] Even if this were correct as a matter of law, the argument cannot succeed given the findings of fact made by the arbitrator. Mr. Solomon asked Ms. Parvez why she drafted a clause that “gave an incentive to the non-selling shareholder to keep the person who wanted to exit stuck in the company”; Ms. Parvez answered that she was “sure” that she would have done it based on client instructions: “I’m sure I drafted the clause the way I was instructed to do.” Thus, the lawyer did not have the “mutual intention” argued by Niv/229. She did not agree that she had made a mistake.
[33] In addition, the arbitrator accepted Ms. Parvez’ evidence that the clause could be beneficial to either shareholder depending on what side they were on when section 7.1 was exercised; it was fair as the non-selling shareholder would want to make sure that it did not end up with an unwanted partner; and Ms. Parvez agreed that while having a devalued minority interest “could be a problem”, she did not agree with the suggestion that a shareholder could “never exit this company.” Therefore, I do not find this to be an issue of law, since as a matter of fact, the lawyer did not have the intention argued by 229/Niv.
[34] Further, the arbitrator found as a fact that Niv and Anat were initially willing to be 40% minority shareholders, and Jonathan’s father Dori lent them the funds to become equal shareholders with Jonathan. He also found as a fact that in the Aromas franchise, it was not unusual for there to be minority shareholders.
Issue #3: Failure to Apply the Standard of a Reasonable Objective Observer
[35] Niv/229 submit that the arbitrator “erred in law by failing to apply the proper standard of review to the evidence on a claim of rectification, namely the standard of a reasonable objective observer, when reviewing the documentary evidence and comparing that to the oral evidence.” The appellants then use the “standard of a reasonable objective observer” to attack a number of findings of fact made by the arbitrator, in particular the evidence of Ms. Parvez.
[36] Whether the arbitrator applied the correct legal standard (“reasonable objective observer”) is a question of law. I find that he did apply the correct legal standard. The arbitrator recognized, as a legal standard, that “in ascertaining common intention, the enquiry is objective”, citing McLean v. McLean, 2013 ONCA, 118 O.R. (3d) (C.A.) at para. 60. He adopted the statement of Lord Denning in Frederick E. Rose (London) Ltd. v. William H. Pim Jnr & Co Ltd., [1953] 2 All E.R. 739 at 747:
Rectification is concerned with contracts and documents, not with intentions. In order to get rectification it is necessary to show that the parties were in complete agreement on the terms of their contract, but by an error wrote them down wrongly; and in this regard, in order to ascertain the terms of their contract, you do not look into the inner minds of the parties – into their intentions - any more than you do in the formation of any other contract. You look at their outward acts; i.e., what they said or wrote to one another in coming to their agreement, and then compare it with the document which they have signed. If you can predicate with certainty what their contract was, and that is, by a common mistake, wrongly expressed in the document, then you can rectify the document; but nothing less will suffice. (emphasis added)
[37] The arbitrator also approved of the following statement of Mustill J. in Etablissements Georges et Paul Levy v. Adderley Navigation Co Panama SA (The Olympic Pride), [1980] 2 Lloyd’s Rep 67 at 72:
The prior transaction may consist either of a concluded agreement or of a continuing common intention. In the latter event, the intention must have been objectively manifested. It is the words and acts of the parties demonstrating their intention, not the inward thoughts of the parties that matter. (emphasis added)
[38] Niv/229, however, argue that the arbitrator “erred in law by failing to apply the …standard of a reasonable objective observer, when reviewing the documentary evidence and comparing that to the oral evidence,” citing numerous alleged errors in the arbitrator’s assessment of the evidence. They argue that a “reasonable objective observer” would not make findings that were allegedly inconsistent with the documentary evidence, inconsistent in approach to individual witnesses, or based on a “guess”. They also alleged that the arbitrator erred in law in “failing to find, based on the standard of the reasonable objective observer”, that ten enumerated facts “were sufficient to prove that the Appellants were entitled to remedy of rectification.”
[39] Niv/229 are using the “reasonable objective observer” legal standard to essentially attack the findings of fact made by the arbitrator. The legal standard cannot be used as a back door to review of findings made on the evidence. How the arbitrator applied the legal standard to the facts is a question of mixed fact and law, not susceptible to review by this court. As stated by Iacobucci, J. in Canada (Director of Investigation & Research) v. Southam Inc., 1997 CanLII 385 (SCC), [1997] 1 S.C.R. 748 at para 35:
Briefly stated, questions of law are questions about what the correct legal test is; questions of fact are questions about what actually took place between the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal tests. A simple example will illustrate these concepts. In the law of tort, the question what “negligence” means is a question of law. The question whether the defendant did this or that is a question of fact. And, once it has been decided that the applicable standard is one of negligence, the question whether the defendant satisfied the appropriate standard of care is a question of mixed law and fact.
[40] I find that throughout his decision, the arbitrator both recognized and applied the appropriate standard of the reasonably objective observer, and the other issues raised are questions of mixed fact and law. Inferences made from facts are also questions of fact and not subject to appeal.
Issue #3: Findings of Fact Based on No Evidence
[41] Niv/229 submit that the arbitrator erred in law in finding facts based on speculation, or “no evidence”. The most significant challenge in this regard is to the Arbitrator’s finding that Anat gave Ms. Parvez instructions to include the partial pick-up language in section 7.1.
[42] It is an error of law to make a finding of fact for which there is no supporting evidence: Shulte v. The Queen, 1985 CanLII 20 (SCC), [1985] 2 S.C.R. 592 at p. 604. However, so long as there is some evidence capable of supporting the conclusion, the issue is not subject to review as a question of law. This court on appeal is not to weigh or evaluate the evidence, or the sufficiency of evidence which has some probative value: the only issue which may be reviewed on appeal is whether there is some evidence.
[43] In finding as a fact that Ms. Parvez was acting on instructions from Anat when she added the partial take-up language to the right of first offer, there was clearly evidence upon which the arbitrator could make that finding. I agree with the respondent’s submissions that there was evidence upon which the arbitrator could make this finding, including:
(1) Ms Parvez stated in her September 12th cover email that her changes to the first draft were based on her discussions with Anat;
(2) At the time, Anat raised no objection that the changes to the unanimous shareholders’ agreement, including the changes to Article 7 highlighted in the Sept. 12th black lined draft, were based on her discussion with Ms Parvez;
(3) The call between Anat and Ms Parvez was the only oral interaction relating to the terms of the agreement between Ms Parvez and her clients after the August 16th call with Dori and Jonathan;
(4) The same contextual factors that had initially led Anat to object to a shot-gun clause – namely, their limited financial resources – would apply to a ROFO that would require Anat and Niv to have to decide whether to buy all of Jonathan’s shares on 15 days’ notice;
(5) Although she does not deny that the call took place, Anat testified that she could not recall asking for the call and she could not recall the call itself. As a result, Anat’s testimony that she did not instruct Ms Parvez to insert the partial take-up language was not given weight, given that she could not recall any of the conversation;
(6) Ms. Parvez testified that: the changes to s. 7.1 were fundamental; the partial take-up provision was unusual and it is unlikely that the clause was a cut-and-paste from a precedent, given that it is an unusual clause ; she would not have inserted that language on her own accord; she would not likely have picked up the language from a template without first discussing it with her client; she was sure she added the language on instructions from one of her clients; it is safe to assume the instruction came from Anat; her intention in drafting the ROFO was to allow the non-seller to take up less than all of the shares on offer; the clause could be beneficial to either shareholder depending on what side they could be on when section 7.1 was exercised; and the clause was fair to both shareholders because the non-selling shareholder would want to make sure he did not end up with an unwanted partner; the typographical errors in the clause suggest it was manually added – Ms. Parvez consciously put pen to paper when she inserted the partial take-up language.
[44] As a result, I find there is clearly some evidence upon which the arbitrator could make his finding. Thus, there is no question of law subject to appeal relating to this finding.
[45] I have reviewed the other allegations raised by Niv/229 regarding reliance on “conjecture”, or findings of credibility made with respect to witnesses. I do not find that these raise questions of law which are subject to appeal; they are all findings of fact, inferences of fact, and assessments of credibility made upon consideration of the whole of the evidence. They are entitled to deference. There is some evidence upon which the Arbitrator could rely. They are not questions of law which are subject to appeal.
Issue # 4: Error in Law re Requirement to Prove Rectification
[46] Niv/229 submit that the arbitrator erred in law “in finding that to support a claim for rectification the proponent is required to provide the precise words of the clause agreed to in principle but incorrectly recorded.” The arbitrator did not require this. Rather, as he stated in para. 164 of his decision:
In this case, the precise aspect of the clause in issue is whether either shareholder could accept an offer for less than all of the shares on offer. In my view, all that Claimants have to prove is that there was a common continuing intention or a specific agreement that there would be no such right. Stated conversely, all Claimants have to prove is that that parties were in agreement that the non-selling shareholder would have to purchase all of the selling shareholder’s shares.
[47] The arbitrator correctly identified the key question – whether there was continuing common intention that the non-selling shareholder would have to purchase all the selling shareholder’s shares. He concluded, after reviewing all the evidence before him, that Niv/229 had not established that there was such agreement. I find no error of law in the arbitrator’s statement as to what had to be established.
Disposition
[48] I dismiss the appeal. The parties have agreed on costs. Niv/229 are to pay $30,000.00 in costs, inclusive of HST and disbursements, fixed and payable within thirty days.
Kristjanson J.
Date: December 20, 2016