Court File and Parties

CITATION: Sofina Foods Inc. v. The Co-operators Group Limited, 2017 ONSC 5774 COURT FILE NO.: CV-16-11344-00CL DATE: 20170928

ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST)

B E T W E E N:

SOFINA FOODS INC. Plaintiff

• and -

THE CO-OPERATORS GROUP LIMITED, PHIL BAUDIN, DANIEL BURNS, EMMET MCGRATH, ROWLAND KELLY, ALBERT DE BOER, JOHN LAMB, JIM LAVERICK, ANDRE PERRAS, GORDON YOUNG, DAVE ABEL, RICHARD LEMOING, WAYNE MCLEOD, DON ALTMAN, DENIS BOURDEAU, JOHANNE CHARBONNEAU, JANET GRANTHAM, ROGER HARROP, SHEENA LUCAS, TERRY OTTO, DON ROLFE, DAVE SITARAM, JACK WILKINSON, ALEXANDRA WILSON, PAUL GODIN, REJEAN LAFLAMME, CONNIE DOUCETTE, JOHN HARVIE, DENIS LAVERDIERE and JIM MCFARLANE Defendants

BEFORE: F.L. Myers J.

COUNSEL: J. Terry and L. Guest, counsel for the Plaintiff R. Harrison and J.L. McAleer, counsel for Defendants

HEARD: September 18, 2017

ENDORSEMENT (TRANSCRIBED)

[1] The plaintiff confirms that it seeks solely re-admission as a member of The Co-operators. Mr. Latifi was clear on cross-examination and counsel confirmed this in open court today. No damages are sought for example. The breadth of the oppression remedy is relied upon by plaintiff only to support re-admission and whatever conditions might seem fit or just to the court to facilitate re-admission.

[2] But the plaintiff cannot be a member of Co-operators. It is not a co-operative. Neither was it a member of The Co-operators before or after April 14, 2011. Section 3.5.2 (b) of The Co-operator’s By-laws cannot be met by the plaintiff.

[3] The plaintiff is a corporate successor to Lilydale and Lilydale was a member. But Lilydale no longer exists as a corporate entity. The plaintiff is the result of an amalgamation between Mr. Latifi’s corporate empire and the Lilydale entity that is the subject of the alleged oppression.

[4] Counsel argues that as successor to Lilydale, the plaintiff owns Lilydale’s rights including its oppression cause of action. That is correct. But, the plaintiff seeks relief that is not available to it. There is no hint of evidence that Mr. Latifi runs the plaintiff in accordance with co-operative principles. Nor is he expected to do so. Even if plaintiff is correct that its Lilydale division is sufficiently run as a co-operative so as to qualify Lilydale for re-admission, Lilydale is not the plaintiff. The plaintiff is. The plaintiff cannot and does not try to meet the membership criteria of The Co-operators. Rather it pleads in para. 5 of its Reply that if required to obtain relief, it can re-organize “in a manner acceptable to plaintiff to accommodate the remedy”.

[5] Mr. Latifi testifies that the amalgamation was for tax or administrative reasons and can be readily reversed. It was done voluntarily by the plaintiff in 2015 on the assumption that it would not affect its causes of action that accrued by or in 2014.

[6] I asked counsel what would happen if the court ruled that a re-installation of Lilydale required the fulfillment of conditions and the plaintiff determined that the “manner” required was not “acceptable” to it. He submitted that in that case “that’s Sofina’s problem”. In other words, the litigation brought by Sofina is conditional or at least the re-admission remedy that it seeks is conditional on it liking the terms of re-admission. If, hypothetically, the tax cost of de-amalgamating exceeds the benefits of re-admission, the plaintiff reserves the right to decline. The litigation and its concomitant cost, expenses, and disruption would be for naught.

[7] Litigation is not a dry run. A plaintiff does not get to try on its claim and then politely decline. The plaintiff has sued a major business and 29 real people who all suffer jeopardy and the imposition of the onerous and stressful requirements of the Rules of Civil Procedure. The plaintiff points to no law allowing a plaintiff to assert a conditional claim to a remedy. It currently does not meet the terms of the by-law under which it seeks re-admission. Had it done this before being ousted, the plaintiff would have created an independent ground for its ouster.

[8] The plaintiff’s argument that it has standing to sue is no answer. The plaintiff does have status to advance Lilydale’s causes of action. But it has chosen to seek a remedy that cannot be open to it. This is a motion for summary judgment. On this narrow issue, there are no facts in dispute. A trial will add nothing. I am satisfied that I can find the relevant facts and apply the law in a fair and just way on this motion. The record is sufficient and no further fact-finding is required.

[9] In my view, there is no serious issue requiring a trial on the oppression relief sought and pleaded by the plaintiff. Even with the breadth of remedial discretion open to the court, the plaintiff cannot be a member of The Co-operators and its offer to consider a ruling that sets conditions for Lilydale to be sufficiently reconstituted to allow re-admission is confirmation that the plaintiff cannot obtain the relief that it seeks. Moreover, the court cannot or will not realistically on the proven facts force The Co-operators to allow a major private concern into its membership. Given that Sofina voluntarily amalgamated after knowing of Lilydale’s cause of action, coupled with Mr. Latifi and Mr. Wien’s evidence that Sofina did not expect to buy Lilydale’s “seat” in Co-operators at the outset in 2010, means it cannot be fit to somehow try to foist a by-law amendment or some other outcome on Co-operators to suit the plaintiff’s current convenience. A trial is not required for that determination. The plaintiff is the author of its own disability for the sole remedy it seeks.

[10] This issue is a neat and narrow one on which the entire case turns. By deciding this issue, the action is fully resolved without further delay, expense, or distress. A summary process is most appropriate here where there is a self-contained gating issue with no facts in dispute.

[11] Action dismissed. I note as well that given the remedy for re-instatement to which plaintiff limited its claim, it was an abuse of process for it to name the personal defendants who are current or former board members. At best, it named them to obtain discovery. At worst, it did so to bully them into pushing Co-operators to concede. In either case, the personal defendants are not proper parties for the relief sought and they should not have been named as parties.

[12] Costs should follow the event. The defendants were forced to do far more work than plaintiff on production. The motion was brought on all issues. It could have been limited to just narrow, gating issues, such as the corporate form of the plaintiff and the propriety of directors. I did not rule on the merits of the oppression and cannot find that moving summarily on those issues would have necessarily succeeded. Moreover, the defendants’ partial indemnity rates greatly exceed the grid. Mr. Harrison could argue for some leeway on his rates. Ms. McAleer is experienced but not beyond the grid. Considering the factors in Rule 57 and the amount plaintiff ought reasonably believed it would have to pay if unsuccessful, in my view it is fair and reasonable for plaintiff to pay the defendants’ jointly and severally costs of $300,000 all in forthwith.

F.L. Myers J.

Date: September 28, 2017