Court File and Parties

CITATION: Ben Medical Pharmacy Inc. v. 2458816 Ontario Limited, 2017 ONSC 6129

COURT FILE NO.: CV-17-573980

DATE: 20171016

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Ben Medical Pharmacy Inc., Hany Bouls and Aziz Yousef, Plaintiffs

AND:

2458816 Ontario Limited, Dr. Romeo Tan Medical Clinic Inc., Romeo Banzon Tan, Zorayda Duenas Cambare, also known as Zorayda Tan and Michael A. McKee, Defendants

BEFORE: J. E. Ferguson, J.

COUNSEL: David Brooker, for the Plaintiffs Michael A. McKee, for the Defendants

HEARD: October 6, 2017

ENDORSEMENT

[1] The plaintiffs are seeking an order allowing them to sell a property for which title is registered in the name of the defendant 2458816 Ontario Limited (“245”). One half of the shares of 245 are each owned by the defendant Romeo Banzon Tan (“Tan”) with the other half owned by the plaintiffs Hany Bouls (“Bouls”) and Aziz Yousef (“Yousef”). Tan is a medical doctor and Bouls and Yousef are pharmacists.

[2] The property serves as a joint medical clinic and pharmacy, with the clinic being run under the corporate defendant Dr. Romeo Tan Medical Clinic Inc. (“Tan Medical”) and the pharmacy being run by the corporate plaintiff Ben Medical Pharmacy Inc. (“Ben Pharmacy”).

[3] A breakdown of the relationship has occurred. There are factual disputes in the original affidavits as to what happened. At one point the defendants hired a security guard effectively preventing the plaintiffs from accessing the medical portion of the clinic. I need not decide what happened in order to make this order.

[4] The plaintiffs brought an urgent motion originally returnable on May 2, 2017 seeking an order allowing them access to the clinic portion of the property; and that 245 list the property for sale; with Bouls and Yousef having full control over the sale process. In his responding affidavit sworn on May 2, 2017 Tan stated that the unanimous shareholder agreement (“USA”) between the parties (Article 19) contained a mandatory arbitration agreement clause.

[5] On the return date of the motion the parties, through counsel, entered into a partial resolution whereby access to the clinic would no longer be prevented and they agreed to work towards a resolution of the impasse with the motion being adjourned until June 20, 2017.

[6] On May 25, 2017, Mr. Brooker on behalf of the plaintiffs put forward an offer to resolve all issues to Mr. McKee to which there was no response from the defendants. By June 8, 2017 there was no response and Mr. Brooker told Mr. McKee by an email that he would proceed on June 20, 2017 with the original motion.

[7] In that email sent by Mr. Brooker to Mr. McKee on June 8, 2017 Mr. Brooker confirmed that a notice had been received from hydro indicating that as of June 12, 2017 if payment had not been made at the premises, it would be disconnected. Mr. Brooker asked that Tan deposit the requested amount to 245 so it could be paid. The defendants have a pattern of not making timely payments of their share of the utilities and only do so when termination is imminent.

[8] On June 20, 2017 the parties entered into an Agreement in Principle, which was more detailed than the previous agreement. It includes the following:

a. that Bouls and Yousef agree to sell the pharmacy business and that all decisions with respect to accepting any offer to purchase, it will be theirs alone;

b. that Tan will agree to abide by Bouls’ and Yousef’s interests in 245 at the price of $20,000.00 for each of them, plus assumption of their personal indebtedness to 245’s bank;

c. that if Tan could not provide approval from 245’s bank for him to purchase Bouls’ and Yousef’s shares and take over their indebtedness, then they may, in turn, sell their shares to the purchaser of the pharmacy business;

d. that each party shall provide information and consents to obtain information from third parties as required to facilitate the transactions set out; and

e. that time shall be of the essence.

[9] After signing that agreement Bouls and Yousef obtained a purchaser for the assets of the pharmacy with a deposit being received. That potential purchaser was interested in buying their shares in 245, in the event that Tan was unable or unwilling to do so.

[10] A corporate solicitor with Mr. Brooker’s office (Mr. Israel) was to act for the plaintiff’s on the contractual side to close the pharmacy asset purchase and if required to draft a share purchase agreement for the plaintiffs’ shares in 245.

[11] At paragraphs 20-28 of Bouls’ second affidavit the further delay caused by the defendants is set out. This evidence confirms the extraordinary delay on Mr. McKee’s part to deal with this matter, supporting Mr. Brooker’s submission that there has been intentional delay on the part of the defendants. I agree.

[12] In the meantime, this deal with the potential buyer of the assets of the pharmacy and the shares of 245 has “died”. There is no evidence before the court that it can be revived.

[13] As well, there continued to be unpaid property taxes and hydro bills on the property for Tan’s half of the bill.

[14] I agree with the plaintiffs that each time the court date was imminent the defendants entered into negotiations to resolve matters and then ignored all communications to carry out those negotiations. In reality the defendants have purposely attempted to further delay the matter.

[15] The plaintiffs now seek the original relief of having the property sold given the fact that Tan has refused to pay his portion of the expenses associated with it and his continuation of his attempts to interfere with its pharmacy business. Tan’s refusal to pay his share of utility expenses and property taxes has resulted in collection proceedings by the city and termination notices being issued.

[16] The only affidavit evidence from Tan is the one sworn on May 2, 2017. Bouls provided affidavit evidence sworn May 1, 2017 and September 22, 2017. The only affidavit evidence therefore before the court since the original motion date of May 2, 2017 is that of Bouls. As there is no evidence contradicting Bouls’ evidence, I accept his evidence. His affidavit evidence in the section titled “Actions of the Party after the First Motion” is set out in paras 7-13. It confirms the delay caused solely by the defendants, which I find to be deliberate delay. He provides at Exhibit E Mr. McKee’s written confirmation that all offers are without prejudice and are not to be considered to have been made pursuant to the USA.

[17] Ben Pharmacy continues to lose money. Bouls’ affidavit at paragraphs 29 and 30 sets out his information that Tan has advised patients of the clinic that they should not attend at the pharmacy whether to renew or fill prescriptions. This evidence is not disputed. The property taxes are in arrears and Tan has refused to pay his portion.

[18] The defendants have not acted in good faith since this matter was first before the court as they agreed to do, and they are responsible for the delay of over four months.

[19] I am not going to accommodate what would be even greater delay by denying the plaintiffs’ recourse to court and force them to go to mandatory arbitration. The court has inherent jurisdiction over such matters and I am exercising it in granting injunctive relief. Further, it would be neither equitable nor just to deny the plaintiffs access to the courts under these circumstances. The defendants entered into agreements in principal that recognized that the parties could no longer operate together. The defendants have not acted in good faith in attempting to resolve the dispute pursuant to those agreements.

[20] I was provided with no responding materials from the defendants’ dealing with the plaintiffs’ request for this injunction, other than to invoke the arbitration clause. The plaintiffs have met the test for an injunction and have shown that there is a serious question to be tried; that the plaintiffs have established that, without an injunction, irreparable harm will occur; and that the balance of convenience favours the granting of the injunction.

[21] Alternatively, pursuant to the provisions of the OBCA, an officer, director or shareholder of a corporation may apply to the court, and where the court is satisfied that the business or affairs of the corporation have been or are threatened to be carried on or conducted, or that the powers of directors of the corporation have been or are threatened to be exercised, in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, the applicant, it may make order it thinks fit. In granting relief under the oppression remedy, the court should consider equitable principles as opposed to a strict adherence to legal rights.

[22] The plaintiffs have demonstrated that they require the assistance of the oppression remedy and the courts’ intervention to allow them to sell the property. The only way in which the plaintiffs can obtain interim relief and stop their flow of damages, is to have the property sold to a third party who would, in turn, manage and operate it in a reasonable business manner as they, as tenants, would expect.

[23] I agree that the evidence establishes that the defendants cannot be trusted to have any type of input or control in the sale of the property, as they have not acted at all appropriately following the agreements that were entered into, particularly the second agreement.

[24] By making this order, I am in no way inhibiting the parties’ rights to invoke the sale of shares pursuant to the USA.

[25] The relief sought by the plaintiffs as set out in their factum dated October 4, 2017 at paragraph 55 (a) to (i) is granted. Counsel can send the order to me for signature (to avoid any confusion as to what relief I have granted).

[26] If the parties cannot agree on costs, the plaintiffs may provide brief written submissions within 14 days and the defendants within a further 7 days by email to my assistant at Annette.Elek@ontario.ca .

J. E. Ferguson, J.

Date: October 16, 2017