COURT FILE NO.: CV-13-1432, CV-15-0103, and CV-15-2933-00
DATE: 2018-04-06
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
ALEKSANDRA MIELCZAREK
Applicant
– and –
HANNA EID, ISSA EID, LE ROYAL LUX INC., LE ROYAL RESTO & LOUNGE INC., OKO BLUE MEDITERRANEAN RESTAURANT AND LOUNGE INC., BARWA RASHID, AMEER SULAIMAN and DALIA SULAIMAN
Respondents
Application pursuant to section 248 of the Business Corporations Act
B E T W E E N:
Applicant/Defendant, Self-represented
Joseph Irving, for the Respondents/Plaintiff
DARIA SULAIMAN
Plaintiff
- and -
RENATA MIELCZAREK, ALEKSANDRA MIELCZAREK, and JAMES WILLIAM SINCLAIR
Defendants
HEARD: April 6, 2018, at Brampton, Ontario
Price J.
Reasons For Order
OVERVIEW
[1] Dalia Sulaiman and others operate a restaurant and banquet facility in the City of Mississauga (“the facility”). The facility is the subject of a proceeding in which Renata Mielczarek applies for remedies as an oppressed shareholder under the Ontario Business Corporations Act. Ms. Mielczarek alleges that her co-owners are trying to force her out of the business and deprive her of the value of her shares.
[2] The Court found that Ms. Mielczarek was an oppressed shareholder and ordered that her shares in the business be valued. The Respondents then formed a new corporation to operate the business, and sought to prevent the Valuator from having access to the banquet hall, which was the more valuable part of the facility. Ms. Mielczarek obtained an order from this Court seizing itself of the matter, appointing a Supervisor, and directing that the Supervisor value the entire business.
[3] The Supervisor submitted a report, and Ms. Mielczarek moved to expand his mandate to include an investigation of the cash transactions of the business. While judgment on that motion was reserved, Dalia Sulaiman sued Ms. Mielczarek for damages in the amount of $340,000 for improperly registering an interest in the assets of the business under the Personal Property Security Act. Ms. Mielczarek asserts that she made the registration in order to prevent the assets of the business from being sold pending a decision in the proceeding, that she removed the registration when requested to do so, and that it caused no loss to the Respondents. She characterizes the lawsuit as an effort to intimidate her from pursuing her remedies as an oppressed shareholder.
[4] Ms. Mielczarek moved to consolidate the action against her with her own applications for remedies as an oppressed shareholder. At the hearing of that motion, there was a brief exchange which Ms. Sulaiman’s lawyer precipitated by saying he was considering bringing a motion to close the restaurant that is part of the facility, to which the Court responded that it was thinking of closing the entire facility. Ms. Sulaiman now brings a motion for me to recuse myself on the ground of bias.
BACKGROUND FACTS
[5] Renata Mielczarek (“Ms. Mielczarek”), is a shareholder of Oko Blu Mediterranean Restaurant and Lounge Inc., operating a restaurant and banquet facility under the name Oko Blu (“Oko Blu #1). In 2015, she applied to the court for a remedy under section 248 of the Business Corporations Act as an oppressed shareholder. She alleged that two brothers, Hanna Eid and Issa Eid, had become 50% shareholders of Oko Blu #1, and had conspired with each other and with others to remove her from the business and deprive her of the value of her shares.
[6] Ms. Mielczarek assigned her cause of action to her daughter, Aleksandra Mielczarek, who has a better command of English and was better able to prosecute the action on her mother’s behalf.
[7] Ms. Sulaiman is one of several respondents in the two applications that Renata Mielczarek began in the Superior Court of Justice in Brampton, namely:
a) Court File No. CV-13-1432-00, against Oko Blu Mediterranean Restaurant and Lounge Inc., Hanna Eid and Issa Eid, as Respondents.
b) Court File No. CV-15-0103-00 against Hanna Eid, Issa Eid, Le Royal Lux Inc., Le Royal Resto & Lounge Inc., Oko Blu Meditterranean Restaurant and Lounge Inc., Barwa Rashid, and Ameer Sulaiman.
[8] On September 16, 2013, Justice Miller heard Ms. Mielczarek’s application. She found that Hanna Eid and Issa Eid had oppressed Ms. Mielczarek as a shareholder of Oko Blu #1. She ordered Ms. Mielczarek to retain a Chartered Business Valuator (CBV) to give an opinion as to the fair market value of her shares of Oko Blu #1, ordered the respondents to give the CBV access to the records of Oko Blu #1, pay for the costs of the CBV, and not interfere or obstruct the CBV, and that, upon receipt of the CBV”s opinion, the respondents were to purchase Ms. Mielczarek’s 50% interest in Oko Blu #1, failing which their shares were to be transferred to Ms. Mielczarek. She further ordered that the Shareholder Agreement of Oko Blu #1 be terminated and ordered the respondents to jointly and severally indemnify Ms. Meilczarek for certain liabilities, and granted leave to Ms. Mielczarek to return the matter to Court for a determination of an amount of compensation for the oppression.
[9] Ms. Mielczarek asserts that Hanna Eid and Issa Eid breached Justice Miller’s Order by refusing to provide information to the CBV, thereby preventing him from determining the value of Oko Blu #1, and conspired to transfer the business of Oko Blu #1 to new corporations, by the following means:
a) Dalia Sulaiman, the sister of the then fiancée of Hanna Eid, incorporated a new Ontario corporation, Oko Blue Lounge Inc. (“Oko Blu #2”), of which Dalia Sulaiman held 50% of the shares and Hanna Eid and Issa Eid each held 25% of the shares;
b) The respondents caused Oko Blu #1 to default in its obligations to its landlord, thereby causing the landlord to transfer Oko Blu #1’s lease to Oko Blu #2. Dalia Sulaiman’s father, Ammeer Sulaiman, furthered the conspiracy by paying $5,000 to the bailiff and $15,000 to the landlord’s representative to transfer the lease, previously held by Oko Blu #1, and the assets of Oko Blu #1, to Oko Blu #2.
c) The respondents then changed the corporate name of Oko Blu #2 to Le Royal Resto & Lounge Inc. (“Oko Blu #3”).
d) Dalia Sulaiman and Ameer Sulaiman’s friend, Barwa Rashid, then incorporated another corporation, Le Royal Lux Inc. (“Oko Blu #4”), which became the lessee for the banquet hall, being the more profitable part of the premises formerly operated by Oko Blu #1.
[10] At a hearing on December 4, 2014, the court seized itself of the matter appointed a Supervisor of the new corporation, ordered that no shares be issued by it and no assets be sold until the issues in the proceeding were determined and ordered that the issues of Hanna Eid’s and Issa Eid’s liability, and the ownership of the common shares of Oko Blu #3 be adjourned to a long motion to be heard on April 23, 2015, and established a timetable for that motion.
[11] The respondents appealed unsuccessfully from that Order to the Divisional Court.
[12] In the meantime, Dalia Sulaiman, one of the respondents in Ms. Mielczarek’s proceeding for remedies for oppression, sued Ms. Mielczarek in 2015 for $340,000 in damages arising from a registration under the Personal Property Security Act of what purported to be security interests in property owned by Ms. Mielczarek or corporations owned by her. Ms. Mielczarek asserts that she registered the security interests in order to be assured of receiving notice of Ms. Sulaiman’s attempts to sell assets in which she claims an interest, and that she removed the said registrations within two days of receiving a request by Ms. Sulaiman to do so.
[13] On August 10, 2017, Ms. Mielczarek moved successfully for an order consolidating Ms. Sulaiman’s action for damages with her own applications as an oppressed shareholder for remedies under the OBCA. In the course of Ms. Sulaiman’s arguments in opposition to that motion, the following exchange took place between Ms. Sulaiman’s lawyer, Mr. Irving, and the Court:
MR. IRVING: And I guess one further point of inquiry. I can indicate to you that my clients are suffering a degree of financial hardship. I am considering – and I am discussing the matter with my clients still, but I am considering bringing my motion in relation to your initial order that may permit them to close the restaurant facility, because it is costing them a large amount of money every single month.
THE COURT: I was thinking of making an order to wind up the whole operation.
MR. IRVING: That may be a bit premature at this point.
THE COURT: Well I am not sure. It is one of the remedies that is available under the Corporations Act.
MR. IRVING: Your Honour, I am not attempting to argue with you. I am pointing out things with a pit of purpose.
THE COURT: Yes?
MR. IRVING: In order to make that order you would necessarily have to hear the fullness of the application before you can make an order like that.
THE COURT: Well, if you are talking about making motions to discontinue a part of the operation, Mr. Irving…
MR. IRVING: Well, that would be a variation of your original Order.
THE COURT: Well, it may be a distinction without a difference.
MR. IRVING: No it is not to close down both parts, all of it; it is to close down one part of it, and it hasn’t been decided. I am just letting you know that that is something under consideration.
[14] On the basis of that exchange between their lawyer and the Court, Ms. Sulaiman and her co-respondents make a motion seeking that I recuse myself from the proceedings on the ground of bias.
THE ISSUE
[15] This Court must determine whether I should recuse myself on the ground of bias.
PARTIES’ POSITIONS
[16] The moving parties submit that that the exchange between the Court and their lawyer demonstrated a bias against them and that they would not receive a fair and impartial hearing if I preside.
[17] The responding parties submit that the moving parties have not demonstrated a basis for concluding that the brief exchange between Mr. Irving and the Court created a reasonable apprehension of bias.
ANALYSIS AND EVIDENCE
The test for bias
[18] The Supreme Court of Canada articulated the test for reasonable apprehension of bias which governs in Canadian courts in Committee for Justice and Liberty v. Canada (National Energy Board) (1978): “what would an informed person, viewing the matter realistically and practically, having thought the matter through, conclude.”[^1]
[19] Actual bias does not have to be established. It is a reasonable apprehension of bias, and not the existence of actual partiality, by which bias is judged.[^2] According to the Supreme Court, “It is the probability or the reasoned suspicion of biased appraisal and judgment, unintended though it may be, that defeats the adjudication at its threshold. Each party, acting reasonably, is entitled to a sustained confidence in the independence of mind of those who are to sit in judgment on him and his affairs…”[^3]
[20] Reasonable apprehension of bias must be based on serious grounds in light of the strong presumption of judicial impartiality.[^4] The presumption of impartiality carries considerable weight and the law should not carelessly evoke the possibility of bias in a judge, whose authority depends upon that presumption.[^5] As a result, the burden is on the party arguing for disqualification, which in this case are the Respondents, to establish that the circumstances justify a finding that I must disqualified myself.[^6]
[21] The burden of proof in establishing a reasonable apprehension of bias is on a balance of probabilities. There must be a real likelihood of probability of bias – mere suspicion is not enough.[^7] The Court of Appeal’s comments in Kelly v. Palazzo, (2008), are apt:
It takes much more than a demonstration of judicial impatience with counsel or even downright rudeness to dispel the strong presumption of impartiality. While litigants may not appreciate that presumption and thus may misread judicial conduct, lawyers are expected to appreciate that presumption and, where necessary, explain it to their clients. Baseless allegations of bias or of a reasonable apprehension of bias founded on a perceived slight or discourtesy that occurred during a trial, will not assist the client's cause and do a disservice to the administration of justice.[^8] [Emphasis added.]
[22] That said, a judge must give careful consideration to any claim the he should disqualify himself on account of bias or a reasonable apprehension of bias. In doing so, the judge must consider whether there is any air of reality to the bias claim. Justice Doherty, in Beard Winter LLP v. Shekdar, (2016), observed:
It is important that justice be administered impartially. A judge must give careful consideration to any claim that he should disqualify himself on account of bias or a reasonable apprehension of bias. In my view, a judge is best advised to remove himself if there is any air of reality to a bias claim. That said, judges do the administration of justice a disservice by simply yielding to entirely unreasonable and unsubstantiated recusal demands. Litigants are not entitled to pick their judge. They are not entitled to effectively eliminate judges randomly assigned to their case by raising specious partiality claims against those judges. To step aside in the face of a specious bias claim is to give credence to a most objectionable tactic. [^9] [Emphasis added]
Applying the legal test to the facts of the present case
[23] Each case of apprehension of bias must be decided on its facts, within its own set of relevant circumstances. As a result, other cases are of limited assistance, aside from setting out the principles that are generally applicable.[^10] That being said, two decisions have addressed the issue of whether a motion judge’s references to potential outcomes of the underlying action evince a reasonable apprehension of bias for the purpose of the motion itself.
[24] In Peoples Trust Company v. Atas, (2018), Corbett J. stated:
[271] Ms Atas was still represented by Mr Napal on the s.140 application, but Mr Napal advised that he would not be representing Ms Atas in respect to the defamation proceedings. Thus Ms Atas was self-represented during argument of the interim injunction motion. She made argument directly to me, rather than through counsel, and my questions were posed directly to her, rather than to counsel.
[272] It was in this context that I was trying to find out the defenses that Ms Atas proposed to assert in the Current Defamation Proceedings — and in particular whether Ms Atas acknowledged publishing the impugned publications. When I told her that she might not be permitted to litigate the defense of justification, she was both surprised and angry. As I indicated earlier in these reasons, I concluded that my question had "hit the proverbial nail on the head": Ms Atas had published the impugned publications, did so with a mind to provoking a lawsuit, and intended to use that lawsuit to litigate the issues she was raising in the underlying litigation.
[273] Is this entering the fray? I think not. A judge can be in a difficult situation on an interim injunction. The order, if made, can profoundly alter the course of things. The record is partial, the parties' preparation is preliminary, and the court's opportunity to immerse itself in the record is limited. Getting to the truth of what is really going on can be a challenge. I usually engage in a Socratic exchange with the parties during submissions (whether on motions or at the end of trial) because it advances my understanding of the case and helps to focus discussion on the matters I consider important and difficult. This is so whether the parties are represented by counsel or are self-represented. I treated Ms Atas in this exchange exactly as I would have treated any litigant in the same situation, and the results were useful for the truth-finding task I faced to reach my decision on the interim injunction.
II. The s.140 Application Does Not Decide the Underlying Litigation on the Merits
[276] This point is a bit tricky because of the nature of the s.140 application. As I indicate at the end of this judgment, my findings in this judgment about the underlying litigation do not constitute findings in the underlying litigation. They are made on the basis of the record on the s.140 application, which does not include a full record on the underlying litigation.
[278] On the usual principles on motions to vary or set aside after judgment, Ms Atas faces a heavy burden to persuade the court to interfere with the judgments in the Gomes/Kelly Mortgage Action and the two Peoples Trust Mortgage Actions. As a result of this judgment, Ms Atas faces the additional burden of satisfying the court that she should be permitted to proceed, given her history as a vexatious litigant. Ms Atas has taken discussion of these issues during argument to have amounted to a statement from me that the decision on this application, itself, estops the underlying litigation. It does not do so by operation of law. It may have that effect if Ms Atas cannot overcome the substantial burdens of persuasion she faces before she can move forward with her proposed motions.
[279] I understand the concern that Ms Atas has here, and the distinctions involved in applying issue estoppel can be fine. The process that will now unfold will give her an opportunity to make her case that claims that she still wishes to pursue should be permitted to proceed. And that process will see outstanding claims for professional fees and mortgage enforcement costs brought to a conclusion promptly, fairly, in a proportional process. None of this bespeaks bias or reasonable apprehension of bias, but rather the consequences of Ms Atas' vexatious behaviour and the court's obligation to wrestle with how to deal with it.[^11]
[25] In the same way that Corbett J., in People’s Trust Company, concludes that findings on the interlocutory/related proceeding about the underlying litigation do not constitute findings in the underlying litigation and do not disclose bias or a reasonable apprehension of bias, my comments during the motion dealing with consolidation of proceedings, about the remedy that could be considered if a motion was made to close part of the facility do not constitute findings in the underlying litigation, nor disclose pre-disposition such as would reasonably lead to an apprehension of bias.
[26] It is worth observing that I did not actually make any findings or conclusions – rather, my comment, in response to Mr. Irving’s assertion that he was considering bringing a motion to close down a part of the facility that is the subject of the proceeding, was that I was thinking of making an order to wind up the whole operation. That is, if a motion was made to close part of the facility, the court might consider making an order closing the entire operation.
[27] At the hearing of the present motion, the Court asked Mr. Irving why, in a motion to consolidate the proceedings, he had mentioned that he was considering making a motion to close part of the facility. The following exchange then occurred:
MR. IRVING: Yes, so I’ve set it out at paragraph 7 of the factum; I’ve also provided to you, and to the others, a full – the volume of the entire transcript. So it starts out with me indicating to you that I was discussing with my clients and considering a motion in relation to the initial order that might permit them to close the restaurant...
THE COURT: Right, and was that....
MR. IRVING: ...because of a large.... I’m sorry?
THE COURT: Why was that?
MR. IRVING: Oh, it – it’s in there – it’s because of the amount of money they were losing every month on the restaurant.
THE COURT: No, but why did you mention it to me during a hearing of a motion to consolidate?
MR. IRVING: Well, it was towards the end of the motion and matters hadn’t been fully concluded. I considered it to be just a way of letting you know that we might want to book some time with you.
THE COURT: Really?
MR. IRVING: Yes.
THE COURT: So did you ask to book some time that day?
MR. IRVING: Well, I didn’t get a chance to, Your Honour.
THE COURT: No?
MR. IRVING: No.
THE COURT: Why not?
MR. IRVING: Because you quickly stated I was thinking of making an order to wind up the whole operation.
THE COURT: Yes.
MR. IRVING: I then went on to advise you that I thought that would be a bit premature. You said “Well I’m not sure it’s one of the remedies if its available under the Corporations Act, which would be the Ontario Business Corporations Act and I then said “Your Honour, I’m not attempting to argue with you, I’m point out things with a bit of a purpose. In order to make that order you would necessarily have to hear the fullness of the application before you and make an order like that. And then you say, “Well if you’re talking about making motions through this continual part of the operation” and I say to you “Well that would be a variation of the original order.” You say “Well it may be a distinction without a difference.” And my response was, “No, it’s not to close down both parts, all of it, it’s to close down one part of it, and it hasn’t been decided. I’m just letting you know that that is something under consideration.”
THE COURT: Okay. And having made that point, why didn’t you then ask for a date for the motion?
MR. IRVING: Well, as I said when I was addressing the court that day, it hasn’t been fully decided to bring the motion.
THE COURT: Well if it had not been fully decided, why were you raising it with me on a motion to consolidate?
MR. IRVING: To simply let the court know that there’s something where we may be booking a date with you.
THE COURT: In the future?
MR. IRVING: Yes.
THE COURT: I see. All right. Go ahead.
[28] My response to Mr. Irving’s statement that he was “considering” bringing a new motion, which would have the effect of further proliferating proceedings that were already complex and costly, was calculated to invite reflection on his part as to the wisdom of bringing such a motion. The point was to remind Mr. Irving of the range of possible outcomes. Such interventions are part of a motion judge’s role, which is to adjudicate the particular motion, while placing it in the context of the overall litigation, and the objectives set out in Rule 1.04(1), of securing the just, most expeditious, and least expensive determination of every civil proceeding on its merits. They do not give rise to a reasonable apprehension of bias.
[29] In McIlvenna v. 1887401 Ontario Ltd., (2015), van Rensburg J.A., speaking for the Court of Appeal, stated:
[9] The appellants have not met the high threshold to establish bias, which requires that "an informed person viewing the matter realistically and practically — and having thought the matter through — [would] conclude... that it is more likely than not that [the decision-maker], whether consciously or unconsciously, would not decide fairly": Committee for Justice & Liberty v. Canada (National Energy Board)(1976), 1976 2 (SCC), [1978] 1 S.C.R. 369 (S.C.C.), at pp. 394-95; see also R. v. S. (R.D.), 1997 324 (SCC), [1997] 3 S.C.R. 484 (S.C.C.), at para. 31.
[10] The transcript of the hearing discloses that the motion judge took an active role in exploring Mr. McIlvenna's arguments. References to his own allergy to smoke and to the odour of marijuana which he described as "noxious" do not mean that he prejudged the question of whether the amended statement of claim disclosed a reasonable cause of action. By making these references, the motion judge was pointing out that in their place of business the respondents would have to be concerned with balancing Mr. McIlvenna's rights with the rights of other persons such as himself. The motion judge recognized that the issue was not to determine the outer limits of the appellants' claim to be able to smoke marijuana "anywhere and at any time" (a position that Mr. McIlvenna at times advanced in argument), but whether the allegations in the amended statement of claim respecting the appellants' treatment, on the evening in question, disclosed a cause of action in law.
[11] The motion judge's frequent interruptions of Mr. McIlvenna's argument reflected his attempts to exercise control over the court proceedings, including trying to keep the arguments focused and on point. While several such interruptions may well have been unnecessary, Mr. McIlvenna had the opportunity to advance his arguments and to respond to the various concerns expressed by the motion judge. Contrary to the appellants' assertion, the motion judge's conduct, in all the circumstances, did not demonstrate bias.[^12] [Emphasis added]
[30] Taking an active role in exploring arguments and attempting to exercise control over court proceedings, including trying to keep arguments focused and on point, does not demonstrate bias. My comment that I was “thinking of making an order to wind up the whole operation” was calculated to explore Mr. Irving’s musings over a motion that was not before the Court, and, alluded to the ramifications of such a motion. While it may reflect the Court’s impatience with Mr. Irving’s statement, as the Court of Appeal noted in Kelly v. Palazzo, (2008), it takes much more than a demonstration of judicial impatience with counsel to dispel the presumption of impartiality. The comment was not likely to cause an informed person, viewing the matter realistically and practically, and having thought the matter through, to conclude that the Court had pre-determined the issues.
[31] While the Respondents may misread a comment from the Bench, lawyers in Mr. Irving’s position are expected to appreciate the presumption of impartiality and, where necessary, explain it to their clients. Baseless allegations of bias, or of a reasonable apprehension of bias founded on an expression of judicial impatience during the hearing of a motion, in response to counsel’s musing that he is “considering” bringing another motion, do not assist the clients' cause, and do nothing to hasten the Court’s consideration of the motions that are before it. As the Court of Appeal noted in Kelly, they do a disservice to the administration of justice.
CONCLUSION AND ORDER
[32] For the foregoing reasons, it is ordered that:
The Respondents’ motion is dismissed.
The Respondents shall pay the Applicant’s costs of the motion, on a partial indemnity scale, fixed in the amount of $1,500.00, inclusive of fees, disbursements, and HST, and payable forthwith.
Price J.
Released: April 6, 2018
COURT FILE NO.: CV-13-1432, CV-15-0103, and CV-15-2933-00
DATE: 2018-04-06
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
DARIA SULAIMAN
Plaintiff
- and –
RENATA MIELCZAREK, ALEKSANDRA MIELCZAREK, and JAMES WILLIAM SINCLAIR
Defendants
ALEKSANDRA MIELCZAREK
Applicant
– and –
HANNA EID, ISSA EID, LE ROYAL LUX INC., LE ROYAL RESTO & LOUNGE INC., OKO BLUE MEDITERRANEAN RESTAURANT AND LOUNGE INC., BARWA RASHID, AMEER SULAIMAN and DALIA SULAIMAN
Respondents
Application pursuant to section 248 of the Business Corporations Act
REASONS FOR ORDER
Price J.
Released: April 6, 2018
[^1]: Committee for Justice and Liberty v. Canada (National Energy Board), 1976 2 (SCC), [1978] 1 S.C.R. 369, at p. 394. [^2]: R. v. S. (R.D.), 1997 324 (SCC), [1997] 3 S.C.R. 484, at para. 109. [^3]: Szilard v. Szasz, 1954 4 (SCC), [1955] S.C.R. 3, at para. 16. [^4]: Szilard v. Szasz, at para. 7. [^5]: R. v. S. (R.D.), at para. 59. [^6]: R. v. S. (R.D.), at para. 59, Ontario (Commissioner, Provincial Police) v. Macdonald, 2009 ONCA 805, 182 A.C.W.S. (3d) 502, at para. 44. [^7]: R. v. S. (R.D.), at para. 112. [^8]: Kelly v. Palazzo, (2008) 2008 ONCA 82, 89 O.R. (3d) 111 (C.A.), at para. 21. [^9]: Beard Winter LLP v. Shekdar, 2016 ONCA 493, para. 10 [^10]: Metrin Mechanical v. Big H (2001), 107 A.C.W.S. (3d) 603 (Ont. Master), at para. 47. [^11]: Peoples Trust Company v. Atas, 2018 ONSC 58, 2018 CarswellOnt 2893 [^12]: McIlvenna v. 1887401 Ontario Ltd., 2015 ONCA 830, 261 A.C.W.S. (3d) 301