Court File and Parties

COURT FILE NO.: 15-63528 DATE: 20181115 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Dennis Marchand Applicant – and – Stuart Graham and David Harrock and 7104383 CANADA INC. Respondent

COUNSEL: Alexander Bissonnette, counsel for the Applicant Peter Liston, counsel for the Respondent

HEARD: September 24, 2018

Champagne, j.

RULING ON MOTION

[1] The applicant Dennis Marchand (Marchand) brings this motion to add Christine Denis (Denis) and 8766177 Canada Inc. (8766177) as parties to this application.

Background and Evidence

[2] Marchand together with Stuart Graham (Graham) and David Harroch (Harroch) were equal shareholders in 7104383 Canada Inc. (7104383) through which they ran an annual hockey tournament in May from 2008 to 2013 called the Ottawa Meltdown.

[3] Marchand alleges that in June 2013, Graham and Harroch dissolved 7104383 after a failed attempt to buy his share in 7104383. Beginning in May 2014 May Madness, operated and owned by 8766177 replaced the Ottawa Meltdown.

[4] Each party provides evidence of the reasons for the dispute between the parties in 2013 which are irrelevant for the purposes of this motion.

[5] The applicant brought an application in 2014 under s. 241 of the Canadian Business Corporations Act R.S.C., 1985, c. C-44 (CBCA) for a declaration that Graham and Harroch acted in an oppressive manner in their attempt to buy him out and in dissolving 7104383.

[6] The parties have exchanged pleadings and discovery is complete.

[7] When Graham served his responding record in 2017, Marchand alleges he learned May Madness and the annual hockey tournaments which ran afterward were operated by Revsport (8766177 Canada Inc.), a company owned by Christine Denis who is Graham’s wife from whom he separated in March 2017. The evidence is that Marchand made no attempt to determine who was operating May Madness or the subsequent tournaments other than to search Twitter where no reference was made to the tournament being sponsored by Revsport. It is fair to say Marchand thought that Graham and Harroch were running it.

[8] Graham’s evidence is that had Marchand conducted a search on the tournament at the time, it would have shown Revsport as a sponsor. He points to the affidavit of Khristian Khouri who states that by using the Wayback Machine Internet Archive he found a copy of the Revsport Website from 2014 which advertised May Madness. There is no evidence that searching May Madness at the time would have led to that site.

[9] There is evidence that Graham gave Denis advice on how to run the tournament herself.

[10] The applicant therefore seeks an order adding Denis and 8766177 as a party.

[11] 8766177 and Denis were served but did not attend the motion.

[12] There is no evidence before the court that Denis or 8766177 were involved with the operation of the Ottawa Meltdown.

The Respondents’ Position

[13] The respondents argue that the relief sought should not be granted as the expiry of the limitation period gives rise to prejudice against them, particularly in the form of increased costs. It is their contention that Marchand should have used due diligence to ascertain who was running the tournaments and his failure to do so runs afoul of the Limitations Act, S.O. 2002, c. 24, Sched. B.

[14] The respondents also argues there is no proprietary interest in the information communicated to Denis about how to run a hockey tournament, nor is there is a cause of action against Denis as Denis and her company were unconnected to 7104383.

The Applicant’s Position

[15] Marchand’s position is that Denis is a necessary party to the application. He argues that Denis used information provided to her by Graham to run May Madness and points to the case of Wilson v. Alharayeri, 2017 SCC 39, para. 29 as standing for the proposition that the relief he seeks can be obtained against “any person” unrelated to the corporation. He also argues that Rule 5.03 of the Rules of Civil Procedure allows the court to add any party whose presence is necessary to enable the court to adjudicate effectively.

[16] Marchand also argues that he has not run afoul of the Limitations Act as he only discovered that Denis should be added as a party in 2017. He contends that he saw references to the involvement of Graham and Harroch regarding the May Madness on social media and assumed that they continued to run the tournament and would have had no reason to suspect anyone else was operating the tournament.

Decision

[17] For reasons that follow, I am not prepared to order Denis and 8766177 Canada Inc. to be added as parties to this application.

Analysis

Limitations Issue

[18] As my decision centers on whether Denis and 8766177 are appropriate parties to this application, I will not deal in the limitations arguments.

Oppression Remedy

[19] The Canadian Business Corporations Act s. 241(1) sets out the following process for a complainant seeking an oppression remedy:

241 (1) A complainant may apply to a court for an order under this section.

(2) If, on an application under subsection (1), the court is satisfied that in respect of a corporation or any of its affiliates

(a) any act or omission of the corporation or any of its affiliates effects a result,

(b) the business or affairs of the corporation or any of its affiliates are or have been carried on or conducted in a manner, or

(c) the powers of the directors of the corporation or any of its affiliates are or have been exercised in a manner

that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of any security holder, creditor, director or officer, the court may make an order to rectify the matters complained of.

The remedies are set out in s. 241(3) as follows:

Powers of court

(3) In connection with an application under this section, the court may make any interim or final order it thinks fit including, without limiting the generality of the foregoing,

(a) an order restraining the conduct complained of;

(b) an order appointing a receiver or receiver-manager;

(c) an order to regulate a corporation’s affairs by amending the articles or by-laws or creating or amending a unanimous shareholder agreement;

(d) an order directing an issue or exchange of securities;

(e) an order appointing directors in place of or in addition to all or any of the directors then in office;

(f) an order directing a corporation, subject to subsection (6), or any other person, to purchase securities of a security holder;

(g) an order directing a corporation, subject to subsection (6), or any other person, to pay a security holder any part of the monies that the security holder paid for securities;

(h) an order varying or setting aside a transaction or contract to which a corporation is a party and compensating the corporation or any other party to the transaction or contract;

(i) an order requiring a corporation, within a time specified by the court, to produce to the court or an interested person financial statements in the form required by section 155 or an accounting in such other form as the court may determine;

(j) an order compensating an aggrieved person;

(k) an order directing rectification of the registers or other records of a corporation under section 243;

(l) an order liquidating and dissolving the corporation;

(m) an order directing an investigation under Part XIX to be made; and

(n) an order requiring the trial of any issue.

[20] Section 2(2) of the CBCA defines affiliates as follows:

(a) one body corporate is affiliated with another body corporate if one of them is the subsidiary of the other or both are subsidiaries of the same body corporate or each of them is controlled by the same person; and

(b) if two bodies corporate are affiliated with the same body corporate at the same time, they are deemed to be affiliated with each other.

[21] Marchand argues that relief can be obtained against “any person” unrelated to the corporation (Wilson v. Alharayeri, 2017 SCC 39, para. 29) and it is on this basis that he wishes to seek relief against Denis and her numbered company. Reading that case, I do not accept this argument. I do not think that the court in Wilson v. Alharayeri meant that an order could be made against any person at large regardless of their connection or lack thereof to a corporation. Wilson v. Alharayeri dealt with the personal liability of directors of a corporation and is distinguishable from the case before me. There is no evidence that Denis or 8766177 were involved with the operation of 7104383 or the tournaments organized by its three directors between 2008 and 2013. 8766177 was not an affiliate of 7104383 within the meaning of affiliate under the CBCA.

[22] In order for me to grant the applicant’s motion to add Denis and her corporation to this application, I must be satisfied that the proposed pleadings amendment sets out a cause of action against the proposed parties. As 8766177 cannot be said to be an affiliate of 7104383, there is no foundation for a cause of action under s. 241 of the CBCA against it. In the circumstances, I am not prepared to order that Denis and 8766177 be named as parties to this application.

[23] The applicant’s motion is therefore dismissed.

[24] Should the parties be unable to agree on costs, they may send me written submissions limited to 3 pages within 30 days.

The Honourable Justice Nathalie Champagne Released: November 15th, 2018