Court File and Parties
COURT FILE NO.: CV-18-589898 DATE: 20200127 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Igor Keselman and 2264632 Ontario Inc. Plaintiffs (Respondents)
AND:
MARKTECH SERVICES INC., DATAGENIX INC., SELF CARE CATALYSTS INC., GRACE CASTILLO-SOYAO, MARKTECH SERVICES U.S. INC., MEDI-PROMOTIONS INC. O/A MEDISCRIPTS and MEDISOLUTIONS (USA), PRINT PAD (2009) INC., MEDISOLUTIONS GROUP LLC, MSR U.S. INC., HOORAY HEALTH LLC, QUREMEDY LP, MOBILUS TECHNOLOGIES LLC, INTEL-SCRIPTS LLC, PROSOFT DEVELOPMENT INC., PROSOFT INTERNATIONAL INC., SCRIPTS INTERNATIONAL CORPORATION, MEDI SCRIPTS GROUP HOLDINGS, JOSHUA LAPSKER, as TRUSTEE OF THE JEL (JOSHUA AND EREZ LAPSKER) TRUST, EREZ LAPSKER, as TRUSTEE OF THE JEL (JOSHUA AND EREZ LAPSKER) TRUST and JOHN DOE, as TRUSTEE OF THE JEL (JOSHUA AND EREZ LAPSKER) TRUST Defendants (Moving Parties)
BEFORE: Justice Swinton
COUNSEL: Matthew Diskin, for Medi-Promotions Inc. o/a Mediscripts and Medisolutions (USA) and Print Pad (2009) Inc., Defendants (Moving Parties) Michael Mazzuca and Broghan Masters, for the Plaintiffs (Respondents)
HEARD: January 22, 2020
ENDORSEMENT
Swinton J.
[1] Medi-Promotions Inc. o/a as Mediscripts and Medisolutions (USA) and Print Pad (2009) Inc. have brought a motion pursuant to rule 21.01(3)(a), arguing that the Superior Court has no subject matter jurisdiction over an oppression claim raised in the Statement of Claim, because they are American corporations and not governed by the Ontario Business Corporations Act, R.S.O. 1990, c. B.16 (the “OBCA”). Accordingly, they seek an order to stay or dismiss the action against them.
[2] This motion was heard at the same time as an appeal to the Divisional Court from an order of Master Sugunasiri dated May 16, 2019, in which she dismissed a motion to stay the action against the appellants based on a lack of territorial jurisdiction. My reasons for dismissing the appeal are found at 2020 ONSC 487.
[3] The respondents have alleged that there was an oral agreement that they would receive a 5% ownership interest in the Medi companies, including the moving parties, based on a promise made by Joshua Lapsker, the chairman and directing mind of the companies. As a result, the respondents allege that additional work was performed beyond their employment and consulting agreements. The shares were never provided.
[4] The moving parties submit that the respondents’ claim against them is a claim based on the oppression remedy in s. 248 of the OBCA. They argue that as American corporations, they are not subject to the Act, relying on Gould v. Western Coal Corporation, 2012 ONSC 5184 (S.C.J.).
[5] Gould does not assist the moving parties. In that case the Ontario Superior Court held that it had no jurisdiction to apply the British Columbia Business Corporations Act, since that Act gave the jurisdiction to the British Columbia courts (at para. 339). In the present case, the respondents rely on the OBCA. The Ontario Superior Court of Justice has jurisdiction to apply the OBCA (see s. 1(1)).
[6] On a motion such as this, the court is not to enter into the merits of the claim and determine whether the OBCA actually entitles the respondents to relief. That is the task of the trier of fact. My task is to determine whether the Ontario courts lack subject matter jurisdiction with respect to the oppression claim and whether a stay or dismissal is warranted.
[7] Before I deal with the OBCA, it is important to note that the oppression claim is not the only claim pleaded against the moving parties. While the moving parties focus on the alleged lack of relief available under the OBCA, there is also a claim for damages based on the failure to comply with the Ownership Agreement and a tracing claim that involves these parties.
[8] Section 248(1) of the OBCA allows a complainant to seek relief under the Act. “Complainant” is defined in s. 245 and can include a beneficial owner of a security in a corporation or any of its affiliates. The respondents have pleaded that they were promised a 5% ownership interest in the Medi companies, including the moving parties, because of an oral agreement, and they have an arguable case that the respondents come within the meaning of complainant.
[9] The respondents have also alleged that the moving parties are affiliates of a number of other companies controlled by Mr. Lapsker, and that control is exercised through a headquarters in Concord, Ontario. The respondents claim that some of those corporations are Ontario corporations. Subsection 248(2) of the OBCA allows a court to grant relief to the complainant if it is satisfied that any act or omission, or conduct in the business or affairs, of a “corporation or any of its affiliates” is oppressive or unfairly prejudicial to or unfairly disregards the interests of a security holder.
[10] A company is deemed to be an “affiliate” in s. 1(4) with another body corporate where each of them is controlled by the same person. A “body corporate” is defined in s.1(1) as “any body corporate with or without share capital and whether or not it is a corporation to which this Act applies.”
[11] The respondents have also pleaded that the moving parties are corporate bodies that form an integral part of a complex corporate structure owned and managed, directly or indirectly, by Mr. Lapsker from Concord, Ontario. Their claim for the shares of the moving parties is based on an alleged oral agreement made in Ontario. In my view, they have demonstrated that the Ontario Superior Court has jurisdiction to deal with the oppression claim.
[12] The respondents are not trying to claim the Medi companies are all one entity, nor are they relying on a group enterprise theory of liability, as the moving parties assert. Rather, the respondents rely on the definition of “affiliates” in the OBCA, asserting that the moving parties are affiliates of Ontario residents.
[13] I note, as well, that the moving parties have not demonstrated that a stay is necessary to prevent substantial prejudice or injustice. Nor have they suggested that another forum has exclusive jurisdiction to deal with the subject matter of the claim (Momentous.ca Corp. v. Canadian American Association of Professional Baseball Ltd., [2010] 1 S.C.R. 359 at para.7).
[14] Furthermore, it would be unjust to stay or dismiss the action against the respondents because of alleged defects in the oppression claim, given there are other claims as well. The Ontario Superior Court clearly has jurisdiction with respect to the other claims made against the moving parties, including breach of the Ownership Agreement, a contract alleged to have been made in Ontario, and a tracing remedy.
[15] Accordingly, the motion is dismissed. As set out in the endorsement in the appeal decision, if the parties cannot agree on costs of the appeal and this motion, they may make brief written submissions on costs of the appeal and costs of the subject matter jurisdiction motion through the Divisional Court office, sent to my attention: the respondents within 21 days of this decision; the appellants within 15 days thereafter.