Suberamaniam v. Cloud, 2020 ONSC 5326

US TO YOU INCORPORATED 2020 ONSC 5326

BARRIE COURT FILE NO.: 19-1752

DATE: 20200710

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: PIRASATH SUBERAMANIAM, Applicant

AND:

JON CLOUD and US TO YOU INCORPORATED, Respondents

BEFORE: Justice V. V. Christie

COUNSEL: Josh David Hemmings, Counsel for the Applicant

Idan Erez Counsel for the Respondents

HEARD: July 10, 2020

ENDORSEMENT

[1] This application seeks to determine the terms of a verbal agreement pursuant to which a transfer of shares in the Respondent, Us To You Incorporated, from the Applicant to Mr. Cloud, is alleged to have taken place.

[2] The Respondent, Jon Cloud, passed away on March 3, 2020, before having an opportunity to deliver a responding record in this application.

[3] The Applicant was informed of Mr. Cloud's death on March 9, 2020, however, has not requisitioned an Order to Continue. No responding materials have been filed in the application and no cross-examinations have taken place.

[4] The Respondents, being the trustees of Mr. Cloud's estate, seek an Order to Continue the application. It would appear that the Applicant is in agreement with the continuation. An Order to Continue may be granted on motion when the record includes the affidavit required by Rule 11.02(1) verifying the transfer or transmission of interest. See Salzman v. Salzman, 2012 ONSC 1733 at paras 19-24. The affidavit provided in this case verifies the transfer of interest.

[5] However, the manner in which this should continue is in dispute. The Respondent submits that the application should be converted to an action. The Applicant submits that an application is the appropriate procedure and that they should be permitted to amend their pleadings.

[6] Dealing first with whether this matter should be converted into an action, a proceeding can be commenced by application if it is authorized by a specific statute (r. 14.05(2)), or if it satisfies the requirements under r. 14.05(3). Rule 14.05(3) enumerates the type of proceedings which may be brought by application. Generally, these are matters where it is unlikely that there will be any material facts in dispute.

[7] The applicable principles to be considered are set out in Przysuski v City Optical Holdings Inc., 2013 ONSC 5709, at paras. 5-10:

[5] It is a well-established general principle that an application should be used when

there is no matter in dispute and when the issues to be determined do not

go beyond the interpretation of a document: see Collins v. Canada (Attorney

General) (2005), 2005 ONSC 28533 (ON SC), 76 O.R. (3d) 228 (S.C.), at para.

28; Marten Falls First Nation v. Ontario (1994), 1994 ONSC 7555 (ON SC),31

C.P.C.(3d) 149 (Ont. C.J. (Gen. Div.)), at paras. 7, 17; Re City of Burlington v.

Clairton Village (1979), 1979 ONCA 2059 (ON CA), 24 O.R. (2d) 586 (C.A.),

at pp. 588-90; and Re Acumen Investments Ltd. v.Williams (1985),1985 ONSC

2068 (ON SC), 1985 ONSC 2068 (ON SC), 53 O.R. (2d) 247 (H.C.), at p. 250. This is not an application

concerning the interpretation of a document.

[6] Where the legislature has stipulated that a proceeding may be brought by

application, there is a prima facie right to proceed by application and the matter should not be converted into an action without good reason: see Sekhon v. Aerocar Limousine Services Co-Operative Ltd., 2013 ONSC 542, at

paras.48-49; and College of Opticians (Ontario) v. John Doe, 2006 ONSC

42599 (Ont. S.C.), at paras. 18-21.

[7] A good reason to convert an application into an action is when the judge who

will hear the matter cannot make a proper determination of the issues on the

application record: see Collins, at para. 29.

[8] When issues of credibility are involved the matter should proceed by way of

action: see Gorden Glaves Holdings Ltd. v. Care Corp. of Canada (2000), 2000

ONCA 3913 (ON CA), 2000 ONCA 3913 (ON CA), 48 O.R. (3d) 737 (C.A.), at para. 30; and Cunningham

v. Front of Yonge (Township) (2004), 73 O.R. (3d) 721 (C.A.), at para. 20.

[9] A factual dispute simpliciter in itself is not sufficient to convert an application.

The fact(s) in dispute must be material to the issues before the court: see Niagara

Air Bus Inc. v. Camerman (1989), 1989 ONSC 4161 (ON SC), 69 O.R. (2d)

717 (H.C.), at pp. 725-26; and BPCO Inc. v. Imperial Oil Ltd. (1993), 17

C.P.C. (3d) 130 (Ont. C.J. (Gen. Div.)), at para. 13.

[10] In determining whether to convert an application into an action, Collins sets

out the following factors that are relevant at para. 5:

• Whether material facts are in dispute;

• The presence of complex issues that require expert evidence and/or

a weighing of the evidence;

• Whether there is a need for pleadings and discoveries; and

• The importance and impact of the application and of the relief

sought.

[8] There is fairly wide discretion given to the court in considering whether to convert an application into an action. Applications can usually be dealt with more expeditiously and with less cost than would an action, which is both in the interests of the parties as well as in the interests of the administration of justice.

See also Triumph Capital Limited v. BSMW Financial Inc., 2020 ONSC 1066.

[9] Having reviewed the motion materials provided, it is the view of this court that an application is not the appropriate procedure for the determination of this dispute. This is so for the following reasons:

1. The dispute will require the Court to determine the terms of multiple verbal agreements potentially dating back to 2016. This may be complicated by the death of

Mr. Cloud. This will require evidence from witnesses which will need to be weighed by the court as to its reliability and credibility. The issues cannot be determined through simple interpretation of documents.

2. The Applicant claims that Mr. Cloud made fraudulent misrepresentations leading up

to the share transfer and breached a duty of good faith. This will involve a

determination of credibility.

3. There may be a need for expert testimony in order to provide the court with a valuation of the shares.

[10] It is the view of this court that there are material facts in dispute, including allegations of fraudulent misrepresentation that will need to be determined by the Court. This will require the court to weigh and assess evidence. It is the view of this court that this matter must be converted to an action.

[11] The parties are encouraged to discuss the issue of costs and resolve the issue in a fair and equitable manner. If this issue cannot be resolved, the court will receive written submissions as to costs, which shall be no more than 3 pages in length, excluding supporting documentation, and must be received by the Court on or before July 17, 2020.

Justice V. Christie

Date: July 10, 2020