Court File and Parties

COURT FILE NO.: CV-19-27687

DATE: 20210414

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Colautti Landry Partners Professional Corporation, Raymond G. Colautti, Raymond G. Colautti Law Professional Corporation, Anita E. Landry and Anita E. Landry Law Professional Corporation

Plaintiffs

– and –

Steven Pickard and 2381814 Ontario Ltd.

Defendants

AND BETWEEN:

Steven Pickard

Plaintiff by Counterclaim

– and –

Colautti Landry Partners Professional Corporation, Raymond G. Colautti, Raymond G. Colautti Law Professional Corporation, Anita E. Landry and Anita E. Landry Law Professional Corporation

Defendants to the Counterclaim

Counsel:

Myron W. Shulgan for the plaintiffs/defendants to the Counterclaim

R. Lee Akazaki, for the defendants/plaintiffs by Counterclaim

HEARD: March 24, 2021

Reasons for Judgment

LEITCH J.

[1] Mr. Pickard, Mr. Colautti and Ms. Landry practised law as partners from premises owned by 231814 Ontario Ltd. Mr. Pickard, Mr. Colautti and Ms. Landry are equal shareholders of 231814 Ontario Ltd. Mr. Pickard is also a creditor of 231814 Ontario Ltd.

[2] There is no issue that the partnership was terminated March 28, 2019. The former partners cannot agree on how to conclude their partnership arrangements. The plaintiffs issued a statement of claim May 1, 2019 and brought two applications described below.

[3] Mr. Pickard filed a statement of defence and a counterclaim in which he alleges, amongst other things, oppressive conduct by Mr. Colautti and Ms. Landry as directors and majority shareholders of 231814 Ontario Ltd. and he seeks numerous remedies pursuant to s. 248 of the Business Corporations Act, R.S.O. 1990, c. B.16 ( the “OBCA”).

THE PICKARD MOTION

[4] Mr. Pickard brought a motion first returnable December 5, 2019. He requested that his motion be heard together with the applications brought by the plaintiffs (“Colautti Landry”) in court file numbers CV-19-28262 and CV-19-28263. He seeks an order for partial summary judgment based on his consent, since September 2019, to the substantive relief claimed in the statement of claim, namely paragraph 1, subparagraphs (a), (b), (c) and (d).

[5] These subparagraphs claim the following:

a) a declaration that a law partnership constituted among Raymond G. Colautti, Raymond G. Colautti Law Professional Corporation, Anita E. Landry, Anita E. Landry Professional Corporation and Steven Pickard was dissolved on March 28, 2019.

b) an accounting to determine the obligations and entitlements of the partners in the partnership;

c) an order directing the partners in the partnership to fulfill their respective obligations to the partnership by making payment of any amounts for which they are held liable to the partnership;

d) an order directing the sale of lands described municipally as 961 Ouellette Avenue, Windsor, Ontario, of which the defendant, 2381814 Ontario Ltd. is the owner.

[6] Mr. Pickard also seeks directions necessary to give effect to the plaintiffs’ prayer for relief and a stay of proceedings in this action and the counterclaim, pending the confirmation of the accounting.

[7] Mr. Pickard’s motion for partial summary judgment was not heard as originally scheduled. In the meantime, the two applications brought by Colautti Landry were heard and dismissed. Mr. Pinkard filed a notice of return of motion and his motion was heard with a cross motion brought by Colautti Landry that I will next describe.

THE COLAUTTI LANDRY MOTIONS

[8] Colautti Landry brought a motion returnable March 10, 2020 seeking leave to amend their statement of claim. Mr. Colautti swore an affidavit in support of the motion on February 12, 2020.

[9] The proposed amendment was the deletion of the claim that the lands described municipally as 961 Ouellette Avenue, Windsor, Ontario (the “Building”) be sold. Instead, Colautti Landry sought an order requiring Mr. Pinkard to sell his shares in 2381814 Ontario Ltd. to Colautti Landry.

[10] Mr. Colautti deposed that “it was an error to request the sale of” the Building and it was never the intention of Colautti Landry to sell the Building.

[11] Colautti Landry filed a Notice of Abandonment of this motion on March 19, 2021.

[12] Colautti Landry then brought a motion returnable today, supported by a more expansive affidavit from Mr. Colautti sworn March 18, 2021, requesting the same and more relief as follows:

(a) an order to abridge the time for service and filing of this within motion;

(b) an order granting leave to the plaintiffs to amend their statement of claim in the form attached as Exhibit 4 to the affidavit of Raymond Colautti, sworn March 18, 2021;

(c) an order to wind up 2381814 Ontario Ltd.;

(d) an order that Steven Pickard produce an accounting of all fees, disbursements, with applicable HST, that he has collected on any and all accounts that were rendered by Colautti Landry Professional Corporation, no later than Friday April 21, 2021;

(e) an order that Steven Pickard produce an account of all fees, disbursements, with applicable HST, that he has collected on any and all accounts for his time incurred while he was at CLP no later than Friday April 21, 2021;

(f) an order that Steven Pickard provide a current status report on the Ontario Superior Court of Justice court file number CV-17-25534 to the plaintiff, Colautti Landry Partners Professional Corporation, and further updates within 5 days of a request being made.

(g) an order that Steven Pickard be required to notify us immediately if the matter settles, provide us with all of the terms of the settlement and forward payment of the contingency amount within 6 days of his receipt of settlement funds.

(h) an order to seal the within motion record.

[13] Mr. Colautti’s affidavit sworn March 18, 2021 was far more expansive than the affidavit sworn in support of the abandoned motion. He again deposed that the original relief requested “was imprecisely pleaded and in error”.

[14] In addition, the amendments to the Statement of Claim are more expansive. While still deleting the request for an order directing the sale of the Building, Colautti Landry now requests an order to wind up 2381814 Ontario Ltd., an order that Mr. Pickard sell his shares in 2381814 Ontario Ltd. or alternatively an order allowing Colautti Landry to purchase the Building. The proposed new subparagraph (d) of paragraph 1 of the Statement of Claim is as follows:

d) An order to wind up 2381814 Ontario Ltd., pursuant to ss. 206, 207, 208 and 209 of the Business Corporations Act, R.S.O. 1990, c. B. 16.

i. An order directing that the defendant Pickard sell and transfer his interest in 238184 Ontario Ltd. to the plaintiffs for fair market value; or

ii. In the alternative, an order allowing the plaintiffs to purchase the land building and premises owned by 238184 Ontario Ltd. at fair market value.

[15] The proposed amendments now also include additional paragraphs alleging that Mr. Pickard “has acted in a manner that is oppressive or unfairly prejudicial and has unfairly disregarded the interests of Mr. Colautti and Ms. Landry in 231814 Ontario Ltd.”. Colautti Landry now plead and rely on sections 207, 208 and 209 of the OBCA and all references to the previously requested sale of the building are deleted.

[16] I note that counsel for Mr. Pickard took no issue with the short service of the Colautti Landry second motion and the more expansive affidavit of Mr. Colautti, although he observed in the updated factum that “a fair amount of it provides subjective colour, to express the plaintiffs’ belief that the defendant Pickard is to blame for the break-up of the partnership”.

[17] I further note that counsel for Colautti Landry indicated that he was not pursuing a request for the relief described in subparagraphs (d) to (g) above nor was he pursing a request for a sealing order described in subparagraph (h) above.

DISCUSSION AND DISPOSITION

[18] I will turn first to Mr. Pickard’s motion for partial summary judgment on the basis of his consent to the relief sought by Colautti Landry in the Statement of Claim. There is no issue that the law partnership among Mr. Pickard, Mr. Colautti and Ms. Landry was dissolved on March 28, 2019 pursuant to the provisions of s. 32 of the Partnerships Act, R.S.O. 1990 Chapter P.5. Accordingly, an order will go as sought in subparagraph (a) of paragraph 1 of the Statement Claim: the court declares that a law partnership constituted among Raymond G. Colautti, Raymond G. Colautti Law Professional Corporation, Anita E. Landry, Anita E. Landry Professional Corporation and Steven Pickard was dissolved on March 28, 2019.

[19] With respect to the request for partial summary judgment in accordance with subparagraph (b) of paragraph 1 of the Statement of Claim, namely an accounting to determine the obligations and entitlements of the partners in the partnership, all parties agree that such an accounting is required.

[20] Mr. Pickard, in his motion, set out what his counsel described as “a detailed set of directions that entailed a reference to Mr. Stulberg as a neutral accountant reporting to the court”. Mr. Colautti and Ms. Landry have not agreed with those directions. Counsel have also advised that the parties cannot agree on a person to conduct the accounting and they therefore seek an order for a reference directed to a judicial officer.

[21] Pursuant to r. 54.02 , with the parties’ consent, an order will go directing a reference to settle the accounts between the partners in accordance with s. 44 of the Partnerships Act.

[22] Pursuant to r. 54.03 a reference may be directed to the referring judge, to another judge with that judge’s consent, to a registrar or other officer of the court or to a person agreed on by the parties. An order will go directing a reference to a judicial officer designated by Regional Senior Justice Thomas.

[23] Pursuant to r. 54.04 I designate Colautti Landry to have carriage of the reference.

[24] I note that pursuant to r. 55.02, the party having carriage of the reference shall forthwith have the order directing the reference signed and entered and within 10 days after entry, request an appointment with the referee for a hearing to consider directions for the reference and, in default, any other party having an interest in the reference may assume carriage of it. The order directing the reference shall be signed and entered forthwith after the referee has been designated by Regional Senior Justice Thomas.

[25] Counsel’s attention is drawn to the remainder of r. 55 which governs the procedure on a reference.

[26] The remaining issue on the motion and the cross motion relates to whether the court should order the sale of the Building, as originally sought by Colautti Landry, and agreed to by Mr. Pickard on his motion for partial summary judgment, or whether the Statement of Claim should be amended as Colautti Landry proposes.

[27] It is obvious now that the Statement of Claim was not well drafted. Mr. Pickard was entitled to bring his motion for partial summary judgment after consenting to the relief sought 18 months ago. However, Colautti Landry is also entitled to seek leave to amend its Statement of Claim and it is unfortunate that we now have a third attempt in drafting the Statement of Claim before the court.

[28] There is no disagreement that 238184 Ontario Ltd. should be wound up and therefore there is no issue with the proposed new subparagraph (d) of the statement of claim.

[29] However, counsel for Mr. Pickard submits that there is no statutory authority for the remedies specifically sought in the proposed new subparagraph (d): an order requiring Mr. Pickard to sell his shares in 238184 Ontario Ltd. to Colautti Landry or an order “allowing” Mr. Colautti and Ms. Landry to purchase the Building. On the same basis, counsel for Mr. Pickard asserts that the proposed new paragraph 20(b) is an untenable pleading and as set out in Brookfield Financial Real Estate Group Limited v. Azorim Canada (Adelaide Street) Inc., 2012 ONSC 3818, an amendment which does not raise a tenable claim should not be allowed.

[30] As described above, the proposed new paragraph 20(b) alleges that Mr. Pickard as an officer and director of 238184 Ontario Ltd. “has acted in a manner that is oppressive or unfairly prejudicial and has unfairly disregarded the interests of Mr. Colautti and Ms. Landry in 231814 Ontario Ltd.”. The foundation for this allegation is “by reason of the particulars as plead in paragraphs 14-18”. These “particulars” allege Mr. Pickard’s attendance at the partnership office declined, his revenues were significantly lower, Mr. Pickard was not prepared to discuss terms on which he would withdraw from the partnership, Colautti Landry elected to dissolve the partnership and ultimately Colautti Landry “advised Pickard that he was not welcome at the firm’s premises”. I observe parenthetically that it seems questionable whether Colautti Landry has plead any particulars of conduct by Mr. Pickard as a director and officer of 231814 Ontario Ltd. In any event, the position of counsel for Mr. Pickard is that the remedy of requiring a purchase of shares by a corporation or any other person pursuant to s.248(3)(f) of the OBCA is not available to majority shareholders noting that the “only provision in the OBCA requiring a security holder to sell his or her shares is s. 188” which is applicable in relation to take-over bids.

[31] I agree with counsel for Mr. Pickard that the Court of Appeal in Mason v. Intercity Properties Ltd., 1987 CanLii 173 stated that the remedial provisions in issue are “remedial legislation for the relief of minority shareholders in closely held corporations” and “relief may be given to a minority shareholder upon proof of unfair prejudice to or disregard of his or her interests, both of which are less rigorous grounds than oppression”.

[32] I disagree with counsel for Colautti Landry that the impugned amendments to the Statement of Claim are necessary to define the basis of, and direction for, the winding up of 231814 Ontario Ltd. However, I acknowledge that pursuant to s. 207(2) of the OBCA, upon a winding up application, “the court may make such order under this section or section 248 as it thinks fit”. Therefore, considering the very broad discretion granted to the court on a winding up application, I cannot conclude that the relief sought in the proposed amendment is untenable in law. As a result, the statement of claim may be amended as proposed.

[33] Despite the disagreement with the respect to the amendment of the statement of claim, as observed previously, the parties’ consent to an order for the winding up of 231814 Ontario Ltd. They submit that a winding up order is just and equitable in these circumstances where all shareholders consent to the windup and accordingly they request such an order pursuant to s.207(1)(b)(iv). An order to wind up 2381814 Ontario Ltd. is hereby granted and the winding up shall be deemed to commence as set out below.

[34] Counsel for Mr. Pickard requested that Mr. Pickard be appointed as liquidator pursuant to s.210 of the OBCA. Counsel for Colautti Landry did not oppose the appointment of a liquidator but submitted that an independent third party should be appointed. In my view, the involvement of a neutral party would be helpful however, no submissions were made in relation to who could serve in that capacity. As a result, pursuant to s. 209 of the OBCA, I refer the proceedings for the winding up of 231814 Ontario Ltd. to the judicial officer designated to conduct the reference ordered above. Pursuant to s. 213, the winding up shall be deemed to commence on a date specified by such judicial officer.

[35] I urge counsel to resolve the issue of costs in relation to these motions. However, if there is no such resolution brief submissions on costs may be made within 60 days. The parties should also endeavour to agree on who will prepare their final partnership accounts, who will act as the liquidator of 231814 Ontario Ltd. and what directions should be considered for the reference.

“Justice L.C. Leitch”

Justice L.C. Leitch

Released: April 14, 2021

COURT FILE NO.: CV-19-27687

DATE: 20210414

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Colautti Landry Partners Professional Corporation, Raymond G. Colautti, Raymond G. Colautti Law Professional Corporation, Anita E. Landry and Anita E. Landry Law Professional Corporation

Plaintiffs

– and –

Steven Pickard and 2381814 Ontario Ltd.

Defendants

AND BETWEEN:

Steven Pickard

Plaintiff by Counterclaim

– and –

Colautti Landry Partners Professional Corporation, Raymond G. Colautti, Raymond G. Colautti Law Professional Corporation, Anita E. Landry and Anita E. Landry Law Professional Corporation

Defendants to the Counterclaim

REASONS FOR JUDGMENT

Justice L.C. Leitch

Released: April 14, 2021