COURT FILE NO.: CV-14-0520-00
DATE: 2021-06-01
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
ANDREW LOCKE and 1833340 ONTARIO LTD.
J. Clark, for the Applicants
Applicants
- and -
UWE QUAST and LAKEHEAD IRONWORKS INC.
Self-represented
Respondents
HEARD: May 10, 11, 12 and 14, 2021, at Thunder Bay, Ontario
Mr. Justice F. Bruce Fitzpatrick
Judgment on Trial of Issues
Procedural Background
[1] This is a shareholder’s dispute case.
[2] In 2014, Andrew Locke (“Locke”) and 1833340 Ontario Inc. (“1833340”) commenced an application seeking, among other things, a declaration of oppression against the Respondents Ewe Quast (“Quast”) and Lakehead Ironworks Inc. (“LII”). The application was heard by Pierce J. in December 2015. Justice Pierce rendered judgment on March 20, 2016 (see Locke v. Quast, 2016 ONSC 1873, 54 B.L.R. (5th) 263). Justice Pierce did not find the Respondents to have acted in an oppressive manner. However, Pierce J. did order a trial of issues. The trial would determine the value of 1833340’s shareholding of LII and who would be required to purchase those shares, as she found 1833340’s request that the shares be purchased to be a reasonable one.
[3] The litigation continued with a number of further interlocutory decisions related to the matter being made by Shaw J. and Nieckarz J. By coincidence, I presided over two procedural motions in 2019 that were disposed of on consent. The matter was headed for trial in the spring of 2020. In February 2020, Warkentin R.S.J. directed a trial management conference be held on March 30, 2020. World events intervened.
[4] In April 2021, I began the trial management process as the result of the trial of the issues being delayed by the pandemic. Through the trial management process, I determined a further issue was required to be tried in order to give effect to the matters directed to be tried by Pierce J. (see Locke et al. v. Uwe Quast et al., 2021 ONSC 2613).
Factual Background
[5] In my view, Pierce J. made a number of important findings of fact when determining the original application. Justice Pierce set out those findings at paragraphs 9- 12, 15, 16, 25, 27, 30, and 33 of her judgment. I rely on those findings in coming to this decision and I set out these findings now:
[9] In 1976, Mr. Quast’s father, Josef Quast, incorporated Lakehead Ornamental Ironworks Inc., a company that specialized in producing residential iron work such as hand rails, steel stairs and gates. The company also provided maintenance and repair work to residential customers.
[10] Josef planned to retire. In 1990, his son, Uwe, incorporated Lakehead which purchased the assets, inventory, customer lists, contracts and goodwill from his father’s company. From 1990 until May 1, 2008, Uwe Quast was the sole shareholder and directing mind of Lakehead. He shifted the focus of Lakehead’s work from residential ironworks to the fabrication of structural steel for commercial buildings. In addition, Lakehead expanded to the industrial sector where the company supplied steel and steel repair for mining equipment.
[11] In 2008, Mr. Quast invited Mr. Locke, a journeyman machinist, to run the day-to-day operations. At the time, Quast was issued 400,000 preferential shares in Lakehead worth $400,000, representing the equity that he brought to the company. These shares entitled him to dividends. In addition, he was issued 80% of the common shares and was designated president of the corporation. Mr. Locke was appointed vice-president and secretary-treasurer, and was issued 20% of the shares. Although two shareholder agreements were drafted, neither was executed.
[12] Mr. Quast maintains that when Mr. Locke began to work for the company, he asked for a larger salary than the company could afford. He says that in return for a lower salary, the parties agreed that the share transfer would be implemented for no consideration, as a deferred compensation plan. It was his intention that “the shares were meant to off-set his lower salary over the lifetime of our ownership.”
[15] The parties agreed that Mr. Locke would be subordinate to Mr. Quast in running the company although both men would share in its management.
[16] Under the stewardship of the parties, the company expanded and thrived. Mr. Quast became the manager of the structural steel division. Mr. Locke created the company’s heavy industry division which needed an expanded work force and expanded premises. A second shop was leased to accommodate demand. In 2011, as a result of a corporate reorganization, each man’s shares were transferred to their respective holding companies and Mr. Quast redeemed his 400,000 shares.
[25] The expansion was financed by a non-revolving mortgage from the Royal Bank in the amount of $1.4 million. Subsequently, Lakehead received a loan of $907,638 from the Northern Ontario Heritage Fund which was used to pay down the Royal Bank mortgage, leaving a balance of about $500,000 owing. About $453,684 of the Heritage Fund loan was forgiven, leaving a balance of $867,000 owing on the two mortgages.
[27] The mortgage was refinanced in 2013; the current balance is about $580,000.
[30] In 2013, Lakehead needed additional shop space. A new addition was constructed at a cost of $275,000. This new space housed equipment for cleaning the steel with abrasives as well as a “pre centre” to take the place of manual work and consumables costing Lakehead about $200,000 annually. Locke and Quast discussed this proposal in advance.
[33] In August 2014, the two men had a heated argument and Mr. Locke left. Mr. Locke indicated that he returned to work a couple of days later, after he calmed down, and wanted to come back to work. He had no plans to retire at that point. He says that by the time he returned to work, Mr. Quast had made arrangements to replace him.
[6] The day to day working relationship of Mr. Locke and Mr. Quast came to an end in August 2014. There was a heated dispute in the workplace between the two men. Mr. Locke left. The parties exchanged emails. Mr. Locke did not go back to LII after the end of August 2014.
[7] Mr. Locke and 1833340 asserted on the application that they had been treated in an oppressive fashion. Justice Pierce disagreed. In my view, this was an important finding.
[8] At this trial, it was agreed that the evidence in chief of the main parties, Mr. Locke and Mr. Quast, would be given by affidavit. Both parties filed affidavits. In my view, there was an attempt by both parties to revisit issues that were decided by Pierce J. and, in particular, to address the conduct that Pierce J. did not find to be oppressive. I appreciate that the Applicants rely on the conduct, particularly near the end of the time Mr. Locke was actively involved in day to day operations, to assert the actions of the parties should influence a decision about whether the shares should be subject to the so called “minority discount”. I will be applying a minority discount to the shares at issue and will explain why in more detail under the heading “minority discount”. At this point, what is important is that Pierce J. determined, despite no finding of oppression, that upon the breakdown in the relationship, “Mr. Locke’s expectation that he be paid for his shares is a reasonable one”.
[9] The parties agree that the valuation date for the shares is August 26, 2014.
Issues to be Determined
[10] At the outset of trial, I advised the parties that based on the decision of Pierce J. and my decision of April 2021, the issues for trial were:
a trial of an issue shall take place to determine the proper value of the applicants’ shares in Lakehead Ironworks Inc. and to determine the terms and conditions for purchase of the applicants’ shares, whether by Lakehead Ironworks Inc. or any other person, pursuant to the provisions of s. 248(3)(f) of the Ontario Business Corporations Act, (para 80 Locke v Quast 2016 ONSC 1873 (Pierce J. March 16, 2016) as repeated in Locke et al v Uwe Quast et al 2021 ONSC 2613 (Fitzpatrick J. April 8, 2021) at para 2; and
included in the issues for trial will be a question as to whether the value of the holdings of 1833340 to be determined is for 20 common C class shares or for 10 per cent of the value of LII. (Locke et al v Uwe Quast et al 2021 ONSC 2613(Fitzpatrick J. April 8, 2021) at para 15.
It is appropriate to deal with issue no. 2 first.
Issue No. 2: The “10 or 20” Issue
[11] Mr. Locke asserts his holding company, 1833340, owns 20 common shares of LII. Mr. Quast agrees that is what the corporate records of LII say. However, Mr. Quast asserts the grant of shares was contingent on an earn out arrangement. This earn out arrangement was such that the value of 1833340’s shares represented only 10 per cent of the value of LII as of August 26, 2014.
[12] I find 1833340 owned 20 common shares of LII as of August 26, 2014. 1833340 owns 20 common shares of LII as of the date of this judgment. I do not accept the factual assertion of Mr. Quast that the value of these 20 common shares should be considered as anything less than that of 20 common shares of LII. I do not accept Mr. Quast’s assertion that the grant of shares which ultimately were held by 1833340 were subject to any earn out arrangement, or a “spit and a handshake” deal, as alleged by Mr. Quast.
[13] I so find for the following reasons.
[14] I rely on the share register of LII which was placed in evidence on this trial. It sets out the shareholdings for the company. The shareholders register of LII as of August 2014 shows:
May 1, 2011 183339 Ontario Ltd. 80 Class B Common shares
May 1, 2011 1833340 Ontario Ltd. 20 Class C Common shares
[15] 183339 Ontario Ltd. is wholly owned by Mr. Quast. It was not disputed, that despite the designation of class for the common shares, there was no material difference in rights or nature of the holding between the Class B and Class C common shares.
[16] The maintenance of a share register by LII is mandated by s. 141(1) of the Ontario Business Corporations Act, R.S.O. 1990, c. B.16, as amended (the “OBCA”). The share register is kept in a Minute Book. Section 139(3) of the OBCA states:
(3) The bound or looseleaf book or, where the record is not kept in a bound or looseleaf book, the information in the form in which it is made available under clause (2) (b) is admissible in evidence as proof, in the absence of evidence to the contrary, of all facts stated therein, before and after dissolution of the corporation.
[17] The shareholders register is definitive evidence of the shareholdings of LII in this matter. It is not displaced by the contradictory evidence of Mr. Quast as to some other arrangement. Mr. Quast bears the burden of proving such an agreement. I find he did not meet his evidentiary burden on that issue.
[18] In 2008, when the working relationship between Mr. Quast and Mr. Locke began, their common share holdings were held personally. A reorganization in 2011 led both men to transfer their shares in LII to the holding companies.
[19] Mr. Quast testified that when the shares were granted in 2008, they were subject to a condition. Mr. Quast testified this “earn out” arrangement was verbal. Mr. Locke denies any such earn out agreement existed. I prefer the evidence of Mr. Locke on this issue.
[20] Mr. Quast said the agreement was written on a napkin. He did not produce the napkin at trial. He stated in cross-examination he threw the napkin away at the restaurant where he alleges the agreement was made in 2008. This is not the action of a prudent business owner who saw it as significant to commit an agreement to writing, even if it was on the “back of a napkin”.
[21] In 2008, the two men were embarking on a serious business venture. Mr. Quast had an established business. It is clear from the evidence Mr. Quast and his father had worked very hard to build it up. A new non-family member was being given equity in this business about which Mr. Quast was rightly proud and which represented his life’s work. This was an important event in the history of a closely held business. Despite the fact that the shares being granted would give Mr. Locke a minority position, it was a grant of an ownership interest with significant rights and the possibility of sharing in the future economic success of the company.
[22] The parties did have the wherewithal to attempt to agree to a shareholder agreement after the shares were granted. Two drafts of shareholder agreements were placed before the court at this trial. It was proffered by Mr. Locke for the purpose of refuting Mr. Quast’s assertion of an oral agreement that was contrary to the shareholdings evidenced by the share register. Neither of the shareholder agreements contain any provisions that state or even remotely infer the parties had agreed that the grant of shares in 2008 to Mr. Locke was in any way conditional. There are no clauses that dealt with an “earn out’ arrangement. If such an arrangement was contemplated, it seems to me that the parties at least would have included those types of terms in the draft of a contract designed to prevent future disagreements as to the nature of the respective shareholdings.
[23] I find this alleged earn out agreement did not exist. Such an agreement between Mr. Locke and Mr. Quast was never made. The evidence that Mr. Locke was being brought into the business to contribute his expertise and experience leads me to conclude that an earn out concept in those circumstances was vague, indefinite and commercially unreasonable. This would be particularly so for a person holding a minority position. The value of Mr. Locke’s (and then 1833340’s) holdings would be entirely at the whim of Mr. Quast. He would be in control of deciding how much Mr. Locke had “earned” at any given time. This arrangement did not make commercial sense.
[24] Mr. Quast argued that a 12-year period was contemplated by the parties for the earn out to be fully engaged. I see no reasonable basis for that particular number of years in the evidence before me. It strikes me as an “after the fact” kind of assertion. The evidence before me suggested both men played important management roles in the day to day operations of the company. Mr. Locke was more than just an important employee. He was left to manage the entire Thunder Bay operation when Mr. Quast was pursuing international business for the company. In my view, the position that the shares were to be contingently valued on an assessment of the degree to which Mr. Locke “earned them” is inconsistent with the official corporate documents which were in the control of LII. It is also inconsistent with Mr. Locke’s testimony that he did not understand what an earn out was and his firm testimony that Mr. Quast offered him 20 common shares, in his office, and he accepted.
[25] I find that 1833340 is entitled to be paid the value of 20 common shares as determined by me as follows.
Issue No. 1: The Value of 20 Common Shares and the Expert Valuation Evidence
[26] Three expert witnesses were called in this matter. All three were qualified to give expert opinion evidence on the value of the shareholdings of LII as of August 26, 2014.
[27] The valuators and their midpoint opinions of value before the application of a minority discount were as follows:
Dennis Leung: $2,870,000.00 (20 common shares = $574,000);
Stephen Kertzman: $1,877,694.00 (20 common shares = $375,539); and
Ron Martindale: $2,802,500.00 (20 common shares = $560,500).
[28] While this number of experts is not unusual in a commercial case, some background is necessary to understand how I interpreted and weighed the evidence of the respective expert witnesses.
[29] In giving judgment on the initial application, Pierce J. ordered:
“The parties shall agree on a licensed business valuator who shall determine the fair market value of Mr. Locke’s shares with and without a minority discount;
Without prejudice to either party’s argument that the costs of the business valuator be borne by another party, and subject to further order of the court, Lakehead Ironworks Inc. shall pay the reasonable costs of the business valuator.
[30] The parties agreed to a consent order on August 11, 2016, that the firm Bain Smith Business Valuation & Consulting Inc. be jointly retained to provide the business valuation as directed by Pierce J. Ultimately, Bain Smith did not prepare a report. About a year later, new counsel for Mr. Quast proposed the parties retain the national accounting and business valuation firm Grant Thorton (“GT”) as the joint valuator. The reason for this change was not explained in the evidence of the parties. However, Mr. Locke agreed to this change.
[31] The valuator from GT was Dennis Leung. Mr. Leung was qualified by this court to give expert opinion evidence as to the value of all issued and outstanding shares of LII as of August 26, 2014. In my view, he gave his evidence in a straightforward, unbiased and impartial manner.
[32] However, it did not appear to me from the evidence that Mr. Leung was particularly aware of the direction of the court that the nature of his retainer was to be “joint”.
[33] I find Mr. Locke was only minimally consulted by Mr. Leung in his coming to his valuation opinion. I say this for a number of reasons. Mr. Locke says so. I believe him. The GT report was addressed exclusively to Mr. Quast. Mr. Quast alone signed the engagement letter for GT. In the “documentation” section of the report, at paragraph 13, Mr. Leung lists nine sources of information, documents and data that he relied upon to prepare his opinion of value. Neither Mr. Locke nor his counsel are one of those sources listed. Mr. Leung did admit in cross-examination this was an oversight and he did have some discussions with Mr. Locke.
[34] To be clear, the lack of consultation does not detract from the reliability and usefulness to the court of the content of Mr. Leung’s opinion evidence. For me, in the circumstances of this case, it strengthens the degree to which the opinion can be assessed as fair, objective and non-partisan. In my view, Mr. Quast, his counsel and the valuator he retained, Mr. Kertzman, were the primary sources of information for Mr. Leung in coming to his opinion of value. Despite the degree of involvement of those persons, Mr. Leung provided an opinion which Mr. Quast argues should not be accepted.
[35] Mr. Quast complains the GT report did not properly account for the value of the property where LII’s production facility is located. This component of value was the main area where the opinions of the three valuators diverged. All three used the same financial records of the company for the period 2010 to 2014. All three valued the business as a going concern. All three utilized an income-based technique which applied a capitalization rate to the earnings of the company. Earnings were treated as before interest, taxes, depreciation and amortization. All three deducted the value of Mr. Quast’s preference share interest of $400,000.00 from the value of the company. The capitalization rates used by the valuators were in a comparable range from 25.20% (Leung and Kertzman) to a high of 33.3% (Martindale).
[36] Mr. Quast argues Mr. Leung improperly treated the production facility as a redundant asset. Mr. Leung explained that the land and building where the company is located were “redundant” in that they had an independent value to the company above and beyond their integral use to the operation of the company. In Mr. Leung’s opinion, despite the fact that the building contains specialized equipment, has unusually large bays and contains specialized infrastructure designed to support the excessive power needed to operate the equipment in the building, the building itself could be sold on its own, or used to generate an income stream independent of the operations of LII.
[37] Mr. Leung relied on an independent appraisal of the land that was entered into evidence at this trial. This retrospective appraisal of the land and buildings owned by LII was performed by Graydon Butt, an AACI and chartered valuation surveyor. Mr. Butt valued the fee simple ownership interest of the 38 Haniak Road, Thunder Bay property where LII is located at $1.9 million as of August 1, 2014. In simple terms, Mr. Leung valued the income stream of the company, added Mr. Butt’s land value, deducted a notional rent cost of $12,000.00 per month, the cost of interest bearing debt of $803,000 and the value of the preference shares to come to a fair market value of the common shares of LII of between $2,810,000 and $2,940,000.
[38] Mr. Kertzman took a contrary view of how to value the land. He treated it as included in value as the property which was so integrally related to the operation of the business that it could not be said to be “redundant”. When questioned about the topic of redundancy, Mr. Kertzman candidly admitted it was a subjective question of opinion on how to treat this particular issue.
[39] I note that Mr. Locke had initially indicated he intended to take the position that the entirety of Mr. Kertzman’s evidence should not be admitted. Mr. Locke initially intended to argue Mr. Kertzman had taken steps in this matter that would lead to a realistic concern that he was unable or unwilling to comply with his duty to the court to give his evidence in a fair, non-partisan and objective manner. Ultimately, Mr. Locke did not pursue that particular argument. I agree that was a prudent tactical decision given the manner that Mr. Kertzman testified. I find Mr. Kertzman was not biased within the meaning attributed to such conduct by the Supreme Court of Canada in White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, [2015] 2 S.C.R. 182, such that I would not admit his evidence at trial.
[40] However, this is not the end of the matter with regard to Mr. Kertzman’s evidence. While his evidence was admitted, I do not give it as much weight as that of Mr. Leung.
[41] I find that the nature of Mr. Kertzman’s retainer, as described in the engagement letter before the court, indicates to me that he did exercise a degree of partisanship and advocacy such that I am led not to prefer his approach regarding the land owned by LII. He was wearing a number of hats during his engagement with this file. Initially, he was acting in the capacity of advocate for Mr. Quast. His initial retainer was to advise Mr. Quast if Mr. Leung’s valuation was reasonable. There were three drafts and then a final report made by Mr. Leung. Mr. Kertzman pointed out the initial value provided by Mr. Leung was for a 2017 date. Why this date was not satisfactory when the 1833340 shareholdings continued to exist was not explained. The date was changed to August 2014 on agreement.
[42] Further, Mr. Kertzman engaged in an exercise akin to “hot tubbing” (his words) when discussing the value of the building directly with Mr. Leung. While this process is perfectly appropriate in the normal course, where parties retain their own experts, in this case, the court had directed a value to be obtained jointly from an agreed valuator. This is an important direction in my view. It was a court order. It was not a court suggestion. How the scope widened such that both parties retained their own experts was not addressed in the evidence. However, as Mr. Kertzman candidly admitted, the land value question is a subjective question of opinion, and I prefer Mr. Leung’s approach for a number of reasons.
[43] First, Mr. Leung was the most “independent” of the three experts who testified. Justice Pierce had directed the parties to obtain one expert. Mr. Leung was the only expert who consulted both parties in coming to his opinion, albeit only minimally with Mr. Locke. Second, given the $1.9 million value of the building attributed by the independent land appraiser, Mr. Kertzman’s overall opinion of value of the shares at $1.8 million – less than the value of the buildings – does not persuade me that it is as reliable an opinion of value as Mr. Leung’s. From looking at the financials of the company in the five years leading up to 2014, the business was growing, it had acquired a new building, and it was experiencing a positive cash flow without a significant degree of debt. LII presents as a solid business in August 2014. I am persuaded that its shareholding value was more accurately reflected in the higher value attributed to it by Mr. Leung. Third, in my view, Mr. Kertzman’s report and evidence was aimed largely at criticizing Mr. Leung’s report. I did not see this as offending against Mr. Kertzman’s duty to the court, but it was more in the nature of advocating for one position as opposed to giving the court the most impartial and objective evidence on the matter.
[44] Mr. Martindale testified as an expert for Mr. Locke. He, too, was properly qualified to give an opinion of value of the shares of LII. I find he gave his evidence in a forthright, credible and effective manner. His opinion of value was very close to that of Mr. Leung. For me, it acted as a kind of check on Mr. Leung. In any event, I prefer Mr. Leung’s evidence of value as the best evidence to assist the court on the issue of value for the reasons stated above.
[45] Accordingly, I find that the value of all common shares of LII as of August 26, 2014, was $2,870,000.00.
Minority Discount
[46] Mr. Locke argued no minority discount should be applied in determining the value of the 20 common shares of LII owned by 1833340. Mr. Quast argued that a minority discount of 25% should be applied.
[47] A minority discount is an economic concept that relies on free market experience. Generally, the offer to purchase a minority share position in a closely held company is not as attractive as a majority or equal position, because the minority will be practically unable to assert any control over the direction of the affairs of the company. This leads to a lessening of the value of the shares and a “minority discount”. On the other hand, in oppression proceedings, generally speaking, valuations should be made without reference to a minority discount (see Markus Koehnen, Oppression and Related Remedies (Toronto: Thomson Carswell, 2004), at p. 370, citing, among otheres, Naneff v. Con-Crete Holdings (1995), 1995 CanLII 959 (ON CA), 23 O.R. (3d) 481 (C.A.), at 493). This approach relies on the theory that but for the oppression, the sale of shares would not occur and the minority shareholder could continue to enjoy the benefits of share ownership equivalent to the full pro rata value of whatever percentage position was held. A sale in a circumstance of oppression often allows a majority shareholder to consolidate their holdings, which is considered beneficial. Conceptually allowing a minority discount on an occasion of oppression is a reward of behavior the legislature has disavowed by enacting the oppression remedy sections of the OBCA.
[48] In this matter, Pierce J. has found no oppression on the part of the respondents. Nevertheless, the shares have been ordered purchased following a determination of their value.
[49] Practically, Mr. Quast and his holding company will be consolidating its position as the result of this litigation. This is a benefit to him. The valuators all reduced their value based on the preference shares held by Mr. Quast. These preference shares do not appear on the shareholder register for LII. Mr. Locke argued that Mr. Quast froze the value of LII as of 2008 by having the company recognize these preference shares. Accordingly, Mr. Locke argues the intent of the parties was to share 80/20 in the increase in value of LII post-2008 and no minority discount is applicable.
[50] On the other hand, Mr. Locke is receiving value for shares for which he paid one dollar. No doubt he contributed to the growth and success of the company leading up to its August 2014 value. However, he was brought into LII on a minority basis. There was no evidence to suggest he would have been offered to increase his position to that of a 50% owner, for example, nor be offered the opportunity to buy out Mr. Quast. These facts, in my view, militate towards a valuation that gives recognition to an open market approach to value as opposed to one that reflects a sale arising from oppressive conduct.
[51] The valuators all provided an opinion on the quantum of a minority discount. Mr. Leung proposed a range of between 25% to 30%, and the other two valuators proposed 27.5%. They all acknowledged this amount was based on their overall experience and the trends they had seen in the case law. In this matter, I find that a minority discount of 20% is appropriate. In my view, it represents a fair amount for the reasons stated above. As there was no finding of oppression, a value that represents the impact of an open market sale is most fair and equitable in all the circumstances of this case.
Value of 20 Common Shares of LII
[52] I therefore find the 20 Common Shares of LII owned by 1833340 as of August 26, 2014, are valued at $459,200.00 ($2,870,000.00 X .20= $574,000 less 20% = $459,200.00).
Prejudgment interest
[53] Mr. Locke argues that prejudgment interest at the rate established by the Courts of Justice Act, R.S.O. 1990, c. C.43, for the third quarter of 2014 should be applied to any award in this matter. Mr. Quast argues that no interest should be paid.
[54] In my view, LII has had the benefit of the value of the 1833340 shares since 2014. 1833340 has not, and will not, be able to share in any growth in value of the company since August 26, 2014. In my view, this entitles 1833340 to be paid interest on the value of the shares awarded by this judgment calculated at the Courts of Justice Act rate for the third quarter of 2014. Therefore, the rate of prejudgment interest will be 1.3% up to June 1, 2021. Post judgment interest at the published rate for the second quarter of 2021 will also be applicable to the amount awarded by this judgment, commencing June 1, 2021.
Who is to buy the Shares?
[55] In submissions, counsel for Mr. Locke argued that LII should buy the 20 common shares from 1833340. Mr. Quast agreed. It is thereby ordered that the respondent LII pay 1833340 the sum of $459,200.00 plus interest for the 20 common shares owned by 1833340. Upon receipt of payment in full plus interest, 1833340 shall surrender its shares to LII, and Mr. Locke will resign as an officer and director of the company.
Costs
[56] Parties shall make submissions in writing regarding costs. Costs submissions shall be no more than two pages double spaced. The only acceptable exhibits to the submissions will be a bill of costs and copies of any relevant offers to settle. The Applicant will submit first. Their submissions shall be served and filed on or before June 18, 2021. The Respondents shall reply on or before June 25, 2021. If no costs submissions are received by June 28, 2021, the court will assume costs have been resolved between the parties.
Final Order
[57] Order to go for LII to pay 1833340 the sum of $459,200.00 plus pre- and post judgment interest, following which its shares are surrendered. Costs to be determined. The parties may request a case conference with Fitzpatrick J. which is to occur on or before June 11, 2021, if there are any issues concerning the text of the formal order required to implement this judgment.
[58] The court thanks Mr. Clark and Mr. Quast for their patient, cooperative and professional approach to conducting this trial during this difficult time of the pandemic.
“original signed by” The Hon. Mr. Justice F.B. Fitzpatrick
Released: June 1, 2021
COURT FILE NO.: CV-14-0520-00
DATE: 2021-06-01
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
ANDREW LOCKE and 1833340 ONTARIO LTD.
Applicants
- and –
UWE QUAST and LAKEHEAD IRONWORKS INC.
Respondents
JUDGMENT ON TRIAL OF ISSUES
Fitzpatrick J.
Released: June 1, 2021
/cjj