Court File and Parties

Court File Nos.: CV-20-640907-00CL; CV-21-655525-00CL; CV-21-659278-00CL Date: 2023-03-28 Superior Court of Justice - Ontario

Re: DOUG MIDDLETON, Applicant, And: DIRECT BROADCAST SATELLITE COMMUNICATIONS CORP., THE BENEFITS GROUP INC. and MARK BER, Respondents

And Between: JDP GROUP LTD. and JASON MIDDLETON, Applicants And: DIRECT BROADCAST SATELLITE COMMUNICATIONS CORP., PRODUCERS PLANNING GROUP LTD., THE BENEFITS GROUP INC., THORNBRIDGE CAPTIAL INC. and MARK BER, Respondents

And Between: DIRECT BROADCASTING SATELLITE COMMUNICATIONS CORP., THE PRODUCERS GROUP LTD. and MARK BER, Applicants And: JDM GROUP LTD., PRODUCERS PLANNING GROUP INC., THE BENEFITS GROUP INC. THORNBRIDGE CAPITAL GROUP INC., DOUG MIDDLETON and JASON MIDDLETON, Respondents

Before: Cavanagh J.

Counsel: Howard Borlack, Stephen Barbier and Ben Tustain for Doug Middleton, JDM Group Ltd. and Jason Middleton Kevin L. MacDonald and Jamie Sanderson for Direct Broadcasting Satellite Communications Corp., The Producers Group Ltd. and Mark Ber

Heard: In Writing

Costs Endorsement

[1] On December 30, 2022, I released an endorsement with my disposition of three related applications that were heard together, although they were not consolidated.

[2] The form of Order was settled and the parties approved the Order that was issued.

[3] The issues in the three applications involved the rights of shareholders of three private companies: Producers Planning Group Ltd. (“PPG”), The Benefits Group Inc. (“TBG”), and Thornbridge Capital Inc. (“Thornbridge”).

[4] The Order provides (i) for the appointment of a sales officer to carry out a process for the sale of the business and assets of PPG and TBG; (ii) that, except to the extent that relief is awarded in accordance with the terms of the Order, the claims made by the applicants in each of the three applications (including remedies for oppressions) are dismissed; and (iii) that any interested party may apply to this court for an order winding up PPG and TBG as may be deemed necessary after the sales process is completed.

[5] This is my decision with respect to costs.

Parties

[6] The JDM Group Ltd. and Jason Middleton are referred to as the “JDM Parties”.

[7] The JDM Parties and Doug Middleton (“Doug”) (together, the “Middleton Parties”) were represented by the same legal counsel.

[8] Mark Ber and Direct Satellite Communications Corp. (“DBS”) are referred to as the “Ber Parties”.

[9] The Ber Parties are respondents to the application commenced by the JDM Parties and to the application commenced by Doug.

[10] The Middleton Parties are respondents to the application commenced by the Ber Parties.

Positions of the Parties

[11] The Middleton Parties submit that they were substantially successful on the applications by obtaining an order winding up PPG and TBG and by successfully defending the claims of oppression and breach of fiduciary duty made by the Ber Parties. They seek costs of the applications from the Ber Parties on a substantial indemnity basis (in the amount of $691,552.37 plus disbursements in the amount of $52,356.17) or, alternatively, on a partial indemnity basis (in the amount of $219,732.90) to February 13, 2022 and thereafter on a substantial indemnity basis (in the amount of $282,393.90) for a total of $567,403.28 plus disbursements in the amount of $52,356.17.

[12] The Ber Parties submit that there was divided success on the application commenced by the JDM Parties and the application commenced by the Ber Parties because the central issues in each application involved claims for remedies for oppression and these claims were dismissed. The Ber Parties submit that there should be no costs of these applications. The Ber Parties submit that they were successful on the application commenced by Doug and seek costs of this application on a partial indemnity scale in the amount of $135,988.19.

[13] The positions of the parties must be viewed in the context of the issues raised in the three applications, most importantly, in my view, the issues arising from the claims of oppression.

[14] Claims for remedies for oppression in respect of PPG and TBG were made by the applicant or applicants in each of the three applications. Much of the affidavit evidence filed on the applications was directed to these issues. No party took the position on the applications that the shareholders were not deadlocked and no party sought a disposition that would leave the status quo in place. At the hearing of the applications, it was made clear that if the oppression relief claimed by the parties on their respective applications were to be denied to all applicants, the parties were seeking a disposition that would allow them to go their separate ways.

The Application by the JDM Parties against the Ber Parties

[15] In their Amended Notice of Application (that was amended at the hearing), the JDM parties sought (a) an order winding up and dissolving PPG and TBG; (b) in the alternative, an order directing the Ber Parties to purchase JDM’s shares in TBG and PPG, failing which those companies will be dissolved; (c) an order directing Thornbridge to transfer 50% of its investment assets to JDM in consideration for the redemption of JDM’s shares and other nominal consideration; (c) a declaration that the Ber Parties have caused the business or affairs of PPG, TBG and Thornbridge to be operated in a manner that is oppressive toward the JDM Parties, (d) interim and permanent injunctive relief because of alleged oppressive conduct; and (e) damages for oppression in the amount of $1 million against the Ber Parties.

[16] In their factum filed for use at the hearing of the three applications, the JDM Parties submitted that relief was warranted under s. 207(1)(a) of the OBCA in that Mark has clearly carried on the affairs of the Companies in a way that is oppressive to Doug and Jason. They contended that Mark had engaged in a scorched earth approach involving reprisals against Doug and Jason. The JDM Parties sought relief to disentangle them from their business dealings with Mark to address his oppression.

[17] In their factum, the JDM Parties sought an Order under s. 207(1) of the OBCA as described in their factum. The JDM Parties proposed that the Order first give Mark a period of 30 days to buy out the JDM Parties’ interest in TBG, PPG and Thornbridge, in addition to orders compensating Jason for unpaid salary draws, dividing cash on hand, and redeeming JDM’s shares in Thornbridge in exchange for an assignment to JDM of a proportionate share of Thornbridge’s investments. The JDM parties proposed that if, after 30 days, Mark has not taken steps to purchase JDM’s shares or Jason’s unpaid salary draws have not been repaid, an Order appointing a liquidator to wind-up the companies be made.

[18] The Middleton Parties rely on an Offer to Settle dated February 14, 2022 made by the JDM Parties pursuant to Rule 49 of the Rules of Civil Procedure. The Offer to Settle offers to settle the JDM application on terms that Mark and/or DBS shall purchase JDM’s 50% shares in PPG for $700,000 or, alternatively, the parties shall agree to an order for the winding up and dissolution of PPG and the appointment of a receiver. The Offer to Settle provides that Mark and DBS agree to the assignment of 50% of the partnership units held by Thornbridge in certain real estate investments to JDM and JDM shall redeem its 50% shares in Thornbridge back to Thornbridge for a nominal value or, in the alternative, the parties shall agree to an order for the winding up and dissolution of PPG (sic) and the appointment of a receiver. The Offer to Settle provides for payment of costs on a partial indemnity scale by Mark Ber.

[19] No order was made in respect of Thornbridge. No order was made against Mark Ber. The JDM Parties did not obtain a judgment that was as favourable or more favourable than the terms of the Offer to Settle. As a result, the Offer to Settle does not trigger costs consequences under the Rules.

[20] It was open to the JDM Parties to limit the relief claimed in their application to an order winding up PPG and TBG and directing the sale of their assets, or substantially similar relief, without making claims for oppression. They did not do so. The claims by the JDM Parties, as amended when the application was heard, included claims for substantial relief for oppression including $1 million in damages. The Ber Parties were not obliged to accept the Offer to Settle by the JDM Parties or to make a counteroffer. In the circumstances, I do not consider the decision by the Ber Parties not to accept the Offer to Settle to influence my decision as to costs.

[21] The JDM Parties were unsuccessful on the claims for oppression. There was no finding of oppression against the Ber Parties. No injunctive relief was granted. No damages were awarded. No remedy in respect of Thornbridge was ordered. Although the Order that was issued provides for a sale of the businesses and assets of PPG and TPG (which gives effect to the requested winding up and dissolution order), because of the acknowledgement by all parties that there was a breakdown in trust among the shareholders, this issue was not, in my view, seriously contentious (if I were to conclude, as I did, that the oppression remedy claims in all three applications should be dismissed).

The Application by the Ber Parties against the JDM Parties and against Doug

[22] In their Notice of Application, the Ber Parties sought remedies against the JDM Parties and against Doug for oppression including a requested order that Jason acquire all of the Ber Parties’ interest in PPG, TBG and the PG owned book of business as a remedy to the dissolution of PPG and TBG (in an amount to be determined and subject to terms as determined by the Court), an accounting, and damages for oppression.

[23] In their factum, the Ber Parties contended that Jason and Doug acted oppressively against them in various ways, including through alleged breaches of their fiduciary duties as directors, and sought declaratory relief in this respect. The Ber Parties requested that the JDM Parties and Doug be ordered to purchase the interest of the Ber Parties in PPG and TBG, an accounting of commissions and other income earned by Jason and Doug and compensation for amounts diverted by them, and an order directing the trial of valuation and accounting issues. The Ber Parties claimed damages against Jason and Doug for inducing breach of contract in an amount to be determined.

[24] The Ber Parties were unsuccessful on the central contentious issue on their application, that is, whether a remedy against the JDM Parties or against Doug for oppression should be ordered.

Doug Middleton’s Application against the Ber Parties

[25] In his Notice of Application, Doug claimed (a) an order winding up and dissolving TBG, (b) a declaration that the Ber Parties acted oppressively in relation to Doug’s interests, interim and permanent injunctive relief, and damages for oppression in the amount of $1 million. At the hearing, Doug withdrew his claim for damages.

[26] The Judgment providing for the sale of TBG gives effect to Doug’s claim for a winding up order in respect of TBG. To this extent, Doug’s application was successful. If this was the only issue on his application, Doug would be entitled to an award of costs. However, Doug did not so limit his claims. He made claims for substantial relief for oppression. Doug was unsuccessful in obtaining an order for relief for oppression.

Disposition as to Costs

[27] The respondents in each of the three applications were substantially successful.

[28] The Ber Parties were substantially successful in opposing the application by the JDM Parties because they were successful on the central contentious issue involving claims for oppression. The JDM Parties were substantially successful in opposing the application by the Ber Parties for the same reason. Doug was substantially successful in opposing the application by the Ber Parties. The Ber parties were substantially successful in opposing Doug’s application.

[29] Although there were three separate applications that were heard together, the issues overlapped considerably. The costs of the successful respondents in each application would be largely offset by the costs for which these parties would be liable as the applicants in another application.

[30] Given my determinations as to who the successful and unsuccessful parties were on these three applications, the appropriate disposition as to costs of each of the three applications is that there be no order as to costs. I so order.

Cavanagh J. Date: March 28, 2023