Mera v. Sana, 2012 NUCJ 27

Nunavunmi Maligaliuqtiit NUNAVUT COURT OF JUSTICE Cour de justice du Nunavut Citation: Mera v. Sana, 2012 NUCJ 27 Date: 20121130 Docket: 08-12-425 Registry: Iqaluit Applicant: Veronique Mera -and- Respondent: Benoit Heneault and Sana Investment Inc. ________________________________________________________________________ Before: The Honourable Madam Justice Cooper Counsel (Applicant): Philip W. Augustine Counsel (Respondent): Self-Represented Location Heard: Iqaluit, Nunavut Date Heard: November 30, 2012 Matters: Business Corporations Act, S.N.W.T. 1996, c. 19, s. 216(1) (b) (Nunavut) REASONS FOR JUDGMENT (NOTE: This document may have been edited for publication)

I. BACKGROUND [ 1 ] Sana Investment Inc. was incorporated in 2005 and carries on the business of real estate development, largely in the City of Iqaluit. Mera and Heneault are the sole directors and shareholders of the Corporation. For many years they also lived together as common-law partners. [ 2 ] The common-law relationship ended in approximately 2009 and with it came difficulties in the managing and operation of the Corporation. In the fall of 2011, Mera brought an application for interim and permanent relief pursuant to section 216 (1) (

a) of the Business Corporations Act, S.N.W.T. 1996, c. 19 (Nunavut) [the Act], for an oppression remedy, essentially seeking to gain control of the Corporation so that certain projects could be completed. In December 2011, the court denied the application for interim relief. [ 3 ] The matter is now before the court in the context of a new action filed by Mera, seeking the appointment of a liquidator, receiver or receiver/manager for the Corporation, an order for liquidation and dissolution of the company, and various directions regarding how the income and assets of the company are to be managed in the interim. Mera relies upon section 216(1)(

b) of the Act. II. EVIDENCE [ 4 ] The current assets of the Company are: a residence that was used by the parties as their home during their relationship, a building that consists of both commercial and residential units (Building 5100), and various vehicles and tools. [ 5 ] Following the dismissal in December 2011 of Mera's application for interim relief, there was some cooperation between the parties. Both parties agreed to a sale of the residence formerly shared by them. They agreed that the net proceeds from that sale be held in trust pending an agreement by the parties or a court order as to distribution.

Heneault agreed to sign all documentation necessary for the Corporation to secure further funding for the purposes of completing Building 5100. There was also further agreement regarding access by the parties to Building 5100 and to the Corporation's financial records. [ 6 ] The Court has been advised that, while the sale of the residence has been completed and the money is now being held in trust, Heneault has failed to comply with other aspects of the agreement.

Perhaps the most significant failure to comply was his failure to sign all of the documents necessary to secure additional financing for the Corporation. This financing is required to complete the building so that it can be leased or sold. [ 7 ] The Corporation is in significant debt. Building 5100 is not fully leased. It is alleged by Mera that one of the reasons for this is the refusal of Heneault to cooperate in showing the premises to prospective tenants.

A number of potential tenants expressed an interest in leasing a portion of Building 5100, but because of delays in settling a lease, they ultimately signed leases with other landlords. There have also been opportunities to sell the building, but again, these potential sales have been lost, perhaps at least partially due to the lack of real communication between the parties.

Although a sale of Building 5100 may or may not satisfy the debt, it would undoubtedly minimize the ongoing losses of the Corporation. [ 8 ] It is unnecessary to review all of the evidence that supports the proposition that the parties can no longer work together in the best interests of the Corporation. The evidence in this regard is compelling. [ 9 ] Further, the evidence also suggests that the parties are essentially in agreement that Building 5100 should be sold and the business relationship brought to an end.

III. THE LAW [ 10 ] Section 216(1)(

b) of the Act provides: The Court may order the liquidation and dissolution of a corporation or any of its affiliated corporations on the application of a shareholder, … (

b) if the court is satisfied that … (ii) it is just and equitable that the corporation should be liquidated and dissolved. [ 11 ] There is ample authority for the proposition that disputes between shareholders resulting in deadlock and an inability to make decisions in the best interests of the corporation is a sufficient basis for granting an order for its liquidation and dissolution. Such is the case in this instance. IV. ISSUES RESPECTING NOTICE [ 12 ] At the hearing in December 2011, both parties were represented by counsel and both provided affidavit evidence to the court.

The court at that time was not satisfied that the criteria for granting an interim remedy under the oppression provisions of the Act had been met and therefore the application for interim relief was dismissed, with costs to be in the cause. [ 13 ] Subsequent to the December 2011 hearing, it appears that the relationship between the parties continued to deteriorate. [ 14 ] Mera retained new counsel and brought the within application. The application was returnable on August 22, 2012. Heneault was personally served on July 23, 2012 with Notice of the August 22, 2012 court date.

Mera did not serve Heneault's counsel as Mera's counsel had been advised that Heneault's counsel was no longer acting on his behalf. On approximately August 21, 2012, Mera's counsel filed a Consent Order [the Order], which had been signed by Heneault. The Order resolved some of the issues that were to be determined at the August 22, 2012, court application, particularly in relation to the residence that the parties had formerly shared.

The Order provided that the balance of the issues would be dealt with in court on October 17, 2012. [ 15 ] The chambers judge directed that the matter be put on the chambers list for September 19, 2012. Mera's counsel filed a Notice of Motion returnable September 19, 2012, and served the Notice of Motion and supporting documents on Heneault by email. Unfortunately, the service by email did not comply with the Practice Directive of the court.

Heneault had not previously consented to being served by email, and there was nothing in the Affidavit of Service to assure the court that Heneault had actual notice of the September 19th, 2012, court date. [ 16 ] Heneault did not appear on September 19th, 2012. He has not made efforts to contact the court to determine the status of the matter. [ 17 ] While I have concerns regarding service in this matter, I am prepared to make an Order, as the relief which that I will grant will not prejudice Heneault and will, in fact, be to his benefit as a shareholder of the Corporation. V.

CONCLUSION [ 18 ] There will be an Order as follows:

1. The proceeds from the sale of House #5054A shall be held in trust pending further order of the Court. 2. Director's Resolution No. 1, dated May 16, 2009, which grants Heneault sole authority to sign on behalf of the Corporation, is vacated. 3. There will be a third party Receiver/Manager appointed to manage the affairs of the Corporation. Mera may apply to the court, on notice to Heneault, to have the Receiver/Manager approved and the terms and conditions of the appointment settled, including remuneration for the Receiver/Manager. 4. The Receiver/Manager will have the authority to:

i) sign contracts, including leases, on behalf of the Corporation; ii) borrow money on behalf of the Corporation and secure loans against Corporate assets; iii) pay debts and operating expenses of the Corporation; iv) sell Corporate assets; and

v) apply to the court for liquidation and dissolution of the Corporation. 5. The parties, Mera and Heneault, shall be granted access to the assets of the Corporation at the discretion of the Receiver/Manager. 6. The parties, Mera and Heneault, shall be granted access to the financial records of the Corporation. 7. This Order shall be prepared and filed in both English and French and copies of each served on Heneault, who shall have five clear business days from the date of service to file with the court an application to have the Order set aside, failing which the Order shall take effect. 8.

Counsel may serve Heneault by email, provided that: i. Counsel can satisfy the Court that the email is regularly used by Heneault; and ii. Counsel can establish that the email was received by Heneault. Dated at the City of Iqaluit this 30th day of November, 2012 ___________________ Justice S. Cooper Nunavut Court of Justice