Katz v. Babkat Inc. et al., 2012 MBCA 68

Citation: Katz v. Babkat Inc. et al., 2012 MBCA 68 Date: 20120618 Dockets: AI 11-30-07518; AI 12-30-07713 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Freda M. Steel Mr. Justice Marc M. Monnin Mr. Justice Alan D. MacInnes BETWEEN : ALEC KATZ ) L. M. Smordin ) for the Appellants (Applicant) Respondent ) ) D. G. Hill and - and - ) S.

Cadili ) for the Respondent BABKAT INC. and ) ARMIK BABAKHANIANS ) Appeals heard and ) Decision pronounced: (Respondents) Appellants ) June 18, 2012 STEEL and MONNIN JJ.A. (for the Court): 1 These two appeals deal with a declaratory order under the provisions of ss. 231 and 234 of The Corporations Act , C.C.S.M., c. C225, declaring that the individual appellant’s conduct was unfairly prejudicial and unfairly disregarded the respondent’s interests. 2 The appellants allege that the judge erred in hearing the matter in a

summary fashion as opposed to directing a trial of the issue. 3 This is a discretionary order. If a judge has committed no error in either law or fact, his order should not be interfered with unless it is so clearly wrong as to amount to an injustice. See Danylchuk et al. v. Wolinsky et al. , 2007 MBCA 132 at para. 36 , 225 Man.R. (2d) 2 , and Zhang v. Chik et al. , 2012 MBCA 28 , 94 B.L.R. (4th) 10 . 4 Moreover, where there are undisputed material facts, it is preferable both for the parties and the interests of justice that the matter be decided in a

summary fashion as opposed to subjecting the parties to the expense and inconvenience of an unnecessary trial. There were undisputed material facts here that allowed the application judge to make his decision in a

summary fashion. 5 The appellants also appeal from the decision of the application judge ordering that, following upon the declaration of unfair prejudice, the appellants pay the respondent the fair value of his interests in Babkat Inc. He set that at $1,872,228, derived as follows (at para. 36): (

a) the fair value of the applicant’s shares in Babkat based on an estimated market value for the Property of $3,127,500 … $1,541,543 (

b) the (undisputed) value of the applicant’s shareholder loan $41,950 (

c) the amounts awarded to the applicant by the

Arbitrator plus interest as calculated by Mr. Martyszenko $288,735 6 The appellants allege that the valuation of the shares was excessive as the application judge chose a midpoint between the evidence of value of the two evaluators presented by each party.

It was reasonable to do so given the acknowledged expertise of both experts and we see no error in the decision of the application judge. 7 The appellants also question the repayment of the respondent’s shareholder loan on the ground that, since the only asset of the corporation was the property, the fair value of the shares included the shareholder loans of each party. 8 That is not in accordance with the evidence of the respondent’s expert, Mr. Alan Martyszenko, who, at the hearing, valued the shares separate and apart from the shareholder loans.

He was not cross-examined on the point. 9 We see no error in the application judge’s decision to order repayment of the shareholder loan of the respondent. 10 The appellants also argue that the interest rate of 7.4 per cent, ordered by the application judge in respect of the arbitration award, was unreasonable. 11 We note that the application judge explains his choice of interest rate in his judgment of November 22, 2011, beginning at para. 23. The interest rate chosen was one supported by the evidence.

In fact, the application judge found that, based on the evidence, a corporate guarantee would not have been required and therefore, a three per cent premium was not justified. The application judge chose and found that the rate of 7.4 per cent was reasonable based on the evidence adduced. We see no ground for interference. 12 Both appeals are dismissed. There will be one set of costs to the respondent, plus disbursements. J.A. J.A. J.A.