Venini v Venini, 2023 ABKB 601

Court of King’s Bench of Alberta Citation: Venini v Venini, 2023 ABKB 601 Date: 20231023 Docket: 1901 10836 Registry: Calgary Between: George Frederick Venini and David Venini Applicants - and - Eugene Venini Respondent _______________________________________________________ Reasons for Decision of the Honourable Justice M.A. Marion _______________________________________________________ I. Introduction and Background [ 1 ] This matter relates to an ongoing dispute amongst four siblings each holding 25% of the shares in a closely-held family business started or continued by their father in 1946.

For ease of reference, I refer to the family-members by their first names. The siblings are George Venini ( George ), David Venini ( David ), Eugene Venini ( Eugene ) and Mary Ann Lyons (née Venini) ( Mary Ann ). Their corporation is John G Venini Investments Limited ( JGVI ). [ 2 ] On April 12, 2023, I heard an originating application filed by George and David seeking: (

a) an order declaring that Eugene may not vote at a JGVI directors’ meeting with respect to Eugene’s employment with JGVI pursuant to section 120(6) of the Alberta Business Corporations Act , RSA 2000 c. B-9 ( ABCA ); (

b) an order declaring that Eugene’s employment with JGVI be set aside pursuant to section 120(9) of the ABCA ; and (

c) an order directing that Eugene’s legal costs in respect of this application cannot be paid by JGVI. [ 3 ] On September 15, 2023, I granted an order by which I: (1) declared that Eugene was not permitted to vote at a director’s meeting on May 6, 2019 and, in doing so, breached section 120(6) of the ABCA ; and (2) declared that Eugene is not entitled to vote on any future JGVI directors’ vote about the termination of Eugene’s employment, provided that none of the exceptions in section 120(6) of the ABCA apply ( Vote Declaration ). I refused George and David’s request for a declaration that Eugene’s employment should be set

aside pursuant to section 120(9) of the ABCA. I gave reasons for my decision: Venini v Venini, 2023 ABKB 524. [4] On October 6, 2023, Eugene appealed the first two paragraphs of my order noted above. He then applied to stay the VoteDeclaration aspect of my decision pending appeal pursuant to rule 14.48(

a) of the Alberta Rules of Court, Alta Reg 124/2010 (Rules). Hefiled an affidavit and was questioned on that affidavit. The transcript of the questioning was before me and has been filed. I heard theapplication on October 19, 2023 and ordered a temporary interim stay of the Vote Declaration pending my decision. This is my decision. II. Issue [5] The issue is whether the Vote Declaration should be stayed pending appeal. III.

Analysis [6] Under rule 14.48, the applicant seeking a stay must show: (1) that there is a serious question to be considered on appeal, (2)that the applicant will suffer irreparable harm if the stay is not granted, and (3) that the balance of convenience favours granting the stay:Stokes v Heck, 2023 ABCA 39 at para 5; Dugandzic v Collins, 2023 ABCA 103 at para ; Snowball v Ham Estate, 2021 ABCA 358 atpara 4, citing RJR-MacDonald Inc v Canada (Attorney General), (SCC), [1994] 1 SCR 311 at 334-335, 111 DLR(4th) 385. [7] Even if the tripartite test is not met, the court must decide whether the interests of justice call for a stay: Lloyd-Martinez vMartinez, 2021 ABCA 13 at para 9; Santoro v Bank of Montreal, 2018 ABCA 264 at para 4.

A. Is There a Serious Question to be Considered on Appeal? [8] The test for determining whether the appeal is arguable or not has a low threshold: Stokes at para 6; Aubin v QuantiamTechnologies Inc, 2022 ABCA 125 at para 8, citing Polansky Electronics Ltd v AGT Limited, 2000 ABCA 46 at para 11.

It does notrequire an examination of the merits of the case, but rather simply involves an assessment of whether the appeal is frivolous orvexatious: Stokes, citing Polansky Electronics at para 11, in turn citing RJR-MacDonald at 334; AB v College of Physicians andSurgeons of Alberta, 2021 ABCA 320 at para 47. [9] In Venini, I interpreted

section 120 of the ABCA. Eugene plans to argue on appeal, among other things, that I interpreted themeaning of “transaction” too broadly, relying on Canadian Broadcasting Corp Pension Plan v BF Realty Holdings Ltd, , 10 BLR (3d) 188 and (ONSC) and Computershare Trust Company of Canada v Crystallex International Corporation, (ONSC). [10] Statutory

interpretation is a question of law that will engage a correctness standard of review on appeal: Stubicar v Calgary(Subdivision and Development Appeal Board), 2022 ABCA 299at para 16, citing Housen v Nikolaisen, 2002 SCC 33. [11] Eugene has sufficiently established that there is a serious question to be considered on appeal. His appeal is not a frivolous orvexatious. B.

Will Eugene Suffer Irreparable Harm if a Stay is Not Granted? [12] The second branch of the test has been summarized by Feehan JA in Poole v City Wide Towing and Recovery Service Ltd,2020 ABCA 102, at para 20: On the second branch of the test, the issue is “whether a refusal to grant relief could so adversely affect the applicants’ own interests thatthe harm could not be remedied if the eventual decision on the merits does not accord with the result of the interlocutory application”(RJR-MacDonald, 341).

Irreparable harm refers to the nature of the harm suffered rather than its magnitude: “[i]t is harm which eithercannot be quantified in monetary terms or which cannot be cured” (341 and 348).

In some cases, inability to recover costs in conjunctionwith other factors qualifies as irreparable harm: Canadian Natural Resources Ltd v Wood Buffalo (Regional Municipality), 2011ABQB 220, paras 62-69, 516 AR 51, and where an appeal is rendered moot without the granting of a stay there is a rebuttablepresumption that irreparable harm is inevitable: Patel v Tulan, 2015 ABCA 384, paras 16-17, 612 AR 42. [13] The reference in Poole to the “applicants’ own interests” reflects that irreparable harm usually must be to that of the applicantand not potential harm to third parties or entities without legal standing: Columbia National Investments Ltd v Abbotsford (City), 2007BCSC 386 at para 33. [14] The latter point made in Poole recognizes that irreparable harm will generally be established when a refusal to grant a staymight render an appeal nugatory: Prosper Petroleum Ltd v Her Majesty the Queen in Right of Alberta, 2020 ABCA 85 Knox vConservative Party of Canada, 2007 ABCA 143 at para 17; Maverick Equities Inc v The Owners: Condominium Plan No 942 2336,2008 ABCA 190 at para 11. [15] Further, evidence of irreparable harm must be clear and not speculative: EnCharis Community Housing and Service vAlberta Securities Commission, 2019 ABCA 177 at para 23; Modry v Alberta Health Services, 2015 ABCA 265 at para 82. [16] In this case, following the release of my decision, George circulated a notice of a JGVI directors’ meeting.

Eugene isconcerned that George intends to bring a motion to terminate Eugene’s employment and that Eugene will not be entitled to vote unless astay is granted. I suspect he further believes that if a stay is granted then George will not bring the motion for a directors’ vote at all.

Eugene argues that a directors’ vote on his termination, without a stay, will cause irreparable harm because he will lose his long-standing employment, he will have difficulty finding another job given his age and lack of other experience, JGVI will be disrupted pending the appeal given that he has been managing its business for many years, and that his termination will damage JGVI. He also argues his appeal will be rendered nugatory if the stay is not granted. [ 17 ] George and David argue that Eugene’s application is based on speculation or lack of proof of irreparable harm.

It is true that there is no direct evidence as to what George and David will do if the stay is not granted. For example, there is no evidence of their actual intention to hold a vote, or what the proposed resolution might be so that it could be assessed to see if any exceptions under section 120(6) of the ABCA might apply. Further, there is no evidence as to what Mary Ann’s position would likely be if there was to be a vote at this time (some four years after the May 2019 vote that was addressed in Venini ).

So it is arguably speculative as to whether a stay would prevent Eugene’s termination in any event even if he was allowed to vote.

It is also unclear whether, if Eugene’s employment was in fact terminated, JGVI would provide him a period of reasonable working notice or immediate termination with payment of severance – a reasonable notice period could potentially mitigate or eliminate some possible irreparable harm. [ 18 ] However, given the lack of responding evidence from George and David, it is reasonable based on the evidence before me on this application, and that was before me on George and David’s application, to infer that Mary Ann continues to support Eugene’s employment and that George and David would initiate a JGVI directors’ vote to terminate Eugene’s employment if no stay is granted.

George and David’s core purpose in these proceedings has been to terminate Eugene’s employment and they have not suggested they are willing to continue to wait for the outcome of the appeal. [ 19 ] George and David further argue that, even assuming a directors’ vote terminating Eugene’s employment will occur if the stay is not granted, Eugene has not established irreparable harm. They argue that Eugene cannot claim disruption to JGVI as irreparable harm to Eugene because JGVI is a separate entity. Further, they argue that any harm to Eugene is simply monetary or compensable in damages.

They also argue that if he is terminated and Eugene is successful on appeal, JGVI (or potentially the court under

section 242 of the ABCA ), can set aside the directors’ vote and reinstate his employment, even if JGVI has put contracts in place with a new management company or employee during the interim period pending the appeal. [ 20 ] I agree that Eugene cannot claim harm to JGVI as irreparable harm, because JGVI is a separate entity and Eugene is a shareholder of JGVI.

However, when Eugene’s status as long-standing employee and director of JGVI are considered together, I find that he has established irreparable harm. [ 21 ] In CVD Financial Corporation v Beta Well Service Inc , 1996 ABCA 276 , two groups were fighting for control of a corporation’s board of directors. Each supported a different slate of directors. At issue was which slate was properly elected at the shareholders’ annual general meeting. At that meeting, the chairman of the board declared the management-supported slate of directors to have been elected.

Subsequently, a chambers judge declared that the “CVD slate” of directors were elected. The subject corporation appealed and sought a stay of the chambers judge’s decision pending appeal. The different slates of directors had different visions for the future management of the company. Hunt JA concluded (emphasis in original): [14] I agree that the question to be determined concerns irreparable harm to the corporation and not harm to any individual potential directors.

I also agree that the directors are duty bound to act in the best interests of the corporation and it may very well be that the actions proposed by the CVD slate are to the benefit of the corporation. It is hardly for a court to second guess duly elected directors in their business decisions. [15] However, in the circumstances of this case, it seems to me that I must take a broad view of the concept of harm to the corporation. Specifically, I must consider its officers and its employees and its overall business plans, as well as its shareholders.

The simple fact is that the CVD directors propose, quite openly, to take certain actions (such as relocating the head office) which in my view would be difficult to undo. It would not be impossible to undo those decisions, but in the meantime there is the prospect of serious dislocation to the lives of employees of the Appellant. There would also obviously be other impacts from such a decision, including changes to business arrangements and contracts, such as leases and employment contracts.

If the CVD slate proceeds with such plans, pending an appeal, their actions may effectively amount to a fait accompli , and from a practical standpoint, render the appeal nugatory. [16] I should add that I would have taken a different view of the situation had there been any indication on the part of members of the CVD slate that they were prepared to run the company on a more or less “status quo” basis until the appeal could be heard.

But they gave no such indication during the submissions. [ 22 ] CVD Financial is different because the appeal and stay application were filed by the underlying corporation (the equivalent of JGVI) and not its shareholders, directors, officers or employees. However, the Court took a more holistic view of the interests of the corporation to include employees.

Based on CVD Financial , even when it might be theoretically possible to reverse a course of action that will likely be taken by a corporation’s directing minds pending an appeal, if it is practically not feasible to do so, or will effectively result in a fait accompli , that may sometimes render the appeal nugatory or support a finding of irreparable harm. [ 23 ] CVD Financial provides some support for Eugene’s position as an employee of JGVI, however, the steps that were likely to be taken in CVD Financial pending the appeal were more disruptive and much more difficult to undo that in this case.

If Eugene was only an employee, and his termination was the only basis he argued irreparable harm, I may not have found him to have established irreparable harm. [ 24 ] In my view, however, Eugene’s interests as a current director must also be considered. JGVI’s shareholders have not taken any steps that I am aware of to remove Eugene as a director during this long-standing dispute. As a director, subject to the provisions of the ABCA at issue in this action, and JGVI’s bylaws, he has the right to vote on resolutions of JGVI’s board.

There is some authority that the loss of a right to vote is a loss that is not compensable in damages and gives rise to irreparable harm. [ 25 ] In Boucher v Métis Nation of Alberta Association , 2008 ABQB 262 , the applicant Boucher sought to quash a Métis Judiciary Council decision finding that he contravened conflict of interest provisions in the Métis Nation of Alberta Bylaws. His application was dismissed, he appealed and applied for a stay of the decision. In granting the stay, Côté JA said this:

Would denying a stay work irreparable prejudice or make the appeal nugatory? One can usually not be certain. But here there is some sworn evidence that the Provincial Council of the Métis Nation of Alberta is now split between two factions on many issues. Though that is not a happy result, democracy sometimes does that. The evidence suggests that if the appellant is removed, that will produce a tie which Audrey Poitras can break with her casting vote as an ex-officio member. I believe that would cause some irreparable harm to the appellant and his allies .

In addition, the appellant is one of the two elected representatives for one region. Without a stay, they will lose his services and votes irreparably. [ 26 ] There is also authority from Ontario that has held that the loss of a right to vote pending an appeal is not quantifiable in money and constitutes irreparable harm: Malik v Sabha , 2018 ONSC 5317 at para 27 ; Deol v Ontario Khalsa Darbar , 2015 ONSC 6256 at para 21 . To the opposite effect, see: Singh v Sandhu , 2013 ONSC 6479 at para 11 .

I prefer the analysis in Malik and Deol and find that the loss of a validly-elected director’s right to vote pending appeal can give rise to irreparable harm. [ 27 ] In all the circumstances, I find that the collective harm caused to Eugene would render the appeal nugatory, both legally and practically, due to the potential loss of his right to vote as a director and the disruption to his long-standing employment which may not be practically reversed if he is successful on appeal. He has sufficiently established irreparable harm. C.

Does the Balance of Convenience Support a Stay? [ 28 ] At this stage, the court must consider which of the parties will suffer greater harm from the granting or refusal of the stay pending the appeal: Stokes at para 13 ; Knelsen Sand & Gravel Ltd v Harco Enterprises Ltd , 2021 ABCA 362 at para 9 ; RJR- MacDonald at 334.

The court must assess the severity of the harm and identify the party that should not be ordered to endure that adversity associated with either granting or dismissing the application because it exceeds that the other party will experience: Knelsen at para 9; B ruderheim Community Church v Board of Elders of the Canadian District of the Moravian Church in America , 2017 ABCA 343 at para 103 . [ 29 ] If a stay is not granted it is likely that David and George will bring a directors’ resolution to terminate Eugene’s employment.

Eugene will lose the only employment he has known for many years, and will be put at significant uncertainty about his future employment. Until the appeal is resolved, he won’t know whether he should be looking for a new job. On the other hand, as noted in my reasons in Venini at para 109 , David and George, as directors and shareholders, delayed in taking any steps to address or confirm Eugene’s employment after events that took place in 2016-2018.

Then, during the lengthy wait to have their application heard, they agreed not to take steps pending the outcome of their application and to preserve the status quo pending clarification of the parties’ rights by the court. While I acknowledge that David and George would like to be able to move on to direct the affairs of JGVI now that they have my decision, I find that the balance of convenience favours a stay pending the appeal. IV.

Conclusion [ 30 ] I grant a stay of the Vote Declaration portion of my order pending Eugene’s appeal. [ 31 ] Costs of this application are deferred to be dealt with as may be determined or directed by the Court of Appeal following Eugene’s appeal. Heard on the 19 th day of October, 2023. Dated at the City of Calgary, Alberta this 23 rd day of October 2023. M.A. Marion J.C.K.B.A. Appearances: Peter W. K. Ridout for the Applicant, Eugene Venini Robyn Graham for the Respondents, George Frederick Venini and David Venini