2023 QCCA 298, 2023 QCCA 298

Istanboulian c. Kalajian 2023 QCCA 298 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-030166-227 (500-17-119227-216) DATE: March 1, 2023 CORAM: THE HONOURABLE ROBERT M. MAINVILLE, J.A. STEPHEN W. HAMILTON, J.A. CHRISTINE BAUDOUIN, J.A. ASPID ISTANBOULIAN SEVAN ISTANBOULIAN GESTION FAMILLE ISTANBOULIAN INC. APPELLANTS – Defendants v. HOVANES JOHN KALAJIAN RESPONDENT – Plaintiff 9200-1973 QUÉBEC INC. 9200-1965 QUÉBEC INC. 9297-2686 QUÉBEC INC. 9140-3188 QUÉBEC INC.

IMPLEADED PARTIES – Impleaded parties JUDGMENT [ 1 ] This is an appeal from a judgment rendered on July 13, 2022, by the Superior Court, district of Montreal (the Honourable Guylène Beaugé), which granted in part the Appellants’ application and referred one of the Respondent’s three causes of action to arbitration. [1] By this appeal, the Appellants seek to have the other two causes of action referred to arbitration. [ 2 ] The Respondent and the Appellant company are equal shareholders of two companies, 9200-1973 Québec inc. (“TMC Rosemère”), which operates a bistro and prepares and supplies pastries and cakes, and 9200-1965 Québec inc. (“9200”), which, until 2019, owned the building in which TMC Rosemère operates.

There are also other entities owned by the Appellants, referred to in the proceedings and the judgment under appeal as TMC Laurier, TMC Notre-Dame, TMC Berri and Della Corte. [ 3 ] In November 2021, the Respondent sued the Appellants.

The relevant proceeding is the Amended Originating Application dated May 13, 2022. [2] The Respondent alleges essentially three causes of action: 1. he is claiming half of the amount of $514,961 allegedly owed by TMC Laurier, TMC Notre-Dame and TMC Berri to TMC Rosemère; 2. he is claiming $212,500, alleging that 9200 guaranteed a loan of $425,000 to Della Corte which was repaid out of the proceeds of sale when 9200 sold the building; [3] and 3. he is claiming $558,238, alleging that he never received his share of the net proceeds of sale when 9200 sold the building. [ 4 ] The Appellants filed a motion on June 1 st , 2022, to have the matter referred to arbitration pursuant to the arbitration agreement in the TMC Rosemère Unanimous Shareholders’ Agreement: 12.1 Should a dispute arise among the Parties touching upon any decisions affecting the Parties of the carrying on of the business of the COMPANY pursuant to this Agreement or otherwise, the parties covenant and agree to avoid the necessity of legal proceedings, that such dispute as a condition precedent must be submitted to and settled by arbitration. [ 5 ] There is no such arbitration agreement for the other companies. [ 6 ] The judge concluded that only the first cause of action was covered by the arbitration agreement.

That conclusion with respect to the first cause of action is not contested on appeal. The Appellants argue on appeal that the other two causes of action should also be covered.

[ 7 ] The appeal will be dismissed. [ 8 ] The trial judge found that the arbitration agreement covered only disputes “ touchant les activités de l’entreprise ” and not “ tout différend étranger aux activités de TMC Rosemère ”. [4] This

interpretation of the arbitration agreement does not suffer from a palpable and overriding error justifying the Court’s intervention. The clause is unambiguous. It states that it applies to disputes “touching upon any decisions affecting the Parties of the carrying on the business of the Company”. The phrase “or otherwise” qualifies only the source of the dispute (“pursuant to this Agreement ( i.e. , the Unanimous Shareholders’ Agreement) or otherwise”), but not its subject-matter. [ 9 ] The second and third causes of action clearly relate to the affairs of 9200 and not TMC Rosemère.

The facts that TMC Rosemère operates out of the premises owned by 9200 and that the corporations have the same shareholders are not sufficient to give the arbitrator jurisdiction. The situation is sufficiently clear that we do not need to refer this issue to the arbitrator and allow him to decide first. [ 10 ] Finally, the Appellants made a claim for $15,000 under

Article 342 C.C.P (which they increase to $35,000 on appeal) to sanction the Respondent’s “intentional petition to the wrong forum”. The trial judge dismissed the claim. Given the dismissal of the appeal, the Court will do the same. FOR THESE REASONS, THE COURT: [ 11 ] DISMISSES the appeal, with costs of the appeal only. ROBERT M. MAINVILLE, J.A. STEPHEN W. HAMILTON, J.A. CHRISTINE BAUDOUIN, J.A. Mtre Simon Grant GILBERT SÉGUIN GUILBAULT For Appellants Mtre Simon Rainville LAPOINTE ROSENSTEIN MARCHAND MELANÇON For Respondent Date of hearing: February 24, 2023