2022 QCCA 905, 2022 QCCA 905

Kaulins-Plaskacz c. Pine & Birch Ranch and Rentals Inc. 2022 QCCA 905 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-700038-219 (550-17-010085-171) DATE: June 22, 2022 BEFORE THE HONOURABLE BENOÎT MOORE, J.A. ILZE LAIMA KAULINS-PLASKACZ, in her capacity as liquidator of the estate of John Plaskacz APPELLANT – Plaintiff v. PINE & BIRCH RANCH AND RENTALS INC. 167957 CANADA INC., also known as southridge development THE PLASKACZ FAMILY TRUST Todd Plaskacz RESPONDENTS – Defendants and Remax québec ouest inc. john plackacz services inc.

IMPLEADED PARTIES – Third Parties and wayne johannsen FRÉDÉRIC ALLALI IMPLEADED PARTIES JUDGMENT [ 1 ] The appellant is the liquidator of the estate of her late husband, John Plaskacz. As such, she owns approximately 50% of the shares of respondents Pine and Birch Ranch and Rentals Inc. (“Pine and Birch”) and 167957 Canada Inc. (“167957”), the latter also being known as Southridge Developments (collectively, the “Companies”). [ 2 ] She appeals against a judgment rendered on May 18, 2021, by the Superior Court, District of Gatineau (the Honourable Mr.

Justice Michel Déziel), [1] which dismissed her application for an oppression remedy against respondent Todd Plaskacz, her brother-in- law, who is the Companies’ director. [ 3 ] At trial, the Companies were represented by the same lawyer, Mtre Antony Paul Robert. Respondent Todd Plaskacz was self- represented and the trust had not filed an appearance. [ 4 ] On appeal, Mtre Frédéric Allali, who had previously represented Pine and Birch in another dispute, filed an appearance for all the respondents. The appellant thus applied to the Court to disqualify Mtre Allali.

A few days before the hearing of that application, Todd Plaskacz substituted for Mtre Allali by filing a non-representation statement. [ 5 ] In a judgment dated March 11, 2022, [2] our Court concluded that since the dispute is between two equal shareholders, there is a conflict of interest in having the same lawyer represent the shareholder-manager and the Companies. It found that this conflict subsisted even after Mtre Allali had ceased representing Todd Plaskacz. The Court therefore disqualified Mtre Allali from representing the Companies.

It also appointed an independent director for each of the Companies (Mtre Joseph Gorman for 167957 and Mtre Gilles Laflamme for Pine and Birch), whose sole task would be to appoint and instruct independent lawyers to represent the Companies for purposes of this appeal. [ 6 ] On March 2, 2022, Mtre Robert filed a representation statement for Todd Plaskacz. [ 7 ] I have now before me two applications filed by the appellant: an appeal management application under art. 378 of the Code of Civil Procedure and an application to disqualify Todd Plaskacz’s counsel, Mtre Robert, who represented the Companies at trial.

[ 8 ] I will first address the appeal management application, in which the appellant has made requests with respect to two matters. At the outset, I wish to point out, as I did at the hearing, the futility of a number of elements of the present debate and how very regrettable is it that the time and resources of the parties and of the Court are being consumed by such requests. [ 9 ] The first matter pertains to possession of the copies of the appellant’s brief intended for the Companies.

The appellant asks me to order Mtre Allali, the Companies’ former counsel, to provide these copies to Mtre Gorman and Mtre Laflamme. At the hearing, Mtre Allali informed me that electronic copies had already been sent. As for the paper copies, he undertook to provide them, excluding his annotations. I will take notice of this undertaking and fix a 10-day time limit for fulfilling it. [ 10 ] The second matter pertains to the payment of the lawyers appointed to represent the Companies.

In accordance with the March 11, 2022, judgment, Mtre Gorman appointed Mtre Nicolas Thibault-Bernier to represent 167957 and Mtre Laflamme appointed Mtre McMartin to represent Pine and Birch. In both instances, a request was made to Todd Plaskacz, as director of the Companies, to make deposits in the amount of $5,000. It is alleged that Todd Plaskacz has failed or refused to make these deposits and that he contacted Mtre Gorman to inform him that he was terminating his mandate.

The appellant therefore asks me to order Todd Plaskacz to make the required deposits, using the Companies’ assets, and to pay all future fees.

She also asks that I declare him “guilty” of abuse of procedure and condemn him to pay $5,000 in extrajudicial fees. [ 11 ] The Court’s judgment dated March 11, 2022, sought to ensure that the case could move forward and that, having regard to the allegations of oppression made against respondent Todd Plaskacz, the shareholder-manager, the Companies’ decisions pertaining to this dispute would be made by neutral directors. [ 12 ] Despite this, at the hearing before me, respondent Todd Plaskacz refused to undertake to make the payments requested by the directors appointed in accordance with said judgment.

In support of his refusal, he reiterated that there is no need for the Companies to be represented in this appeal, all the more so given that my colleague, Vauclair, J.A., refused to grant the Companies an extension to file their briefs and that a certificate of foreclosure was issued on May 10, 2022. [ 13 ] The appellant, however, still maintains that it is necessary for the Companies to be represented. [ 14 ] The parties are therefore in the same situation as they were last March.

That said, I would point out that, in its judgment, the Court wrote the following: [14] Appellant seeks to have independent counsel appointed to represent the corporate entities. As in many similar cases, where the dispute is essentially between the two shareholders, it is questionable whether the companies actually need to be represented by attorneys in the appeal. However, since there is no agreement between the parties and given the disqualification of Mtre Allali, the mechanism suggested by Appellant will be included in the Court’s order – i.e. in exercise of the Court’s jurisdiction under s. 241

Canada Business Corporations Act, the two notaries suggested by Appellant will be named as directors for the sole and limited purpose of appointing and instructing lawyers to represent each of the companies in this case.

Should the two shareholders subsequently and unanimously resolve to vote their shares for another solution, they can renounce to this part of the judgment and put in place their solution. [Reference omitted] [ 15 ] Since there is still no agreement between the parties, Todd Plaskacz cannot unilaterally decide that Mtre Gorman’s mandate is over, nor can he refuse to implement the decisions of the directors who have been appointed, without thereby running afoul of the Court’s judgment.

Failing an undertaking by him, I will therefore order him to make the payments requested by the directors appointed in accordance with the judgment dated March 11, 2022. [ 16 ] As for declaring respondent Todd Plaskacz’s conduct to be an abuse of procedure, if indeed I have jurisdiction to adjudicate the matter, on which I express no opinion, it should be referred to the panel that will hear the case on its merits. [ 17 ] The second application before me is an application to have Todd Plaskacz’s lawyer, Mtre Robert, disqualified.

In this application, the appellant also asks that I disqualify Mtre Allali from representing Todd Plaskacz. This “preventive” application was made because Mtre Allali allegedly expressed his interest in representing Todd Plaskacz if Mtre Robert were disqualified. Lastly, the appellant asks me to declare that Todd Plaskacz’s conduct represents an abuse of procedure and to condemn him to pay $8,000 in extrajudicial fees. [ 18 ] A judge of the Court sitting alone has jurisdiction to hear an application for disqualification [3] because it is an incidental application under art. 378 C.C.P .

I would also point out that the principles regarding conflicts of interest, the obligation of loyalty and the need to protect the integrity of the justice system apply in the same manner to appeals. [4] The appellant therefore argues that Mtre Robert cannot represent Todd Plaskacz because he represented the Companies at trial.

She is of the view that Todd Plaskacz’s interests may be contrary to or diverge from those of the Companies, such that not only would it be impossible for Mtre Robert to abide by his duty of loyalty both to his client and to his former clients, but respondent Todd Plaskacz would obtain an undue advantage.

The appellant also argues that such a scenario is contrary to the spirit of the Court’s judgment, of which I take the opportunity to cite a passage: [5] [12] In the circumstances of this case, the same attorneys clearly cannot represent the companies and a 50% shareholder who is the manager of the companies and in fact the “active partner”. The Respondents’ attempt to remedy this by personal Respondent self representing may or may not be genuine. However, the fact that personal Respondent self represents does not change that he, as the director of the corporations, will instruct Mtre Allali.

The dispute is between the two individuals. If not already reflected in the record, the degree of conflict between the individuals was only emphasized at the hearing by the tone and content of personal Respondent’s representations. Any attorney representing the companies should be neutral as to the conflictual situation between the two shareholders. That the mandate of the companies’ lawyers may emanate from the director as a matter of law, does not have any impact on the conflictual situation here where the personal litigants are equal shareholders and one of which is the sole director of the corporate entities.

Consequently, Mtre Allali and his firm are in a conflict of interest. Moreover, given the existing relationship with personal Respondent, Mtre Allali does not have the independence to represent the corporate entities. Accordingly, he should be disqualified from representing the corporate Respondents as well as the trust.

[ 19 ] Although the situation at hand is not identical, I find that the appellant is right to argue that the spirit of the March 11, 2022, judgment requires that Mtre Robert be disqualified. [ 20 ] Pursuant to that judgment, Mtre Robert would not have been entitled to represent the Companies and Todd Plaskacz concurrently. Nor, in my view, can he do so successively without, in so doing, violating his obligation of loyalty to the Companies and, indirectly, to their shareholders, including the appellant.

Such a practice would only favour the shareholder-manager, who would benefit from the work performed by the Companies’ lawyer, whose fees were paid by them and were therefore borne equally by the appellant and respondent Todd Plaskacz. Such an outcome is not acceptable within the context of an oppression remedy.

In light of all of the circumstances of the case at bar, I therefore find that having Mtre Robert represent the interests of respondent Todd Plaskacz is likely to undermine confidence in the administration of justice in the eyes of a reasonably informed member of the public. [6] [ 21 ] As for the application with respect to Mtre Allali, not only was the application not notified to him, such that he only became aware of it at the hearing, but at this stage it is hypothetical. I will therefore not grant it.

I would point out, however, that this case must be able to move forward and that the parties, as well as their current or future counsel, must, in determining their actions, take notice of the various—and already numerous—judgments rendered. In this regard, and for greater certainty, I remind the parties that Mtre Allali has been disqualified from representing the Companies by reason of his connection to respondent Todd Plaskacz and that Mtre Robert is being disqualified today from representing Todd Plaskacz because he previously acted as counsel to the Companies.

These decisions cannot be ignored and should undoubtedly guide the parties. [ 22 ] Lastly, as regards the application to declare Todd Plaskacz’s conduct to be an abuse of procedure, for the same reasons set out above, it will be referred to the panel that will hear the case on its merits.

FOR THESE REASONS, THE UNDERSIGNED: With respect to the application for appeal management: [ 23 ] TAKES NOTICE of Mtre Frédéric Allali’s undertaking to provide Mtre Joseph Gorman and Mtre Gilles Laflamme with paper copies of the appellant’s brief intended for the Companies, without any annotations, within 10 days of this judgment; [ 24 ] ORDERS Todd Plaskacz to take the necessary steps to cause the Companies to make the deposits or pay the invoices of their lawyers who were appointed in accordance with the judgment dated March 11, 2022, by the directors, Mtre Joseph Gorman and Mtre Gilles Laflamme; [ 25 ] REFERS the conclusions regarding the application to declare respondent Todd Plaskacz’s conduct to be an abuse of procedure and claiming $5,000 in extrajudicial fees to the panel that will hear the case on its merits; [ 26 ] LEGAL COSTS to follow.

With respect to the application to disqualify Mtre Anthony Paul Robert: [ 27 ] GRANTS the application in part; [ 28 ] DECLARES that Mtre Anthony Paul Robert is disqualified from representing respondent Todd Plaskacz for purposes of this appeal; [ 29 ] REFERS the conclusions regarding the application to declare respondent Todd Plaskacz’s conduct to be an abuse of procedure and claiming $8,000 in extrajudicial fees to the panel that will hear the case on the merits; [ 30 ] DISMISSES the other conclusions; [ 31 ] LEGAL COSTS to follow. BENOÎT MOORE, J.A.

Mtre Dani Ann Robichaud LA BOÎTE JURIDIQUE For Ilze Laima Kaulins-Plaskacz Mtre Anthony Paul Robert ANTHONY PAUL ROBERT, AVOCAT / LAWYER For Todd Plaskacz Date of hearing: June 17, 2022