2023 QCCA 949, 2023 QCCA 949

Kaulins-Plaskacz c. Pine & Birch Ranch and Rentals Inc. 2023 QCCA 949 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-700038-219 (550-17-010085-171) DATE: July 18, 2023 CORAM: THE HONOURABLE MARIE-FRANCE BICH, J.A. FRÉDÉRIC BACHAND, J.A. PETER KALICHMAN, J.A. ILZE LAIMA KAULINS-PLASKACZ, in her capacity as executor of the Late Ihor “John” Plaskacz APPELLANT – Plaintiff v. PINE & BIRCH RANCH AND RENTALS INC. 167957 CANADA INC. (also known as SOUTHRIDGE DEVELOPMENTS) TODD PLASKACZ THE PLASKACZ FAMILY TRUST RESPONDENTS – Defendants and REMAX QUÉBEC OUEST INC. JOHN PLASKACZ SERVICES INC.

WAYNE JOHANNSEN IMPLEADED PARTIES – Third Parties JUDGMENT [ 1 ] This is an appeal from a judgment rendered on May 18, 2021, by the Honourable Michel Déziel of the Superior Court, district of Gatineau, dismissing all but one of the conclusions sought in the appellant’s application for oppression remedies and recovery of loans. The judge also dismissed the appellant’s application to cancel an accepted offer to purchase. *** [ 2 ] The appellant, Ilza Laima Kaulins-Plaskacz, is the wife of the late, Ihor “John” Plaskacz ( John [1] ), and the liquidator of his succession.

It is in this capacity that she brought the proceedings at issue. [ 3 ] The respondent, Todd Plaskacz ( Todd ), was John’s brother. He and John had a close relationship, which included their participation in two corporations in which they were the sole directors and shareholders [2] , namely Pine and Birch Ranch and Rentals Inc. ( P&

B) and 167957 Canada Inc., known as Southridge Developments ( Southridge ). [ 4 ] P&B owns a property that was once occupied by the Plaskacz family and is now used for short-term rentals. It consists of five main residential buildings, a lake, a farm and a petting zoo. Southridge was set up as a real estate management and development company. As at the date of John’s death, its only remaining assets were vacant lands, which were subsequently sold for non-payment of taxes, and a multi-tenant apartment complex with two residential tenants and two commercial tenants. [ 5 ] P&B and Southridge (collectively, the Corporations ) were incorporated under the

Canada Business Corporations Act (the CBCA ) [3] and were run on an extremely informal basis for decades. Prior to John’s death, minute books were not kept up to date and financial statements were not produced. Furthermore, from an accounting standpoint, the Corporations were operated as a single entity. [ 6 ] In 2004, Todd acquired a property known as the Potvin Cottage. P&B assumed the expenses for the cottage, which was later sold to John.

In the context of that purchase, John took on a mortgage that was to be paid by P&B. [ 7 ] After John’s death in July 2016, the appellant began making inquiries into his affairs. Unsatisfied with the responses she received from Todd, she brought proceedings against him, a family trust that he had set up, known as the Plaskacz Family Trust (the Trust ), and the Corporations, alleging that her rights as a shareholder were being unfairly disregarded.

By the time the trial was heard over a seven-day period in April 2021, the appellant was seeking the reimbursement of various loans, the nomination of a liquidator to dissolve the Corporations and to sell their assets, the payment of damages to the Corporations by Todd and the Trust, a declaration that all defendants had acted abusively in their use of proceedings and an order that her legal fees be reimbursed.

[ 8 ] Over the course of the proceedings, the appellant sought several safeguard orders which the respondents did not oppose. One such order provided that appraisals be obtained for the properties belonging to the Corporations. The Southridge property was appraised at $255,000 while the P&B properties were appraised at $680,000. [ 9 ] Shortly after these appraisals were received, Todd, as sole director, accepted an offer to purchase the remaining Southridge property from its principal tenant for the appraised value of $255,000 (the Offer to Purchase ).

The appellant brought an application to annul the Offer to Purchase and Todd agreed to postpone the sale until the judge on the merits had ruled on that application. *** [ 10 ] The judgment of the Superior Court begins with a

summary of the parties’ positions, the relationship between John and Todd and the evidence regarding the appellant’s reasonable expectations as a shareholder of the Corporations. The judge then analyses each aspect of the oppression claim, namely, the appellant’s assertion that Todd had neglected the properties, including by failing to insure them, that he had used the P&B properties for his personal use, that he had charged excessive management fees, that he had failed to have audited financial statements prepared and that he had refused to provide her with a proper accounting.

Based on his analysis, the judge concludes that the appellant failed to prove her claim of oppression and that the remedies sought in that regard, including the liquidation of the Corporations, must also be dismissed. He dismisses the appellant’s application to annul the Offer to Purchase for the same reasons. [ 11 ] Regarding the allegation of procedural abuse, the judge finds that Todd cooperated with the appellant’s requests for documentation and that the defendants had in fact consented to the safeguard orders she sought.

He finds no evidence of abuse and no grounds upon which to order that Todd be required to reimburse the appellant’s legal fees. [ 12 ] With respect to the loans, the judge determines that only one must be reimbursed. [4] He dismisses the claim in regards to all the other loans based either on prescription – because the cheques filed in evidence were dated more than three years before the claim – or in keeping with an agreement that existed between John and Todd, that each would make advances to the Corporations as and when needed but would not be entitled to reimbursement. [ 13 ] Finally, the judge rejects a request by Todd to have the Corporations repurchase John’s shares, determining that since no case for oppression had been made out, such an order could not be issued. *** [ 14 ] The appellant raises several grounds of appeal, which can be summarized as follows:

a) The judge erred in failing to rule that Todd’s actions amounted to oppression.

b) The judge erred in ruling that the loans did not have to be reimbursed.

c) The judge erred in failing to annul the Offer to Purchase.

d) The judge erred in neglecting to rule on her claim for the recovery of expert costs.

e) The judge erred in failing to order that her legal expenses be reimbursed. [ 15 ] The Court will examine each ground in turn and will then deal with certain additional requests that the parties have brought.

a) Did the judge err in failing to rule that Todd had acted in an oppressive manner? [ 16 ] Before the Superior Court, the appellant alleged that since John’s death, Todd, as sole director of the Corporations, had treated her unfairly in a variety of ways. She asserted that she had a legitimate expectation that Todd would treat her as he did John and that she would be able to efficiently wind up the succession.

Chief among her claims of oppressive conduct was that Todd refused to allow her to sit as a director and failed to provide her with satisfactory accounting and access to financial information. [ 17 ] The appellant maintains that the judge erred in identifying her reasonable expectations as a shareholder and committed numerous palpable and overriding errors of fact in his analysis of the grounds of oppression, including focusing on factors that were either irrelevant or unsupported by the evidence. [ 18 ] The Court does not agree. [ 19 ] As far as reasonable expectations are concerned, the judge focuses his analysis on various factors, including the nature and past practices of the Corporations and the relationship between the parties.

There is no error in his approach to this issue, which closely

mirrors that of the Supreme Court in BCE Inc. v. 1976 Debentureholders . [5] [ 20 ] Furthermore, and contrary to what the appellant argues, there is no palpable and overriding error in the judge’s assessment of the appellant’s reasonable expectations, which is primarily fact-based and contextual.

In particular, given the appellant’s acrimonious relationship with Todd, there is no reviewable error in the judge’s determination that she could not reasonably have expected to be named a director of either Corporation. [ 21 ] With respect to oppressive conduct, the judge determines that Todd acted reasonably in managing the properties, that he did not charge excessive management fees or use the P&B properties for his personal use and that he cooperated with the appellant in attempting to satisfy her requests for information.

Though the judge’s reasons could in certain instances have been clearer and more detailed, the appellant fails to identify any palpable and overriding error. In fact, for the most part, she simply refers to vast portions of the evidence without identifying precisely where the alleged error lies and invites the Court to redo the analysis of the trial judge and come to a different conclusion.

This is not the role of an appeal court. [6] [ 22 ] It should be mentioned that insofar as financial statements are concerned, the judge determines that John and Todd had agreed not to have them audited and that the appellant was bound by that agreement. In fact, the requirement to have the financial statements audited is statutory in nature and can only be dispensed with in any given year by a resolution of the shareholders. [7] That said, this error has no bearing on the judge’s analysis or the conclusions sought.

Furthermore, as regards the preparation of financial statements after John’s death, the Superior Court had ordered that a review engagement – and not audited statements – be prepared. [8] The judge determined that the fact the review engagement could not be completed was not attributable to Todd and the appellant has demonstrated no reviewable error in that conclusion. [ 23 ] Given that the request to liquidate and dissolve the Corporations was based on the appellant’s allegations of oppression, the judge did not err in refusing to grant these remedies.

b) Did the judge err in ruling that the loans did not have to be reimbursed? [ 24 ] After John died, the appellant combed through his banking records dating back to 1998 and determined that he and two corporations in which he was the sole shareholder, John Plaskacz Services Inc. and Remax Quebec Ouest Inc., had made loans to P&B and Southridge over the years which had never been repaid.

By her account, John’s succession was owed over $60,000 by Southridge and roughly $37,000 by P&B. [ 25 ] She maintains that the judge erred in determining that these loans were prescribed and in concluding that John and Todd had an agreement that such advances did not have to be reimbursed. [ 26 ] Contrary to what the appellant argues, the judge committed no reviewable error in concluding that the loans did not have to be reimbursed. [ 27 ] Based on Todd’s uncontradicted testimony, the judge concluded that he and John had an agreement that each would make contributions to the Corporations that did not require reimbursement.

The appellant identifies no palpable and overriding error in this conclusion. In fact, as she acknowledges, she had no insight into these arrangements and John never discussed them with her. Furthermore, the existence of such an agreement was perfectly consistent with other elements of evidence, such as the harmonious – albeit informal - way in which the brothers conducted their affairs and the fact that John kept no running tally of such accounts. [ 28 ] Based on this conclusion, there is no need to consider the question of prescription.

c) Did the judge err in refusing to annul the Offer to Purchase? [ 29 ] The appellant maintains that since the sale contemplated by the Offer to Purchase constitutes the entirety of Southridge’s assets, a special resolution was required by virtue of section 189 (3) CBCA. [9] In her view, the judge erred in failing to annul the Offer to Purchase since she was a shareholder and did not provide her consent. [ 30 ] This ground of appeal must fail. [ 31 ] To the extent that the judge addresses this question at all, he appears to treat it as part of the oppression claim, which it is not.

That said, this error is not determinative since selling real estate – even if it was the sole remaining asset – was precisely what Southridge was set up to do and had done in the past. The sale, which, it should be recalled, was concluded for the appraised value, thus appears to have been made in the normal course of business and no special resolution was required.

d) Did the judge err in failing to address the appellant’s claim for reimbursement of accounting fees? [ 32 ] In an order issued by the Superior Court in December 2019, the appellant, Todd and the Corporations were each ordered to pay one third of the accounting fees required to complete a review engagement. The judge also determined that the accounting fees paid by the appellant and by Todd were to be “construed” as debts owed by the Corporations.

The order contains the following conclusion: AUTHORIZES that the accounting fees to be paid by the Plaintiff and the Defendant TODD PLASKACZ are to be construed as debt towards the later ( sic ) by the Defendants PINE AND BIRCH RANCH AND RENTALS INC. and 167957 CANADA INC. affairs; [ 33 ] The appellant submits that the judge erred in failing to order that the expert fees she incurred be reimbursed in accordance with the order of December 2019. [ 34 ] The judge committed no such error. [ 35 ] First, there is no conclusion to this effect in the appellant’s proceedings in first instance.

[ 36 ] Second, the December 2019 order merely states that the amounts paid by the appellant and by Todd are to be considered debts owing by the Corporations, which implies only that they were to be recorded as such in their books but not that they were required to be repaid immediately. Since the order was issued with the consent of the parties, it is likely that it was framed in this way because each of them knew that the Corporations did not have the funds to pay for the review engagement at that time. At any rate, the fact that the judgment contains no order to repay the fees incurred by appellant is not the result of any reviewable error by the judge.

e) The judge erred in refusing to order Todd to reimburse the appellant’s legal fees. [ 37 ] The appellant argues that considering Todd’s oppressive conduct as well as his refusal to comply with various orders issued by the Superior Court, the judge should have concluded that he had acted abusively and ordered him to reimburse her legal fees. [ 38 ] The judge did not commit a reviewable error in refusing to order that Todd reimburse the appellant’s legal fees. [ 39 ] Since the Court finds no error in the judge’s determination regarding oppression, the appellant’s claim for reimbursement of her legal fees on the same basis must also fail. [ 40 ] Similarly, since the judge did not conclude that Todd had failed to respect the various court orders issued over the course of the proceedings and since the appellant failed to demonstrate a palpable and overriding error in that conclusion, no legal fees can be claimed on this basis either. *** [ 41 ] In two separate applications, the appellant asked a judge of the Court to declare Todd’s conduct abusive and to order him to reimburse her legal fees.

These applications were referred to us. [10] [ 42 ] The first application concerns Todd’s failure to respect an order of the Court. [ 43 ] On March 11, 2022, the Court granted an application to disqualify the lawyers then acting for the Corporations and appointed directors for the limited purpose of hiring new, independent lawyers. The relevant paragraphs of that judgment read as follows: [20] APPOINTS Mtre Joseph Gorman as director of 167957 Canada Inc. for the sole and limited purpose and power of: (

i) appointing an independent lawyer to represent such company in the present appeal, such appointment to be made within thirty (30) days hereof; (ii) instructing such attorney; [21] APPOINTS Mtre Gilles Laflamme as director of Pine & Birch Ranch and Rentals Inc. for the sole and limited purpose and power of: (

i) appointing an independent lawyer to represent such company in the present appeal, such appointment to be made within thirty (30) days hereof; (ii) instructing such attorney; [11] [ 44 ] The appointed lawyers requested deposits for their fees, which Todd, as the sole director of the Corporations, refused to pay. In his view, the Corporations did not require representation.

Following an application by the appellant, a judge of the Court ordered Todd to cause the deposits to be paid: [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; [12] [ 45 ] Notwithstanding this order, the Corporations, under Todd’s direction, chose not to be represented in appeal such that no fees were ever incurred, and the deposits were never paid.

In an “ avis de gestion d’instance” dated May 25, 2022, the appellant asserted that by failing to cause the Corporations to pay the deposits Todd had violated an order of this Court, that he had thus committed an abuse of procedure and should be ordered to reimburse her legal fees in an amount of $5,000. [ 46 ] The Court does not condone Todd’s conduct. Whether or not he was correct that there was no need for the Corporations to be represented on appeal, the fact remains that he was ordered to take all necessary steps to ensure that the Corporations paid the deposits and he failed to comply with that order.

As a result, he was declared guilty of contempt of court by the Superior Court and ordered to pay a fine of $1,000. However, even if Todd’s conduct also amounted to an abuse of procedure – a question that need not be answered under the circumstances – the appellant failed to produce any evidence to support her claim for reimbursement. Furthermore, in the Court’s view, Todd’s decision not to have the Corporation’s represented on appeal resulted in less legal fees being incurred by the parties, not more.

Consequently, the appellant’s application will be dismissed. [ 47 ] The appellant presented another application dated May 25, 2022, to disqualify Todd’s then attorney which also contained a request that Todd’s conduct be found to be abusive and that he be condemned to reimburse her legal fees of $8,000. The appellant asserts that Todd’s conduct was solely intended to force her to bring additional legal proceedings and was thus abusive.

This application will be dismissed for the same reason, namely that whether or not Todd acted abusively – and the Court need not decide this issue – no evidence supporting the claim for reimbursement was produced. [ 48 ] Finally, Todd asks that the appeal be declared abusive. This conclusion was not included in his appeal brief and was only raised for the first time during the hearing. It is therefore manifestly outside the delays and will be dismissed on that basis. [ 49 ] Since both parties’ applications for abuse are dismissed, no costs will be awarded on them.

FOR THESE REASONS, THE COURT: [ 50 ] DISMISSES the appeal with judicial costs; [ 51 ] DISMISSESS the application for a declaration of abuse contained in the appellant’s “avis de gestion d’instance” dated May 25,

2022, without judicial costs; [ 52 ] DISMISSES the application for a declaration of abuse contained in the “Demande en declaration d’inhabilité de l’avocat de l’intimé Todd Plaskacz” dated May 25, 2022, without judicial costs; [ 53 ] DISMISSES the respondent’s verbal application to declare the appeal abusive, without judicial costs; MARIE-FRANCE BICH, J.A. FRÉDÉRIC BACHAND, J.A. PETER KALICHMAN, J.A. Mtre Dani Ann Robichaud LA BOÎTE JURIDIQUE For Ilze Laima Kaulins-Plaskacz, in her capacity as executor of the Late Ihor “John” Plaskacz Mtre Eric Vallières Ms. Florence Thibodeau, stagiaire McMILLAN For Todd Plaskacz Date of hearing: May 9, 2023 189

(3) A sale, lease or exchange of all or substantially all the property of a corporation other than in the ordinary course of business of the corporation requires the approval of the shareholders in accordance with subsections (4) to (8). 189

(3) Les ventes, locations ou échanges de la totalité ou la quasi-totalité des biens de la société, qui n’interviennent pas dans le cours normal de ses activités, sont soumis à l’approbation des actionnaires conformément aux paragraphes (4) à (8).