2012 QCCA 2007, 2012 QCCA 2007

Guerrera c. Damiani 2012 QCCA 2007 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-021273-107 ( 500-17-039908-077 ) MINUTES OF THE HEARING DATE: November 6, 2012 CORAM: THE HONOURABLE ALLAN R. HILTON, J.A. MARIE ST-PIERRE, J.A. CLÉMENT GASCON, J.A. APPELLANT ATTORNEY(

S) DENIS GUERRERA Mtre Armand J. Elbaz Colby, Monet, Demers, Delage & Crevier Sencrl RESPONDENTS ATTORNEY(

S) GIORGIO DAMIANI PINO FORGIONE GIANNI CARUSO 3559297 CANADA INC. GESTION GIORGIO DAMIANI 3559289 CANADA INC. RESTAURANT PRIMADONNA INC. Mtre Jean-Pierre Sheppard ROBINSON, SHEPPARD, SHAPIRO, sencrl

On appeal from a judgment rendered on November 18, 2010 by the Honourable Justice Brian Riordan of the Superior Court district of Montreal NATURE OF THE APPEAL : Companies Clerk: Marcelle Desmarais Courtroom: Antonio-Lamer HEARING 9 h 51 Representations by Mtre Armand J. Elbaz. 10 h 07 Representations by Mtre Jean-Pierre Sheppard. 10 h 17 Reply by Mtre Armand J. Elbaz. 10 h 18 End of arguments. 10 h 18 Suspension 10 h 26 Resumption. BY THE COURT: Judgment – see page 3. Marcelle Desmarais Clerk BY THE COURT JUDGMENT

[ 1 ] The appellant Denis Guerrera appeals from a judgment of the Superior Court of Quebec, District of Montreal (The Hon. Mr. Justice Brian Riordan), rendered on November 18, 2010, that granted in part only his action in oppression, pursuant to

section 241 of the

Canada Business Corporations Act . [1] Mr. Guerrera sought an order against three individual defendants, Giorgio Damiani, Pino Forgione and Gianni Caruso, their respective holding companies and their operating company, Restaurant Primadonna Inc., for a total of $225,044.24, comprised of: $55,000 for the reimbursement of his loans to the company, $90,044.24 for unpaid salary in 2005 and 2006 and $80,000 for the purchase of his shares. [ 2 ] The company was condemned to pay Mr. Guerrera $48,950 representing the advances he made to it, together with interest and the additional indemnity since January 1, 2008.

Costs were assessed against all of the defendants solidarily, however, all of Mr.

Guerrera's other claims were dismissed. [ 3 ] The appellant argues that the trial judge erred in allowing his claim for reimbursement of loans or advances only against the company, in dismissing his claim for salary, and in concluding that the respondents' conduct, as hereinafter described, did not constitute oppression: a. the transfer of $63,000 of high-end wine in October 2006 from the inventory of the Primadonna Restaurant, which the company owned and operated, to Cavalli, a restaurant owned by the individual respondents, to the exclusion of Mr.

Guerrera; b. the reduction of inventory of the company in a year when purchases increased; c. the forgiveness of debt of $359,383 in favour of a related company that operated the WAX club; d. the reimbursement of advances to the company made by the brother of one of the partners, Mr. Caruso, who was an employee of the company; e. the payment of a salary to Mr.

Damiani's wife; f. the transfer of funds into a company that was never incorporated; g. the renewal of the lease for the Primadonna Restaurant for 10 years at a point in time when it was making no money; h. the withholding of deductions at source from his salary without showing that on his income tax forms; i. the refusal to pay his salary; j. the refusal to reimburse his advances. [ 4 ] The Court concludes that the trial judge did not err in the manner the appellant argues. [ 5 ] On the topic of the advances (or loans), the trial judge rightly wrote: [23] The proof establishes that Guerrera injected a total of $48,950 into the Company by way of shareholders' loans.

He wants to be reimbursed. There is nothing in the file that would justify this claim against any of the Defendants other than the Company. [24] There is also nothing in the file that would justify his not having the right to claim reimbursement at some point. We repeat that there is no shareholders' agreement or other document restricting his right in this regard.

Although no specific term was mentioned for the repayment of the Advances and the proof does not show that Guerrera put the Company in default by letter in this regard, his action dated November 27, 2007 constitutes a sufficient mise en demeure. [25] After the calling of the loan at that date, the Company would have had a reasonable delay to repay the Advances, for example, until December 31st.

As a result, we shall grant his claim for reimbursement of the Advances and award him the sum of $48,950, with interest and the additional indemnity since January 1, 2008. [ 6 ] Dismissing the $90,044.24 claim for unpaid salary, he summed up his reasons as follows: [21] In the Court's view, Guerrera never realistically expected to be paid during the period under analysis and, in any event, there was no agreement to do. His requests for salary were half-hearted and few and far between.

He was not inexperienced in the industry and had to realize that it made absolutely no sense for the Partners to give with one hand, by injecting funds, to take even less with the other, since whatever they would have paid to themselves would have been taxable.

Rudimentary business sense would have required that, before taking any revenues, they should reimburse themselves their advances, since this would be tax free. [ 7 ] The appellant has failed to demonstrate that the trial judge made a manifest or determinative error in his findings of fact or erred in his application of the law to the facts he found to have been proven. [ 8 ] Finally, after having reviewed in detail each of the ten grounds that, in the appellant's submission, constitute oppression that would justify the forced sale of his shares to the remaining shareholders, the trial judge concluded (at paragraph 27 of his judgment) that there was "nothing fundamentally oppressive about any of these points whether viewed in isolation or together." [2] [ 9 ] A trial judge hearing an application under

section 241 of the CBCA enjoys considerable discretion [3] inasmuch as oppression is fact-specific – “Conduct that may be oppressive in one situation may not be in another”. [4] It is therefore left to the discretion of the trial judge in each case to decide whether, given the specific facts of the case, there is evidence of oppression.

[ 10 ] With respect to the role of an appellate court, Martel states the following: Puisque le recours de l'article 241 L.c.s.a. est un « remède d'équité » laissé à la discrétion du juge, ce n'est qu'exceptionnellement que la Cour d'appel intervient pour renverser sa décision”. [5] (Emphasis added.) [ 11 ] To summarize, the appellant has failed to demonstrate that the trial judge committed a manifest or determinative error in his findings of fact or in his application of the law. Moreover, he has not demonstrated that the trial judge exercised his discretion inappropriately.

FOR THESE REASONS, THE COURT: [ 12 ] DISMISSES the appeal, with costs. ALLAN R. HILTON, J.A. MARIE ST-PIERRE, J.A. CLÉMENT GASCON, J.A.