Wolfe et al v Taylor et al, 2017 MBCA 124

Citation: Wolfe et al v Taylor et al , 2017 MBCA 124 Date: 20171229 Docket: AI17-30-08862 IN THE COURT OF APPEAL OF MANITOBA Coram: Mr. Justice Michel A. Monnin Madam Justice Freda M. Steel Mr. Justice Christopher J. Mainella BETWEEN : ) F. J. Trippier and LINCOLN WOLFE and 5606269 ) A. K. Anjoubault MANITOBA LTD. ) for the Appellants ) ) R. A. McFadyen (Applicants) Respondents ) for the Respondents ) ) J. J. B. Burnell - and - ) on a watching brief for ) Deloitte Restructuring Inc. ) DUANNE TAYLOR, 5608067 MANITOBA ) Appeal heard and LTD., TAYLOR BROS.

FARM LTD. and ) Decision pronounced: EDWIN POTATO GROWERS LTD. ) December 6, 2017 ) ) Written reasons: (Respondents) Appellants ) December 29, 2017 On appeal from Fat Cat Farms Ltd v Wolfe et al; Fat Cat Farms et al v Wolfe et al; Wolfe et al v Taylor et al; Wolfe and 5606269 Manitoba Ltd v Taylor et al , 2017 MBQB 76 MONNIN JA (for the Court): [ 1 ] This appeal by Duanne Taylor (Taylor) and 5608067 Manitoba Ltd. (collectively, the appellants) from an application judge’s order for the liquidation and dissolution of Taylor Bros.

Farm Ltd. (TBF) and Edwin Potato Growers Ltd. (EPG) is the latest salvo in a heavily contested dispute between the parties who, at one time, carried on a farm operation as partners. The order in question was made pursuant to

section 49 of The Arbitration Act , CCSM c A120 (the Arbitration Act ), confirming an award made by an arbitrator. The relevant portions of that

section provide as follows: Enforcement of award 49(1) A person who is entitled to enforce an award made in Manitoba or elsewhere in Canada may make an application to the court to that effect. Court may enforce awards 49(8) The court has the same powers with respect to the enforcement of awards as with respect to the enforcement of its own judgments.

[ 2 ] The appellants allege that the application judge erred in issuing a liquidation order in the absence of a finding of oppressive conduct and/or in the absence of a finding that it was just and equitable that the order be issued. See

section 207 of The Corporations Act , CCSM c C225 (the Corporations Act ). [ 3 ] Following the hearing of the appeal, we dismissed the appeal with costs. We were of the view that there was no merit to the appeal. These are our reasons for so concluding. [ 4 ] A comprehensive history of what has transpired between the parties is to be found in reasons that Hamilton JA released on August 11, 2017, denying the appellants’ application for leave to appeal the very order which is the subject matter of this appeal (see Wolfe et al v Taylor et al; Fat Cat Farms Ltd et al v Wolfe et al , 2017 MBCA 74 ).

Also instructive in fully understanding this matter and our reasons for dismissing the appeal, are the reasons of Dewar J released on February 3, 2016, wherein he ordered that the parties’ dispute be resolved by way of arbitration. See 2016 MBQB 27 . [ 5 ] A brief

summary of that history indicates the following: − In March 2015, the appellants commenced an oppression remedy application pursuant to

section 234 of the Corporations Act . − In August 2015, Lincoln Wolfe (Wolfe) and 5606269 Manitoba Ltd. (collectively, the respondents) commenced an action pursuant to

section 207 of the Corporations Act seeking an order providing for the liquidation of TBF and EPG and the appointment of a liquidator. − The appellants responded to the liquidation application with a notice to arbitrate pursuant to the provisions of an amended unanimous shareholders agreement (the shareholders agreement). − In February 2016, Dewar J accepted that the issue of liquidation, amongst others, should be determined by way of arbitration, and stayed the liquidation proceedings pending the completion of the arbitration process. − On April 20, 2016, the arbitrator released his initial award followed thereafter by a number of subsequent awards; they provided that Wolfe and Taylor agreed “to have TBF and EPG cease operations to proceed with a liquidation of the assets of the corporations”, Taylor “agreed to waive their buy-sell rights” under the shareholders agreement, “the circumstance[s] in this case . . . lead to the conclusion that a winding up of TBF and EPG is warranted” and that “it is just and equitable to order the liquidation of the assets of TBF and EPG and the dissolution of the corporations.” − The respondents then sought to have the awards confirmed before a judge of the Court of Queen’s Bench pursuant to

section 49 of the Arbitration Act . Before the application judge, the appellants unsuccessfully argued that the arbitrator’s awards should be set aside. The appellants argued that their rights to procedural fairness had been denied and that their rights under the arbitration agreement had not been observed. − The application judge dismissed the appellants’ application to set aside the awards. As stated earlier, he issued the liquidation order being appealed, pursuant to

section 49 of the Arbitration Act enforcing the arbitrator’s order to liquidate TBF and EPG and appointed Deloitte Restructuring Inc. for that purpose ( see 2017 MBQB 76 ). In dismissing the awards, he wrote (at paras 9-10): While the agreed upon issues for arbitration did not specifically include a question with respect to the commencement or expiration of the 30 day “shotgun” period, the “shotgun” rights are a matter arising under the [shareholders agreement] for TBF. As noted by counsel for Wolfe, the arbitration clause found at

Article 10.8 of the [shareholders agreement] is very broad and applies to disputes “concerning any question relating to” the [shareholders agreement]. The jurisdiction of the arbitrator in this respect was implicitly, if not expressly, recognized by Taylor as he sought clarification and input from the arbitrator on the issue of his “shotgun” rights. Furthermore, the issue of whether the 30 day period had expired was fairly and reasonably considered by the arbitrator and set out in his detailed decision dated October 17, 2016.

In my opinion, his decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law and is therefore entitled to deference. Accordingly, I decline to set the award aside on this basis. − The application judge denied the appellants’ motion for a stay of the liquidation order. − The appellants then sought leave to appeal the application judge’s order. The appellants’ grounds for seeking leave to appeal are set out in Hamilton JA’s reasons (at paras 43-45, 47-49): Taylor appeals the liquidation order pronounced by the application judge.

TBF and EPG are also named appellants. The stated grounds in the notice of appeal are: 1. the application judge should have set aside the September 7 award, the October 5 award and the October 17 award; 2. the application judge should have held that the arbitrator had not given Taylor a proper opportunity to respond prior to amending his

decision of the September 7 award thereby failing to provide the [appellants] an opportunity to respond to another party’s case and should have set aside the arbitrator’s decision pursuant to sections 45(1)(c), (

f) and (

g) of the [ Arbitration ] Act ; 3. the application judge should have held that the arbitrator’s decision with respect to the expiration of the 30-day buy-sell period was contrary to the law, the evidence and the weight of the evidence and should have set aside the arbitrator’s decision as being unreasonable and contrary to sections 45(1)(c), (

f) and (

g) of the [ Arbitration ] Act ; and 4. the liquidation order, if allowed to stand, would result in an injustice, or in the alternative, an unreasonable result. Taylor filed a notice of motion for a stay of the liquidation order, pending the appeal. This is one of the matters before me. The other two matters before me are the two applications by Fat Cat Farms and Taylor seeking leave to appeal, pursuant to

section 48 of the [ Arbitration ] Act . The first concerns the decision of the application judge dismissing their application to set aside the September 7 award. The second concerns the decision of the application judge dismissing their application to set aside the October 5 award and the October 17 award. The grounds in support of the leave applications are as follows: 1. The application judge erred in finding that the shotgun rights, including the 30-day exercise period, were matters arising under the shareholders agreement; 2.

The application judge erred in finding that the arbitrator had jurisdiction to make the award with respect to the shotgun period; 3. The application judge erred in applying the standard of reasonableness, and not correctness, to the arbitrator’s decision with respect to the shotgun period as it was a jurisdictional issue; and 4. The application judge erred in finding that the arbitrator’s decision with respect to the shotgun period was reasonable.

Taylor’s fundamental position is that the arbitrator’s liquidation order to liquidate TBF and EPG is contrary to the terms of the mediation agreement, which Taylor asserts sets out the rules, guidelines, scope and the limits of the arbitrator’s jurisdiction. Taylor argues that the arbitrator did not follow the procedures set out in the mediation agreement and therefore, he did not have the jurisdiction to deal with the shotgun issue and decide that the shotgun period had expired. Therefore, he had no jurisdiction to order the liquidation order.

Relying on Rolling River School Division v Rolling River Teachers’ Association of the Manitoba Teachers’ Society et al , 2009 MBCA 38 , Taylor says that this jurisdictional issue called for a review by the application judge on the standard of correctness, not reasonableness.

Further, Taylor argues that because the appeal of the liquidation order does not require leave (which Wolfe acknowledges appears to be the case), the motion for the stay of the liquidation order should be the focus of my analysis and should inform the outcome of the leave applications. − In denying leave, Hamilton JA wrote (at paras 52, 57, 71): The issues raised in the motion for the stay of the liquidation order and the applications for leave to appeal are inextricably intertwined.

I agree with Wolfe that my decision on the leave applications will be crucial for my consideration of Taylor’s motion for the stay of the liquidation order. This is so, because there are no independent grounds of appeal concerning the liquidation order. Furthermore, the liquidation order granted by the application judge was simply an order pursuant to

section 49 of the [ Arbitration ] Act to enforce an award. If leave is not granted with respect to the application judge’s decision not to set aside the awards underpinning the liquidation order, Taylor’s motion for the stay is without foundation. Accordingly, I will deal with the leave applications first.

There is no merit to Taylor’s position that the application judge erred when he dismissed the application to set aside the September 7award. First, Taylor’s counsel had notice that Wolfe’s counsel was seeking clarification about the interest rate noted in the

summary ofthe August 24 award. There are no procedural or unfairness issues here. Second, the arbitrator acknowledged he erred in how heexpressed the interest rate in the

summary of the August 24 award. The application judge correctly concluded that the arbitrator wassimply correcting that error, which he was entitled to do pursuant to section 43(1) of the [Arbitration] Act: Given these conclusions, Taylor’s asserted ground of appeal that the application judge relied on the wrong standard of review inconcluding the arbitrator had jurisdiction is not persuasive. In any event, I note that the application judge’s reference to the standard ofreview of reasonableness was in the context of his review of the award itself, not the jurisdictional issue that he addressed.

Theapplication judge made no reference to a standard of review in that regard. [6] Before us, the appellants now raise a ground of appeal that was not argued, either before the application judge orbefore the chambers judge on their leave application; that is that the application judge erred in issuing a liquidation order in the absenceof a finding of oppressive conduct and/or that it was just and equitable that the order be issued. [7] In Samborski Garden Supplies Ltd v MacDonald (Rural Municipality), 2015 MBCA 26, this Court stated thefollowing with respect to grounds of appeal being raised that were not raised before the judge whose disposition is being appealed (atpara 27): As a general rule, an issue not pleaded or raised in the trial court should not be considered on appeal (Quan v.

Cusson, 2009 SCC 62 atpara. 36, [2009] 3 S.C.R. 712; and St. Clements (Rural Municipality) v. Zucawich, 2013 MBCA 65 at paras. 94-98, 294 Man.R. (2d)146). Departure from that rule may occur exceptionally, but only where there is a risk of an injustice and the issue can be decidedwithout further evidence or procedural prejudice to any party (Quan at para. 37; R. v. C.J. (1997), (MB CA), 115Man.R. (2d) 72 (C.A.); R. v. Mian, 2014 SCC 54 at paras. 41, 51-52; Performance Industries Ltd. v. Sylvan Lake Golf & Tennis ClubLtd., 2002 SCC 19 at paras. 32-33, [2002] 1 S.C.R. 678; Athey v.

Leonati, (SCC), [1996] 3 S.C.R. 458 at paras. 51-52;and Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42 at para. 58, [2002] 2 S.C.R. 559). [8] This, in and of itself, would have been sufficient for our denying the appeal. However, we do so, because there is nomerit to the ground on which the appellants seek to rely.

The matter of oppressive conduct and/or that it was just and equitable wereaddressed by the arbitrator who made those exact findings and those findings were then incorporated in the application judge’s ordermade pursuant to the Arbitration Act. [9] With the application judge’s confirmation of the arbitration award and leave to appeal being denied, this matter waseffectively at an end. Accordingly, the appeal is dismissed with costs. JA JA JA