Levy v. Mosher, 2023 NSSC 129

SUPREME COURT OF Nova Scotia Citation: Levy v. Mosher , 2023 NSSC 129 Date: 20230427 Docket: Hfx , No. 519386 Registry: Halifax Between: Susan Elaine Levy Plaintiff v. Kenneth Terry Mosher Defendant Motion for Stay of Proceedings Decision Judge: The Honourable Justice Christa M. Brothers Heard: April 18, 2023, in Halifax, Nova Scotia Oral Decision: Counsel: April 19, 2023 J. Andrew Fraser, K.C., and Manon A.M.

Landry, for the Plaintiff Caitlin Plummer (for Kathryn Dumke) and Claire Wayne, for the Defendant By the Court [ 1 ] The parties, Susan Elaine Levy (“Levy”) and Kenneth Terry Mosher (“Mosher”), have been married for over 20 years. They have both been involved in Karo Horticulture Inc. (“Karo”), a company which runs a garden centre and provides landscaping, construction and property maintenance services. They are the sole owners of the business, with Mosher holding 51% of the shares and Levy 49% of the shares. Levy is a director and the secretary and treasurer of Karo, while Mosher is a director and president.

This is obviously a very closely-held company. [ 2 ] The marriage between the parties has broken down, and a divorce proceeding has been filed in the Supreme Court Family Division. Levy has also filed an oppression claim in this court. The claim advanced by Levy is that since the marriage breakdown, her roles and access to various company information have been negatively affected by the actions of Mosher, causing her rights and interest as a shareholder to be oppressed, unfairly prejudiced and unfairly disregarded.

The allegations set out in the Notice of Action filed on November 23, 2022, are voluminous, and I will not detail them here. Levy claims the business is being negatively affected by Mosher’s actions and seeks various forms of relief, including: (

c) an order that her access to the Bank Accounts, the Karo Software and her office computer be restored and not interfered with by Mr. Mosher, that her management roles in Karo and bookkeeping responsibilities be re-instated and not interfered with by Mr. Mosher, and that her counting of cash and daily accounting duties not be interfered with by Mr. Mosher; (

d) an order that she receive, and continue to receive, the pay or compensation due to her, by way of dividends or otherwise, from Karo, as in the ordinary course, without interference or obstruction by Mr. Mosher or others; …

(

f) such interim orders, as may be necessary, for preservation, disclosure of documents and examination of relevant witnesses in order to redress the ( sic ) Mr. Mosher’s oppressive conduct. (Notice of Action, para. 51) [ 3 ] In response to this action, Mosher filed a defence and counterclaim. In the counterclaim, Mosher also claims entitlement to relief under the Third

Schedule of the Companies Act , alleging that Levy is taking actions which oppress, unfairly prejudice and unfairly disregard his interest in Karo. He claims that excessive spending is draining company resources, and that mismanagement and poor business decisions are putting Karo in a vulnerable and precious business position. Like Levy, he seeks a variety of relief, including: (

b) interim relief restraining Ms. Levy from making financial decisions with respect to Karo and any operational access to Karo’s bank accounts; (

c) an interim order restraining Ms. Levy from interfering with the financial and business decisions of Mr. Mosher on behalf of Karo; … (

e) a complete accounting of any funds and/or cash monies that Mr. Levy failed to deposit in Karo’s business accounts and taken from Karo and wrongfully converted to Ms. Levy’s own use… (Counterclaim, para. 60) Background [ 4 ] The applicant, Mosher, brings this motion to stay the underlying oppression action. He argues in his written submissions that this action is an abuse of process. In oral argument, applicant’s counsel argued that the proceeding should be stayed permanently or conditionally, as the matters in the Family Division are substantially the same, involving the same parties.

The applicant argues that the parties should focus their efforts on the proceeding in the Family Division, instead of dividing efforts and focus with the oppression action. [ 5 ] The respondent, Levy, argues that the action filed in the Supreme Court, General Division is a specific action seeking remedies uniquely provided for in the Third

Schedule of the Companies Act . Levy argues that this action should not be stayed, as such an order would prevent her from accessing this court to seek and obtain remedies for Mosher’s allegedly oppressive conduct. Levy argues that the issues in the oppression action are neither pleaded, nor being determined, in the Family Division proceeding. Preliminary Evidentiary Issue [ 6 ] Before dealing with the substance of the motion, I will address a preliminary issue raised by Levy in relation to the reply affidavit filed by Ms. Caitlin Plummer. Levy contends that the entirety of the affidavit should be struck. Ms.

Plummer agreed in argument that the majority of paragraph five should be struck, and that only the following sentence should remain “The parties to the Divorce Action had a full-day settlement conference on April 5 th , 2023 before Justice Cromwell.” I will allow that sentence to remain, as it does not contain any settlement discussions and is an undisputed fact. [ 7 ] Ms. Plummer argues that the topics and issues discussed and agreed to at the judicial settlement conference in the Family Division are relevant and should remain in evidence. I disagree.

The relevant information is that the parties are involved in another proceeding, a divorce action, in the Family Division. That proceeding has distinct pleadings. These pleadings are attached to the original Caitlin Plummer affidavit and are somewhat germane for the purposes of this motion. While it is of interest that the parties have engaged in a judicial settlement conference and intend to engage in another, the contents of those discussions and topics are irrelevant to this motion and inadmissible, except to the extent that the parties have agreed that the remedies sought pursuant to the Third

Schedule of the Companies Act are neither pleaded nor sought in the family proceeding. The division of Karo is an issue in the divorce action, as Levy’s Answer indicates that she is seeking “division of the interests in Karo Horticulture Inc.” Law and Analysis [ 8 ] The court has the inherent jurisdiction to grant a stay, either on a permanent or conditional basis, in the face of an abuse of process.

Section 41(

e) of the Judicature Act codifies this power. Civil Procedure Rule 88 also recognizes the inherent authority of the court to control an abuse of process. Under Rule 88.02, Mosher has the burden to satisfy the court that: • Commencing or continuing the oppression proceeding is an abuse of process; and that, • a stay of the oppression proceeding is the appropriate remedy to “control” the abuse. [ 9 ] I have reviewed the case law submitted by both parties. [ 10 ] In Attorney General of Canada v.

Marineserve.mg Inc. , 2003 NSSC 26 , Justice Moir stated at para. 6: The power to stay proceedings is ancient and it is closely connected to the inherent jurisdiction of the Court to control its own processes. I do not read the authorities to which counsel referred me as having restricted the exercise of the power to cases of abuse of process. The power is to be approached with great caution. Its use is exceptional. A case for its use must be clearly established. These cautions are indicated by the gravity of shutting a plaintiff from access to the court or delaying the plaintiff's progress toward trial.

The cautions stated in so many authorities do not indicate categorical restrictions upon the discretion. [ 11 ] While the power to stay proceedings is discretionary and broad, it must be used with great caution in only exceptional cases, and a case for its use must be clearly established. This caution is warranted because a stay limits a party’s access to the court, which is

an exceptional thing to order. [ 12 ] I cannot conclude that the continuation of the oppression claim will interfere with the proper adjudication of the family proceeding. Upon inspecting the pleadings, there are no substantial similarities. There is one similarity that I will address further in these reasons. The family proceeding is focused on the division of assets, which may include Karo.

The oppression claim is focused on the parties’ rights and obligations in conducting the business of Karo, and on their reasonable expectations as shareholders, directors and officers. [ 13 ] Levy is not only the former spouse of Mosher, she is also a director, shareholder, and an officer of Karo. It is in these latter capacities that Levy is entitled to bring the within proceeding. [ 14 ] A plaintiff’s right to her day in court, in the appropriate forum of her choosing, is fundamental.

Levy should not be denied her right to bring a claim for relief from oppression simply because she and her former spouse, currently “business partners” in Karo, are also before the court in a separate matrimonial proceeding. [ 15 ] Notably, despite Mosher’s position that the oppression proceeding is an abuse of process, he has filed his own counterclaim against Levy under the Companies Act for relief from Levy’s alleged unfair and prejudicial conduct towards Mosher. [ 16 ] The issues to be addressed in the family proceeding and the oppression proceeding are distinct from one another.

The purpose of Levy’s claim in the oppression proceeding is to obtain relief from Mosher’s alleged oppressive conduct.

Likewise, the purpose of Mosher’s counterclaim is to obtain relief from Levy’s alleged oppressive conduct. [ 17 ] In contrast, the parties in the family proceeding request a divorce, and seek orders in relation to a division of matrimonial assets, possession of the matrimonial home, and spousal support. [ 18 ] The moving party, Mosher, states in his brief: It is respectfully submitted that in the circumstances, Levy does not have the right to file the Corporate Action until the same issues that are being tried in the Divorce Action have been resolved. I disagree.

This can not be a just and proper result in all of the circumstances. [ 19 ] Mosher argues that this is more a family dispute between spouses who operate a business than a true business dispute. He relies on Nolin v. Nolin, 2021 MBQB 120 . However, that decision relates to an application for an oppression remedy under s. 234 of the Manitoba Corporations Act , not a motion for a stay of an oppression proceeding. That is an important distinction. [ 20 ] The parties in Nolin were spouses who were also equal shareholders in two companies.

As in the present case, the marriage had broken down, and the parties had filed a divorce proceeding. Ms. Nolin subsequently filed an application for an oppression remedy, alleging, among other things, that her former husband caused one of their corporations to issue dividends to her every year from 2014 to 2019 without her knowledge or consent and without ever delivering payment of those dividends directly to her. In dismissing the application, the court noted: 23 In coming to this decision I have not ignored Ms. Nolin's complaint that Mr.

Nolin, by his conduct, has deprived her of her right to choose how to spend the dividend income allocated to her in the years in question. But counsel for both parties acknowledged in the course of their submissions that the court in the marital proceedings now underway has the authority to make any necessary financial adjustments to ensure a fair outcome. If Ms. Nolin has concerns with respect to any particular expense enumerated in Exhibit "A" to Mr. Nolin's affidavit, she is free to raise those concerns in that proceeding. … 24 Finally, I find this observation by Greenberg J. in Lopes v. M.R.

Lopes Investments Inc. , 2018 MBQB 5 , 80 B.L.R. (5th) 233 (QL) , to be especially apt: this case, "... as many involving small companies, is really more a family dispute than a business dispute and an applicant cannot reasonably expect that the remedies available under s. 234 will resolve those issues." (at para. 89). [Emphasis added] [ 21 ] The facts in Nolin are clearly distinguishable. While the court in that case was satisfied that Ms.

Nolin’s claim related to use of the dividends could be dealt with by way of a simple financial adjustment in the divorce proceeding, the litany of allegations of oppressive conduct in the present case, including being prohibited from acting in corporate roles and being blocked from accessing corporate information and participating in decisions, are far more complicated, and fall outside the scope of the family proceeding. The Companies Act equips the court with creative, unique and powerful tools to rectify oppressive conduct where it is established.

In the absence of exceptional circumstances (and there are none present here), why would the court block access to such tools? [ 22 ] Mosher argued that it would be wasteful to allow both proceedings to continue when only one party will end up with Karo. I disagree. The allegations by both parties in the oppression proceeding are distinct from those in the family proceeding. If either party’s allegations of oppressive conduct are substantiated by the evidence, that oppressive conduct, if left unchecked, could lead to the erosion of an important asset.

Any order related to the division of Karo in the divorce action may be of little value if the parties’ main asset is allowed to deteriorate in the interim. [ 23 ] It is true that Levy has requested a division of the interests in Karo in the divorce action, while also requesting “an order directing Mosher to transfer his shares in Karo, for fair value, to Levy, in the most tax effective manner for her.” This does not mean, however, that “the same issues … are being tried” in both proceedings, as Mosher suggests.

Levy is seeking 26 forms of relief in the oppression action, with only one creating the potential for overlap with a remedy she is seeking in the family proceeding. Mosher’s misconstrues the issues in the oppression claim, and would unduly restrain Levy from seeking relief for allegedly oppressive conduct in relation to her interest in Karo simply because the parties are former spouses and in the process of divorcing. Denying Levy’s ability to pursue the oppression claim simply because the parties are married is arbitrary, unnecessary, and unwarranted.

[ 24 ] In National Bank Financial Ltd. v. Potter, 2015 NSCA 47 , Saunders J.A. spoke of the fact that the doctrine of abuse of process has been invoked in many situations, including to prevent duplicative claims in a manner similar to the doctrine of res judicata . I cannot conclude that the action for an oppression remedy contains duplicative claims and amounts to an abuse of process for which a stay is the appropriate remedy. Saunders J.A. stated: 214 My review of these and other leading authorities shows that abuse of process comes in many forms.

Inordinate delay; vexatious litigation; multiple proceedings commenced in different jurisdictions claiming virtually the same relief on facts involving identical parties; bogus re-litigation; following previous judicial determinations of the same matters or issues are all examples of situations where the courts have found an abuse of process. Other examples would include cases where the complaint was not so much directed towards the nature of the proceedings, but that the conduct of the parties during the litigation.

This case falls within the latter category. 215 But whatever the type, the focus of the court’s inquiry will always be directed towards the reputation of the administration of justice. Justice Arbour put it best in Toronto (City) v.

CUPE, Local 79, supra , when she said 51 Rather than focus on the motive or status of the parties, the doctrine of abuse of process concentrates on the integrity of the adjudicative process. … [ 25 ] On a full reading of the pleadings, the oppression claim seeks to ensure that the company is run properly, that Levy has a role, and that she is not prevented from acting in that role and exercising her rights as a shareholder, officer and director of Karo while the divorce action proceeds through the Family Division. [ 26 ] Levy’s decision to protect her interests as a shareholder, officer, and director of Karo against allegedly oppressive conduct by filing a claim for relief under the Companies Act cannot be characterized as an abuse of process, and it cannot be, at this point, considered to give rise to a multiplicity of proceedings with a potential for conflicting court decisions.

Conclusion [ 27 ] It cannot be the law that former spouses who are running a company while in the midst of a divorce proceeding are barred from accessing relief under the Companies Act while that action makes its way through the court. If that were the case, it would mean that one spouse would have no recourse if the other decided to hold the company hostage and mismanage the asset. I am not suggesting that this is the situation here. I have no role in adjudicating the oppression claim at this time.

I mention it only to highlight how perverse a stay would be in the circumstances, and what a dangerous precedent it would set. The parties could not point me to any case where an oppression claim was stayed while a divorce action was pending. For all of the reasons articulated, I dismiss Mosher’s motion for a stay of proceedings, whether permanent or conditional. There is no basis at this time to deprive Levy of her ability to advance the oppression claim. Costs [ 28 ] This motion took less than half a day. Tariff C is the appropriate measure of costs.

This was neither a particularly complex nor difficult motion for counsel to brief and present. In all of the circumstances, I decline to apply a multiplier to this matter. I order that costs be paid by Mosher to Levy in the amount of $1,000.00, payable in any event of the cause. Brothers, J.