



COURT OF APPEAL FOR ONTARIO

CITATION: Murray v. Pier 21 Asset Management
    Inc., 2021 ONCA 424

DATE: 20210616

DOCKET: C66936 & C67356

Pepall, Roberts and Thorburn
    JJ.A.

BETWEEN

Emily Murray and 2327342 Ontario
    Inc.

Plaintiffs (Respondents/Appellants)

and

Pier 21 Asset Management Inc.,

David
    Star and 8165246 Canada Inc.

Defendants (Appellants/Respondents)

Igor Ellyn and Kathryn J. Manning, for
    the appellants (C66936)/respondents (C67356)

Edward J. Babin, Cynthia L. Spry and Michael
    Bookman, for the respondents (C66936)/appellants (C67356)

Heard: May 26, 2021 by video
    conference

On appeal from the judgment of Justice Michael
    A. Penny of the Superior Court of Justice, dated April 12, 2019 and September
    25, 2020, with reasons reported at 2019 ONSC 316, 2019 ONSC 4501, 2019 ONSC
    7230, 2020 ONSC 2153, 150 O.R. (3d) 419, and 2020 ONSC 5606.

REASONS FOR DECISION

A.

Background Facts

[1]

The appellants, David Star, Pier 21 Asset
    Management Inc., and 8165246 Canada Inc., (hereinafter referred to as the
    Defendants) appeal from the judgment and orders of Penny J. dated April 12,
    2019, July 29, 2019, July 10, 2020, and July 27, 2020, and seek leave to appeal
    his costs award of September 25, 2020.
[1]

[2]

The respondents, Emily Murray and 2327342
    Ontario Inc., (hereinafter referred to as the Plaintiffs), cross-appeal from
    the same judgment and the orders dated April 12, 2019, July 29, 2019 and April
    8, 2020, and seek leave to appeal the costs award of September 25, 2020.

[3]

Mr. Star launched Pier 21 Asset Management
    (Pier 21), a wealth management business, in 2005. That same year, he and Ms.
    Murray began an affair.

[4]

Ms. Murray agreed to join Mr. Star in launching
    Pier 21. She joined him in June 2006, initially as a consultant and then as a
    Senior VP. It was agreed that she would not be paid any salary for the first
    two years. In lieu of salary, she received 200,000 Class A shares of Pier 21.
    In addition, in exchange for her decision to leave her secure job to help found
    the company, she received an additional 100,000 Class A shares. Her 300,000
    shares represented 16% of the companys Class A shares.

[5]

Another investor, Frank Santangeli, invested
    $150,000 in Pier 21 and received 150,000 Class B non-voting shares.

[6]

In June 2006, Ms. Murray entered into an
    employment agreement. It provided that cash bonuses or dividend distributions
    could be issued in addition to her annual salary based on earnings and
    profitability as well as her contributions with the final amount being at the
    discretion of Mr. Star in his capacity as President and CEO. Ms. Murray entered
    a second employment agreement consistent with that of other senior employees in
    November 2013.

[7]

The individual parties affair ended in 2009.

[8]

In 2011, the company and Mr. Star bought out Mr.
    Santangelis Class B shares. In addition, in the spring of 2012, Ms. Murray
    entered into an agreement (the Share Purchase Agreement) whereby Pier 21
    redeemed 142,250 Class A shares owned by Ms. Murray at $3.42 per share for a
    total of $486,495. As a result, Mr. Star owned 90.9% of the Class A shares and
    Ms. Murray 9.1%.

[9]

Meanwhile, the companys assets under management
    grew from zero when Ms. Murray joined to $3.2 billion when she left at the end
    of 2014 and increased to $3.65 billion by February 27, 2015, the valuation
    date. Revenues amounted to almost $15 million at the end of 2014.

[10]

In 2014, Ms. Murray and Mr. Star began
    discussing her exit from the company. When Ms. Murray left in December 2014,
    Mr. Star refused to buy out her interest in the company. Ms. Murray commenced
    oppression proceedings seeking, among other things, the reversal of the 2012
    Share Purchase Agreement which had reduced her interest from 16% to 9.1%, an
    order requiring Mr. Star to purchase her remaining interest, and equitable damages.

B.

Trial Judges Reasons

[11]

The trial judge declined to set aside the 2012
    Share Purchase Agreement. He was unable to conclude on a balance of
    probabilities that the Share Purchase Agreement defeated Ms. Murrays
    reasonable expectations and that the Agreement was the product of conduct that
    was oppressive, unfairly prejudicial or unfairly disregarded her interests. He
    also concluded that the two-year limitation period expired well before February
    2015 when she commenced her action. He found that the issue of the Agreement
    did not arise out of acts of ongoing oppression but was a discrete one-time
    event.

[12]

He held that Ms. Murray was entitled to the
    return of her capital in Pier 21. He noted that Mr. Star at the opening of
    trial had made a with prejudice offer to purchase her shares based on a $20.8
    million valuation of the company which the trial judge treated as an admission
    that she was entitled to the return of her capital at fair value. Even if not,
    Mr. Stars refusal to repurchase her shares upon her termination was
    oppressive.

[13]

In valuing the company, he considered the
    opinions of the experts, Susan Glass, the expert called by the Defendants,
    valuing the company at $20.8 million and John Temple, the expert called by the Plaintiffs,
    proposing a value of $52.8 million. The trial judge held that both experts were
    qualified to give opinion evidence on the fair value of Pier 21 on the
    valuation date. The Defendants did not object to Mr. Temple being so qualified
    but attacked his qualifications, attitudes and conclusions as going to weight.

[14]

The trial judge found that both experts had
    excellent though different qualifications and he was not prepared to say that
    the opinions of one were overall to be preferred over the other. He therefore
    addressed their opinions on an issue by issue basis. He concluded that the
    company should be valued at $39.1 million, a figure which was later amended to
    $39.3 million due to a calculation error. The share purchase price for Ms.
    Murrays shares would accordingly be $3,576,300, rather than the $1.8 million
    as proposed by the Defendants based on the valuation by Ms. Glass.

[15]

He also awarded Ms. Murray equitable damages in
    the amount of $605,579 (equal to two years salary and dividends for that
    period) and, in an addendum dated April 8, 2020, he determined that the
    transaction giving effect to the judgment should be structured as a repurchase by
    Pier 21.

C.

Discussion

(1)

Fresh Evidence

[16]

The Defendants seek leave to admit fresh
    evidence.

[17]

The fresh evidence consists primarily of time dockets
    of the Plaintiffs expert, John Temple. At trial, Mr. Temple testified that he
    spoke with Peter Tolnai, Ms. Murrays husband. He testified that Mr.
    Tolnai was present in meetings with Ms. Murray. Ms. Murray also testified that
    Mr. Tolnai was involved in the discussions and that it was he who had sourced
    Mr. Temple.

[18]

Mr. Temple testified that Mr. Tolnai did not
    provide any input to my evaluation and that he was not used as a source of
    information for my valuation because I didnt consider him to be knowledgeable
    with this industry.

[19]

Mr. Temples report, served by the Plaintiffs,
    was dated June 2017. The Defendants served Ms. Glass report, dated September
    2017, in reply, and the Plaintiffs delivered a rebuttal report dated December
    2017.

[20]

The dockets of Mr. Temple that are in issue were
    produced by the Plaintiffs in support of their request for costs. This panel
    determined that any privilege attaching to the dockets had been waived.

[21]

The dockets speak of [f]irst review of Peters
    draft on October 31, 2017 and [m]arkup of Peters draft of Rebuttal Letter
    on November 1-3 which the Defendants infer relates to the Plaintiffs reply to
    their experts report.

[22]

The Defendants urge us to conclude that this
    evidence passes the test for admission of fresh evidence because it was
    unavailable until after trial and was key in that it undermined the
    independence and credibility of Mr. Temple. In essence, they say he was an
    advocate for the Plaintiffs, and that his valuation opinion should be
    disregarded and replaced with that of Ms. Glass.

[23]

The Plaintiffs respond, among other things, that
    Mr. Temple was thoroughly cross-examined at trial and no request was made for
    his file. In any event, they say the test for admission has not been met. They
    also seek leave to admit fresh evidence in response to the Defendants fresh
    evidence.

[24]

The test for admission of fresh evidence as
    described in
Palmer v. The Queen
, [1980] 1 S.C.R. 759, at para. 775 and
Sengmueller v. Sengmueller
(1994), 111 D.L.R. (4th) 19 (Ont. C.A.), at
    p. 23, has not been met by the Defendants. Most notably, this fresh evidence
    would not likely be conclusive of any issue on appeal. We fail to see how the
    dockets are at odds with the evidence given by Mr. Temple at trial or that
    his certification to provide impartial advice to the court was materially
    compromised. His valuation of the company was produced in June 2017 and predated
    that of Ms. Glass and the impugned dockets. The mere fact that Mr. Tolnai may
    have provided some comments to the expert following receipt of Ms. Glass
    report does not mean that the expert became an advocate or lacked independence.
    We do not accept that he did as alleged by the Defendants. As Cromwell J.
    stated in
White Burgess Langille Inman v. Abbott and Haliburton Co
., 2015
    SCC 23, [2015] 2 S.C.R. 182, at para. 32, one should apply the jurisprudential
    concepts to the realities of adversary litigation.

[25]

We dismiss the request to admit the fresh
    evidence. It follows that the Plaintiffs motion for leave to admit fresh
    evidence in response is also dismissed.

(2)

Rule 59 and Reconsideration Motions

[26]

The Defendants also appeal from the order of
    Penny J., with reasons dated July 10, 2020, in which he refused to entertain
    the Defendants r. 59.06(2)(a) motion
to re-open the trial on the ground that
    facts arose after his order was made that, if known at the time, would
    potentially have changed the result at trial.

The Defendants also appeal from the order of Penny J., with reasons
    dated July 27, 2020, refusing to reconsider his July 10, 2020 decision. On
    these motions, t
he Defendants

relied
    on the same evidence that is the subject matter of their fresh evidence motion.
    Before this court, they argue that the judgment had not been signed and
    entered, the trial judge was not functus and he ought not to have simply
    referred the matter to this court to be addressed as a fresh evidence
    application.

[27]

This was a contentious and acrimonious
    proceeding. The trial judge gave his reasons for decision on April 12, 2019. As
    he could not find any reference in the oral submissions or a written response from
    the Defendants to the Plaintiffs request for elevated interest reflecting the
    time value of payment for her shares, he deferred a finding on that issue. Both
    parties then brought motions to amend under r. 59.06. On July 29, 2019, among
    other things, the trial judge increased Ms. Murrays equitable damages from
    $278,706 to $605,579 based on a calculation error and dismissed her request for
    elevated interest.

[28]

There also arose an issue as to how the share
    purchase transaction was to be structured. The trial judge determined that he
    had jurisdiction to decide that issue on December 13, 2019, and he set out a
    process for the filing of additional evidence, the conduct of
    cross-examinations and the filing of written submissions, all of which was
    completed on April 1, 2020. He released his reasons on the transaction
    structure on April 8, 2020. In June 2020, following a review of background
    material in support of the costs request of the Plaintiffs, the Defendants
    prepared another r. 59.06 motion. On July 10, 2020, the trial judge issued an
    endorsement declining to hear the motion. In doing so, although not attributing
    the delay to either of the parties, he observed that the trial had already
    dragged on for far too long. The Defendants then brought another motion asking
    him to reconsider his endorsement which he also declined to entertain on July
    27, 2020. On September 25, 2020, he released his reasons for costs.

[29]

Placed in context, it was understandable that
    the trial judge was reluctant to embark on a further proceeding between the
    parties.

[30]

The Defendants concede that the trial judge had
    the power to control the process of the case. Litigation cannot be never
    ending. In this case, the trial judge could have proceeded with the r. 59.06
    motion, thereby continuing these already protracted proceedings, declined to
    hear the motion or dismissed it. He clearly was concerned about the passage of
    time, reasons for judgment having been released more than one year earlier. It
    was facially evident from a review of the fresh evidence that it would not meet
    the threshold for admission.

[31]

The r. 59.06 motion was properly returnable
    before the Superior Court of Justice. Although it would have been preferable
    for the trial judge to have given reasons and dismissed the motion, in the end
    result, it is of no moment. It follows that the appeal relating to the trial
    judges refusal to reconsider that decision must also fail.

[32]

For these reasons, we dismiss the Defendants
    grounds of appeal based on the trial judges failure to consider the r. 59.06
    motion and to reconsider it.

(3)

Equitable Damages

[33]

On the issue of equitable damages, the
    Defendants submit that the award gave Ms. Murray an unwarranted windfall.
They argue that once the trial judge
    directed
the Defendants to repurchase her shares at
    fair value, the oppression was remedied. They state that in her negotiations
    with Mr. Star in September 2014 and in her trial testimony, she stated she
    would resign if she received a fair price for her shares and she did not expect
    anything more. The damages awarded were for wrongful dismissal but were
    improperly disguised as equitable damages.

[34]

As stated by the Supreme Court in
Wilson v.
    Alharayeri
, 2017 SCC 39, [2017] 1 S.C.R. 1037, at para. 59, the
Canada
    Business Corporations Act
, R.S.C. 1985, c. C-44 vests the trial judge with
    broad discretion when dealing with the oppression remedy and an appellate court
    should adopt a deferential stance in the absence of reviewable error or a
    manifestly unjust result. Under the oppression provisions, the court may make
    any order it thinks fit. The appellate courts power of review is limited:
Naneff
    v. Con-Crete Holdings Ltd
. (1995), 23 O.R. (3d) 481 (C.A.), at pp. 486-87.
    The remedy is to rectify oppression or certain unfair conduct. As mentioned in
    that decision, the oppression remedy operates as corrective justice.

[35]

Here the trial judge found that the refusal to
    redeem Ms. Murrays shares on termination was oppressive and her termination
    was closely connected to her status as shareholder. They were inextricably
    intertwined and her reasonable expectations were thwarted. She had a
    reasonable expectation that she would not be terminated in the manner she was.
    Based on the record before him, it was open to the trial judge to make that
    determination. We see no reason to interfere.

[36]

We also reject the Defendants alternative
    submissions that Ms. Murrays equitable damages should be reduced by 25% to reflect
    the remuneration she received from June 2014 when she first broached the
    question of her departure from Pier 21, or by the amount of the discretionary
    dividend that may not have been awarded. We see no error in the trial judges
    assessment of the equitable damages that he found were caused by the
    Defendants oppressive behaviour in forcing Ms. Murrays departure from Pier 21
    contrary to her reasonable expectations.

(4)

Expert Valuation Evidence

[37]

As for the Defendants submissions relating to
    the experts evidence, in essence, the Defendants seek to reargue the trial
    judges factual findings. They say he erred in equating the experience of Ms.
    Glass with Mr. Temple. The Defendants did not object to Mr. Temple being
    qualified as an expert and the trial judge properly received and considered his
    evidence. He carefully reviewed their respective positions on each issue and
    reached a reasonable conclusion on the valuation of Pier 21. We see no palpable
    and overriding error in his treatment of the valuation of the company. Nor are
    we persuaded that the decision is manifestly unjust or clearly wrong.

[38]

We will address the issue of costs raised by the
    Defendants at the same time as we address the Plaintiffs request for leave to
    appeal costs.

(5)

Plaintiffs Grounds of Appeal

[39]

Turning to the grounds of appeal advanced by the
    Plaintiffs, they raise six issues.

[40]

First, the Plaintiffs submit that the trial
    judge erred in refusing to find a fiduciary relationship between Mr. Star and
    Ms. Murray. We disagree. The parties were not in a partnership or trust
    relationship but were shareholders of the same corporation who did not owe each
    other fiduciary duties. Mr. Star did not undertake to act in Ms. Murrays best
    interests nor did Ms. Murray repose any trust in him. Here Mr. Star owed
    fiduciary duties to the corporation, not to Ms. Murray: see
BCE Inc. v.
    1976 Debentureholders
, 2008 SCC 69, [2008] 3 S.C.R. 560, at paras. 37, 66.
    In any event, even if the trial judge had found a fiduciary relationship and a
    breach of a fiduciary duty, we fail to see that additional compensation beyond
    what the trial judge already had ordered would be merited.

[41]

Second, Ms. Murray submits that the trial judge
    erred in holding that there was insufficient evidence of her opposition to the
    2012 Share Purchase Agreement because there was no contemporaneous documentary
    evidence.

[42]

We reject this argument. First, that is not what
    the judge said. He said at para. 28, that he found it difficult to believe
    that, if she felt as strongly then about the Share Purchase Agreement as she
    maintains now, there was no email, note or minute of any kind recording her
    concerns to Mr. Star and no attempt to seek legal advice. He recognized at
    para. 22 that she had a lawyer helping her negotiate the draft shareholders
    agreement the previous year, but she made no effort to seek legal advice about
    the repurchase of her shares until much later. He also referenced the evidence
    that she raised concerns with two friends at the time about the buyout of her
    shares. The trial judge was not imposing a requirement for contemporaneous
    documentary evidence. It was open to the trial judge to weigh the conflicting
    evidence from the parties and conclude that the Plaintiffs had not met the
    burden of proof.

[43]

We also agree with the trial judges analysis of
    the limitation issue. We would accordingly dismiss this second ground of
    appeal.

[44]

Third, the Plaintiffs submit that the trial
    judge erred in the quantum of equitable damages because they failed to
    recognize that the Defendants have had the use of Ms. Murrays capital since
    2015. They submit that these additional damages could take the form of an
    increased interest rate or an increased award.

[45]

The trial judge considered the Plaintiffs
    request in the context of the Defendants request for a credit for the amount Ms.
    Murray earned on the investment of the proceeds of the sale of the 6.9% of Class
    A shares. The Plaintiffs claimed their loss should be calculated on the same
    basis. They claimed the compound return Ms. Murray actually earned on the
    capital arising from the 2012 repurchase of shares, which was 10.38%. They sought
    this return on a compounded basis on all amounts awarded from February 27,
    2015.

[46]

The trial judge rejected the Plaintiffs
    arguments. He concluded that the pleadings did not support the request. The Plaintiffs
    had pleaded ss. 128 and 129 and not s. 130 of the
Courts of Justice Act
,
    R.S.O. 1990, c. C.43 and they did not seek to amend or provide an explanation
    for their failure to do so: at paras. 33-35. Moreover, he reasoned that these
    issues were raised after the conclusion of the evidence at trial and to permit
    the claims at this stage would be seriously prejudicial to the Defendants.

[47]

The reasons given by the trial judge support his
    rejection of the Plaintiffs claim for a compounded interest rate of 10.38%
    since 2015. While the trial judge could have exercised his discretion to award
    compound interest as part of the oppression remedy he otherwise granted, he was
    not obligated to do so: see
Ford Motor Co. of Canada, Ltd. v. Ontario
    Municipal Employees Retirement Board
(2006), 263 D.L.R. (4th) 450 (Ont.
    C.A.), at para. 181, leave to appeal refused, [2006] S.C.C.A. No. 77. There was
    no palpable and overriding or legal error in his reasoning. We dismiss this ground
    of appeal.

[48]

Fourth, the Plaintiffs ask this court to
    interfere with the trial judges dismissal of Ms. Murrays claim for punitive
    damages. We see no error that allows for appellate intervention. It is not for
    this court to substitute its discretion for that of the trial judge.

[49]

Fifth, the Plaintiffs submit that the trial
    judge erred in the selection of the transaction structure when he required Pier
    21 to repurchase Ms. Murrays shares for cancellation rather than requiring the
    Defendants to purchase the shares of Ms. Murrays holding company, 2327342
    Ontario Inc., which would be more tax efficient for her.

[50]

Again, the trial judges reasons for decision on
    the transaction structure are detailed and sound. There was no evidence to
    support a reasonable expectation that she would be entitled to a structure that
    would minimize her tax liability to the exclusion of other considerations, one
    of which is that the Defendants would inherit potential unknown liabilities in
    2327342 Ontario Inc.

(6)

Costs Awards

[51]

Lastly, both parties also take issue with the
    trial judges costs award.

[52]

The Defendants state that the trial judge made
    errors in his costs decision because he required them to pay one third of the
    disbursements paid to Mr. Wintrip who delivered no report and did not testify;
    he rejected most of Mr. Temples opinions but still required the Defendants to
    pay his fees; and the Defendants had to defend against valuation claims that
    the court rejected.

[53]

The Plaintiffs state that he erred in holding
    that oppressive conduct does not necessarily entail elevated costs awards and
    by granting a distributive costs award contrary to
Oakville Storage &
    Forwarders Ltd. v. C.N.R. Co
. (1991), 84 D.L.R. (4th) 326 (Ont. C.A.).

[54]

Absent an error in principle or an award that is
    plainly wrong, a trial judges exercise of discretion in the award of costs is
    entitled to deference:
Hamilton v. Open Window Bakery Ltd
., 2004 SCC 9,
    [2004] 1 S.C.R. 303, at para. 27. The trial judge found that by any measure,
    Ms. Murray was the effective winner in the litigation and was
prima facie
entitled to her partial indemnity costs.

[55]

The trial judge instructed himself not to make a
    distributive costs award but followed this courts guidance in
Eastern
    Power Limited v. Ontario Electricity Financial Corporation
, 2012 ONCA 366,
    and considered that some analysis of relative success may be appropriate in
    determining quantum of entitlement. He found that the post-trial motion on the transaction
    structure was free-standing and that the costs incurred were substantively and
    temporally distinct from all the other costs of the trial. He accordingly awarded
    costs to the Defendants who were successful on this motion. This was not an
    error in principle nor plainly wrong. The same is true with the trial judges
    treatment of the claim for elevated costs, the Defendants arguments about the
    Wintrip invoice, which was discussed in detail at paras. 63-66 of the trial
    judges decision, and his treatment of the costs as they relate to the
    valuation claims. We see no reason to interfere.

D.

Disposition

[56]

For all of these reasons, we dismiss the appeal,
    dismiss the cross-appeal, and refuse both parties leave to appeal costs. In
    addition, we dismiss the motion and cross-motion for admission of fresh
    evidence.

[57]

The parties are to make brief (not to exceed
    five pages in length) submissions on costs of the appeal, the Plaintiffs to
    file theirs by June 18, 2021, and the Defendants by June 25, 2021.

S.E. Pepall
    J.A.

L.B. Roberts
    J.A.

J.A. Thorburn
    J.A.





[1]

Reasons
    were released on April 12, July 29, and December 13, 2019, April 8, July 10,
    July 27, and September 25, 2020 but were reflected in one judgment bearing two dates:
    April 12, 2019 and September 25, 2020.


