



COURT OF APPEAL FOR ONTARIO

CITATION:

Hawley v. Pennington, 2012
    ONCA 594

DATE: 20120911

DOCKET: C55316

Cronk, Epstein and Hoy JJ.A.

BETWEEN

James B. Hawley, a partner of Steppe Financial
    Partnership

Plaintiff/Appellant

and

John Pennington
, Howard Rubinoff and Fogler
    Rubinoff LLP

Defendant/Respondent (John Pennington)

Ronald S. Sleightholm, for the appellant

Craig R. Colraine, for the respondent John Pennington

Heard and released orally: September 5, 2012

On appeal from the judgment of Justice C. William Hourigan
    of the Superior Court of Justice, dated March 12, 2012.

ENDORSEMENT

[1]

The appellant appeals from the judgment of Hourigan J. of the Superior
    Court of Justice dated March 12, 2012, granting summary judgment in favour of
    the respondents.  The judgment concerned the appellants claim that the
    respondent Penningtons actions caused 5400 Dixie Road Inc. (5400 Inc.) to
    lose its business, thereby depriving the appellant, as a shareholder of 5400
    Inc., of his share of 5400 Inc.s annual income in management fees
    (approximately $30,000 per year).

[2]

In our view, the appeal must be dismissed, essentially for the reasons
    of the motion judge.  In particular, we note the following:

1.    5400
    Inc. was placed in liquidation in December 2004 by consent court order;

2.    the effect
    of the liquidation order was to require that 5400 Inc. be replaced as the
    general partner of two limited partnerships involved with the Stage West Hotel
    in Mississauga;

3.    the
    process for the replacement of 5400 Inc. as the general partner of the limited
    partnerships was ultimately determined by court order dated April 4, 2005. 
    Hawleys appeal from that order was dismissed by this court, as was his earlier
    request for a stay of the order pending his appeal;

4.    the
    election of the replacement general partner, an entity associated with the
    respondent Pennington, was approved by court order dated July 18, 2005.  Hawley
    did not appeal that confirmation order; and

5.    once
    5400 Inc. was wound up and replaced as general partner of the two limited
    partnerships, it ceased to exist and therefore had no legal capacity to
    generate further management fees.

[3]

In all these circumstances, the loss of 5400 Inc.s business was
    occasioned by its consent liquidation, not by any actions of the respondent
    Pennington.  That a corporation associated with Pennington was thereafter
    appointed the new general partner and realized the income previously earned by
    5400 Inc. in no way alters this conclusion.

[4]

We note that the appellant relies on a suggested comparison between this
    case and a dispute between the parties concerning Canadian Equity Resources
    Corporation (CER Corp.), another corporation previously owned by the
    parties.  We do not regard this suggested comparison as helpful.  The facts
    regarding the CER Corp. dispute are distinguishable from the facts of this
    case.  For example, the replacement of the general partner in that case was not
    approved by court order.  In any event, there was no court determination that
    Penningtons conduct in relation to CER Corp. was oppressive in any way: the
    CER Corp. dispute was settled by the parties following a mid-trial pre-trial.

[5]

The appeal is dismissed with costs of the appeal to the respondents in
    the amount of $6,000, inclusive of disbursements and all applicable taxes.

E.A. Cronk J.A.

G.J. Epstein J.A.

Alexandra Hoy J.A.


