580680 B.C. Ltd. v. Randhawa

2016 BCSC 911 580680 B.C. Ltd. v. Randhawa

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: 580680 B.C. Ltd. v. Randhawa, 2016 BCSC 911 Date: 20160524 Docket: 1547960 Registry: Prince George Between: 580680 B.C. Ltd. Petitioner And Jason Justindar Randhawa Respondent Before: The Honourable Mr. Justice Tindale Reasons for Judgment In Chambers Counsel for petitioner: J.M. Duncan Appearing on his own behalf: J.J. Randhawa Place and Date of Hearing: Prince George, B.C. February 1, 2016 Place and Date of Judgment: Prince George, B.C. May 24, 2016 [1] The petitioner seeks an order directing the sale of property located in Penticton, British Columbia, pursuant to section 6 of the Partition of Property Act, R.S.B.C. 1996, c. 347. [2] The respondent is opposed to the relief claimed by the petitioner.

BACKGROUND [3] The petitioner is a corporation incorporated pursuant to the laws of British Columbia with a registered records office at 251 George St., Prince George B.C. [4] The respondent is a businessman who resides in Penticton, British Columbia. [5] The petitioner and respondent are tenants in common of property with the legal description: Parcel Identifier: 010-850-163 Legal Description: Lot 1 District Lot 250 Similkameen Division Yale District And Of District Lot 1 Group 7 Similkameen Division Yale (Formerly Yale-Lytton) District Plan 1164 ("the Property") [6] The Property has a civic address of 1196 Fairview Road, Penticton, B.C. [7] The petitioner has an undivided 55% interest in the Property. The respondent has an undivided 45% interest in the Property. [8] There is a home located on the Property which is being rented. There is also an operating convenience store.

THE EVIDENCE [9] It is necessary to summarize the relevant evidence from the various affidavits tendered on this application. Evidence Submitted by the Petitioner [10] The evidence in the first affidavit of Jaswinder Kaur Garib ("Ms. Garib") made on October 7, 2015, can be summarized as follows: (a) She is a shareholder and director of the petitioner. (b) The petitioner has issued 100 Class "A" voting shares. She owns 30 of the voting shares, her son Alexinder Singh Garib ("Mr. Garib") owns 30 of the voting shares and a company 685781 B.C. Ltd ("685") owns the remaining 40 voting shares. (c) Since September 2012, the petitioner has not received any portion of the rent for the house or the store on the Property. (d) Exhibit D of her affidavit is a signed directors' resolution authorizing the sale of the Property dated October 6, 2015. This document is signed by Ms. Garib and her son Mr. Garib. [11] The evidence in the first affidavit of Karnail Singh Sidhu ("Mr. Sidhu") made on October 16, 2015, can be summarized as follows: (a) He is a former director and shareholder of the petitioner and is currently 82 years of age. (b) He denies the allegations of the respondent that Mr. Garib (the son of Ms. Garib) received his shares of the petitioner through fraudulent means. (c) Ms. Garib is his daughter. In 2008, he and Ms. Garib invested approximately $94,000 in 685. Both he and his

daughter received 30 Class "A" common shares and 30 Class "B" non-voting shares in the petitioner. (d) Exhibit A to his affidavit is a copy of the shareholders' consent resolutions dated February 13, 2008, appointing Malvinder Singh Randhawa ("Mr. M. Randhawa"), Ms. Garib and himself as directors of the petitioner. (e) In 2010 he gifted his shares in the petitioner to Mr. Garib. Exhibit E to his affidavit is a directors' resolution of the petitioner transferring his shares in the petitioner to Mr. Garib. This document appears to be signed by Mr. M. Randhawa among others. [12] The first affidavit of Mr. Garib made on December 4, 2015, can be summarized as follows: (a) He is a director and shareholder of the petitioner. In 2010, his grandfather Mr. Sidhu transferred his interest in the petitioner to him. (b) He denies drafting or signing the documents marked as Exhibits A or B and attached to the affidavit of Mr. J. Randhawa or Mr. M. Randhawa. (c) Until October 2015, the minute books of the petitioner were maintained by Mr. M. Randhawa's daughter, who is a lawyer. He believes the minute books were properly maintained during this time. (d) The minute books of the petitioner are now in the possession of his lawyer Mr. Duncan. (e) The minute books of the petitioner do not contain any records of his resignation or transferring of the shares. (f) He is agreeable to listing the

Property at $950,000 for a period of six months. Evidence Submitted by the Respondent [13] During the application the respondent submitted a letter dated January 8, 2016, apparently signed by Mr. Sidhu, stating that he is out of the country and that he wishes to "exclude my affidavit submitted in evidence". That letter was marked as Exhibit 1 on this hearing. [14] The evidence in the first affidavit of the respondent Jason Justindar Randhawa ("Mr. J. Randhawa") made on November 7, 2015, can be summarized as follows: (a) He is a 45% owner of the Property. (b) 685 owns 40% of the 55% shares owned by the petitioner. (c) He is opposed to the sale of the Property. (d) The initial purchase of the Property was paid for by his father Mr. M. Randhawa and his mother Harbans Kaur Randhawa. The total purchase price of the Property was approximately $940,000. (e) Ms. Garib has made no payments for her shares in the petitioner and she had been allotted the shares based on trust. (f) Mr. Sidhu is his grandfather. His grandfather only paid for approximately 10% of the shares in the petitioner. (g) The signature that purports to be of his father, Mr. M. Randhawa, found on Exhibit E of the affidavit of Mr. Sidhu is not his father's signature. (h) Exhibit A to his affidavit is a document purportedly signed by Mr. Garib dated October 30, 2013, resigning as Director, President and Secretary of the

petitioner. (i) Exhibit B to his affidavit is a document purportedly signed by Mr. Garib dated October 30, 2013, transferring his shares in the petitioner to Mr. Sidhu. (j) He would agree to the sale of the Property on the condition that Ms. Garib, Mr. Garib and Mr. Sidhu all consent to the payment of the money owing for their share purchases plus interest. [15] The first affidavit of Mr. M. Randhawa made on November 7, 2015, can be summarized as follows: (a) He was the sole director of the petitioner when the Property was initially purchased in November of 2007. (b) On October 22, 2015, a meeting of the petitioner's shareholders was held. He was assigned as a proxy by 685 to oppose the sale of the Property. (c) Mr. Sidhu only paid for 10% of the shares of the petitioner. However, Ms. Garib talked him into assigning Mr. Sidhu 30% of the shares as a sign of respect to him. (d) Ms. Garib convinced him to give her 30% of the shares of the petitioner on the basis that she would pay for them at a later date when one of her investment was sold. Mr. M. Randhawa and Ms. Garib are currently involved in a lawsuit relating to the proceeds of the sale of Ms. Garib's investment. (e) He denies signing the document which transfers shares from Mr. Sidhu to Mr. Garib, which can be found as Exhibit E to the first affidavit of Mr. Sidhu. (f) Exhibit A and Exhibit B to his affidavit are the

resignation of Mr. Garib as a director of the petitioner and the document transferring Mr. Garib's shares in the petitioner to Mr. Sidhu. (g) Mr. Sidhu agreed to transfer those shares to Mr. M. Randhawa. (h) He believes if the Property is sold there will be a considerable problem in trying to determine how the sale proceeds should be divided. [16] Mr. M. Randhawa said the following at para.16 of his first affidavit: The dilemma in the whole scenario is Karnail owes me and his daughter Harbans over $600,000. I owe Ms. Garib $125,000 from the $200,000 realized from an investment we made together. I was willing to allot the whole $200,000 towards her share allotment in 580680 BC Ltd. until she filed a suit to claim the whole proceeds and now wants to sell 580680 lands without any payment. Ms. Garib owes Karnail close to $300,000 by way of a mortgage she put on Karnail's house to purchase another business, which is now bankrupt. Karnail was to pay his debt from the sale of that house proceeds to me and Harbans. [17] The first affidavit of Neil Pagely made on November 7, 2015, can be summarized as follows: (a) He is a director and shareholder of 685, which owns 40% of the shares of the petitioner. (b) He is opposed to the sale of the Property.

POSITION OF THE PARTIES The Petitioner [18] The petitioner acknowledges that it is their onus to establish that they have a 50% or more interest in the Property. The petitioner argues that they have clearly established that they have a 55% interest in the Property and that there is no good reason not to sell it. [19] The petitioner argues that the respondent's contention that Mr. Sidhu's shares were not fully paid for is a collateral debt issue. The petitioner points to section 64 (2) of the Business Corporations Act, S.B.C. 2002, c. 57 which states: (2) A share must not be issued until it is fully paid. [20] The petitioner argues that the respondent has done nothing to advance his contention that the shares were not paid for in full, and these concerns are irrelevant to the application before the Court. [21] The petitioner is agreeable to an order for joint conduct of sale of the Property in the amount of $940,000. The parties would jointly appoint a realtor to sell the Property. The proceeds of sale would be paid into court, pending an accounting of the rents that have been collected on the Property by the respondent. The Respondent [22] The respondent argues that this petition should be heard as a trial so that all of the issues can be properly canvassed. The respondent also argues that Mr. Sidhu has recanted the evidence he gave on this proceeding, as indicated by the

letter that is marked as Exhibit 1 on this hearing. [23] The respondent argues that because he owns a 45% interest in the Property and the company 685 owns 40% of the shares in the petitioner, it is not a majority decision to sell the Property. [24] The respondent also argues that the market value of the property is approximately $700,000, and if it was sold they would not recoup their initial investment.

DECISION [25] Sections 6 and 7 of the Partition of Property Act read as follows: (6) In a proceeding for partition where, if this Act had not been passed, an order for partition might have been made, and if the party or parties interested, individually or collectively, to the extent of 1/2 or upwards in the property involved requests the court to direct a sale of the property and a distribution of the proceeds instead of a division of the property, the court must, unless it sees good reason to the contrary, order a sale of the property and may give directions. (7) In a proceeding for partition where, if this Act had not been passed, an order for partition might have been made, and if it appears to the court that because of the nature of the property involved, or of the number of parties interested or presumptively interested in it, or of the absence or disability of some of those parties, or of any other circumstances, a sale of the property and a distribution of the proceeds would be more beneficial for the interested parties than a division of the property, the court may (a) on the request of any of the interested parties and despite the dissent or disability of any other interested party, order a sale of the property, and (b) give directions. [26] In Bourgeault v. Walton, [1998] B.C.J. No. 1957 (S.C.), the court at para.3 summarized the onus on the parties seeking a sale of

property as follows: [3] The onus is on the petitioners under s.6 to establish that parties interested in 1/2 or more of the property wish a sale of it. If they do not discharge that onus they must satisfy the court under s. 7 that a sale of the property would be more beneficial to the interested parties than a physical division of it. If the petitioners do discharge the onus under s. 6 the court must order a sale of the property unless there is a good reason not to, the onus with respect to which falls upon the interested parties opposed to sale. [27] The evidence establishes that the petitioner has a 55% interest in the Property. The issue on this application is whether or not the decision to sell the Property has been properly made. [28] I do not accept the respondent's argument that because he does not wish to sell the Property and the company 685 does not want to sell the Property that somehow equates to a majority of the interested parties not wanting to sell. [29] If Ms. Garib and Mr. Garib properly own their respective 30% of the shares in the petitioner, then the petitioner's decision to sell the Property was made by a majority of the shareholders. [30] I agree with the petitioner that any dispute between Ms. Garib and Mr. M. Randhawa over her share purchase is a separate debt issue between those two individuals. The shares were issued to Ms. Garib. [31] The difficulty

in deciding this application is the respondent's contention that Mr. Garib resigned as a director of the petitioner on October 30, 2013, and transferred his shares in the petitioner to Mr. Sidhu on the same date. [32] There is a clear credibility contest on the evidence of the petitioner and the respondent as to whether or not Mr. Garib was entitled to make any decision with regard to the sale of the Property. [33] Both parties have produced documents on this hearing that the other party alleges are forgeries. [34] While I acknowledge that the letter from Mr. Sidhu which is been marked as Exhibit 1 on this hearing is not attached to an affidavit, it does raise some concerns as it appears that Mr. Sidhu is now recanting his evidence given on this hearing. [35] If Mr. Garib did in fact resign as a director of the petitioner in 2013 and transferred his shares to Mr. Sidhu then the petitioner cannot be said to have properly made the decision to sell the Property. [36] The Court has to be mindful of the need to avoid multiple proceedings, unnecessary costs and delay. However, in my view the witnesses have significant credibility issues that have to be assessed in order for the court to fully understand all of the evidence. These issues cannot be determined solely on the documentary evidence. [37] The only way to resolve the credibility issues on this hearing is to refer the matter to the trial list for viva voce evidence pursuant to Rule 22-1 (7) (d) of the Supreme Court Civil Rules.

CONCLUSION [38] I order that this petition be converted to an action and that the matter be set for trial. [39] The petitioner will within 30 days of this decision file a notice of civil claim and service on the respondent. [40] The respondent will have 21 days to file his response to civil claim. [41] The cost of this hearing will be decided by the trial judge. "R.S. Tindale, J."