Tory MLA Khan asks court to dismiss lawsuit

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This article was published 16/11/2022 (770 days ago), so information in it may no longer be current.

A lawsuit alleging Tory backbencher Obby Khan and his eight-year-old juice company failed to repay more than $560,000 in financial support is “rife with false and reckless allegations,” a statement of defence says.

A statement of claim filed Sept. 23 by Jones and Company Wine Merchants Inc. alleges Khan, the main shareholder of Green Carrot Juice Company Inc., a co-defendant in the lawsuit, “orally committed” to repaying the money in a series of emails to Jones and Company principal Tina Jones, but has yet to do so.

Khan “expressly denies that he ever personally guaranteed the repayment of any sum of money to Ms. Jones or the plaintiff,” says the statement of defence, which was filed Nov. 7 in Manitoba Court of King’s Bench.

Aside from a $50,000 loan advanced to Green Carrot in 2014 with a promissory note, any other funds Jones gave to the company were a capital investment and not a loan, according to the statement of defence.

“There was no promissory note or any other formal documentation or agreements of any kind” setting out repayment terms, it states.

“At all times… Ms. Jones knew that her investment in Green Carrot was speculative and involved a significant number of risk factors, including that Green Carrot was a start-up company that had no operating history with the likely result that it could incur operating losses for the foreseeable future, or may in fact fail as a business altogether.”

The statement of claim alleges Khan approached Jones “at the onset” of Green Carrot’s inception “for assistance in the running of… Green Carrot and for injections of capital.” Tina Jones “supplied likely hundreds of hours in the investment of time as well as funds, assisting the defendants,” alleges the statement of claim.

The statement of defence says Jones voluntarily agreed to become an investor and business partner in Green Carrot and agreed to certain injections of capital and to provide assistance with other aspects of the business — such as accounting and bookkeeping functions, marketing advice and business mentorship — with a view to ensuring its viability.

Sometime in 2018, Jones withdrew the provision of all services, including the accounting support “which she pledged to provide,” the statement of defence alleges.

Green Carrot has struggled financially for a variety of reasons, the court document says. One of those reasons is that Jones withdrew the services “which exacerbated the operational and financial struggles of the business,” it says. The COVID-19 pandemic also hurt operations, and the business has “yet to become profitable to the point where shareholders can be repaid.”

Khan, it said, has not taken a salary from Green Carrot since its inception. Green Carrot owes him more than $312,000 that won’t be repaid until the business turns a profit and arm’s length creditors of the business have been paid, according to the statement of defence.

It asks the court to dismiss the claim with costs on a solicitor-client basis.

A 2014 Free Press business profile described Jones as one of three partners in the fledgling cold-pressed juice company, along with Khan and restaurateur Johnny Kien. In March, Khan ran successfully for the Progressive Conservatives in the Fort Whyte byelection after former premier Brian Pallister resigned his seat. Khan is a former professional football player with the Winnipeg Blue Bombers.

carol.sanders@freepress.mb.ca