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Mandatory injunctions for board reinstatement and dividend declaration denied; non-mandatory injunction granted preserving corporate assets.
The plaintiffs, minority shareholders, brought a motion for a mandatory interlocutory injunction seeking reinstatement to the board of directors and an order compelling the corporation to declare dividends.
The plaintiffs had previously sued the corporation and majority shareholders for $7.5 million for conspiracy, fraud, and oppression.
The court dismissed the request for mandatory injunctions, finding the plaintiffs did not establish a strong prima facie case for reinstatement due to their conflict of interest, nor for an immediate dividend distribution while the corporation's liability in the lawsuit remained undetermined.
However, the court granted a non-mandatory injunction preserving the status quo by prohibiting the corporation from expending funds outside the ordinary course of business.
An order to fund a court-appointed corporate inspector is not automatically stayed pending appeal.
The court appointed an inspector to investigate the affairs of the appellant corporation and ordered the appellants to fund the inspector's work.
The appellants appealed the order and argued that the funding requirement was an 'order for the payment of money' automatically stayed under Rule 63.01(1) of the Rules of Civil Procedure.
The Divisional Court held that an order to fund a court-appointed inspector is not an order for the payment of money, as it does not give monetary relief to a party and cannot be enforced by a writ of seizure and sale.
The court declared the automatic stay inapplicable and, in the alternative, exercised its discretion to lift the stay.
The appellants' cross-motion for a stay was dismissed.
