DIVISIONAL COURT FILE NO.: 161/24
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
McSweeney, Davies, Shore JJ.
BETWEEN:
Douglas Evashkow
Appellant
– and –
David Melia, Ralph Goldsilver, Robert MacBean, and Michael Smith
Respondents
Christopher McClelland, for the Appellant
Jordan Katz, for the Respondents
HEARD at Toronto: November 19, 2024
REASONS FOR JUDGMENT
BY THE COURT:
A. Overview
Overview
1Douglas Evashkow was removed as director and Chief Executive Officer of blueRover Inc., a privately held technology company, by an order made by Justice Osborne on February 1, 2024 under s. 248 of the Business Corporations Act, R.S.O. 1990, c. B.16 (“OBCA”).
2Mr. Evashkow appeals Justice Osborne’s order to the Divisional Court under s. 255 of the OBCA.
3The removal of Mr. Evashkow as director and CEO was one of many orders made by the Application Judge in deciding the competing oppression claims made by the two warring shareholder groups: the Saccucci Parties and the Smith Parties. The Smith Parties are the Respondents to this appeal.
4In his lengthy Disposition Reasons, Justice Osborne first had to resolve a dispute over who the rightful shareholders are of blueRover. He then dismissed the Saccucci Parties’ oppression application and allowed the Respondents’ oppression application in part. The Saccucci Parties were ordered to pay costs of $98,000 to the Respondents. None of those orders is being appealed.
5Mr. Evashkow is not a shareholder in blueRover Inc. and was not one of the Saccucci Parties. However, he was nominated to the Board by Korona Group Limited (“Korona”), one of the Saccucci Parties, and was therefore aligned with their interests. Justice Osborne ordered Mr. Evashkow to be removed as CEO and director but authorized Korona to nominate Mr. Evashkow’s replacement to the Board.
6The Appellant argues that this Court should overturn the order removing him as director and CEO of blueRover Inc. on the basis that the Application Judge made several errors of law, fact or mixed fact and law.
B. Legal Framework and Standard of Review
Legal Framework and Standard of Review
7The applicable standard of review on questions of law is correctness. Questions of fact are reviewable for palpable and overriding error. Questions of mixed fact and law are also reviewed for palpable and overriding error unless the legal issue is extricable from the factual issues. If there is an extricable legal issue within a question of mixed fact and law, the standard of review is correctness: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235.
8Where a judge at first instance resolves a question for which the law provides a discretion, the standard of review is also deferential:
An appellate court will be justified in intervening in a trial judge's exercise of his discretion only if the trial judge misdirects himself or if his decision is so clearly wrong as to amount to an injustice: Elsom v. Elsom, 1989 100 (SCC), [1989] 1 S.C.R. 1367, at para. 18.
9Appellate intervention in a discretionary decision is also appropriate where a lower court has given no weight, or insufficient weight to a relevant consideration: Aquam Corp. v. Coffey et al, 2019 ONSC 7218, at para. 6, citing Friends of the Oldman River Society v. Canada (Minister of Transport), 1992 110 (SCC), [1992] 1 S.C.R. 3, at pp. 76-77.
10In sum,
an appellate court must defer to a judge’s exercise of discretion unless she or he makes an error in law - adopting the wrong legal principle or giving insufficient weight to a relevant factor - or if the decision is clearly wrong. Otherwise the appeal court cannot substitute its own judgment call in place of the judgment of the judge whose decision is under review: Aquam Corp., at para. 7.
C. Issues on appeal
Issues on appeal
11Mr. Evashkow alleges five errors by the Application Judge as the basis for asking this Court to overturn the Respondents’ oppression application, or alternatively, to set aside both the finding that his conduct was oppressive as well as the order removing him as director and CEO of blueRover Inc.
12Mr. Evashkow argues that the Application Judge erred in:
(1) treating the Respondents as “complainants” under the OBCA;
(2) finding that he caused the business to be carried out oppressively;
(3) assessing the Respondents’ reasonable expectations;
(4) failing to consider whether the Respondents came to the Court with clean hands, before granting them an equitable remedy;
(5) finding that his removal as officer and director was an appropriate remedy.
13For the following reasons, we would not give effect to any of these grounds and dismiss the appeal.
Issue 1 – Did the Application Judge err in treating the Respondents as “complainants” under the OBCA?
14Under s. 248 of the OBCA, “a complainant” may seek an oppression remedy. The term “complainant” is defined in s. 245 to mean:
(a) a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a corporation or any of its affiliates,
(b) a director or an officer or a former director or officer of a corporation or of any of its affiliates,
(c) any other person who, in the discretion of the court, is a proper person to make an application under this Part.
15Mr. Evashkow alleges that none, or at least “not all” of the four Respondents qualified as “complainants” when they applied for an oppression remedy in June 2022, as not all had been confirmed as directors through the proper process by that time. Mr. Evashkow contends that his alleged misconduct could not have oppressed them as officers, directors, or as creditors/shareholders of the company because they were not directors at that time. Mr. Evashkow argues that the Application Judge therefore committed a reversible error in granting an oppression remedy to parties lacking the standing to seek such relief.
16Mr Evashkow did not make this argument before the Application Judge. The Respondents submit that he should be estopped from pursuing this argument for the first time on appeal.
17This argument has no merit. The Respondents were voted to the Board of Directors in November of 2021, the year before their oppression application was commenced. Each of them was thereafter a “complainant” whether or not they remained in office, as the statutory definition includes “… a former director or officer of a corporation.”
18Further, the definition of complainant is not exhaustive. The definition includes those determined by the court to be “proper persons to commence oppression proceedings.” It was within the Application Judge’s discretion to permit the Smith Parties to pursue their application for such reasons as would presumably have been identified by the court if the Applicant had raised the issue of their standing at first instance.
19We give no effect to this ground of appeal.
Issue 2 – Did the Application Judge err in finding that Mr. Evashkow caused the business to be carried out oppressively?
Issue 2 – Did the Application Judge err in finding that Mr. Evashkow caused the business to be carried out oppressively?
20The Appellant argues that the Application Judge’s conclusion that Mr. Evashkow engaged in oppressive conduct was based on several palpable and overriding factual errors, specifically his findings that:
(1) Mr. Evashkow improperly demanded information and documents prior to being appointed a director and officer;
(2) Mr. Evashkow’s communications were confrontational or sarcastic;
(3) Mr. Evashkow required Mr. Smith to attend a clinical or mental fitness evaluation;
(4) Mr. Evashkow purported to terminate officers;
(5) Mr. Evashkow improperly voted for himself as CEO; and that
(6) Mr. Evashkow engaged in actions that caused disfunction and disharmony in the company after the court appointed a Monitor.
21We would not give effect to this ground of appeal because the record and the reasons provide a basis for each finding.
22For example, the Appellant disputes that he “improperly demanded information and documents prior to being appointed a director and officer.” However, the Application Judge noted and relied on the fact that Mr. Evashkow conceded that his demands were made “before he held any office or authority at blueRover whatsoever”.
23Regarding the Appellant’s argument that he did not purport to terminate two directors, the Application Judge found that Mr. Evashkow suspended the directors and concluded that “the effect is the same, and whether they were called terminations or suspensions, the actions of Evashkow were oppressive in the circumstances”. The Application Judge made no error in making those findings.
24With respect to the sixth alleged error – that the Application Judge erred in finding that Mr. Evashkow caused dysfunction and disharmony – the Appellant argues that the Application Judge relied on some conduct that occurred after, rather than before, the Monitor’s appointment in November 2022.
25We agree that Mr. Evashkow’s behaviour referenced by the Application Judge at paragraph 126 of the Disposition Reasons occurred prior to the Monitor’s appointment. While the Application Judge was mistaken about the timing of Mr. Evashkow’s conduct, the timing of the behaviour was not the “linchpin” of the Application Judge’s conclusion as to the overall oppressive character of Mr. Evashkow’s conduct. The Application Judge made a clear finding that Mr. Evashkow’s conduct was oppressive and the timing of his conduct does not undermine those findings.
26Justice Osborne’s reasons also reference oppressive actions by Mr. Evashkow that did occur after the Monitor’s appointment in November 2022. This includes Mr. Evashkow’s failure to comply with or work cooperatively with the Monitor, which continued to cause dysfunction in the company: see, for example, Disposition Reasons, at paras. 129 and 160.
27We conclude that the Application Judge’s error in describing the timing of Mr. Evashkow’s oppressive actions was not significant to his analysis or conclusion. It does not warrant appellate intervention and does not rise to the level of palpable and overriding error.
28We give no effect to this ground of appeal.
Issue 3 – Did the Application Judge err in assessing the Respondents’ reasonable expectations?
Issue 3 – Did the Application Judge err in assessing the Respondents’ reasonable expectations?
29The Appellant submits that the Application Judge erred in identifying the Respondents’ “reasonable expectations” and thus erred in concluding that his conduct had violated those expectations.
30The Application Judge succinctly set out the test for assessing reasonable expectations in the context of an oppression remedy application at para. 101 of the Disposition Reasons:
- The oppression remedy is an equitable remedy that gives the Court a broad jurisdiction to enforce not just what is legal, but what is fair corporate conduct. In assessing a claim for oppression, a court must answer two questions:
a. does the evidence support the reasonable expectation the claimant asserts; and
b. does the evidence establish that the reasonable expectation was violated by conduct falling within the terms “oppression”, “unfair prejudice” or “unfair disregard” of a relevant interest?
See: The Investment Administration Solutions Inc. v. Pro-Financial Asset Management Inc., 2018 ONSC 1220, at para. 85, citing with approval BCE Inc. v. 1976 Debentureholders, 2008 SCC 69.
31The Disposition Reasons give a detailed review of the facts found to constitute oppressive conduct by Mr. Evashkow. Justice Osborne reviewed in detail the positions advanced by Mr. Evashkow and by the Respondents.
32Justice Osborne referenced the shareholders’ reasonable expectations as including the expectation that a director will work for the common good of the company and all of its shareholders, as required by section 134 of the OBCA; and that the director’s actions will be consistent with what the Supreme Court of Canada describes as the “fair treatment that is most fundamentally what stakeholders are entitled to reasonably expect”: BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, at para. 64.
33Justice Osborne concluded, at para. 134, that “Mr. Evashkow’s conduct is inconsistent with the reasonable expectations of the Smith Parties and was unfairly prejudicial to and unfairly disregarded their interests”.
34We find no error in the Application Judge’s analysis. The facts support his finding that the reasonable expectations of the Respondents to fair treatment of their interests were violated by Mr. Evashkow’s extensive unreasonable actions, such that a remedy for that oppression was required.
Issue 4 – Did the Application Judge err in in failing to consider whether the Respondents came to the Court with clean hands, before granting them an equitable remedy?
Issue 4 – Did the Application Judge err in in failing to consider whether the Respondents came to the Court with clean hands, before granting them an equitable remedy?
35Mr. Evashkow submits that the Application Judge erred in law in failing to consider that the Respondents themselves engaged in conduct that should have disentitled them to any equitable relief. Mr. Evashkow’s argument is based on the Respondents’ conduct with respect to an improperly constituted meeting on July 27, 2022, held to remove Mr. Evashkow as CEO.
36Mr. Evashkow raises this issue for the first time on appeal. He contends that having found that the Saccucci Parties did not come to court with clean hands, and thus were not entitled to an equitable remedy, the Application Judge erred in not expressly performing the same analysis with respect to the Smith Parties’ oppression claim, given their conduct on July 27, 2022.
37Justice Osborne was alive to the referenced conduct of the Respondents. The Application Judge not only considered the Respondents’ actions in relation to the July 27, 2022 meeting, he subsequently invalidated the resolutions made at that meeting, and in doing so recognized Mr. Evashkow’s continuing role as director and CEO.
38We find no error by the Application Judge on this issue.
Issue 5 – Did the Application Judge err in removing Mr. Evashkow as an officer and director?
Issue 5 – Did the Application Judge err in removing Mr. Evashkow as an officer and director?
39The Appellant submits that his removal as officer and director was an extraordinary remedy that the Application Judge granted without sufficient factual and legal basis for doing so.
40Section 248 of the OBCA gives the Court broad discretion to make “any interim or final order it thinks fit.” Section 248(3)(c) of the OBCA expressly authorizes the Court to make an order “appointing directors in place of or in addition to all or any of the directors then in office.”
41The choice of an appropriate remedy is a discretionary decision that attracts a high degree of deference. Absent a reviewable error of fact or law, a reviewing court generally will not interfere if the judge below “has given sufficient weight to all relevant considerations and the exercise of discretion is not based on an erroneous principle”: Canada (Attorney General) v. Fontaine, 2017 SCC 47, [2017] 2 S.C.R. 205, at para. 36.
42Having said that, removal of a director is an extraordinary remedy that should be imposed sparingly. However, an order for removal of a director “could be suitable where the continuing presence of the incumbent directors is harmful to both the company and the interests of the corporate stakeholders, and where the appointment of a new director would remedy the oppressive conduct”: Stelco Inc. (Bankruptcy), Re (2005), 75 O.R. (3d) 5 (C.A.), at para. 55 citing Catalyst Fund General Partner I Inc. v. Hollinger Inc., 2004 40665 (ON SC), at para. 68.
43Where an oppression remedy is found to be warranted to correct an oppressive situation, “the surgery should be done with a scalpel, not a battle axe”. An important consideration is that the court must, in granting a remedy, “even up the balance not tip it in favour of the hurt party”: Naneff v. Con-Crete Holdings Ltd., 1995 959 (ONCA), at pp. 490-491.
44The circumstances at blueRover Inc. under Mr. Evashkow’s leadership as CEO, were of the nature contemplated by the Court of Appeal in Re Stelco. Having found that Mr. Evashkow’s conduct had “exponentially” increased the level of dysfunction and acrimony in the corporation, the Application Judge concluded that his removal was required:
I pause to observe that Evashkow himself is not a shareholder of blueRover. He has no stake in the equity of the company. He became involved, as described above, as the nominee of Kozar [of Korona Group] to the Board. I am satisfied that it would be inappropriate for him to continue as a Director or officer: Disposition Reasons, at para. 136.
45Courts often exercise caution in removing a director when doing so interferes with the will of the shareholders. That was not a factor in this case. Mr. Evashkow was not elected by a vote of the shareholders. He was appointed by one of the shareholders, the Korona Group. To the extent that Mr. Evashkow’s removal interfered with the authority of the shareholder who nominated him, that shareholder (Korona Group Ltd.) took no part in this appeal. Korona Group also retained its authority to appoint a new CEO following Mr. Evashkow’s removal.
46We conclude that the Application Judge considered and applied the relevant principles to the record before him. The remedy of Mr. Evashkow’s removal was responsive and proportionate to the business realities. Further, his order for removal does not disturb the Board’s balance of power, as the party that nominated Mr. Evashkow was able to nominate his replacement.
47We give no effect to this ground of appeal.
D. Conclusion
Conclusion
48The Application Judge made orders within his discretion that were supported by findings on the evidence before him. The Appellant has failed to establish that he erred in doing so. We find the Application Judge’s orders were informed by appropriate considerations of business realities and that the remedies appealed – including removal of Mr. Evashkow as director – were ordered only after the Application Judge was satisfied, following court-monitored interim operation of blueRover, that such orders were necessary.
49The Application Judge committed no palpable and overriding errors, and we find no injustice in his decision.
E. Order
Order
50The appeal is dismissed with costs.
51Counsel agreed on a costs quantum of $10,000 to be paid to the successful party. We agree with that amount.
52Costs fixed in the amount of $10,000 are payable by Douglas Evashkow to the Respondents.
McSweeney J.
I agree
Davies J.
I agree
Shore J.
Date: May 8, 2025
CITATION: Evashkow v. Melia, 2025 ONSC 2181
DIVISIONAL COURT FILE NO.: 161/24
DATE: 20250508
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
McSweeney, Davies, Shore JJ.
BETWEEN:
Douglas Evashkow
Appellant
– and –
David Melia, Ralph Goldsilver, Robert MacBean, and Michael Smith
Respondents
REASONS FOR JUDGMENT
Date of Release: May 8, 2025