Court File and Parties

Court File No.: CV-22-00674624-00CL Date: 2024-09-06 Ontario Superior Court of Justice

Between: Robert Matuk and North America I-Gaming Group Inc., Plaintiffs – and – James Vannelli, HappyGo Marketing Inc, FinanceVine Inc. and Transformm Inc. (formerly known as Transformational Marketer Inc.), Defendants

Counsel: A.J. Johnson, for the Plaintiffs/Moving Parties J. Samac and T. Mathews, for the Defendants/Responding Parties

Heard: February 22, 2024

Reasons for Judgment

Wilton-Siegel J.

[1] On this motion, the plaintiff Robert Matuk (“Matuk”) seeks summary judgment against the defendants in respect of claims arising out of the breakdown of the relationship between Matuk and the defendant James Vannelli (“Vannelli”) as shareholders of the defendant corporation HappyGo Marketing Inc. (the “Corporation”).

Factual Background

The Early History of the Corporation

[2] Matuk and Vannelli met in an online digital marketing and advertising group in March 2019. In July 2019, together with a third person, Isaac Wardle (“Wardle”), they formed the Corporation under the Canada Business Corporations Act (the “CBCA”). In that connection, they signed a unanimous shareholders agreement which contemplated that each would own one-third of the shares of the Corporation and would be a director.

[3] The business of the Corporation was described as a “pay-per-leads” business model under which clients would buy a quantity of business prospects generated by the Corporation. The strategy of the Corporation to generate leads used marketing processes taken from video courses offered by a third party which Matuk obtained.

[4] Initially, Matuk and Wardle oversaw the generation of leads and Vannelli oversaw operations including the accounting and banking activities of the Corporation. In addition, a fourth party, Ryan Kellock (“Kellock”), was hired as a salesman with a commitment that he would receive a 5% equity stake in the Corporation which would vest over two years.

[5] In or about September 30, 2019, Matuk and Vannelli terminated Wardle’s relationship with the Corporation as they considered that Wardle had been unable to generate sufficient leads in the geographic area for which he was responsible, being Asia and the United Kingdom. Wardle’s exit, which involved the return of his shareholder loan, was not overtly acrimonious.

[6] The parties dispute whether the manner of Vannelli’s termination informed Matuk’s expectations regarding his treatment when he agreed later with Vannelli to exit the Corporation, as described below. In my view, the circumstances were sufficiently different that it is not appropriate to draw any inference regarding Matuk’s expectations on a break-up of his relationship with Vannelli and Kellock from their collective treatment of Wardle. Among other things, the Corporation had not attained profitability before Wardle’s departure. Accordingly, Wardle’s principal interest was the return of his shareholder loan. In contrast, there was no mention of a shareholder loan of Matuk and, the Corporation having become profitable, Matuk’s interest was the value of his shares in light of his view of the Corporation’s future prospects.

The New Arrangements After the Departure of Wardle

[7] Upon Wardle’s departure, Matuk and Vannelli entered into a new shareholders agreement dated as of October 1, 2019 reflecting their respective 50% ownership interests [1] in the Corporation (the “Shareholders Agreement”). It is unclear whether Matuk and Vannelli intended that their respective holding corporations would be the shareholders of the Corporation or that they would personally be the shareholders. However, this issue is not relevant on this motion given the conclusions reached herein.

[8] In these Reasons, a reference to Matuk in respect of his shares or shareholding interest in the Corporation includes his personal holding corporation, the defendant North America I-Gaming Group Inc. (“Naig”), to the extent Naig is determined to have held Matuk’s shares or shareholding interest.

[9] In addition to the Shareholders Agreement between Vannelli and Matuk, the Corporation entered into a new agreement with Kellock dated as of September 27, 2019 whereby, in addition to a sales commission, Kellock was to receive a 10% shareholding interest in the Corporation which would vest over two years at the rate of 1/24 th of such interest per month.

The Relevant Terms of the Shareholders Agreement

[10] The Shareholders Agreement is an unsophisticated document prepared without the benefit of legal counsel. There are several admitted errors including an inconsistent treatment of the identities of the shareholders (the individuals or their respective holding corporations), the corporate name of Matuk’s holding corporation and the number of shareholders. More importantly, the Agreement, particularly Article 8.6 which is described below, is awkward in its application to the present circumstances. The following terms of the Shareholders Agreement are however relevant for the issues in this proceeding.

[11] First, Article 8.4 of the Shareholders Agreement addresses voluntary sales of a shareholder’s shares as follows:

A Shareholder may voluntarily sell all the Corporation’s stock presently owned by such Shareholder (“Departing Shareholder”). Any and all sales hereunder with respect to the Departing Shareholder shall be made within sixty (60) days after written notice of intent to sell served on the Corporation and the remaining Shareholders.

[12] Second, Article 8.6 of the Shareholders Agreement provided for a mandatory buy-out of a shareholder’s interest in the Corporation in the following terms:

The Board of Directors defines consecutive service as follows:

• Each shareholder shall attend unanimously agreed upon meetings on time, and all efforts made to reschedule are done more than 24 hours in advance, and complete unanimously agreed upon activities for the Corporation by the unanimously agreed upon deadlines.
• Adherence to these conditions will be reviewed by the board monthly, and written notice must be sent the shareholder who has been deemed to not adhere to the conditions.
• If these conditions have not been adhered to for 3 consecutive months by any of the 3 shareholders, the two other shareholders may initiate a mandatory buyout to buy back of [sic] all the shares of the shareholder who has failed to meet the standards of consecutive service.
• Exceptions: if a mandatory buyout is initiated this circumstance against a shareholder who has not met the conditions of consecutive service due to a tragedy, unavoidable act of nature, or disability, a neutral third party mediator shall be appointed to make a decision on whether or not the mandatory buyout can be completed or not.

[13] I pause to note that the beneficiary of this right is not clarified in the Agreement. The use of the term “buy-out” in the title, in two paragraphs in Article 8.6 and in Article 8.7 suggests a right in favour of the exercising shareholders to purchase the shares of the third shareholder directly. On the other hand, the reference to a “buy back” suggests a right in favour of the exercising shareholders to cause the Corporation to purchase the shares of the third shareholder. As described below, Vannelli appears to have proceeded on the basis that Article 8.6 contemplated a purchase by the Corporation. However, given the more extensive use of the language of a “buy-out”, the fact that the Corporation is not a party to the Shareholders Agreement, and the failure to address the mechanics of a purchase by the Corporation including any reference to the potential operation of the solvency test in s. 34(1) of the CBCA, I think that the better interpretation of Article 8.6 envisages the simpler transaction – a right in favour of the exercising shareholders to acquire the shares of the third shareholder directly.

[14] Third, the Shareholders Agreement contained the following provision in Article 8.7 regarding the valuation of the Corporation’s shares. This provision was applicable, among other things, in the event of a mandatory buyout under Article 8.6:

The current formula to determine the Corporation’s valuation in the event of a buy or sell of part or the entire Corporation, including a mandatory buyout is as follows:

A. For the purposes of any sale, purchase or other transaction involving Shares which requires a determination of fair market value (“FMV”), the parties to such transaction will, for a period of no less than thirty (30) calendar days, make a good faith effort to agree on FMV, based on Company’s then-current financial information, assets, liabilities and contracts, the markets for and marketability of Company and its products and/or services, and any other factors the parties agree are relevant to such valuation, all in accordance with generally accepted accounting principles, which principles shall be consistently applied.

B. As of the time that this document is signed, the Shareholders agree that FMV of the business is calculated as the total of the past 12 complete months profit.

C. The shareholders agree to meet, review, and update the FMV calculation every 3 months, starting Jan 1, 2020.

[15] Fourth, Article 4.1 of the Shareholders Agreement contains a non-competition covenant which reads as follows:

Each Shareholder agrees that as long as he or she is the owner, or in control of, any of the Corporation’s shares, the Shareholder will not be employed, concerned, or financially interested, either directly or indirectly, in the same or a similar business as that conducted by the Corporation, or compete with the Corporation.

[16] Fifth, Article 4.2 of the Shareholders Agreement contains a non-disclosure covenant respecting the Corporation’s intellectual property which reads as follows:

Each Shareholder acknowledges that the customer lists, trade secrets, processes, methods, and technical information of the Corporation and any other matters designated by the President or by the written consent of all Shareholders are valuable assets. Unless he or she obtains the written consent of each of the other Shareholders, each Shareholder agrees never to disclose to any individual or organization, except in authorized connection with the business of the Corporation, any customer list, or any name on that list, or any trade secret, process, or other matter referred to in this paragraph while the Shareholder holds, or has the control of, any shares of the Corporation, or at any later time.

[17] Lastly, Article 7.1 provides that “[a]ll Shareholders must consent to voluntary dissolution.”

The History of the Corporation From September 30, 2019 to May 18, 2020

[18] It is agreed that the Corporation was not profitable at the time of Wardle’s departure. Revenues did however increase in the final quarter of 2019 and the Corporation began to generate a profit in December 2019. Matuk says that he and Vannelli were paid a total of $78,222.06 from December 2019 to and including April 2020 as distributions to the shareholders. Vannelli considers that most of the payments to Matuk and himself represented salaries for their services to the Corporation rather than distributions of profit, leaving little actual profit.

[19] In any event, the profitability of the Corporation and its longer-term prospects became a matter of serious dispute between the parties by March 2020. Vannelli and Kellock say that, commencing in February 2020, Matuk “disengaged”, that is that he ceased any lead generation activities. Matuk says that he required unspecified assistance in the lead generation department which was ignored. From this time onward, if not before, Matuk and Vannelli had extensive disagreements over the operations of the Corporation and the particular strategy and practice of lead generation.

[20] By May 2020, Matuk and Vannelli had scarcely communicated with each other for a period of at least several weeks. The parties agree that lead generation and profits were significantly reduced in May 2020 concurrently with the onset of COVID-19 restrictions.

[21] Vannelli, Matuk and Kellock had regularly scheduled meetings each Monday. The meeting on May 11, 2020 was very confrontational. Vannelli and Kellock aired their grievances regarding Matuk’s performance.

[22] On May 15, 2020, Vannelli sent a video to Matuk and Kellock for review prior to the shareholders meeting scheduled for the following Monday, May 18, 2020. The video contained, among other things, a proposal to restructure the share ownership of the Corporation such that each of Matuk, Vannelli and Kellock would own one-third of the oustanding shares. This reflected Vannelli’s view that Matuk had ceased contributing to the Corporation’s lead generation activities.

[23] Because Matuk did not confirm his review of the video, Vannelli cancelled the shareholders meeting. Matuk says he did not view the video because he knew its contents and “found the imperative tone of Vannelli’s email offensive.”

The Events Giving Rise to this Proceeding

Events Preceding Delivery of the Mandatory Buy-Out Notice

[24] On Monday, May 18, 2020, notwithstanding cancellation of the scheduled shareholders meeting, Vannelli and Kellock purported to hold a shareholders meeting at which they resolved to exercise a mandatory buy-out of Matuk’s shares pursuant to Article 8.6 of the Shareholders Agreement (the “Mandatory Buy-Out”). Vannelli ascribed a nil value to Matuk’s shares for purposes of the Mandatory Buy-Out. At the same time, Vannelli and Kellock purported to remove Matuk as a director and Vannelli, as the sole director, resolved to remove Matuk as an officer of the Corporation.

[25] Vannelli did not, however, immediately inform Matuk of the meeting or the actions taken at it. Instead, he sought a telephone call with Matuk. This did not occur until the morning of May 20, 2020. In that telephone conversation, Matuk and Vannelli agreed that they no longer wished to work together and Matuk agreed to a voluntary buy-out of his shares in the Corporation pursuant to Article 8.4 of the Shareholders Agreement. I note that it is not clear whether the purchaser under this offer was to be Vannelli or the Corporation as no corporate approval or transfer documentation for the sale of Matuk’s shares was ever prepared by Vannelli, other than the Mandatory Buy-Out Notice described below.

[26] In this conversation, it was also agreed that Vannelli would prepare an offer to purchase Matuk’s shares and that either Matuk would cease all work for the Corporation or would cease all work while the offer was being prepared. While Vannelli’s offer price was to be the fair market value of Matuk’s shares, it is not clear whether the price was to be determined in accordance with the formula in Article 8.7 of the Shareholders Agreement or would represent Vannelli’s view of the fair market value of Matuk’s shares, which was nil.

[27] In this conversation, Matuk agreed to give Vannelli 24-48 hours to finalize the current financial statements of the Corporation and to prepare his offer for Matuk’s shares. However, later that morning, Matuk sought access to the accounting records of the Corporation, which Matuk says he did for the purposes of formulating his own view of the value of the Corporation and of his shareholding interest. Vannelli resisted Matuk’s actions. Thereafter their relationship spiraled out of control by their own admission.

[28] While Matuk was entitled to review the accounting statements to form his own view of the value of his shares, his action was premature because some time was required to perform a period-end reconciliation of the financial statements as this transaction was occurring in the middle of the month. However, Vannelli treated Matuk’s actions not merely as premature but as a breach of their agreement to allow him 48 hours to reconcile the financial statements and prepare his offer. Vannelli resisted any access to the Corporation’s accounting records. He insisted that Matuk wait until he had presented his offer.

[29] Matuk’s initial request was for access to the Corporation’s Quickbooks records. Vannelli says that Matuk was unable to log into Quickbooks as he was not familiar with the process. Vannelli denies that he locked Matuk out of the Quickbooks application as Matuk alleges but he did not assist him either, apart from saying that he could log in via Google which Matuk could not, or would not, do. In response to Matuk’s repeated attempts to access the accounting records, however, Vannelli and Kellock decided to remove Matuk from the various internet accounts of the Corporation including Quickbooks, Facebook ads, Slack and email. Vannelli also requested that the Corporation’s bank, Scotiabank (the “Bank”), remove Matuk from the Corporation’s banking authorities.

[30] The Bank’s representative with whom Vannelli and Matuk dealt was Travis Bradley (“Bradley”). Before amending the Corporation’s banking authorities, Bradley required proof that Matuk was no longer a director. Vannelli provided Bradley with a Form 6 – Changes Regarding Directors under the CBCA showing that Matuk was no longer a director of the Corporation as of May 18, 2020.

The Mandatory Buy-Out Notice

[31] The next day, May 21, 2020, in pursuit of access to the Corporation’s banking records, Matuk spoke to Bradley. He asserted that he was still a director and shareholder of the Corporation. Bradley asked for proof to which Matuk responded by an email which attached the Shareholders Agreement. Bradley then informed Vannelli that Matuk’s access to the banking accounts would be restored unless he could provide evidence that the buyout of Matuk’s shares had been completed.

[32] In response, Vannelli delivered a mandatory buy-out notice (the “Mandatory Buy-Out Notice”) to both Matuk and Bradley giving effect to the actions of Vannelli and Kellock at the purported shareholders meeting of May 18, 2020. The Mandatory Buy-Out Notice indicated a nil value for Matuk’s shares in accordance with the decision at that meeting. The Mandatory Buy-Out Notice was sent as an attachment to a covering email which read: “See attached. Any further attempts to access Company property or finances will be subject to both criminal and civil charges.”

[33] The following is the text of the relevant portions of the Mandatory Buy-Out Notice:

Per Section 8.6 of the HappyGo Marketing Inc. Shareholders agreement, The Board has initiated a Mandatory Buyout for all of the shares of Robert Matuk in the company, for the reason of not meeting the standards of “consecutive service” to the company which includes attendance at staff meetings, completion of tasks on mutually agreed upon deadlines for 3 or more consecutive months.

Written notice was given on Friday, May 15th, 2020, which was not responded to.

As Per Section 8.7, Valuation, the buyout value will be determined based on FMV (fair market value) as agreed to by the Directors based good faith effort to agree on FMV, based on Company’s then-current financial information, assets, liabilities and contracts, the markets for and marketability of Company and its products and/or services, and any other factors the parties agree are relevant to such valuation, all in accordance with generally accepted accounting principles, which principles shall be consistently applied.

Good-faith negotiations were attempted, and failed. As such, the Company has determined that FMV to be $0.00, based on the following:

• Company revenue has decreased to $12,500 in May, with expenses on track to exceed that revenue.
• Projected revenue for June is currently $0.00, with contractual liabilities creating expenses that will put the company at a net negative position.
• The remaining shareholders have had to apply for the CERB from the Federal Government in order to play living expenses.

The dispute process is outlined in Article 9 of the shareholders agreement. As per the terms, it is the “third entity” who shall meditate any disagreements. The third entity was originally Isaac Wardle, the third shareholder & collaborator in the business, who has since been replaced by Ryan Kellock, a minority shareholder and full-time collaborator in the business. Ryan Kellock has heard the arguments and agrees with the Company’s valuation of $0.

As per the terms of the shareholders agreement, that resolves the matter fully.

As part of this mandatory buyout, your name has been removed from all corporate documents and banking agreements, and all of your accounts have been revoked. You have no further ownership, interests, claim, or affiliation with HappyGo Marketing Inc. or any HappyGo Marketing Inc.’s affiliates, subsidiaries, or property, either now or anytime in the future.

The Mandatory Buy-Out Notice was signed by Vannelli in his capacity as a director and Kellock in his capacity as the third party mediator and shareholder.

Events Following Delivery of the Mandatory Buy-Out Notice

[34] Following delivery of the Mandatory Buy-Out Notice, Vannelli moved all of the funds in the Corporation’s bank account to the bank account of his personal holding corporation, the defendant Transformm Inc. (“TI”). According to Vannelli, this was done in multiple transactions due to limits on his ability to transfer funds. Vannelli says he took this step because he was concerned that Matuk would withdraw the Corporation’s funds. He says that the Corporation needed these funds to continue its operations. Vannelli was also concerned that Matuk would jeopardize his credit by accessing certain company credit cards on which Vannelli and Matuk were co-signatories.

[35] For his part, not surprisingly, Matuk became very suspicious. He assumed that Vannelli was manipulating the financial statements in his favour. He regarded these transactions as evidence of misappropriation by Vannelli when he was able to access the Corporation’s bank accounts later on May 21, 2020. There is however no evidence that any funds were taken by Vannelli personally at this time.

[36] From and after May 21, 2020, all communications between the parties took the form of communications between Vannelli and Derek Brett (“Brett”), a lawyer for Matuk. On May 21, 2020, shortly after Vannelli delivered the Mandatory Buy-Out Notice to Matuk, Brett sent Vannelli an email which is not before the Court.

[37] On May 22, 2020, Brett sent a further email containing the following demands:

The following serves as notice that you must immediately return the shares that Mr. Robert Matuk owns in HGM Inc. which you unlawfully transferred. Additionally, you must also return his access to any corporate bank accounts/credit cards, and promptly account for any transferred funds. You must also provide access to all of HGM Inc.’s corporate finances. Further, you must restore Mr. Matuk’s access to any media network accounts jointly owned by the company, including, but not limited to, Facebook and Google accounts. This is in addition to any other accounts or software access that are required as a part of Mr. Matuk’s resumption of his role as a director/shareholder of HGM Inc. [italics original]

The letter also accused Vannelli of failing to apply the accounting principles required by Article 8.7 of the Shareholders Agreement in calculating the value of Matuk’s shares.

[38] Vannelli responded with an email of May 22, 2020 which, among other things, set out his intention to fulfil existing customer contracts, close all of the Corporation’s banking facilities, pay all of its outstanding liabilities and taxes, and thereafter dissolve the Corporation. In short, Vannelli advised that he was proposing to wind up the business and affairs of the Corporation immediately. Matuk never responded to this statement of Vannelli’s intention. For his part, Vannelli did not advise Matuk that he and Kellock also intended to continue to carry on a lead generation business in a new corporation to be incorporated by them as described below.

[39] Vannelli sent a further email on May 23, 2020 in which he set out his rebuttal of the allegations in Brett’s email of May 22, 2020 with attached documentation that he considered supported his position. This email concluded with the following statement:

In considering all of the above false claims, evidence presented to refute those claims, and the fact that your firm is not licensed to practice Law in Ontario - where ALL disputes related to the company must be handled as per the shareholders agreement, we have decided to close off any communication with your firm or your client from this point forward.

Any attempts to further contact myself, Ryan, or the Company with false or fraudulent claims will be documented as evidence in a potential suit against you and/or your client.

This will be our last reply.

[40] Brett replied in an email on May 26, 2020 setting out Matuk’s rejection of Vannelli’s claims that he had complied with the Shareholders Agreement. The email then set out the following position of Matuk at that date:

Here is the bottom line, Mr. Vannelli. You invoked a Shareholder Agreement clause that fundamentally deprived Mr. Matuk of a property right on extremely tenuous grounds without following any of the processes required in the Shareholders’ Agreement or the CBCA. Further, this was done without any form of compensation, on grounds that you will not provide anyone else access to, besides the two persons who made the decision to divest and who also stand to financially gain from this action. This will not stand-up in Court.

We are therefore providing you a final opportunity to correct your mistakes here. The following serves as notice that you must immediately cease and desist all activities to divest Mr. Matuk of his legal interest in HappyGo Marketing Inc. You are to disclose all corporate finance documents to us, including, but not limited to, any activity on the Scotiabank account that has occurred throughout the 12-month period as anticipated by article 8.7-B. You have until the end of May 28, 2020 to provide a response. Before this deadline occurs, I have once again made myself available to speak to you about the matter. Failure to speak with us, or to comply with the above demands will result in us immediately seeking interim relief in the Courts. [italics original]

[41] Vannelli responded by a further email dated May 28, 2020 in which he suggested that the financial disclosure sought in Brett’s email of May 26, 2020 was the same financial disclosure which Vannelli had already agreed to provide on May 20, 2020, implying that the acrimonious demands and exchanges since that date on Matuk’s part were entirely unnecessary. Vannelli ignored the rest of Brett’s demands made in his emails of May 22 and May 26, 2020 including the restoration of Matuk’s shares and his reinstatement as a director of the Corporation. In other words, Vannelli interpreted the Brett letter of May 26, 2020 as a change in position – from a demand that he restore or recognize Matuk’s shareholding interest in the Corporation to a demand for the financial information regarding the state of the Corporation, presumably to re-engage in negotiations over the sale price of Matuk’s interest. Vannelli did not however provide Matuk with the information that he says that he agreed to provide him in their telephone call of May 20, 2020.

The Events After May 28, 2020

[42] Despite the deadline set out in Brett’s email of May 26, 2020, there was no further communication or action on the part of Matuk until he commenced this action by a Statement of Claim dated January 4, 2022. In particular, Matuk did not attempt to negotiate the value of his shareholding interest in the Corporation. On the other hand, apart from the Mandatory Buy-Out Notice which had been delivered previously, Vannelli did not deliver any offer for Matuk’s shareholding interest nor did he attempt to negotiate a purchase price for Matuk’s shareholding interest. Nor, as mentioned, did Vannelli provide Matuk with any financial information regarding the financial position of the Corporation as of May 20, 2020 to initiate any such negotiation. Instead, from this date forward, Vannelli proceeded on the basis that Matuk was no longer a shareholder, director or officer of the Corporation.

[43] Vannelli implemented his stated intention to wind up the business and affairs of the Corporation and dissolve the Corporation. The Corporation effectively ceased doing business by June 30, 2020. Vannelli says that he personally fulfilled the outstanding customer contracts for which the Corporation had unearned revenue. He also says that TI paid the outstanding liabilities of the Corporation as of June 1, 2020 using the monies transferred to it from the Corporation’s bank accounts on and after May 20, 2020 as mentioned above.

[44] Vannelli says that only a “negligible or nil balance of funds” remained in TI from the Corporation after the winding up. However, it also appears that he and Kellock received one or more payments in unspecified amounts during the period of winding up which Vannelli suggests were in line with past practice. Vannelli filed articles of dissolution dissolving the Corporation on December 3, 2020.

[45] Vannelli and Kellock started up a new lead generation business in a newly incorporated corporation, FinanceVine Inc. (“FinanceVine”), which commenced business on or about July 1, 2020. For this purpose, Vannelli and Kellock incorporated FinanceVine on June 8, 2020. TI held 80% of the outstanding shares of FinanceVine and a holding corporation of Kellock held the remaining 20% of the outstanding shares. As mentioned, there is no evidence that Vannelli advised Matuk of their intention to proceed in this manner after winding up the business of the Corporation.

[46] The parties disagree on the extent to which FinanceVine carried on a different business from that of the Corporation. Matuk describes the business of FinanceVine in general terms as a lead generation business. He says that FinanceVine simply took over the business of the Corporation. Vannelli acknowledges that FinanceVine is in the lead generation business but says it has a narrower focus than the Corporation. He says FinanceVine concentrates on delivering leads specifically to clients in the financial services industry. He also says that FinanceVine uses different business and marketing strategies than the Corporation and has developed its own software processes. Accordingly, Vannelli suggests that both the client focus and the manner of generating leads for its clients are substantially different from that of the Corporation.

Preliminary Procedural Matter

[47] In the Notice of Motion, the plaintiffs sought orders striking certain paragraphs in the affidavits of Vannelli and Kellock in the Responding Motion Record. At the outset of the hearing, the parties agreed to defer the hearing of these motions until after a decision was rendered by this Court on the plaintiffs’ motion for summary judgment. The motion therefore proceeded with the impugned paragraphs before the Court. I note however that these paragraphs did not affect the result set out in these Reasons because, in broad terms, they either related to Vannelli’s position that the Mandatory Buy-Out was validly exercised, which the Court rejected notwithstanding such evidence for the reasons set out below, or they related to the comparability of the businesses of the Corporation and FinanceVine, which the Court did not address as discussed below.

The Summary Judgment Motion

Applicable Law

[48] The following legal principles are relevant to the issues in this action and on this summary judgment motion.

Summary Judgment

[49] This motion is brought under r. 21.01(1)(a) [2] of the Rules of Civil Procedure. The following principles set out in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 at paras. 47, 49 and 50 govern a summary judgment motion and are applicable to this motion:

[47] Summary judgment motions must be granted whenever there is no genuine issue requiring a trial (Rule 20.04(2)(a)). ...

[49] There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[50] These principles are interconnected, and all speak to whether summary judgment will provide a fair and just adjudication. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.

[50] The Supreme Court also laid out the following roadmap for dealing with summary judgment motions under Rule 21.01 at para. 66 of Hryniak v. Mauldin:

[66] On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole. [italics original]

Oppression Action

[51] Section 241(2) of the CBCA sets out the requirements for the remedy for oppressive behaviour by a corporation or its directors:

(2) If, on an application under subsection (1), the court is satisfied that in respect of a corporation or any of its affiliates

(a) any act or omission of the corporation or any of its affiliates effects a result,

(b) the business or affairs of the corporation or any of its affiliates are or have been carried on or conducted in a manner, or

(c) the powers of the directors of the corporation or any of its affiliates are or have been exercised in a manner

that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of any security holder, creditor, director or officer, the court may make an order to rectify the matters complained of.

[52] The approach to be adopted by a court in addressing an oppression claim was articulated by the Supreme Court in BCE Inc. v. 1976 Debentureholders, 2008 SCC 69 at para. 68 as follows:

In summary, the foregoing discussion suggests conducting two related inquiries in a claim for oppression: (1) Does the evidence support the reasonable expectation asserted by the claimant? and (2) 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?

[53] The Supreme Court addressed the relevant concepts included in the concept of “reasonable expectations” in paras. 62 and 67 of BCE as follows:

[62] As denoted by “reasonable”, the concept of reasonable expectations is objective and contextual. The actual expectation of a particular stakeholder is not conclusive. In the context of whether it would be “just and equitable” to grant a remedy, the question is whether the expectation is reasonable having regard to the facts of the specific case, the relationships at issue, and the entire context, including the fact that there may be conflicting claims and expectations….

[67] … Even if reasonable, not every unmet expectation gives rise to claim under s. 241. The section requires that the conduct complained of amount to “oppression”, “unfair prejudice” or “unfair disregard” of relevant interests. “Oppression” carries the sense of conduct that is coercive and abusive, and suggests bad faith. “Unfair prejudice” may admit of a less culpable state of mind, that nevertheless has unfair consequences. Finally, “unfair disregard” of interests extends the remedy to ignoring an interest as being of no importance, contrary to the stakeholders’ reasonable expectations: … The phrases describe, in adjectival terms, ways in which corporate actors may fail to meet the reasonable expectations of stakeholders.

[54] Section 241(3) grants a court wide discretion to grant any order it may think fit in connection with an application under section 241 including, in section 241(3)(j), “an order compensating an aggrieved person.”

[55] An important principle in the present context, as noted in Naneff v. Con-Crete Holdings Ltd., [1995] O.J. No. 1377; (1995), 23 O.R. (3d) 481 at p. 488, is that any remedy for oppression must not extend beyond that which is necessary to rectify the particular oppression found to have occurred:

The provisions of s. 248(3) give the court a very broad discretion in the manner in which it can fashion a remedy. Broad as that discretion is, however, it can only be exercised for a very specific purpose; that is, to rectify the oppression. This qualification is found in the wording of s. 248(2) which gives the court the power, if it finds oppression or certain other unfair conduct, to "make an order to rectify the matters complained of". Therefore, the result of the exercise of the discretion contained in s. 248(3) must be the rectification of the oppressive conduct. If it has some other result the remedy would be one which is not authorized by law.

Unjust Enrichment

[56] Unjust enrichment requires demonstration that: (1) the defendant has been enriched; (2) the plaintiff has suffered a corresponding deprivation; and (3) the absence of any juristic reason justifying the defendant’s retention of that transfer of value: Moore v. Sweet, 2018 SCC 52 at para. 37.

Did Matuk Remain a Shareholder After May 20, 2020?

[57] A central issue in this proceeding is whether Matuk remained a shareholder of the Corporation up to and including the date of dissolution of the Corporation on December 3, 2020. I will address this issue before considering Matuk’s claims in this action as the determination informs the Court’s approach to such claims. The following summarizes my understanding of the principal submissions of Matuk and Vannelli regarding the relationship of Matuk to the Corporation after their telephone call of May 20, 2020 until the date of dissolution of the Corporation and then sets out my conclusion on this issue.

Matuk

[58] It is Matuk’s position that he remained a shareholder, director and officer of the Corporation until its dissolution on or about December 3, 2020. Matuk says he agreed to “step back” from the Corporation to negotiate the sale of his shares pursuant to an offer that Vannelli would make within 24-48 hours. By “stepping back”, he meant that he would not do any work for the Corporation. He wanted a “voluntary exit” from the Corporation provided he was paid appropriately for his interest. He says, however, that he did not resign from the Corporation or transfer his shareholding interest in the Corporation at that time.

[59] While he acknowledges that, in the telephone call of May 20, 2020, the parties “agreed to go their separate ways”, Matuk says that this did not necessarily mean that he would sell his shareholding interest. He says he reserved the right to buy the shareholding interest of Vannelli. In other words, Matuk says that he agreed to do no more than commence the process of negotiating a value for his shares after which he would decide whether he would sell his shareholding interest in the Corporation or buy out Vannelli’s interest.

[60] I do not accept Matuk’s assertion that the “agreement in principle” with Vannelli went this far in the absence of any documentation supporting this claim. This suggestion does not appear to have been made until sometime after the Fresh as Amended Statement of Claim was delivered in July 2023 as that pleading alleges that “the two parties agreed that the Defendant would purchase the Plaintiff’s shares.” There is no evidence that Vannelli ever indicated that he was agreeable to departing the Corporation. In addition, as a practical matter, Matuk would have known that any purchase of Vannelli’s shares by himself was not workable given Kellock’s role in the Corporation and his alignment with Vannelli.

[61] Matuk denies that he breached any commitment to give Vannelli 28-48 hours to prepare an offer for his shares. He says that, after being denied access to the Corporation’s accounting records and banking facilities, he ceased the process of negotiating a value for his shares and demanded “reinstatement” as a shareholder and a director.

[62] Matuk relies upon Brett’s letters of May 22 and May 26, 2020 on his behalf as evidence that he did not, and did not intend to, transfer, relinquish or abandon his shares to Vannelli or the Corporation. He explains his silence after Vannelli’s email of May 28, 2020 until the commencement of this action by saying that he left the matter with Brett and then became preoccupied with his mother’s health and death after an accident in July 2020.

Vannelli

[63] After May 20, 2020, in winding up the business of the Corporation and filing articles of dissolution, Vannelli proceeded on the basis that he or the Corporation had acquired Matuk’s shares for nil consideration. Between his affidavit affirmed September 15, 2023 in the Responding Motion Record (the “Vannelli Affidavit”) and his submissions on this motion, Vannelli offered four possible grounds for this position:

1. The agreement reached with Matuk in their telephone call of May 20, 2020;
2. The exercise of the Mandatory Buy-Out;
3. The exercise of Vannelli’s powers as a director to cause the Corporation to acquire Matuk’s shares; and
4. Matuk’s abandonment of his shares through his silence as of May 26, 2020.

Analysis and Conclusions Regarding the Issue of Whether Matuk Remained a Shareholder of the Corporation after May 20, 2020

[64] I will review the four alternative grounds on which Vannelli asserts that Matuk ceased to be a shareholder in turn.

[65] First, Vannelli relies upon his agreement with Matuk in their telephone call of May 20, 2020. Vannelli’s position is that, in the telephone call, Matuk agreed to sell his shareholding interest in the Corporation to Vannelli or the Corporation and to depart the Corporation effective that date. He says that, given that Matuk’s shareholding interest in the Corporation had nil value, Vannelli was entitled to treat Matuk’s shareholding interest as transferred to him or the Corporation without any payment in exchange therefor.

[66] However, in that call, Matuk agreed only to sell his shares at a price to be agreed upon. He did not transfer his shares at that time or at any time thereafter. As mentioned, no transfer documentation, including any notice under Article 8.4 of the Shareholders Agreement, was ever prepared. The alleged agreement was not legally binding such that Vannelli could enforce a transfer of Matuk’s shares. The “agreement” was merely an “agreement to agree” unaccompanied by any consideration with two principal terms, being the price and the identity of the purchaser, to be determined by negotiation. Vannelli’s view of the value of Matuk’s shares was never accepted by Matuk. Consistent with this position, among other things, Matuk specifically denied that he had ceased to be a shareholder in his conversation with Bradley on May 21, 2020. In short, there is no basis for Vannelli’s assertion that Matuk transferred his shareholding interest in, or as a result of, his telephone call with Matuk on May 20, 2020 such that thereafter Matuk ceased to be a shareholder of the Corporation.

[67] As a related matter, Vannelli alleges that Matuk did not bargain in good faith following their telephone call. Vannelli says that, instead, Matuk breached their agreement by failing to give him 24-48 hours before seeking access to the Corporation’s accounting records. As discussed above, Matuk’s request was premature and his persistence and suspicion destructive. However, Vannelli’s response in the form of the exercise of the Mandatory Buy-Out, which did not constitute an offer for the purposes of Article 8.6, prevented any negotiation. It could be characterized in its own right as a failure to negotiate in good faith as discussed below. In any event, even if a breach of an obligation of Matuk to act or negotiate in good faith were established, it could not result in a transfer of Matuk’s shares for nil consideration.

[68] Second, as mentioned, Vannelli submits that he and Kellock validly exercised the Mandatory Buy-Out. I do not agree. The following two fatal defects with the purported exercise of the Mandatory Buy-Out by Vannelli and Kellock, as well as several other problems, have the result that the purported exercise of the Mandatory Buy-Out was null and void, that is of no force and effect.

[69] First, Vannelli has failed to demonstrate satisfaction of the conditions in Article 8.6 entitling the exercising shareholders to avail themselves of this right.

[70] Article 8.6 requires that, for three consecutive months, a shareholder shall have (1) failed to attend shareholder meetings on time and (2) failed to “complete unanimously agreed upon activities for the Corporation by unanimously agreed upon deadlines.” Article 8.6 requires that both these conditions shall be satisfied. Vannelli has demonstrated that there was considerable acrimony between himself and Matuk. He has also demonstrated that there was a dispute regarding the extent to which Matuk was contributing to the Corporation. He has not, however, demonstrated that either of these conditions was satisfied.

[71] There is evidence that Matuk failed to attend one agreed upon meeting, the meeting of May 18, 2020. It is arguable however that he did not fail to attend this meeting given that Vannelli cancelled it. In any event, Article 8.6 requires demonstration of a failure to attend agreed upon meetings for three consecutive months. That evidence is lacking.

[72] In addition, there is no evidence that the directors agreed upon specific activities and a related timeline for such activities. The undated Slack messages in Exhibit X to the Vannelli Affidavit reflected exchanges between Vannelli and Matuk, often acrimonious, on a number of subjects. They do not however evidence “unanimously agreed upon activities for the Corporation” nor do they include “unanimously agreed upon deadlines” for such activities, but rather unilateral demands by Vannelli. Nor does Vannelli’s lengthy undated critique of Matuk’s performance in Exhibit W to the Vannelli Affidavit. It was therefore impossible to comply with the requirement that adherence to these conditions have been “reviewed” by the board on a monthly basis.

[73] There is also no evidence that written notice was given to Matuk as a shareholder who had been deemed not to adhere to the foregoing conditions. In my view, the language and context of Article 8.6 requires notice after each of the three consecutive months of non-compliance. Even if one accepts Vannelli’s interpretation that only one notice was required, there is no evidence that a notice specifically directed toward the exercise of rights under Article 8.6 was ever provided to Matuk. In particular, the email dated May 15, 2020 referred to in the Mandatory Buy-Out Notice, upon which Vannelli principally relies, did not contain any such notice.

[74] Second, Article 8.7 requires that Vannelli and Matuk shall make a good faith effort to agree on the fair market value of Matuk’s shares for a period of at least thirty calendar days. Vannelli made no attempt to negotiate such value after Matuk tried to obtain the financial and accounting records of the Corporation. Instead, Vannelli asserted a nil value in the Mandatory Buy-Out Notice and made no further attempt to negotiate a price by furnishing the financial statements he promised to deliver in the telephone call between himself and Matuk on May 20, 2020.

[75] Vannelli’s actions reflected his view, as expressed in his email of May 22, 2020, that there was “an implied agreement that anyone involved in the business who didn’t do their work, or left the company hanging, would not get to walk away with anything.” However, there is no evidence of this alleged implied agreement and certainly no evidence that Matuk shared this view. In addition, Matuk’s actions in seeking the accounting and financial information, even if they breached an “agreement” to give Vannelli time to prepare his offer, did not relieve Vannelli of his obligation of good faith negotiation under Article 8.7. As a consequence of Vannelli’s failure to make a good faith effort to negotiate the fair market value of the Corporation for thirty days as required by Article 8.7, the fair market value of the Corporation, and therefore the purchase price for Matuk’s shares, was never established.

[76] In addition to the foregoing defects which in my view are fatal, there are the following additional problems with the manner in which the Mandatory Buy-Out was exercised.

[77] As mentioned above, in my view, the proper interpretation of Article 8.6 requires that the purchasers pursuant to the Mandatory Buy-Out right be the exercising shareholders. However, the Mandatory Buy-Out Notice states that “the Board” has purported to exercise the right, which I take to mean on behalf of the Corporation.

[78] In addition, the Mandatory Buy-Out Notice reflects a belief that the mediation provisions of Article 8.6 were applicable in the circumstances. While this is not entirely clear given the last paragraph of Article 8.6, to the extent that these provisions were applicable, they were not complied with despite the wording of the Mandatory Buy-Out Notice. Kellock failed to hear any arguments that Matuk may have wished to present. The only arguments he heard were those of himself and Vannelli.

[79] Before proceeding, I note that, in the course of his oral submissions, Vannelli’s counsel acknowledged that Vannelli’s position was essentially that three months of dissatisfaction on the part of one shareholder gave that shareholder the right to exercise the Mandatory Buy-Out to terminate the relationship with the other shareholder under Article 8.6. In effect, Vannelli’s position was that the Court should give effect to this alleged intention of Article 8.6 and overlook the obvious defects in the manner of exercise of the Mandatory Buy-Out, which the argument implicitly recognized.

[80] I do not accept this interpretation of Article 8.6 notwithstanding the provisions of Articles 2.7 and 3.1 upon which Vannelli relies as support for his interpretation. Vannelli’s interpretation of Article 8.6 cannot be justified in terms of either the language of the Shareholders Agreement or common sense. As Vannelli implicitly recognized in making this argument and in his actions in withholding the Mandatory Buy-Out Notice until after his initial negotiations with Matuk in their telephone call of May 20, 2020, Article 8.6 is intended to be the final recourse of shareholders after discussion and negotiation have failed leaving no other means of breaking up the relationship between the exercising shareholders and the third shareholder. Vannelli’s interpretation requires that the Court disregard entirely the wording, however imperfect, of Article 8.6 which protects a shareholder from an arbitrary taking of his shares by setting out specific conditions which had to be satisfied, including notice in advance to a non-adhering shareholder to permit him to take steps to avoid that result.

[81] Vannelli’s third ground for his position that Matuk ceased to be a shareholder is that the Corporation acquired Matuk’s shares after a determination by Kellock and Vannelli that this was in the Corporation’s best interests. In making this argument in his factum, Vannelli relies on the “business judgment rule.” I understand this to mean that, after a determination by the shareholders that it was in the best interests of the Corporation to terminate Matuk’s shareholding interest, Vannelli caused the Corporation to acquire the shares for nil consideration outside of the mechanism provided for in Article 8.6 by exercising his powers as the sole director of the Corporation.

[82] There are two problems with this argument. First, because the exercise of the Mandatory Buy-Out was invalid, as discussed below, Vannelli was not the sole director of the Corporation. Accordingly, he was not in a position to exercise the powers of the directors, including causing the Corporation to acquire Matuk’s shares, without the consent of the other director, Matuk.

[83] Second, and in any event, the Corporation’s outstanding shares were Class A Shares. The Articles of Incorporation of the Corporation did not provide that these shares were redeemable. The CBCA does not provide any mechanism by which non-redeemable shares can be purchased from an individual shareholder in the absence of an agreement with that shareholder. There is no evidence of such an agreement as discussed above.

[84] As a variant of this argument, Vannelli suggested in effect that an agreement existed that comprised the Mandatory Buy-Out Notice and Matuk’s silence. Treating the Notice as an offer, Vannelli suggests that he was entitled to treat Matuk’s failure to deliver a counter-offer as acceptance. However, as mentioned above, the Mandatory Buy-Out Notice served a single purpose – notice of the exercise of the Mandatory Buy-Out right. There is no reasonable basis for Vannelli’s position that Matuk should have also considered it to be an offer to which he was obligated to respond or be held to be bound.

[85] Lastly, Vannelli appears to have proceeded on the basis that, to the extent that Matuk had not already transferred his shares, Matuk abandoned and transferred his shares sometime after May 28, 2020 by his silence and inaction, that is, by his failure to take any action to assert any rights that he might otherwise have had. In proceeding in this manner, however, Vannelli disregarded the assertions in Brett’s letters of May 22 and May 26, 2020 that clearly demanded continued recognition of Matuk’s rights as a shareholder. Insofar as Vannelli relied upon his express statement of his intention to wind up and dissolve the Corporation set out in his email of May 22, 2020, he erred. Even if Matuk is considered to have acquiesced with knowledge to Vannelli’s intention to wind up the Corporation and to file of articles of dissolution, any such acquiescence did not constitute the abandonment and transfer of his shares in favour of Vannelli or the Corporation.

[86] In summary, I see no basis on which Vannelli or the Corporation acquired Matuk’s shares. Accordingly, I conclude that Matuk remained a 45% shareholder of the Corporation at all times after May 20, 2020.

[87] There are several consequences that result from this determination that are relevant. First, as mentioned, the resolution of Vannelli and Kellock at the shareholders meeting of May 18, 2020 removing Matuk as a director was invalid. Matuk remained a shareholder. In the absence of proper notice of the meeting as required by s. 135 of the CBCA or a waiver under s. 136, the meeting was invalid and any business transacted at the meeting was ineffective.

[88] Second, because Matuk remained a director of the Corporation, any actions taken by Vannelli as the purported sole director of the Corporation were also unauthorized. This includes, among other things, his removal of Matuk as an officer, his revocation of Matuk’s banking authorities, his termination of Matuk’s access to the Corporation’s internet accounts, and any action to cause the Corporation to acquire Matuk’s shares, as discussed above.

[89] Third, any corporate matters requiring approval of the shareholders after May 20, 2020 were also invalid in the absence of proper notice to Matuk. As a consequence, the dissolution of the Corporation was not validly authorized. However, as discussed below, the consequences of this defect are not material.

[90] Fourth, as Matuk remained a shareholder, he has status under the Shareholders Agreement and pursuant to s. 241 (2) of the CBCA to assert his claims of breach of Articles 7.1, 4.1 and 4.2 of the Shareholders Agreement and oppression, respectively.

[91] Fifth, because Matuk remained the owner of his shares, he was entitled to share proportionately in any proceeds of distribution of the remaining assets of the Corporation, if any, after the winding up of the business and affairs of the Corporation and to an accounting of that process. This would include the proceeds of sale of any property of the Corporation, including any goodwill of the Corporation to the extent that it was acquired by FinanceVine. He is also entitled to any damages that he may establish in respect of his allegations of breaches of Articles 7.1, 4.1 and 4.2 of the Shareholders Agreement. To be clear, however, I make no determination as to whether any such amounts or damages are in fact owing. The determination of these issues is addressed later in these Reasons.

[92] Lastly, and most importantly, while neither Vannelli nor the Corporation acquired Matuk’s shares as a legal matter, in winding up the business and affairs of the Corporation and in continuing a lead-generation business in FinanceVine together with Kellock, Vannelli proceeded on the basis that Matuk no longer had any shareholding interest in the Corporation and that he had full control over those shares. Vannelli therefore assumed that Matuk had no rights as a shareholder that had to be taken into consideration. In acting in this manner, Vannelli effectively treated Matuk’s shares as if he or the Corporation owned them free of any obligation to pay any amount to Matuk for the shares. For this purpose, it does not matter that no documentation was ever executed formally assigning Matuk’s shares to Vannelli or the Corporation. In my view, Vannelli’s actions substantively amounted to the appropriation of Matuk’s shares for himself for nil value. This conclusion is central to the analysis regarding Matuk’s claims discussed below.

The Substantive Causes of Action Asserted by Matuk

[93] In this action, Matuk asserts causes of action based on breach of contract, oppression and unjust enrichment.

Breach of Contract

[94] As I understand Matuk’s breach of contract claim, he argues that Vannelli breached the Shareholders Agreement in the following manner:

1. In the dissolution of the Corporation without the consent of all of the shareholders in breach of Article 7.1 of the Shareholders Agreement;
2. In the exercise of the Mandatory Buy Out in failing to comply with the pre-conditions for the exercise of this right and with the provisions for the calculation of the value of Matuk’s shares thereunder in breach of Articles 8.6 and 8.7 of the Shareholders Agreement;
3. In the conduct of the affairs of FinanceVine in direct competition with the business of the Corporation in breach of Article 4.1 of the Shareholders Agreement; and
4. In the disclosure of the Corporation’s intellectual property, including in particular its customer lists, trade secrets and lead generation techniques and processes, to FinanceVine in breach of Article 4.2 of the Shareholders Agreement.

Oppression

[95] Matuk asserts that each of the factual circumstances that ground his claims for breach of contract set out above also constituted oppressive conduct on the part of Vannelli for the purposes of s. 241(2) of the CBCA.

[96] In addition, and more generally, Matuk argues that Vannelli’s actions in removing him as a director and officer, revoking his banking authorities and appropriating his shares as described above also constituted oppression. Matuk’s counsel summarized Matuk’s position as having been oppressed not only by the exercise of the Mandatory Buy-Out but also more generally when Vannelli ceased to treat him as a shareholder, director and officer of the Corporation in winding up the business of the Corporation and continuing a lead generation business in FinanceVine. This claim is also implicit in Matuk’s position that (1) the exercise of the Mandatory Buy-Out was “illegal”, which implies that it was a nullity, and (2) Vannelli appropriated or forcefully took his shares in the Corporation for no consideration after their telephone call of May 20, 2020 for which appropriation or forceful taking he seeks a restoration of his rights. Although the facta of the parties principally addressed the exercise of the Mandatory Buy-Out, I am satisfied that the parties also understood and addressed the claim of an appropriation or forceful taking of Matuk’s shares outside the operation of Article 8.6 of the Shareholders Agreement.

Unjust Enrichment

[97] Matuk submits that the actions which he alleges constituted breaches of the Shareholders Agreement and/or oppressive conduct for the purposes of s. 241(2) of the CBCA also give rise to a claim for unjust enrichment. However, in my view, Matuk’s claim for unjust enrichment can only succeed in circumstances where his claim for breach of contract or oppression also succeeds. Accordingly, Matuk’s claim for unjust enrichment cannot be treated as an alternative claim that would be available in the event that his claims for breach of contract and oppression do not succeed. I have therefore not addressed this claim further in these Reasons.

Remedies Sought By Matuk

[98] Matuk seeks compensation for the loss of his shares in the form of damages for breach of contract, compensation pursuant to s. 241(3)(j) of the CBCA or restitution for unjust enrichment. He also seeks similar relief for the breaches he alleges of Articles 7.1, 4.1 and 4.2 of the Shareholders Agreement.

[99] Matuk argues that collectively the breaches of the Shareholders Agreement and the alleged oppressive conduct should entitle him to 45% of the profits of FinanceVine to December 3, 2020, 45% of the value of FinanceVine as of that date and 45% of the revenues of FinanceVine derived from former clients of the Corporation on a going-forward basis. As an alternative to such compensation, Matuk seeks a declaration that he has been the beneficial owner of 45% of the shares of FinanceVine since its incorporation by means of a constructive trust imposed pursuant to the powers granted a court under s. 97 of the Courts of Justice Act, by virtue of an order pursuant to s. 241(3) of the CBCA, or as a remedy for unjust enrichment.

[100] For the purpose of quantifying his claim, Matuk has produced a valuation dated October 3, 2023 of Yousef Kamhiyah (the “Valuation”). The Valuation provided a valuation of the Corporation and FinanceVine combined as a single entity at or about the date of dissolution of the Corporation, being December 3, 2020. The valuator considered this approach to be the most appropriate approach to valuation based on the valuator’s instruction from Matuk that Vannelli was operating the business of the Corporation through FinanceVine after July 1, 2020. The Valuation ascribes a value to Matuk’s interest of between $427,000 and $521,000.

Analysis and Conclusions

[101] I will address Matuk’s claims for breach of contract and oppression in turn. As this is a summary judgment motion, in addressing Matuk’s claims, it is necessary to consider which claims can be determined by the Court on the basis of the record and which claims present a genuine issue requiring a trial. I will address the disposition of this motion after this review.

[102] I note that, in his factum and his oral submissions, Vannelli addressed the merits of Matuk’s claims rather than the question of whether any of such claims presented a genuine issue for trial. However, insofar as the Court makes specific determinations below, including determinations regarding the merits of Matuk’s claims, the Court has considered whether such issues present a genuine issue for trial and, based on its reading of the entirety of the evidence before it in this action, is satisfied that they do not. In particular, the Court is satisfied that oral testimony of Matuk and/or Vannelli would not be necessary given the full exposition of their respective views on such issues in their respective affidavits in the motion materials and in the Examination for Discovery of Matuk and the Cross-Examinations of each of Matuk and Vannelli and given the absence of any other documentation that would be relevant for such issues.

Analysis and Conclusions Regarding Vannelli’s Liability for Breach of Contract and Oppression

[103] As mentioned, Matuk argues that Vannelli’s actions in appropriating his shares and forcibly removing him from the Corporation without compensation constituted a breach of the Shareholders Agreement and oppressive conduct for the purposes of s. 241(2) of the CBCA. In addition, Matuk argues that Vannelli’s actions in winding up and dissolving the Corporation and in continuing a lead-generation business in FinanceVine contravened Articles 7.1, 4.1 and 4.2 of the Shareholders Agreement. The following sets out my determinations regarding each of these claims.

Alleged Breach of Article 7.1 of the Shareholders Agreement

[104] Matuk alleges that Vannelli’s actions in formally dissolving the Corporation breached Article 7.1 of the Shareholders Agreement which required unanimous consent. Matuk says that he remained a shareholder so that his consent was required with the result that the dissolution of the Corporation was not authorized. While I agree that this requirement and the requirement under s. 210 of the CBCA were not satisfied, the issue is more complicated. Matuk had knowledge of Vannelli’s intention to dissolve the Corporation. He remained silent for over eighteen months during which time he effectively left Vannelli in full control of the Corporation. There is therefore a reasonable argument that he is estopped from asserting this default. However, I do not think that it is necessary to reach a conclusion on this issue, which was not argued by the parties. The issue is of no practical consequence. Given that the Corporation had only negligible net assets at the time of its dissolution, I do not see any damage that resulted from this particular breach of the Shareholders Agreement. It is Vannelli’s actions in the course of winding up the business and affairs of the Corporation, rather than the formal dissolution of the Corporation, that have resulted in a potential loss to Matuk.

[105] While an unauthorized dissolution of the Corporation could also constitute oppression for the purposes of s. 241(2) of the CBCA, the appropriate order to rectify the oppressive behaviour would be to restore the Corporation’s corporate status. In the circumstances, such an order would not be meaningful. It would not, by itself, entitle Matuk to an order for any compensation in the absence of evidence that the Corporation had any assets at the time of its dissolution.

Claims Based on the Appropriation of Matuk’s Shares

[106] Matuk submits that Vannelli’s invocation of the Mandatory Buy-Out pursuant to Article 8.6 of the Shareholders Agreement breached the Agreement. For the reasons set out above, in my view Vannelli’s purported use of this provision was ineffective. There is therefore no valid claim for breach of contract related to the purported exercise of the Mandatory Buy-Out right. Nor can there be a valid claim for oppression in circumstances where the alleged oppressive activity was a nullity.

[107] However, Matuk also argues more generally, as discussed above, that Vannelli’s actions in appropriating his shareholding interest in the Corporation in the course of winding up the business and affairs of the Corporation breached the Shareholders Agreement and constituted oppressive conduct for the purposes of s. 241(2) of the CBCA.

[108] With respect to Matuk’s claim for breach of contract in respect of these actions, there is no suggestion that Vannelli’s actions were authorized or implemented pursuant to any specific provision of the Shareholders Agreement. Accordingly, in the absence of a demonstrated contravention of a specific provision of the Shareholders Agreement, Matuk cannot demonstrate a claim for breach of contract in respect of such actions. However, such circumstances do not exclude a claim for oppression under s. 241(2) of the CBCA whether the acquiror of Matuk’s shares was Vannelli, as I find, or the Corporation. The following analysis of this oppression claim follows the approach mandated by the Supreme Court in BCE.

[109] First, Matuk says that he had a reasonable expectation that he would not be forcibly removed from the Corporation without fair compensation. I do not think that it can be denied either that he held such an expectation as a shareholder of the Corporation, whether direct or indirect through Naig, or that this was a reasonable expectation.

[110] Second, Vannelli’s effective appropriation of Matuk’s shares does not fall with paragraph 241(2)(a) as an “act or omission of the corporation or any of its affiliates”. It is arguable that Vannelli’s actions fall within paragraph 241(2)(b) on the basis that the appropriation of Matuk’s shares occurred in the conduct of “the business or affairs of the corporation.” In any event, however, in appropriating Matuk’s shares in the course of the winding up of the Corporation, Vannelli was acting in his capacity as the sole director de facto of the Corporation and was exercising the powers of the directors. Such conduct therefore falls within paragraph 241(2)(c) of the CBCA.

[111] Third, I also do not think that there can be any doubt that the involuntary appropriation of a shareholder’s shareholding interest in a corporation constitutes an action that “unfairly disregards the interests of the shareholder” as that term is understood for the purposes of s. 241(2). The result is the same whether Vannelli appropriated the shares thereby benefiting himself directly or caused the Corporation to purport to acquire the shares thereby benefiting himself indirectly.

[112] Accordingly, I conclude that Vannelli’s actions in effectively appropriating Matuk’s shares in connection with the winding up of the Corporation’s business and affairs constituted oppressive conduct for the purposes of s. 241(2) of the CBCA. I will address Matuk’s claim for an order against Vannelli personally in rectification of such oppression in the following discussion of the appropriate remedy for such actions.

The Appropriate Remedy for Matuk’s Oppressive Conduct

[113] I turn then to the appropriate remedy for Vannelli’s oppressive conduct in appropriating the shares of Matuk.

[114] Matuk argues that the appropriate remedy for such actions would be an order effectively granting him a 45% shareholding interest in FinanceVine. Matuk seeks an order that awards him 45% of the profits of FinanceVine to December 3, 2020 and either the value of a 45% shareholding interest in FinanceVine at that date together with, going forward, 45% of the revenues of FinanceVine derived from former clients of the Corporation or a 45% shareholding interest in FinanceVine from the date of its incorporation.

[115] For reasons set out below, I do not agree that a remedy effectively granting Matuk a 45% shareholding interest in FinanceVine would be appropriate in the present circumstances by way of compensation to Matuk for Vannelli’s appropriation of his shares.

[116] In my view, the appropriate remedy to compensate Matuk for Vannelli’s appropriation of his shareholding interest in the Corporation is an order that Vannelli be required to purchase Matuk’s shareholding interest at its fair market value as of May 20, 2020. There are four elements to this conclusion which will be addressed in turn – the nature of the remedy, the date, the liability of Vannelli personally and the amount.

The Nature of the Remedy for Vannelli’s Appropriation of Matuk’s Shares

[117] In fashioning the appropriate remedy for oppressive conduct, an important consideration is the principle that a court shall impose a remedy that goes no farther than is required to rectify the oppressive conduct found to have occurred. For this reason, any remedy for oppression should do no more than compensate Matuk for the forcible taking of his shareholding interest in the Corporation as it existed at the time of the appropriation of that interest. In addition, the appropriate remedy should “[have] regard to the considerations of a personal nature” which existed among the parties involved: see Naneff at p. 488. In this case, the personal working relationship between Matuk and Vannelli has been irretrievably broken with the result that it is not realistic to contemplate a continued involvement of Matuk in the Corporation.

[118] These two considerations are reflected in the remedy described above in the following manner.

[119] First, the oppressive conduct for which Matuk is entitled to be compensated is Vannelli’s effective appropriation of his shares in the course of winding up the business and affairs of the Corporation. This oppressive activity commenced shortly after the telephone call of May 20, 2020. The appropriate remedy would therefore restore Matuk to the position that he was in when he and Vannelli held their telephone call on May 20, 2020.

[120] Second, as mentioned, the appropriate remedy must address the fact that the relationship between Matuk and Vannelli has irretrievably broken down. The remedy must therefore include a mechanism that would terminate their relationship as joint shareholders of the Corporation. Accordingly, the appropriate remedy must include a requirement that Vannelli purchase Matuk’s shareholding interest. This is also consistent with the fact that, in their call, Vannelli and Matuk agreed in principle that Matuk would exit the Corporation and be paid the fair market value of his 45% shareholding interest in the Corporation as at that time. Most importantly, a compulsory purchase of Matuk’s shareholding interest is also consistent with Matuk’s reasonable expectations in May 2020.

[121] Matuk’s actions at that time, and his affidavit evidence, reflect an expectation that, if, as occurred, the parties became unable to work together, one would have to buy out the other’s shareholding interest. Any remedy should do no more than give effect to this expectation. There is no evidence that Matuk would have reasonably expected to remain a silent partner of the Corporation if he and Vannelli failed to reach agreement on a price for his shares after a negotiation on price. I have no doubt that Matuk would have required Vannelli, by litigation or otherwise, to purchase his shares at their fair market value at the time of the breakdown in their relationship. As mentioned above, I do not accept Matuk’s suggestion that he would have purchased Vannelli’s shares rather than have required a purchase of his shareholding interest.

[122] Third, I have rejected Matuk’s position that he should be compensated by an order granting him a 45% interest in FinanceVine for the reason that any remedy that granted him an interest in FinanceVine would go well beyond what is necessary to remedy Vannelli’s oppressive conduct in respect of Matuk’s interest in the Corporation.

[123] The oppressive conduct that calls for a remedy is the deprivation of Matuk’s rights as a shareholder of the Corporation. He was never a shareholder of FinanceVine regardless of how similar the businesses of the two corporations might have been. To the contrary, Matuk abandoned the business of the Corporation after May 20, 2020 and took no part in the operations of FinanceVine. The evidence before the Court indicates that the business of the Corporation would not have continued after FinanceVine commenced operations without the active involvement of Vannelli, who replaced Matuk as the person responsible for generating leads, and Kellock. An order granting Matuk a 45% shareholding interest in FinanceVine, or 45% of the profits of FinanceVine, would however give Matuk, without any adjustment or compensation, the full benefit of the efforts of Vannelli and Kellock in servicing and maintaining clients in the period during which FinanceVine carried on business as well as the benefit of any new clients obtained by FinanceVine.

[124] Further, as mentioned, such a remedy would be inconsistent with Matuk’s expectation that he would not remain a shareholder in the Corporation and, mutatis mutandis, in any successor corporation, in this case FinanceVine.

[125] Lastly, while I think it improbable that the business of the Corporation in May 2020 and the business of FinanceVine in December 2020 were essentially the same as Matuk argues, the value of FinanceVine in December 2020 would be reflected in the value of the Corporation in May 2020 if that were the case. In other words, under such a scenario, a valuation of FinanceVine and the Corporation combined as of December 2020 would not be necessary to provide Matuk with the proper amount of compensation if the compensation were based on the value of the Corporation in May 2020.

The Date of Determination of Any Compensation to Which Matuk May Be Entitled

[126] The issue of the date on which Matuk’s shareholding interest in the Corporation should be valued is closely related to, but separate from, the question of whether the valuation should be conducted with regard to Matuk’s shareholding interest in the Corporation or should be conducted as if he were a 45% shareholder of FinanceVine.

[127] Matuk submits that the valuation of his shares for the purposes of determining the compensation to which he is entitled under s. 241(3)(j) for the appropriation or forcible taking of his shares should be conducted as of December 3, 2020 using the combined revenues of the Corporation and FinanceVine for the twelve months ended as of November 3, 2020 in respect of FinanceVine and as of December 3, 2020 in the case of the Corporation. I conclude however that a valuation date on or about May 20, 2020 rather than December 3, 2020 is appropriate for the following reasons.

[128] First, as mentioned above, the appropriate remedy should restore Matuk to the position that he was in immediately before the oppressive conduct that commenced after the telephone call of May 20, 2020. Further, the oppression that occurred was the appropriation of Matuk’s shareholding interest in the Corporation in the course of the winding up of the business of the Corporation in May 2020. Vannelli’s oppressive conduct therefore occurred in May and June 2020, not December 2020 when he filed articles of dissolution at a time when the Corporation had negligible net assets.

[129] Second, each of Matuk and Vannelli took their respective actions regarding Matuk’s shareholding interest in the Corporation in May 2020, not December 2020, based on their assessment of the value of the Corporation in May 2020. Matuk took no action after May 26, 2020 and Vannelli essentially completed the winding up of the business of the Corporation in May 2020, apart from dealing with a few outstanding liabilities.

[130] Third, as mentioned, there is no evidence that Matuk would have reasonably expected to remain a silent partner of the Corporation if he and Vannelli failed to reach agreement on a price for his shares after a negotiation on price.

Whether Vannelli Should be Personally Liable

[131] Matuk seeks an order that Vannelli be obligated personally to purchase his shareholding interest, although as noted above he casts such obligation as an obligation to purchase a 45% shareholding interest in FinanceVine as of December 2020 rather than of his 45% shareholding interest in the Corporation as of May 2020.

[132] I conclude that Vannelli should be personally obligated to purchase Matuk’s shareholding interest in the Corporation for two principal reasons.

[133] First, as noted above, Vannelli has wound up the business and affairs of the Corporation and filed articles of dissolution. Any remaining assets of the Corporation after the winding up would have been received by Vannelli, apart from any modest share due to Kellock. Any order requiring the Corporation to purchase Matuk’s shares, even if the Corporation were revived, would be meaningless.

[134] Second, Vannelli’s actions as the de facto sole director of the Corporation in winding up the Corporation were not directed toward the best interests of the Corporation. They were taken to benefit himself and secondarily Kellock as the shareholders. In other words, Vannelli personally benefitted in connection with the winding up of the business of the Corporation to the extent that Matuk’s shares had any value at the time that Vannelli appropriated them. He should therefore be personally liable for his actions notwithstanding the fact that he was purporting to act as a director of the Corporation and exercising the powers of a director in so doing.

The Amount of Compensation to Which Matuk May be Entitled

[135] There is limited evidence before the Court regarding the value of the Corporation, and of Matuk’s shareholding interest, as of May 20, 2020 for the purposes of determining the amount of compensation, if any, to which Matuk is entitled for the appropriation or forcible taking of his shares. The following deficiencies in the evidence raise a genuine issue for trial regarding the value of the Corporation, and of Matuk’s shareholding interest, as of May 20, 2020.

[136] First, neither Matuk nor Vannelli put in evidence a valuation of the Corporation or of Matuk’s shareholding interest as of May 2020. The only valuation before the Court is the Valuation presented by Matuk which values his shares by reference to the combined revenue and profit of the Corporation and FinanceVine for the twelve months ended on or about December 3, 2020. While the financial performance of FinanceVine for the five-month period ended November 30, 2020 may be of assistance to a valuator to the extent the businesses of the Corporation and FinanceVine remained comparable, the Court could only take the Valuation as indicative of the value of Matuk’s shares as of May 2020 if there were evidence supporting an equivalence of the valuations as of such dates and the comparability of the businesses of the Corporation and FinanceVine. There is no evidence to this effect before the Court.

[137] Second, the parties dispute the profitability of the Corporation in May 2020. Vannelli asserts that it was increasingly unprofitable and would have become insolvent by July 2020. Matuk says that the Corporation was profitable as late as April 2020 and only experienced financial difficulties with the onset of the COVID pandemic in May 2020. As mentioned above, Vannelli never provided the financial information that he committed to give Matuk for the purposes of their negotiation regarding the price for Matuk’s shares that would have addressed this issue. The financial information regarding the financial position of the Corporation in May 2020 that is in the record is not sufficient to permit the Court to determine the profitability and future prospects of the Corporation as of May 2020. Nor is it sufficient to permit the Court to reach a conclusion on the value of the Corporation at that time or to direct a valuation of Matuk’s shareholding interest on specific terms and assumptions.

[138] Third, Vannelli valued the Corporation and therefore Matuk’s shareholding interest at nil. In the Vannelli Affidavit, Vannelli states that he intended to “make the case” for a nil value to Matuk “based on the fact that [the Corporation’s] financial position was dire, the fact that [the Corporation] had existed for less than one year, that … Matuk’s violation of consecutive service had negatively impacted [the Corporation], that no reasonable person would assess a [fair market value] of more than $0 to [the Corporation] in the state that it was in, and the fact that Vannelli and … Kellock intended to wind up [the Corporation’s] operations by the end of June, 2020.” He therefore appears to have limited his view of value to the profitability of the Corporation as he perceived it in May 2020 without regard to the application of the formula in Article 8.7 of the Shareholders Agreement. Among other things, a determination is required as to whether, and in what manner, the provisions of Article 8.7 govern the calculation of the fair market value of Matuk’s shareholding interest. The Court has not had the benefit of the parties’ representations on this issue given their respective positions on valuation.

[139] Fourth, any valuation of the Corporation should take into consideration any excess of assets over liabilities after the winding up of the business of the Corporation. The complete financial results of the winding up, including the payments to Vannelli and Kellock, are not in the record.

[140] Lastly, the value of the Corporation should also take into account the value of the goodwill of the Corporation’s business, if any. Vannelli proceeded on the basis that the business of the Corporation had no goodwill that had to be included in the calculation of the value of the Corporation and therefore of Matuk’s shares. Vannelli’s view that the Corporation had no goodwill – including the value of the Corporation’s customer lists, its processes, its approach to the generation of leads, its reputation in the marketplace etc. – would be contradicted to the extent that Vannelli and Kellock appropriated and used any such goodwill in continuing a lead-generation business in FinanceVine. However, the extent to which the businesses of the Corporation and FinanceVine were the same, and the extent to which FinanceVine used or appropriated the goodwill of the Corporation, are disputed. As described below, determination of these issues in the context of Matuk’s claim of a breach of Article 4.2 of the Shareholders Agreement requires oral evidence of Vannelli and Matuk and significantly more focused documentary evidence than the self-serving evidence produced for the purposes of this motion.

[141] Based on the foregoing, I conclude that there is a genuine issue for trial regarding the value, if any, of the Corporation, and of Matuk’s shareholding interest in the Corporation, as of May 20, 2020. There is therefore also a genuine issue for trial regarding the amount of compensation, if any, to which Matuk is entitled in respect of Vannelli’s oppressive conduct in the appropriation of Matuk’s shares.

Alleged Breach of Article 4.1 of the Shareholders Agreement

[142] Matuk’s allegations of breaches of Articles 4.1 and 4.2 raise a different issue – whether the actions of Vannelli and Kellock in carrying on a lead-generation business in FinanceVine had legal consequences.

[143] Matuk argues that Vannelli’s actions as an officer, director and shareholder of FinanceVine while he was also a shareholder, or was the controlling party of TI insofar as it was a shareholder, of the Corporation constituted a breach of Article 4.1 of the Shareholders Agreement. He also suggests that such actions constituted oppression for the purposes of s. 241(2) of CBCA.

[144] I do not think that either of these claims can succeed regardless of whether the business of FinanceVine continued the business of the Corporation without any material change for the following reason.

[145] The provisions of Article 4.1 require that another corporation be carrying on the same or a similar business as the Corporation at the same point in time. In this case, while Vannelli was a shareholder, or in control of a shareholder, of both the Corporation and FinanceVine at the same time, the evidence before the Court indicates that FinanceVine was never in the same or a similar business as that conducted by the Corporation at any particular time nor was it in competition with the Corporation at any particular time. The Corporation ceased carrying on business on or before July 1, 2020 except to the extent of completing contracts in respect of earned revenue not exceeding $24,000 which, in this context, is not material. FinanceVine commenced carrying on business on or after July 1, 2020.

[146] Accordingly, I conclude that Vannelli’s involvement with FinanceVine did not create a breach of Article 4.1 of the Shareholders Agreement. For the same reason, there is no basis for a claim of oppression based on any alleged competition between FinanceVine’s business and the business of the Corporation.

Alleged Breach of Article 4.2 of the Shareholders Agreement

[147] Matuk submits that, in carrying on the business of FinanceVine as an officer, director and shareholder of that corporation, Vannelli disclosed trade secrets of the Corporation to FinanceVine in breach of Article 4.2 of the Shareholders Agreement. He alleges that such disclosure also breached an expectation that “Vannelli would not … use its ‘valuable assets’ in pursuit of a competitor or in any manner that could harm [the Corporation]” and thereby constituted oppression under s. 241(2) of the CBCA. In these Reasons, a reference to Matuk’s claim of a breach of Article 4.2 of the Shareholders Agreement also includes a reference to his claim of oppression based on the same facts to the extent that a court were to find s. 241(2) applicable to such facts.

[148] Underlying this claim is the assertion that FinanceVine carried on the business of the Corporation without any material changes in its business up to and including December 3, 2020 using the Corporation’s intellectual property, including in particular its customer lists and its lead generation techniques and processes.

[149] Vannelli’s position with regard to Matuk’s claims regarding the breach of Article 4.2 is that he and Kellock were free at all times to cease operating the Corporation, or to give up their shares in the Corporation, and in either case to begin operating a new lead-generation business. While true, this is a trite statement. The important point is that, in starting up a new business, they were not free to take advantage of any property or goodwill of the Corporation, including any intellectual property of the Corporation, without compensating the shareholders of the Corporation, including Matuk.

[150] On the limited relevant evidence before the Court, there is a legitimate question as to whether Vannelli breached Article 4.2 of the Shareholders Agreement by providing intellectual property of the Corporation to FinanceVine including, in particular, its customer lists and its lead generation techniques and processes.

[151] However, the Court is not in a position to make a determination of Matuk’s claim of a breach of Article 4.2 of the Shareholders Agreement on the basis of the record before it. Such a determination would require oral testimony from the parties and documentary evidence not in the record regarding the specific intellectual property alleged to have been provided by Vannelli to FinanceVine or otherwise used by FinanceVine in its business and the value to FinanceVine of such intellectual property. Such evidence would also be required for the related question of the extent to which FinanceVine carried on the business of the Corporation. In addition, to determine this latter issue, it would be necessary for a court to have before it evidence of the nature of FinanceVine’s business as compared with the Corporation’s business based on clients, proportionate business, marketing strategies and revenues.

[152] It is less clear that Vannelli’s actions in this regard constituted oppression for the purposes of s. 241(2) of the CBCA inasmuch as the actions complained of do not appear to fall with the provisions of paragraphs 241(2)(a) or (b) and it is questionable whether Vannelli’s alleged disclosure of intellectual property of the Corporation occurred in the exercise of the powers of directors of the Corporation such that any disclosure of such intellectual property would fall within s. 241(2)(c). I note that, as FinanceVine was not an “affiliate” of the Corporation for the purposes of s. 241 of the CBCA, any actions of Vannelli in the exercise of the powers of the directors of FinanceVine would not constitute oppressive conduct in respect of Matuk as a shareholder of the Corporation. However, in view of the conclusion above, which is also relevant for this claim of oppression, it is not necessary to reach a conclusion on the application of paragraphs 241(2)(a), (b) or (c) to this claim.

[153] For the foregoing reasons, I therefore conclude that there is a genuine issue for trial regarding whether Vannelli breached Article 4.2 of the Shareholders Agreement in carrying on a lead-generation business in FinanceVine.

The Possible Impact of any Finding of a Breach of Article 4.2 of the Shareholders Agreement on the Appropriate Remedy for the Appropriation of Matuk’s Shares

[154] In the absence of a determination of Matuk’s claim of a breach of Article 4.2 of the Shareholders Agreement, I do not propose to address the appropriate remedy for any such claim. However, having concluded that the appropriate remedy for Vannelli’s appropriation of Matuk’s shares of the Corporation is an order compelling Vannelli to purchase Matuk’s shareholding interest in the Corporation at its fair market value as of May 20, 2020, I have considered whether a ruling in Matuk’s favour in respect of his claim of a breach of Article 4.2 of the Shareholders Agreement would render an award of a 45% shareholding interest in FinanceVine a more appropriate remedy for the appropriation of Matuk’s shares in the Corporation.

[155] I have concluded however that any finding of a breach of Article 4.2 of the Shareholders Agreement would have no impact on the nature of the appropriate remedy for Vannelli’s appropriation of Matuk’s shares in the Corporation for the reasons set out below. To be clear however, nothing in these Reasons is intended to suggest that a court could not order a shareholding interest in FinanceVine in favour of Matuk as a remedy for a breach of Article 4.2. The determination in this section is limited to the conclusion that the appropriate remedy for the appropriation of Matuk’s shares, being a mandatory purchase of Matuk’s shareholding interest in the Corporation as of May 20, 2020, would not be affected by a finding of a breach of Article 4.2 of the Shareholders Agreement.

[156] First, Matuk’s claim for oppression in respect of the appropriation of his shares and his claim of a breach of Article 4.2 of the Shareholders Agreement are separate and distinct claims based on entirely different factual circumstances. Without making any finding on the nature of the appropriate remedy for any finding of a breach of Article 4.2, the remedy for each of these claims would similarly be separate and focused on remedying the specific consequences of the circumstances giving rise to such claims.

[157] Second, as a related matter, neither of the two considerations described above that govern the fashioning of the appropriate remedy for the appropriation of Matuk’s shares would be affected in any manner by any finding of a breach of Article 4.2 for the reason that any such breach would relate to factual circumstances that occurred after the circumstances that are relevant to the fashioning of the appropriate remedy for the appropriation of Matuk’s shares. For the same reason, I do not think that any finding of a breach of Article 4.2 would raise any additional consideration that was relevant to the determination of the appropriate remedy for the appropriation of Matuk’s shares. In short, I cannot identify any principle that would dictate a different remedy from the remedy addressed herein.

[158] Third, as was pointed out in Naneff at p. 491, a remedy for oppression “cannot be a remedy which gives a shareholder something that even he never could have reasonably expected.” For the reasons discussed above, I conclude that Matuk could not reasonably have expected a remedy in the form of a 45% interest in FinanceVine as compensation for the appropriation of his shares in the Corporation. I see no basis on which that expectation would change as a result of an additional finding of a breach of Article 4.2 of the Shareholders Agreement.

[159] In short, if neither claim warranted the imposition of a 45% shareholding interest in FinanceVine by way of a remedy on its own, I do not see any principle upon which it could be argued that imposition of such an interest in FinanceVine would be appropriate if both claims were held to be well-founded.

Conclusions Regarding the Disposition of the Motion

[160] On a summary judgment motion, a court is required to address whether there is a genuine issue to be tried that requires a trial. In the present case, as described above, Matuk raises a number of issues pertaining to his various claims of breach of contract and oppression. These issues break down into matters pertaining to liability, to the appropriate remedy and to the amount of compensation or damages by way of remedy.

[161] In my view, for the reasons set out above, it is possible to determine the issues of liability, apart from Matuk’s claim of breach of Article 4.2 of the Shareholders Agreement. It is also possible to address the nature of the appropriate remedy for Vannelli’s oppressive conduct in appropriating Matuk’s shares.

[162] However, I conclude that a trial is required: (1) to determine the compensation, if any, to be paid by Vannelli to Matuk for the appropriation of Matuk’s shares in the Corporation, being the value, if any, of Matuk’s shareholding interest as of May 20, 2020; (2) to determine whether a breach of Article 4.2 has occurred in respect of the alleged disclosure of intellectual property of the Corporation; and (3), if a breach of Article 4.2 has occurred, to determine the appropriate remedy for such breach and, in that regard, to determine whether Matuk has suffered damages as a result of such breach that are in addition to the amount of the compensation to be paid in respect of the appropriation of his shares in the Corporation.

[163] I conclude that considerations of efficiency, proportionality and the economy of judicial resources dictate that partial summary judgment should be granted in respect of the matters on which the Court has made the determinations above and that a trial should be ordered in respect of the remaining issues. In my view, the remaining issues which require a trial are not so inextricably connected to the issues in this action for which the Court has made the determinations above that a trial of the entire action must be ordered.

[164] This conclusion is based on an assessment that the issues of (1) liability for the oppressive conduct determined above and (2) the appropriate remedy for such oppression are conceptually and factually distinct from the remaining issues of the amount of compensation, if any, owed to Matuk and his entitlement to a remedy for any breach of Article 4.2 of the Shareholders Agreement that may be found to have occurred.

[165] The issues upon which the Court is able to reach conclusions relate entirely to Vannelli’s actions in his dealings with Matuk and as the sole director and officer de facto of the Corporation in winding up the business and affairs of the Corporation. The remaining issues that require a trial relate to the financial position of the Corporation as of May 2020, the relative comparability of the businesses of the Corporation and FinanceVine, and Vannelli’s actions as an officer, director and shareholder of FinanceVine in the conduct of its business after it commenced business in July 2020.

[166] I accept that, in the event of a finding of a breach of Article 4.2 of the Shareholders Agreement, there is a possibility of double counting of damages that could arise under two different scenarios. If a court were to award damages as compensation for a breach of Article 4.2, there could be an issue of double counting to the extent that the valuation of the Corporation as of May 2020 included a component for goodwill which represented, in whole or in part, the value of any intellectual property of the Corporation. In such circumstances the value of Matuk’s proportion of such goodwill, and the damage suffered by Matuk from any breach of Article 4.2 of the Shareholders Agreement related to the disclosure of such intellectual property, would appear to be the same. Conversely, an award to Matuk of a 45% shareholding interest in FinanceVine as damages or compensation for a breach of Article 4.2 might entail some double counting of damages alongside the remedy for the appropriation of Matuk’s shares in the Corporation depending upon the manner of calculation of each award. In either case, however, a court could address any such double counting in the calculation of damages or other compensation at the time. The possibility of either scenario does not, in my view, prevent an order of partial summary judgment in this action on the basis described above.

[167] Based on the foregoing, partial summary judgment is granted in favour of the plaintiffs on the following basis. The plaintiffs are entitled to an order in their favour to the effect that the actions of Vannelli in effectively appropriating the shareholding interest of Matuk constituted oppressive conduct for the purposes of s. 241(2) of the CBCA entitling Matuk to compensation from Vannelli for the value, if any, of his shareholding interest as at May 20, 2020. A trial is ordered in this action to determine the following issues: (1) the amount of compensation to which Matuk is entitled for Vannelli’s appropriation of his shares; (2) whether, in his dealings as an officer, director and shareholder of FinanceVine, Vannelli breached Article 4.2 of the Shareholders Agreement or engaged in oppressive conduct in respect of the disclosure of any intellectual property of the Corporation to FinanceVine; and (3) if the answer to issue #2 is in the affirmative, the appropriate remedy for such breach or oppressive conduct and, in that regard, whether Matuk suffered or incurred any damages as a result of such breach or oppressive conduct that are not encompassed within the compensation to which he is entitled for Vannelli’s oppressive conduct as determined pursuant to issue #1.

Costs of this Motion

[168] As the Court has granted only partial summary judgment on this motion, costs of the action, including costs of this motion, are remitted to the trial judge hearing the trial of the remaining issues in this action.

Wilton-Siegel J. Released: September 6, 2024

COURT FILE NO.: CV-22-00674624-00CL DATE: 20240906 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: Robert Matuk and Naig Inc. Plaintiffs – and – James Vannelli, Happygo Marketing Inc, FianceVine Inc. and Transform Inc. (formerly known as Transformational Marketer Inc.) Defendants

REASONS FOR JUDGMENT Wilton-Siegel J. Released: September 6, 2024

[1] In the Fresh as Amended Statement of Claim, Matuk asserted a 47.5% shareholding interest in the Corporation. In his Factum and at the hearing of the motion as well as in the Valuation, he asserted a 45% shareholding interest. In these Reasons, I have used the latter figure as the most recently asserted position.

[2] The Notice of Motion merely specifies Rule 20. I have proceeded on the basis that the plaintiffs rely on r. 20.01(1)(a) in bringing this motion.