Citation and Parties

CITATION: Paragon Protection Ltd. v. Tamstu-Harjon Holdings of Canada, 2026 ONSCDC 575

DIVISIONAL COURT FILE NO.: 605/25

DATE: 2026-02-04

SUPERIOR COURT OF JUSTICE – ONTARIO DIVISIONAL COURT

RE: PARAGON PROTECTION LTD. AND ROSENCRANTZ & GUILDENSTERN INC., Appellants AND: TAMSTU-HARJON HOLDINGS OF CANADA LIMITED, JONATHAN ROSENTHAL AND BENJAMIN BARRETT AS ESTATE TRUSTEES OF THE ESTATE OF CYRIL HIRSH ROSENTHAL AND JONATHAN ROSENTHAL, Respondent

BEFORE: Matheson, O’Brien and Kaufman JJ.

COUNSEL: Kevin W. Fisher and James Beesley, for the Appellants Jonathan C. Lisus and Andrew Winton, for the Respondent Jonathan Rosenthal

HEARD: January 28, 2026

Endorsement

[1] Paragon Protection Ltd. and Rosencrantz & Guildenstern Inc. (R&G) appeal from the decision of Justice J. Dietrich dated June 24, 2025, dismissing this oppression claim as against Jonathan Rosenthal in his personal capacity (the Decision).

[2] Paragon is a security company. R&G is the sole registered shareholder of Paragon, which it purchased in 1978. The issues in the underlying dispute include whether the respondent Tamstu-Harjon Holdings of Canada Ltd. (Tamstu) acquired a potential 25% interest in Paragon in 1978 and other terms and the enforceability of a consultancy agreement between Paragon and Tamstu beginning in 1978.

[3] Cyril Rosenthal was the sole shareholder and directing mind of Tamstu until his death in 2008. In the underlying litigation, the appellants claim that he was the accounting and financial advisor to Paragon, R&G and the family that owned R&G, and a party to the consultancy agreement, from 1978 onward.

[4] In 2020, after Cyril’s prior estate trustees sought to retire, his son the respondent Jonathan Rosenthal (Mr. Rosenthal), became an estate trustee. Shortly afterward, he became a director and officer of Tamstu.

[5] In 2022, Tamstu commenced proceedings against Paragon and others alleging oppression and breach of the consultancy agreement. This was followed by an oppression and breach of contract claim by Paragon and R&G against Tamstu, the estate trustees and as against Jonathan Rosenthal personally.

[6] Mr. Rosenthal moved for summary judgment dismissing the oppression claim as against him in his personal capacity. The issue on the summary judgment motion was limited to whether or not the appellants were proper complainants to advance an oppression claim again Mr. Rosenthal personally under the Ontario Business Corporations Act, R.S.O. 1990, c. B. 16 (the OBCA).

[7] The appellants must fall within the definition of “complainant” as set out in s. 245 of the OBCA, which provides for three ways to qualify, the first two of which do not apply:

(i) Neither appellant is a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a corporation or any of its affiliates (s. 245(a)).

(ii) Neither appellant is a director or an officer or a former director or officer of a corporation or of any of its affiliates (s. 245(b)).

(iii) A complainant may also include any other person who, in the discretion of the court, is a proper person to make an application under this Part of the OBCA. The appellants rely on this category (s. 245(c)).

[8] At the examinations for discovery, when asked about the basis for complainant status, counsel to Paragon and R&G indicated that Paragon had a contract with Tamstu (the consultancy agreement) and while the appellants were not current creditors of Tamstu, depending on the determination of the dispute about the consultancy agreement, they were potential creditors of Tamstu.

The Decision

[9] The motion judge noted that the appellants did not fall within the two specific categories for a complainant, above, and were relying on the court’s discretion to permit them to proceed as a “proper person” under s. 245(c). The motion judge discussed s. 245(c) beginning with the principles set out in Royal Trust Corporation of Canda v. Hordo, [1993] O.J. No. 1560 (Gen. Div.). The motion judge referred to key holdings in Royal Trust, where the court held that while creditors are not complainants as of right, the court may exercise its discretion to grant a creditor that status. The court held that this should not be done routinely and set out criteria that would show a person was not a “proper person” under s. 245(c).

[10] As noted by the motion judge, Royal Trust held that a person who may have a contingent interest in an uncertain claim for unliquidated damages is not a creditor. Citing other established case authority as well, the motion judge held that a creditor’s claim arising from the very litigation in which the oppression remedy is sought is insufficient, on its own, to establish that the party is a “proper person” to be granted complainant status.

[11] The motion judge considered the allegations against Mr. Rosenthal, essentially that after he became involved he caused Tamstu to breach the consultancy agreement and interfered with the appellants, including through commencement of the above litigation. The motion judge discussed Paragon’s status as a potential creditor of Tamstu, and further found that the appellants’ claimed relationship with Tamstu was not analogous to a minority shareholder, another factor in Royal Trust.

[12] The motion judge concluded that if all that was required for a claim of oppression was a reasonable expectation that someone would not cause a contract to be breached or commence litigation, every such claim would be elevated to a claim for oppression.

[13] On the issue of partial summary judgment, the motion judge summarized the relevant summary judgment law, including the onus on Mr. Rosenthal, the evidentiary obligations of the parties, and the principles that apply to partial summary judgment. The motion judge considered the high threshold for partial summary judgment and the risks of delay, expense, inefficiency and inconsistent findings. She noted that Mr. Rosenthal did not become a director of Tamstu until 2020. He did not have a role in the more than forty year period at issue commencing in 1978. The motion judge found that the high threshold for partial summary judgment was met.

[14] The summary judgment motion was granted and the claim against Mr. Rosenthal personally dismissed.

[15] The appellants have a right of appeal under s. 255 of the OBCA.

Analysis

[16] The standard of review is as set out in Housen v. Nikolaisen, 2002 SCC 33: correctness for questions of law; palpable and overriding error for questions of fact; and palpable and overriding error for questions of mixed fact and law except that extricable questions of law are reviewed for correctness.

[17] The issues raised by the appellants are as follows:

(i) whether the motion judge erred in misconstruing the nature of the appellants’ claims in the litigation;

(ii) whether the motion judge made a palpable and overriding error by proceeding with an incomplete evidentiary record;

(iii) whether the motion judge erred in law in concluding that the appellants were not “complainants” under the OBCA, by focusing too narrowly on the appellants’ role as creditors or potential creditors and on whether they were analogous to minority shareholders; and,

(iv) whether the motion judge erred in applying the principles of partial summary judgment.

[18] The first issue is readily addressed. The appellants selectively quote from the reasons for decision and submit that the underlying claim has been mischaracterized. Yet the reasons for decision expressly include the issue said to be overlooked in a subsequent paragraph, as follows: “The main dispute between the parties concerns the terms and enforceability of the consultancy agreement.”

[19] The appellants further submit that the motion judge mischaracterized the role of Mr. Rosenthal personally. However, the motion judge quoted the paragraph from the statement of claim that set out the oppression allegations against Mr. Rosenthal. The appellants submit that the motion judge missed other pleadings, later particulars (even though expressly mentioned in the reasons) and the information obtained at discovery that formed part of their motion record.

[20] It is not necessary to refer to every fact (or, in this instance, every allegation) in reasons for decision. We are not persuaded that a fair reading of the reasons for decision shows a reversible error regarding the first ground.

[21] The appellants then submit that the motion judge made a palpable and overriding error of fact by proceeding to hear the motion without a complete evidentiary record. They rely on their entitlement to certain productions ordered in a refusals motion that were the subject of an outstanding motion for leave to appeal. They submit that they could not put forward the complete record without those productions and the motion judge ought to have drawn an adverse inference against Mr. Rosenthal in that regard. However, the reasons of the motion judge who ordered production show that those documents are not relevant to Mr. Rosenthal’s actions as a director of Tamstu – they predate his involvement. There was no palpable and overriding error.

[22] The appellants further submit that an adverse inference should have been drawn from the absence of an affidavit from Mr. Rosenthal. However, the issue on this summary judgment motion was limited to the appellants’ status and Mr. Rosenthal had been examined at length on discovery. The motion record was extensive.

[23] Moving to the third issue, the appellants submit that the motion judge erred in narrowly focusing on the appellants’ potential role as creditors when concluding that they are not proper complainants under s. 245 of the OBCA.

[24] The appellants now put forward three grounds to support their position that they are proper complaints:

(1) that they are “creditors or potential creditors” of Tamstu;

(2) that Mr. Rosenthal’s conduct was a breach of the appellants’ reasonable expectations of Tamstu with respect to its rights and obligations under the consultancy agreement; and,

(3) that Mr. Rosenthal’s acts and conduct amounted to his use of Tamstu as a vehicle to manufacture the claims in this litigation and disrupt the day-to-day operations of the appellants.

[25] The appellants are not creditors despite referring to that status above. As for their status as potential creditors, that issue was dealt with by the motion judge without legal error. The motion judge considered relevant factors as set out in Royal Trust. Contrary to the submissions on this appeal, the motion judge did not find that that she was constrained to consider only those factors. The motion judge followed well-established authority regarding potential creditors.

[26] The appellants submit that the motion judge focused too narrowly on the question of whether or not the appellants were in a position akin to a minority shareholder. The appellants rely on para. 14 of Royal Trust and emphasizes the following quote: “Status as a complainant should also be refused where the creditor is not in a position analogous to that of the minority shareholder and has no “particular legitimate interest in the manner in which the affairs of the company are managed” (emphasis by the appellants).

[27] To begin with, the appellants are not creditors. Even if they were, in the same paragraph from Royal Trust, the judge observes that it “does not seem to me that debt actions should be routinely turned into oppression actions [citation omitted]”. Being analogous to a minority shareholder was not the only factor that the motion judge considered. The (lack of) status as a creditor and the nature of the claim as a potential creditor were considered. The relationship between the parties in the litigation was considered. Although not raised in the discovery answer above, legitimate expectations were also considered, with the motion judge finding that ground without an evidentiary foundation.

[28] Essentially, the appellants submit that they did not expect Tamstu to advance claims that had not previously been made over a long contractual relationship, nor did they expect Tamstu to sue. The motion judge addressed these arguments, observing that if that is all that is required for a claim of oppression, every breach of contract claim would be elevated to an oppression claim.

[29] The appellants have not shown that the motion judge erred in law in finding that there was no triable issue that the appellants are complainants under s. 245(c) of the OBCA.

[30] Lastly, the appellants submit that the issue of their standing to bring an oppression claim against Mr. Rosenthal personally should not be decided on this motion for partial summary judgment. The appellants repeatedly emphasize that their claims are based on a complex, longer-than-forty year history between these companies, beginning in 1978. Yet they submit that the motion judge erred in taking into account Mr. Rosenthal’s limited role, becoming a director and officer in 2020 on forward. The appellants further rely on the risk of conflicting findings and on the second ground of appeal, above, asserting that there is not a full evidentiary record at this stage. We have already found that ground is not well-founded.

[31] The motion judge did not err in law or make a palpable and overriding error of fact. The motion judge followed the established Court of Appeal jurisprudence about partial summary judgment as set out in Malik v. Attia, 2020 ONCA 787. The motion judge noted that the summary judgment motion had been screened through a Commercial List case management process, as recommended at para. 58 of Malik, under which Justice Kimmel permitted the motion to proceed on the issue set out above. The motion judge considered delay, expense, inefficiency and the risk of inconsistent findings. The motion judge noted that Mr. Rosenthal would continue to be involved as one of the estate trustees. The motion judge found that the litigation would be narrowed and less expensive if the oppression claim against Mr. Rosenthal personally was dismissed on the summary judgment motion. With respect to inconsistent findings, the summary judgment motion was limited to the standing issue of whether the appellants could claim oppression against Mr. Rosenthal personally. Further, the motion judge did not err by taking into account Mr. Rosenthal’s short involvement with Tamstu in the context of the very long time period at issue.

[32] The appellants have not shown a successful ground of appeal.

Disposition

[33] This appeal is dismissed with costs in the agreed-upon amount of $25,000, all inclusive.

Matheson J.

O’Brien J.

Kaufman J.

Date: February 4, 2026