The applicant sought leave to commence a derivative action on behalf of two closely held companies (Cen-Ta Real Estate Ltd. and Plum Financial Group Inc.) against the companies' directors for breach of fiduciary duties and duties of care.
The applicant alleged that the directors awarded themselves and their personal companies unreasonable and unfair compensation despite the companies' declining revenues and financial losses.
The respondent directors opposed the application, arguing the applicant failed to satisfy the mandatory statutory preconditions under the Ontario Business Corporations Act, specifically that the applicant was not acting in good faith and the proposed action was not in the interests of the corporations.
The court granted leave for the derivative action, finding that the applicant satisfied all requirements under the Act, was acting in good faith, and the action was in the interests of the corporations.
The court ordered that the applicant and corporations share legal costs equally.