ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV09-013 (Cayuga)
DATE: 2014-01-02
BETWEEN:
Cassandra Frances Susi
Plaintiff
– and –
Gary Bourke and
Beverly Anne McBain-Bourke
Defendants
W.P. Murray, for the Plaintiff
W.G. Emery for the Defendants
HEARD: September 10, 12, 2012
November 15, 2012
April 30, 2013
May 1, 2, 3, 2013
June 5, 7, 17, 18, 19, 2013
July 15, 16, 2013
September 13, 25, 2013
REASONS FOR DECISION
THE HONOURABLE MR. JUSTICE D.J. GORDON
[1] When all directors fail to comply with their fiduciary duty owed to the corporation, can one or more pursue an oppression remedy? In the circumstances of this case, I conclude the answer is no.
Background
[2] Professional Painting & Decorating Inc. (“PPD”) was incorporated in 1998 as the successor to Professional Painting & Decorating Ltd. The former company ceased operations following a claim from the Workplace Safety and Insurance Board. PPD was essentially a painting contractor, providing services to commercial and residential customers.
[3] Gary Bourke is presently 68 years of age. He and the co-defendant, Beverly Anne McBain-Bourke, have been married for 38 years. They have one adult child. Mr. Bourke has been in the painting business most of his adult life. Ms. Bourke was never actively involved in the business although being a shareholder and director. She retired as a flight attendant with Air Canada several years ago. PPD was operated, in part, as a vehicle for income splitting amongst family members.
[4] Mr. Bourke wanted to retire. Ms. Bourke was entitled to travel privileges as part of her retirement package. They had been travelling extensively since her retirement and planned on doing more on his retirement.
[5] Jason Bourke is the son of Mr. Bourke and his former spouse. He had been involved in PPD. The original plan was for Jason to take over the company. For some reason, that did not occur and, in early 2005, Jason left the company and established his own painting business.
[6] Cassandra Susi is 49 years of age. Her training and experience was in bookkeeping. Ms. Susi enrolled in a business program at Mohawk College, leaving in 1988 with one credit short of a diploma. She had various employment positions over the years in business offices, gaining experience in bookkeeping. In 1997, Ms. Susi established her bookkeeping business, Check Mark, and commenced working for a variety of business clients.
[7] Ms. Susi was hired by PPD in 2001 as an independent contractor, through Check Mark, to provide bookkeeping services. Over time, she took on a greater role in the office, such as dealing with calls from customers, assigning painters to job sites and handling problems as they arose. Ms. Susi continued to serve other clients of Check Mark, using the PPD office for that purpose.
[8] Ms. Susi and Mr. Bourke became friends. Each developed a trust in the other regarding PPD operations. After Jason left the company in 2005, Ms. Susi approached Mr. Bourke as to purchasing the business. As the bookkeeper, she had determined PPD was a profitable company. Mr. Bourke wanted to reduce his involvement in the business, sell his interest and retire.
[9] Ms. Susi and Mr. Bourke would enter into an oral share purchase agreement. Ms. Susi delivered a deposit to Mr. Bourke. The agreement was never completed. PPD continued to operate. Mr. Bourke did most of the job estimating and site supervision while Ms. Susi managed the office. Negotiations continued.
[10] Two written agreements were signed in 2008. Neither were completed, although the closing of the second agreement was not scheduled to occur until 2009.
[11] PPD was a profitable business, at least until 2005. In prior years, the Bourke family received a good income from the company.
[12] In 2006, business operations started to decline. Income would drop considerably in 2007, in part due to the recession. Expenses were increasing. In the past, PPD had supported one family. After 2005, it was supporting two families as Mr. Bourke and Ms. Susi were drawing a salary and other benefits, including payment of certain personal expenses. PPD could not afford these payments. Debt increased. Payroll deductions and other taxes were not being remitted to Canada Revenue Agency. Demand for payment was received. The parties attempted to address what was now a financial crisis.
[13] In November 2008, Ms. Susi took a leave of absence from PPD to deal with health and personal issues. Mr. Bourke returned to the company on a full-time basis and took over all decision making duties. He determined PPD was no longer viable and, in January 2009, Mr. Bourke caused PPD to make an assignment in bankruptcy.
[14] Prior to closing down PPD operations, Mr. Bourke established his own business, Gary Bourke’s Painting. In large measure, the new business was the successor to PPD, Mr. Bourke being the face of both entities from the customer’s perspective. Gary Bourke’s Painting was immediately successful. Mr. Bourke, and Ms. Bourke, continued to receive a similar income as in the past. But, Mr. Bourke was unable to retire as had been his plan. There were several PPD debts he was required to pay.
[15] Ms. Susi commenced this action by statement of claim issued on January 28, 2009. She claimed damages, and other relief, by way of an oppression remedy pursuant to section 248, Business Corporations Act. The statement of defence and counterclaim followed on April 24, 2009. The counterclaim, amended at trial, likewise sought damages as an oppression remedy.
(continues verbatim)
[193] As is often the case, both parties blame the other for the downfall of PPD and their resultant loss. I have determined Ms. Susi and Mr. Bourke are both responsible for the events that occurred, defeating their mutual reasonable expectations that may have existed at the start of their business relationship.
[194] In result, the claim and counterclaim are both dismissed. I expect counsel ought to be able to resolve the issue of costs; failing which, brief written submissions are to be delivered to my chambers in Cayuga within 45 days.
[195] I thank counsel for their assistance and in the manner this difficult case was presented.
D.J. Gordon J.
Released: January 2, 2014
COURT FILE NO.: CV09-013 (Cayuga)
DATE: 2014-01-02
ONTARIO
SUPERIOR COURT OF JUSTICE
Cassandra Frances Susi
Plaintiff
– and –
Gary Bourke and
Beverly Anne McBain-Bourke
Defendants
REASONS FOR DECISION
D.J. Gordon J.
Released: January 2, 2014
lr