COURT FILE NO.: 39929 DATE: 2016/08/02

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

790668 Ontario Inc., Frezza Management Inc., Elio Frezza, Gina D’Andrea-Vozza, Donna D’Andrea Hogan, Onorio Frezza, Tara Frezza, Julia Frezza and Michael Frezza

William V. Sasso and Craig J. Allen, for the Plaintiffs

Plaintiffs

- and -

D’Andrea Management Inc., Daney D’Andrea, D’Andrea Developments Inc., Rick D’Andrea, 1317539 Ontario Inc., 1476335 Ontario Inc., 1052534 Ontario Ltd, Aldo Rotandi, Jose Nunes, 1536962 Ontario Ltd., St. Willibrord Community Credit Union Ltd., now operating as Libro Financial Group

Self-represented, for Daney D’Andrea, Dandrea Developments Inc. and 1315739 Ontario Inc. Thomas J. Corbett, for D’Andrea Management Inc. and Rick D’Andrea Jonathan F. Lancaster, for 1476335 Ontario Inc. and Aldo Rotondi Harry van Bavel, for St. Willibrord Community Credit Union Ltd., now operating as Libro Financial Group

Defendants

HEARD: February 1, 2, 3, 4, 5, 8, 9, 10, 11,16,17,18, 22, 23, 24, 25, March 2, 3, May 9, 2016.

Morissette J.:

REASONS FOR JUDGMENT

OVERVIEW

[ 1 ] This protracted acrimonious litigation in essence is a dispute dating back to 1994 involving family members as shareholders.

[ 2 ] Attached as schedule “A” to these reasons is a glossary of who the parties are and their relation to each other. As well, a list of the material companies and other individuals involved in this litigation.

[ 3 ] The litigation involves two distinct time periods: events that pre-date 2002 and those that follow 2002. They are described as the oppression claims and property claims respectively. By order of the case management judge, Madam Justice Rady dated May 12, 2009 these two actions were consolidated for trial purposes.

[ 4 ] The oppression claim does not involve Aldo Rotondi, (“Aldo”) 1476335 Ontario Inc. (“147”) or St. Willibrord Community Credit Union Limited (“Libro”). Accordingly, only D’Andrea Management Inc. (“DMI”), Rick D’Andrea (“Rick”) and Daney D’Andrea (“Daney”) are the defendants in that part of the claim.

[ 5 ] The property claim does not involve DMI and Rick, but does involve Aldo, 147, Libro and Daney.

[ 6 ] There was a third action by 147 for mortgage deficiency as against DMI, but it was abandoned.

[ 7 ] All agreed that it was sensible to try the oppression action first, immediately followed by the property action. As a result, it was appropriate and necessary that some of the witnesses be required to testify twice in respect of each claim.

[ 8 ] The plaintiffs’ opening remarks referenced anticipated evidence that should lead this court to find a “sham” perpetrated by the defendants against the plaintiffs thereby causing each of them damages. The plaintiffs’ closing submission seeks “relief from oppression, an accounting of diverted benefits, damages for conspiracy and orders setting aside certain conveyances of the property purchased by DMI and known municipally as 704 Mara Street in Point Edward, Ontario (“the property”).”

[ 9 ] In essence, the plaintiffs’ claims of oppressive conduct is directed at alleged “conduct by Daney, Rick and DMI in a manner the plaintiffs say is oppressive, unfairly prejudicial to or that unfairly disregards the interests of the plaintiffs as DMI creditors and minority shareholders”. [1]

[ 10 ] The plaintiffs’ claim in the property action is a challenge to the validity of the sale of the property under power of sale because of a “conspiracy” between Daney and Libro. The plaintiffs allege that Daney, as shareholder of DMI, which owned the property, conspired with Libro to obtain benefits from the transfer of ownership and control of the property, which should be shared with the plaintiffs who are minority shareholders.

CHRONOLOGY OF EVENTS:

(A) 1991-2001:

[ 11 ] In 1991, Daney was the sole shareholder of D’Andrea Developments Inc. (“DDI”). DDI was involved in constructing and developing commercial properties. In mid-1991, Daney became aware that the sale price of the “property” then owned by Fiberglas, which had been on the market for some time, had been lowered from $8 to $5 million.

[ 12 ] Daney obtained authorization from Fiberglas for access to the property in order to view it with prospective investors and tenants. He also wanted to ascertain what he required for zoning purposes to create a multi-use commercial/professional building. He retained engineers and others to advise him. The property was a former industrial complex comprised of over 13.5 acres.

[ 13 ] By 1993, Daney was working on this project full time and as a result let DDI’s other business opportunities go. He informed his family members of his plan to purchase the property and that he was looking for $1 million in order to convince Fiberglas to take a vendor take-back mortgage for the balance.

[ 14 ] By February 3, 1994, a unanimous shareholders’ agreement [2] was executed by the family members [3] who had agreed to participate in the purchase of the property from Fiberglas for $4.5 million.

[ 15 ] The plaintiffs provided 58.36% of the DMI financing and received 35% of its issued and outstanding common shares. DDI held 42% of the share in DMI, classified as Class A preferred shares. Rick held 1%. Daney’s mother owned 12% and Daney’s friends held the remaining 10%.

[ 16 ] As part of the consideration for the purchase, Fiberglas took a vendor take back mortgage of $4.1 million. No personal guarantees by any of the shareholders were required. The minority shareholders secured the advances they had made to DMI for the balance of the purchase price of $593,700 with a second mortgage against the property.

[ 17 ] In addition to their shares, the plaintiffs were also issued promissory notes. Initially, the notes were erroneously made “on demand” [4] because of a mistake by the lawyer drafting them. The evidence is clear that describing the notes to be “on demand” made no commercial sense to accomplish the deal.

[ 18 ] Each note is identical except for the amount and they provide “on account of interest and/or principal shall be at the direction of the Directors of DMI, and principal and interest monies at the rate of 10% per annum owing hereunder shall be fully due and payable on the sale of the property”. [5]

[ 19 ] At the initial shareholders’ meeting on February 3, 1994, the agreement was discussed with Daney’s lawyer and accountant present. According to the minutes of the meeting, Daney’s preference share, preferential dividend and the promissory notes were discussed.

[ 20 ] In early March 1994, Daney met with Peter, Onorio and Elio who advised him that they had now read the shareholders’ agreement they had signed. They thought it did not accord with their understanding of the deal.

[ 21 ] On March 7, 1994, a further shareholders’ meeting took place during which the promissory notes and shareholders’ agreement were fully discussed. Daney testified and the minutes [6] of that meeting reflect that he told those present that “if there is anything in here that anybody is not satisfied with…we will start from scratch or we will get you your money back or we will come to an agreement that everybody can live with”.

[ 22 ] After much discussion and debate, a resolution passed unanimously to endorse the agreement. In cross-examination, both Peter and Onorio confirmed that “yes, at that time, “we reluctantly lived up to the agreement.”

[ 23 ] Onorio agreed in cross examination that there was nothing in the shareholders’ agreement that stated that Daney had to give up shares, nor was he allotted shares, as a condition of managing the DMI property ad infinitum without compensation.

[ 24 ] Peter testified that “Dan would put in a little money and would get a large percentage for putting the deal together, looking after the renovations and putting in tenants.”

[ 25 ] Peter assisted in supervising trades for DMI work on the building, while Peter was constructing leasehold improvements for his operation known as Mara Trade Centre (“Mara”). Peter was paid $5,000 from DMI for this work.

[ 26 ] In April of 1994, a trust agreement was created to provide proportionate interest amongst shareholders in the income of DMI building [7] . From 1994 to 1999, the plaintiffs were paid management fees totaling $373,840.00.

[ 27 ] In 1996, Peter who owned Mara, a tenant of the DMI building, required loans and accommodations from DMI, which resulted in a debt to DMI.

[ 28 ] In September 1998, DMI retained B&B an engineering firm to conduct an environmental assessment of the site.

[ 29 ] In October 1998, Daney applied to Libro to ascertain the availability of financing, in order to deal with the expiration in 1999 of the term of Fiberglas mortgage. Daney already had a relationship with Libro based on an earlier large and successful deal he had done with its financing.

[ 30 ] In December 1998, the shareholders were told that a statement of claim was issued by DMI against Fiberglas, seeking damages due to environmental issues, but not yet served, because negotiations were proceeding in order to resolve this litigation. The negotiations carried on for many months in 1999.

[ 31 ] On February 24, 1999, Les Otto, a commercial appraiser, was retained by DMI to prepare an appraisal for “internal use only” and not for financing purposes. He valued that property at $1.7 million.

[ 32 ] As of the end of July 1999 was approaching, it became evident to Daney that a deal with Fiberglas was imminent. He asked to be appointed sole director of DMI in order to close the deal. A unanimous resolution to appoint Daney was passed. [8] Until that time, Rick’s girlfriend, Angela Smolders, had been the named director of DMI because of fear of director’s liability for environmental contamination. Angela was impecunious.

[ 33 ] On August 18, 1999 the deal with Fiberglas was discussed at the shareholders’ meeting. Fiberglas was prepared to accept $1.05 million in satisfaction of its mortgage. Libro agreed to fund the DMI/Fiberglas deal with financing of $1.3 million in order to pay tax arrears and legal fees. The uncontroverted evidence is that everyone was very happy with the deal. It was self-evidently advantageous to the shareholders. At this meeting, the need to discharge the shareholders’ second mortgage was discussed.

[ 34 ] One of the issues in this case is whether there was any discussion of Peter and Onorio and the other shareholders postponing their mortgage. This, the plaintiffs argue is Daney’s “initial mischief”, with Libro’s assistance.

[ 35 ] The evidence included the following:

a) The August 18, 1999 letter of instruction from Libro to Brian Donavan, (“Donavan”) solicitor for DMI noted Libro’s requirement of a valid first charge against the land in its favour; [9]

b) The discharge of the second mortgage [10] was circulated to all shareholders, and executed by all shareholders, except Peter and Onorio;

c) Daney testified that he met with Onorio, just before the August 31, 1999 shareholders’ meeting, during which the discharge of the shareholders’ mortgage was discussed. Onorio is alleged to have said: “this is just an investment to me. I am out of $120,000 but you and your mom will be out everything. Business is business.” Onorio denied saying this to Daney. Daney also testified that Peter told him that he would not sign the discharge without knowing what would happen to the Mara debts, something Peter denied.

d) The minutes of the August 31, 1999 shareholders’ meeting [11] reflect the following:

i) Daney spoke about the requirement of discharging the collateral second mortgage in order to pay Fiberglas out. Peter asked if the mortgage could be re-registered and Daney did explain that the bank did not want any other encumbrances on the land. Daney explained that they were not discharging the debt but the mortgage only.

ii) Brenda Frezza (Onorio’s wife) and Peter raised again the issues they had raised during the negotiations for the 1994 shareholders’ agreement.

iii) Peter was trying to make a deal with respect to Mara’s debt owing to DMI.

iv) Daney explained and offered to have Donavan give Onorio and Peter a letter saying that the loans are still owing.

v) Gina asked Peter to sign the discharge and Peter said that “he feels that if he signs that he would be giving into Dan.”

e) At trial, Peter and Onorio testified that they were prepared to sign a “postponement” agreement with Libro.

f) Rick testified about multiple discussions he had with Peter at their daily coffee meeting during which Rick asked him “why will you not sign the discharge?” According to Rick, Peter reiterated the 1994 issues. Peter does not remember those conversations.

g) Donavan testified that on August 30, 1999, he made contemporaneous notes of a phone conversation with Onorio when he explained to him that Libro’s request to discharge the shareholders’2 nd mortgage was not discharging the debt obligation. He testified that he offered to have DMI write such a letter in the shareholder’s favour. According to Donavan, Onorio stated that perhaps the mortgage should be re-registered behind Libro’s mortgage. Donavan told Onorio that re-registration should be “run by” Libro. Onorio indicated to Donavan that DMI could provide an undertaking to re-register the mortgage at a later date, for example, in 60 days. Donavan responded that he had no instruction, but he could see what he could do by contacting Libro. In response, according to Donavan, Onorio said: “let it ride” and “do not contact Libro”. Donavan did not communicate with Libro.

h) At trial, Onorio denied any such conversation with Donavan.

i) On September 13, 1999, Donavan wrote to Libro confirming that the shareholders had been approached about signing a discharge of their collateral mortgage “or in the alternative a postponement agreement”.

j) Daney testified that he believed that Peter was not going to sign anything because of his issues with the Mara debts. And Onorio was supporting Peter all the while trying to renegotiate 1994 agreement.

k) Linda Mackenzie (“Mackenzie”), the general manager of the local Libro branch, testified about an internal memo [12] she provided to the Vice President of loans at Libro, Frank Kennes (“Kennes”). She explained that she had learned of the second collateral mortgage registered against the property and that two of DMI’s shareholders would not sign the discharge in Libro’s favour.

l) Libro, Donavan, Mr. DaRe (the solicitor for DMI in negotiations with Fiberglas), DMI’s accountant and Daney were looking at options to get the Fiberglas deal closed.

m) Mackenzie testified that she has no memory of any discussion about a postponement, but she said that in general, for a postponement to be agreed upon, the second mortgagees would each require independent legal advice and it would have to be a formal postponement agreement with head office.

n) Mackenzie further explained that the problem with a subsequent second mortgage or postponement is that if more money is borrowed and advanced after the original funding of the mortgage, Libro would be at risk because it would be in third position on that new advance.

o) Finally, Daney knew that the deal with Fiberglas had to be closed as soon as possible, because DaRe had information from Paul Beaudet (the solicitor for Fiberglas) that Fiberglas might not want to close the deal.

[ 36 ] From the totality of the evidence, it appears clear that no such formal postponement agreement was ever produced for execution purposes, nor discussed. This Court finds that even if the postponement had been discussed, or contemplated by the shareholders, the evidence does not support that Libro would have accepted a postponement in any event.

[ 37 ] Further the aforementioned evidence does not support the proposition that in the summer of 1999, Daney was conspiring with Libro against his fellow shareholders in not having them postpone their mortgage.

(B) The Creation of Newco:

[ 38 ] Shortly after the August 31, 1999 meeting, Donna Hogan (“Donna”) testified that a meeting took place between Daney, herself, her husband and Gina’s husband at Donna’s house. Daney says that Peter and Onorio were trying to play hardball. Dan explained his plan for Newco and that he would allow the people who had signed the discharge to participate in Newco.

[ 39 ] On September 23, 1999, an application for a business loan was submitted to Libro by 1317539 Ontario Inc. (“Newco”).

[ 40 ] On September 30, 1999 or thereabout, a shareholder’s resolution allowing Daney, personally as a shareholder and as director of DMI to provide to Newco the mortgage payments on the $4.1 million Fiberglas mortgage of which Newco would be taking an assignment. That mortgage was then re-assigned to Libro as security for the Libro mortgage.

[ 41 ] On October 4, 1999, the Fiberglas mortgage of $4.1 million was assigned to Libro in exchange for $1.3 million to pay out Fiberglas. Libro required that Daney provide his personal guarantee on the $1.3 million mortgage. Daney testified that was significant to him because his net worth was not much more than that and so he would have no other equity to do any further deals.

[ 42 ] The agreement between Newco and DMI was that Newco would retire DMI’s property tax arrears totaling $250,000. Newco would reduce the amount outstanding on the Fiberglas mortgage from $5.0 million to $4.286 million and DMI would pay interest on $4.286 million at the Royal Bank prime rate of 1.5%.

[ 43 ] Clearly, this meant that Newco paid on account of the $1.3 million indebtedness only while DMI paid Newco on account of the $4.1 million debt. This resulted in Daney diverting the benefit of the Fiberglas settlement to himself for almost a year in order to defeat the interest of the minority shareholders (i.e. the plaintiffs) until the settlement of the derivative action, which I will discuss later.

[ 44 ] On October 21, 1999, a Notice of Shareholders’ went out for a November 8, 1999 meeting for: “a complete and thorough update as to the transaction and settlement between DMI, Fiberglas and associated companies”.

[ 45 ] On November 8, 1999, a shareholders’ meeting was held. Minutes were prepared by Sharon [13] (Daney’s wife and DMI’s secretary responsible for taking minutes), Peter made notes [14] , and Gina did too [15] . The plaintiffs testified that they were concerned about the accuracy of the minutes taken by Sharon. Sharon testified that she did her best and prepared, sometimes well after the meeting, the minutes which would be circulated amongst the shareholders thereafter. Daney testified he had nothing to do with the drafting of the minutes.

[ 46 ] Daney’s testimony and the minutes reflect that he advised of the closing with Fiberglas and that the $4.287 million was assigned to Newco. He further advised that he had to provide a personal guarantee and indemnity in order to obtain Libro financing to close the deal.

[ 47 ] The plaintiffs on the other hand testified that he did not disclose that DMI was to pay the 4.2 million dollars as they later discovered. Daney simply told the shareholders: “it was nobody’s business what transpired between Newco and Fiberglas”.

[ 48 ] Most shareholders testified that they agreed that Daney had indicated that he would share in Newco with the cooperating shareholders but not Onorio and Peter.

[ 49 ] Onorio hired Paul Beaudet (“Beaudet”) on November 22, 1999 because “he was familiar with the file” and Daney said “he was a good lawyer”. Beaudet had been Fiberglas’ lawyer. The purpose of his retainer was to sue on the promissory note “on demand”, knowing that there was in place a replacement note, due to the error of the lawyer who drafted the original note. Onorio testified that he remained upset about the 1994 deal.

[ 50 ] But by February 10, 2000, Daney received a letter from Onorio’s other lawyer, Mr. Van Klink (“Van Klink”) suggesting there had been an appropriation of corporate opportunity by Daney and demanding certain records. As a result of this impending derivative action by Onorio, Daney was no longer willing to prepare any documents to include any other shareholder into Newco.

[ 51 ] On February 23, 2000, DMI sent a demand letter to Peter for his debts owing on Mara and terminated the tenancy.

[ 52 ] On March 16, 2000, Beaudet as solicitor of Fiberglas wrote to DMI stating that Fiberglas believed that DMI had committed fraud against it and alleged there were two sets of books.

[ 53 ] Sometime in the spring of 2000, Peter went to the police to file a complaint about Daney. Daney became aware of this and disclosed the alleged fraud to Libro in a memo dated September 14, 2000. [16]

[ 54 ] By letter dated June 2, 2000 Van Klink, Onorio’s lawyer, demanded that DMI commence an action against Daney and Newco. [17]

[ 55 ] On July 10, 2000 a shareholders’ meeting was held, with Van Klink and DMI’s lawyer, Mr. DaRe (“DaRe”) present. Acrimony amongst the shareholders was at its highest. The meeting was taped and a transcript was made. [18]

[ 56 ] The minutes record that Daney offered to refund the investment of any who wanted out. However, Onorio and the other shareholders wanted access to the accounting books. Onorio proposed a resolution requiring DMI to forgive the Mara debt of $100,000. Van Klink moved that DMI commence proceedings against Daney and Newco. Both motions were defeated.

[ 57 ] DaRe wrote [19] to Van Klink to arrange for the review of the DMI documents by the plaintiffs. He offered to resolve all issues arising from Daney’s alleged appropriation of DMI benefits in the Fiberglas settlement by Daney through Newco.

[ 58 ] The minutes and transcript of the shareholders’ meeting on August 8, 2000, reflect that Daney wanted everyone to sign a personal guarantee just as he had in order to spread the risk proportionately amongst all shareholders.

[ 59 ] Libro sent a standard letter [20] to advice that the personal guarantee was due for renewal on September 15, 2000.

[ 60 ] On September 12, 2000, Van Klink sought leave to commence a derivative action on behalf of Onorio’s company Frezza Management Inc. (“FMI”). Two days later Daney met with MacKenzie of Libro. Her memo to Kennes used the term “game plan”, which she testified demonstrated her propensity to use sports analogies. She also advised Kennes that a ‘strong letter’ [21] was required to Daney that a renewal of his personal guarantee was required; otherwise Power of Sale proceedings would be commenced.

[ 61 ] Daney retains Angelo D’Ascanio (“D’Ascanio”) to respond to the derivative action. D’Ascanio left a voice message on September 19, 2000 with Van Klink advising him that Daney will not renew his personal guarantee unless other shareholders do so as well.

[ 62 ] On September 25, 2000, D’Ascanio wrote to Van Klink proposing resolution of the issue respecting Newco’s acquisition of the reduced vendor takeback mortgage. [22] In essence, the proposal contemplated equalizing DMI’s liability under the vendor takeback mortgage to Newco’s liability to Libro pursuant to the October 1999 loan agreement.

[ 63 ] Daney notified all shareholders of a meeting to be held on October 11, 2000. Daney brought the ‘strong letter’ with him at the meeting. A resolution was passed allowing the amount owed to Newco under the original Fiberglas mortgage assigned to Newco to be reduced to match the indebtedness owed to Libro. Newco was to account for all money that had been collected from DMI required to service the Libro mortgage and to repay DMI. An independent accountant was to calculate the amount owing. The agreement was reduced to writing. [23]

[ 64 ] Daney resigned as director and stipulated that his resignation both as director and officer was required because, as the only guarantor and therefore the only shareholder personally at risk, he had to be free to protect his personal interest.

[ 65 ] DaRe asked Elio if he wanted to be the director but he declined. No one else stepped up and so Elio Frezza moved to appoint Rick as sole director. Most of the plaintiffs testified that they knew that Rick was placed in a hard situation. Peter said: “I quickly realized he was Dan’s puppet”. Gina said: “Rick was ‘thrown under the bus’ and would be ‘shot at’ as a director.” Rick said that he believed that Elio nominated him because “he always tended to be neutral and had a good relationship with all of the family”. Daney asked Gina to be an officer of the company but she refused.

[ 66 ] Throughout the fall of 2000, Rick with the assistance of Gina attempted to obtain alternative financing without success. Most of the plaintiffs testified that they believed that the reason was because Daney provided inaccurate financial information to Les Otto, the appraiser in order that the property would be valued lower.

[ 67 ] Requests were made by Elio and Peter for particulars of the accountant’s quantification of the overpayment and to find out whether the monies had been paid to DMI.

[ 68 ] On November 8, 2000, Daney sent an email [24] to Mackenzie in which he indicated he had a plan in store for his “deadbeat shareholders” that “he would advise her about that later over lunch”. He further stated “I think I will renew your existing mortgage… prepare the documents and call me. I will come in and sign them.”

[ 69 ] Mackenzie did not recall this email, which is reasonable given the passage of time, and she does not remember any subsequent lunch with Daney, although she did concede that on occasion she did have lunch with clients such as Daney.

[ 70 ] She conceded that the paper work was not done until December 21, 2000 because she had a large number of delinquent loans and was extremely busy at that time.

[ 71 ] On November 14, 2000, Rick (now the director of DMI) wrote to the shareholders advising that Daney would not renew his personal guarantee given the impending litigation and without personal guarantees, Libro would proceed with power of sale. He asked the shareholders to unite by signing personal guarantees or contact him with some suggestions by November 26, 2000. Rick enclosed with his correspondence DMI’s financial statements for fiscal 2000 and the income statements for the trust agreement from 1994 to 1999.

[ 72 ] On November 23, both Elio and Peter asked for further information [25] . Rick testified that he reviewed all of the documentation and bank accounts and confirmed that they were accurate and true. [26]

[ 73 ] Van Klink on behalf of Onorio advised DMI on November 24, 2001 that the plaintiffs were prepared to offer proportionate guarantees, on condition that Daney reduced his percentage share of DMI or pay for an independent property manager. [27]

[ 74 ] Onorio testified that he believed that Daney’s 42% share was based on an agreement that he would manage the property indefinitely. He did concede in cross-examination that the shareholders’ agreement did not provide for such belief.

[ 75 ] On November 27, 2000, the shareholders passed a motion with Onorio abstaining and Peter opposing, to “instruct and empower the Director to do whatever he deems necessary to secure a renewal or replacement of the existing $1.3 million first mortgage.”

[ 76 ] On December 5, 2000, a demand letter and notice of intention to enforce security was sent by Libros’ lawyers. [28] Onorio testified that he believed this demand letter was contrived by Libro. Mackenzie testified that it was a standard letter and necessary notices when there is a default.

[ 77 ] On December 14, 2000, on the eve of the scheduled hearing for the derivative action, lawyers for Onorio advised that they wished to cross-examine Rick on his affidavit and to adjourn the hearing in order to allow for such cross-examination. Onorio testified that the reason for the adjournment request was because “whatever was done by agreement as proposed by Daney could be undone by agreement.”

[ 78 ] The application hearing was held on December 15, 2000. Mr. Justice Hockin refused an adjournment for the purpose of cross-examination. Onorio, as a result, abandoned the application for leave and no costs were ordered by J. Hockin, given an agreement [29] filed with the court. [30]

[ 79 ] Shortly after the withdrawal of the derivative action by Onorio, Rick asked Daney to reconsider a renewal of his guarantee. Daney advised that he would for a very short term to allow Rick to find alternative financing, but that he would not do it for free.

[ 80 ] On December 21, 2000, Libro agreed to renew Daney’s guarantee for six months, retroactive to September 15, 2000, the expiration of the term. This meant that the term of the guarantee would expire on March 15, 2001

[ 81 ] On February 13, 2001, the accounting firm of Courage & Associates reported that the amount owing by Newco to DMI for the lost Fiberglas benefit was $217,000 [31] .

[ 82 ] Both Rick and Daney testified that they entered into an amending amending agreement [32] (dated December 21, 2000) and an extension agreement [33] but which were not executed until late February 2001, after the Courage & Associates report. The amending agreement was described as a management agreement, which created a significant retroactive sum for management fees and a guarantee fee.

[ 83 ] In essence this eliminated the $217,000 that was ultimately to be overpayment by DMI to Newco.

[ 84 ] Rick testified that he had no choice because Daney’s position was not negotiable. He would only renew for a full year if he was paid not only for his personal guarantee but also as property manager. Rick did concede in cross examination that he did not interview any other possible managers. He just knew that he could not do it and believed that Daney was the best person to continue in that role.

[ 85 ] The plaintiffs’ complaint was that the management fee plus the fee for his personal guarantee was too rich and not in the best interest of DMI. When Rick was asked why did he not approach the other shareholders about Daney’s demands, he replied that he knew that they would oppose, but he knew he had to act with authority in the best interest of the corporation. He denied being Daney’s “puppet”. Rick had discussions with DaRe about his authority as director to finalize the amending amending agreement.

[ 86 ] Daney extended his guarantee on March 15, 2001 for another year to March 15, 2002 on the same terms of the amending amending agreement. [34]

[ 87 ] Notice of meeting for March 29, 2001 was sent to shareholders. [35] But because Onorio and Peter were not available, the meeting was adjourned.

[ 88 ] By letter dated April 10, 2001 [36] , Daney wrote to DMI stating that he wanted to sell the property. He testified that he was upset with the allegations of criminal wrongdoing levelled against him and the ongoing dispute amongst the shareholders, all the while be the only one on the hook with his personal guarantee. He asked for a single issue special meeting. A notice of that meeting was issued by Rick setting the date as April 30, 2001. [37]

[ 89 ] On April 23, 2001, Peter sought to add agenda items to the April 30, but Rick refused testifying that he wanted the meeting to be solely focused on the sale of the property.

[ 90 ] On April 30, 2001, the shareholders resolved to list the property for sale with the real estate agent Mario Fazio at a list price of $2.499 million. The plaintiffs dissented. [38]

[ 91 ] On May 1, 2001, DMI wrote to Peter providing him with a copy of the Courage report. The amending amending agreements were now disclosed to all shareholders.

[ 92 ] On June 20, 2001, the plaintiffs commenced this oppression action by notice of application. Rick testified that as a result, on July 9, 2001, DMI notified the shareholders that no further meetings would be held except to apprise of any purchase offers for the property.

[ 93 ] Sometime between April 30, 2001 and July 16, 2001, Gina hired Wayne Taylor (“Taylor”) to pose as a prospective purchaser to get information. From their respective testimony, it is clear that all the plaintiffs knew in some way or another of the existence of the imposter. Taylor toured the building with Rick. Taylor was represented that he was there on behalf of Guy Parent. Taylor was not interested in seeing the building but rather in obtaining information with respect to rent rolls. When Fazio required authentication of the purchaser, Taylor disappeared.

[ 94 ] Sometime in July or August of 2001, Onorio and Peter met with Terry Johnny about a Dennis Shaw (“Shaw”), another potential purchaser. Peter admitted giving Shaw the DMI appraisal of $1.4 million in the late summer of 2001. When asked in cross examination why he would give a lower appraisal than the $2.5 million listing price, he answered: “I don’t know why”.

[ 95 ] Rick remembered giving Shaw a tour of the property in late August 2001but it was strange because again, much like Taylor, he was mostly interested in obtaining information rather than seeing the property.

[ 96 ] On August 23, 2001 an offer [39] of $1.7 million from 1052534 Ontario (“105”) was received open until August 31, 2001. Rick called a meeting to discuss the offer for August 29, 2001.

[ 97 ] Fausto Boniferro (“Boniferro”) attended on behalf of the plaintiffs and required that the formal meeting be adjourned because there was not enough notice. It was agreed that the meeting would proceed informally. Shaw was represented by Terry Johnny who presented an alleged offer of $2.5 million on Shaw’s behalf. Because the plaintiffs requested time to consider the Shaw offer, the meeting was adjourned. The 105 offer was not extended. The Shaw offer never materialized because Shaw disappeared.

[ 98 ] Charles Brudenell (“Brudenell”), a real estate agent testified on behalf of the defendants about how he tried to arrange a meeting with Shaw, but soon realized that Shaw’s coordinates were fictitious.

[ 99 ] On October 15, 2001, DMI advised the shareholders that the guarantee was due on March 15, 2002 and that Daney would not renew it.

[ 100 ] On November 16, 2001, the plaintiffs obtained an order from Mr. Justice Haines, which order was entered on November 21, 2001, which allowed Price Waterhouse Cooper (“PWC”) to obtain whatever information it required to conduct an appraisal of the property [40] . In cross-examination, Onorio acknowledged that the plaintiffs did nothing as a result of Justice Haines’ order.

[ 101 ] In fact, the plaintiffs have not retained any expert to appraise the property. Instead, the plaintiffs wished to rely on the appraisal of Wayne S. Clark’s, a property valuator hired by DMI on October 9, 1998. Mr. Clark was not called to testify by the plaintiffs, because he was not available, for reasons that are not clear. The plaintiffs, requested the admission of Wayne Clark’s opinion as of 1998 as evidence of the value of the property given to Libro in support of Daney’s application for financing in 1998. Counsel for DMI objected.

[ 102 ] I allowed the appraisal to be used as evidence that Libro relied on it when financing was granted to DMI in 1999, subject to a consideration of its weight. Further my ruling made it clear that Mr. Clark’s lack of availability for cross-examination and because the appraisal predated the property sale to 105 by four years, the proffered evidence might be of little evidentiary value. I will discuss this further when dealing with the valuation of the property.

[ 103 ] On November 19, 2001, Les Otto, another property valuator appraised the property for “corporate purposes” at $1.2 million. That appraisal followed the same approach as his appraisal in October 2000 ($1.4 million), except he used a different income approach, namely the discounted cash flow model.

[ 104 ] On January 24, 2002, Boniferro wrote to DMI’s lawyer regarding the upcoming mortgage renewal of March 15, 2002, advising that the plaintiffs were prepared to “personally guarantee any renewal on a ‘pro rata basis’”. [41]

[ 105 ] DMI sought approval from Libro for the proffered ‘pro rata’ renewal by letter dated February 4, 2002 [42] , but Mackenzie testified that Libro was not in favour of Daney’s personal guarantee being reduced to 42%.

[ 106 ] Onorio testified that sometime before February 7, 2002, he and Peter met with Beaudet. They alleged that DMI had faked environmental studies in order to get the settlement with Fiberglas, thereby “defrauding” Fiberglas. This conversation was confirmed by Beaudet in his letter to Peter dated February 7, 2002. [43] . On February 13, 2002 Peter sent Beaudet’s letter to Boniferro. When asked in cross-examination why Peter did so at a time the plaintiffs were offering their personal guarantees, Peter stated that he did not think the settlement with Fiberglas was in peril and if it had been, then he still had the opportunity to stall the process to evict Mara. But that evidence makes no sense given that the eviction occurred two years earlier; however, it does support the finding that Peter was still trying to get either the reduction or elimination of the debt he owed to DMI.

[ 107 ] On February 11, 2002, a judicial pre-trial was held.

[ 108 ] On February 13, 2002, Libro sent the standard letter regarding the expiration of the mortgage on March 15, 2002.

(C) Meeting of February 28, 2002:

[ 109 ] Daney, MacKenzie, Kennes, D’Ascanio and Van Bavel (solicitor for Libro) met. Van Bavel’s notes were filed as exhibit 189.

[ 110 ] Daney remembered the meeting was held in London. He did not recall much of the meeting. Nor did Mackenzie and Kennes.

[ 111 ] The cross examination of the plaintiffs focused on whether there was a discussion then of the “plan” to get the “ball rolling” toward an eventual assignment of the mortgage through yet another corporation of Daney’s.

[ 112 ] During his testimony in the oppression phase of the trial, Daney said that he believed he started to discuss the possibility of buying the mortgage through 147 at this meeting. When he testified a second time during the property phase of the trial, he corrected his testimony. He said that he believed that he was mistaken earlier when he testified in the oppression phase and he believed that the possibility of an assignment of the mortgage was discussed later.

[ 113 ] In his closing submission, Daney said that he recognized his earlier testimony was incorrect when he heard plaintiff’s counsel refer to his earlier “incorrect” testimony in his opening remarks for the property phase of the trial. The plaintiffs placed much emphasis on Daney’s “correction”, but to my mind, their emphasis is unwarranted.

[ 114 ] The most reliable evidence is found in Van Bavel’s notes of the meeting. They make no reference to an assignment. Had there been such a discussion, Van Bavel would certainly have recorded it. Consequently, Daney’s corrected testimony is more probably accurate than not.

[ 115 ] That conclusion has further support. Mackenzie’s evidence was that the discussion of an assignment only occurred on April 8, 2002. Kennes’ did not recall any discussion of an “assignment” at the February 28 meeting. Given the passage of time, it is understandable that neither remembered what was said or discussed at the meeting of February 28, 2002.

[ 116 ] On March 5, 2002, DMI wrote to all shareholders about the renewal of March 15, 2002 and advised that Daney would not renew his guarantee unless all shareholders did likewise. [44]

[ 117 ] Libro’s lawyer wrote to all shareholders on March 5, 2002 advising that Daney would not renew his guarantee and therefore the mortgage would be in default and power of sale proceedings would follow. [45] Van Bavel’s notes [46] refer to a “property manager”, which reflected that a property manager was required during power of sale proceedings.

[ 118 ] A handwritten facsimile from Boniferro dated March 7, 2002 to DMI lawyers stated that: “my clients have confirmed that they are prepared to deliver joint and several guarantees… for the full amount of the debt”. [47] This offer was accepted by DMI, on condition not only the corporate guarantees of Onorio and Peter’s were offered but also their respective personal guarantees. [48]

[ 119 ] Nothing happened as a result of this offer. The plaintiffs’ evidence varies on this point, but in the end, the fact remains that no one did anything to attend at Libro to post their personal guarantees. In one way or another, they testified that they were waiting for their lawyers to do something.

[ 120 ] I pause here to say that the claim against Boniferro for professional liability was dismissed by way of summary judgment on June 9, 2014, a decision upheld by the Court of Appeal.

(D) Assignment of Power of Sale to 147:

[ 121 ] On April 3, 2002, Libro sent notice of intention to enforce its security to all parties including Boniferro. [49] On April 8, and 9, 2002, Daney presented a credit plan for a new loan with different collateral. Daney testified that he discussed the assignment at that time with MacKenzie. He was calling on friends and other family members to assist him in taking an assignment before Libro took steps to sell the property.

[ 122 ] Daney testified that he had no discussion with Rick about the potential assignment for fear of jeopardizing the deal. Rick testified that he did not know of the assignment until June 19, 2002, when Daney told him.

[ 123 ] On April 25, 2002, a notice of sale under the Libro mortgage was issued [50] .

[ 124 ] On May 15, 2002, 147 was incorporated. [51] The initial shareholders of 147 were Sharon (Daney’s wife), his brother John D ’Andrea, (“John”) and his friend Aldo and his wife Joan. Both Aldo and John testified that they were doing this to help Daney.

[ 125 ] On May 16, 2002, Kennes emailed Mackenzie about Van Bavel’s receipt of the plaintiffs’ offer to provide their personal guarantees. Kennes advised Mackenzie that he told Van Bavel that Libro wanted out of the property. He said: “I do not want us to remain in the middle of their fight”. [52]

[ 126 ] Neither Onorio, Peter nor any of the other plaintiffs did anything with respect to their rights to redeem, set to expire by June 1, 2002.

[ 127 ] On June 10, 2002, a shareholder’s agreement was executed by the shareholders of 147. John testified that he did not know anything about the document he was being asked to sign. Aldo testified that he owed his friend because Daney had helped him on a prior occasion long ago.

[ 128 ] The shareholder’s agreement dated June 10, 2002 [53] provided at para 8 the following:

8. upon each of JOHN and ALDO and JOAN being released from their respective obligations under the Credit Union Loan to 147 and the discharge of any security posted by each of them to support the Loan to 147, JOHN and ALDO and JOAN shall each forthwith surrender all of their respective shares in 147 for cancellation or otherwise as 147 may direct and JOHN and ALDO and JOAN and 147 shall deliver to each other mutual releases of any and all claims arising from this Agreement or otherwise.

[ 129 ] All correspondence concerning the purchase by 147 under Libro’s power of sale were addressed by Mackenzie to Daney “as owner of 147” [54] .

[ 130 ] The oppression action was scheduled to be heard on June 18, 2002. For reasons that are not clear, the oppression action was adjourned at the plaintiffs’ request. Both Gina and Donna went through their mother’s records at her home while Peter stood guard. As a result of what they found, they wanted to add their mother as a party defendant. She was never added, however.

[ 131 ] Following the assignments 147 continued Libro’s power of sale proceedings. In order to ensure the propriety of the sale process, Aldo asked Libro to provide statutory declarations concerning the service of the sale notice on affected parties. [55]

[ 132 ] Aldo engaged Fazio as realtor to sell the property on June 3, 2002 for a listing price of $1.499 million.

(E) Sale of Property to 105:

[ 133 ] Mr. Jose Nunes (“Nunes”) a developer with interests in various projects testified. He saw potential in the property and made an offer to buy it in August of 2001 for $1.7 million. That offer could not be considered at the August 29, 2001 shareholders’ meeting, given the Shaw offer of $2.5 million that was presented on that day.

[ 134 ] In June 2002, DaRe told Nunes that the property was for sale by way of power of sale. Nunes used his established 105 corporation [56] to make an offer [57] for $1.3 million with a vendor take-back mortgage of $1.125 million, for a period of three months at 7% interest, compounded. Nunes agreed to assume the realty tax arrears, which were at the time approximately $100,000.

[ 135 ] The offer was accepted by 147 on July 2, 2002 and closed on July 18, 2002. [58]

[ 136 ] By the date of the scheduled June 18, 2002 trial, Daney said he had not told Rick about the assignment; however he did do so the next day. Rick testified that he decided not to tell the shareholders because he felt that the shareholders knew that the property was going to be sold by way of power of sale, in any event, and the fact that 147 would be selling meant it was better for all “a much more friendly party” would be selling.

[ 137 ] Daney advised Rick that 147 had sold the property to 105 on July 18, 2002. Rick testified that he went to the land registry office immediately to confirm it. He wrote right away to the shareholders advising them of the sale to 105 for $1.3 million. [59]

[ 138 ] A shareholders meeting was held on August 6, 2002. A police officer attended as a “sergeant at arms”.

[ 139 ] The plaintiffs’ reaction to the sale to 105 was to bring a motion for a certificate of pending litigation (“CPL”), which was granted on August 23, 2002, but then set aside by Justice Kerr on February 13, 2003 for material non-disclosure (by the plaintiffs).

[ 140 ] Discontent with that result, Onorio reported Aldo, Daney, Rick and Nunes to the police in March of 2003. There was no evidence that would suggest that the police took action with respect to those allegations.

(F) Transfer by 105 (through 153) to 147:

[ 141 ] Nunes testified that he expected to obtain alternate financing to repay 147 on the vendor take-back mortgage, within three months. However, with the CPL in place, any financing secured by the property was not feasible. Nor did the allegations against him to the police help or encourage him to hold on to a property that seemed to be mired into litigation.

[ 142 ] Much like Kennes for Libro, Nunes had seen enough of the family feud. He wanted out. I believe him.

[ 143 ] In June of 2003, counsel for 147 began writing to Nunes’ lawyer to press him for repayment of the take-back mortgage.

[ 144 ] During this time period, Daney’s ailing mother urged him to try to settle the family dispute. Daney complied. By letter dated October 1, 2003 [60] to Van Klink, Daney advised the plaintiffs that Nunes wanted to sell the property and asked if the plaintiffs wanted to participate because it was a good opportunity to put all the outstanding litigation to rest. There was no response to this letter.

[ 145 ] 147 and 153 agreed to a settlement in January 2004, resulting in the transfer of the property to 147 for $1.101 million. [61] The transfer was registered on October 13, 2004. [62] The same day, a mortgage in favour of Motor City Community Credit Union Limited (“Motor City”) was registered for $1.5 million. [63] On August 22, 2007, a mortgage to Lambton Financial Credit Union for $500,000 was registered. [64]

[ 146 ] On December 22, 2008, FMI was dissolved and has never been revived to this day.

[ 147 ] On January 2016, the plaintiffs agreed to dismiss the action against Nunes, 105 and 153 for no compensation. [65]

VALUATION OF PROPERTY:

[ 148 ] As already noted, DMI purchased the property on January 19, 1994 for $4.5 million and paid for it by way of vendor takeback mortgage to Fiberglas for $4.1million and cash of $400,000 from shareholders which was subsequently secured by way of the second mortgage of $593,786.

[ 149 ] The Clark appraisal [66] estimated market value as of October 8, 1998 for “mortgage financing purposes” to be $3.5 million. The appraisal assumed the following:

(a) Municipal tax assessment of $2,620,000; (b) Gross revenue of $825,880; (c) Vacancy rate of 30%; (d) Net operating income of slightly more than $400,000; and (e) A capitalization rate of 11%.

[ 150 ] In contrast, on February 11, 1999 Les Otto opined fair market value to be $1.7 million.

[ 151 ] On October 4, 1999, Fiberglas discounted their vendor takeback mortgage by $3 million (from $4.1 million to $1.05 million).

[ 152 ] On October 5, 2000, Les Otto estimated fair market value to be $1.4 million assuming the following:

(a) Gross rental revenue of $813,000; (b) A vacancy rate of 31%; (c) Municipal tax assessment of $2,620,000; (d) Net operating income of slightly more than $200,000; (e) Capitalization rate of 12 to 13%; and (f) An adjustment for roof repairs at $180,000.

[ 153 ] On November 7, 2001, Les Otto estimated fair market value to be $1.2 million assuming the following additional factors:

(a) Municipal tax assessment had been decreased to $2 million; and (b) Pending roof repair expense of $290,000 in the near future.

[ 154 ] On June 4, 2002, Les Otto produced his final appraisal for the purpose of “the extension of credit, mortgage financing” [67] . It was a limited scope request, meaning it was an update of the 2001 appraisal. He appraised the property at $1.2 million.

[ 155 ] On July 18, 2002, 147 sold the property to 105 for $1.3 million.

[ 156 ] In their closing submissions, the plaintiffs state that the “Otto reports were not prepared in the ordinary course at the relevant times to establish valuation which the company and its directors could rely on with respect to corporate decision making”, because they say that information concerning the current rent rolls and other information was “materially inaccurate”. The plaintiffs further submit that the Otto appraisals were designed “to assist Daney in his ‘plan’ to get rid of the plaintiffs”.

[ 157 ] Les Otto testified that he measured value on a comparative approach utilizing “an overall comparison of five sales of competing properties” and based upon an income approach. Each approach yielded essentially the same result.

[ 158 ] When reviewing the rent rolls in each appraisal, I find that the rent rolls of $67,803/month, is consistent with the rent rolls of August 31, 1998 at $68,823/month, August 1999 at $70,565/month and February 28, 2001 at $70,759/month.

[ 159 ] The plaintiffs did not call any appraiser to support their criticisms of Otto’s work on the merits. Rather, the plaintiffs called Jacques Beauchamp (“Beauchamp”).

[ 160 ] Beauchamp testified that he remembers well, that in the summer of 2002 he was in contact with Fazio. Fazio told Beauchamp that “an offer for $2.1 million from the Hospital Group had been received and so his offer would have to be around $2.4 million to purchase the property”. [68] At Gina’s request, Beauchamp signed a statement on August 2, 2003 confirming this.

[ 161 ] The Hospital group’s offer was made on November 5, 2001 and withdrawn on January 23, 2002 [69] . Therefore, the hospital offer was not in play in June of 2002 the date to which Beauchamp was testifying.

[ 162 ] Beauchamp testified that he made an offer of $1.2 million in the summer of 2002 but was unable to produce such an offer to the court. Having heard no response to his offer, he went to the property to meet with Daney who allegedly told him that his offer looked good. Daney denied having ever met Beauchamp. When Daney confronted Beauchamp during cross examination that they had never met, Beauchamp replied “you all look the same”.

[ 163 ] Beauchamp claimed that Fazio “slip-sheeted” his signature page on a $500,000 offer from Beauchamp. However the evidence was that the double-sided form in use at that time did not allow for “slip-sheeting”. Fazio further testified that Beauchamp had a history of making offers at about half of the asking price.

[ 164 ] For all of these reasons, Beauchamp’s testimony is unreliable, not credible and is rejected in its entirety.

[ 165 ] I am satisfied that there is reliable and credible evidence that the property’s value was trending downward. Even the Clark appraisal, with the little weight given to it appraised the property at $1 million less than that for which it was purchased only four years previously. The fact that Fiberglas was prepared to take a discount of just over $3 million on its vendor takeback mortgage supports this finding.

[ 166 ] For all of these reasons, including my comments on the Clark appraisal, the only reliable valuation evidence respecting the property is the Otto expert evidence which valued it at approximately $1.3 million.

OPPRESSION ACTION

(A) Oppression or Derivative Action:

[ 167 ] The defendants argue that the plaintiffs’ claim must fail because it was not pleaded as a derivative action, which required leave of the Court to proceed.

[ 168 ] The plaintiffs argue that where there is discrimination or unfair dealing among corporate stakeholders, a breach of legal or equitable right or appropriation of corporate property, an oppression action is a “broad and flexible remedy” which is available.

[ 169 ] Here the plaintiffs wear many hats, as minority shareholders of the defendant DMI and as creditors of DMI owning a debt instrument [70] .

[ 170 ] The defendant Daney was 42% shareholder and prior to July 20, 1999, Daney was the property manager and operating mind of DMI. Daney became director of DMI on July 20, 1999 and was the sole guarantor of the mortgages to Libro and Newco at all material times. Daney resigned as director on October 11, 2000 and Rick, a minority shareholder, became director of DMI.

[ 171 ] The claims relating to the October 23, 2000 Newco/DMI agreement [71] , known as the “amending agreement” is a derivative claim which was brought by the plaintiffs on September 12, 2000 and properly withdrawn on December 15, 2000 because “the company has in the form of the agreement (exhibit 45) what it wished to sue for.” [72]

[ 172 ] At issue for this court is two distinct periods of governance of DMI, being:

(a) From July 20, 1999, when Daney became the sole director of DMI, until October 11, 2000 when he resigned as a director and officer; (b) From October 11, 2000 when Rick was the sole director and officer of DMI.

[ 173 ] Daney’s actions prior to July 20, 1999 are not in issue for the purpose of the oppression claim.

[ 174 ] Are the plaintiffs’ claims associated with the alleged “misappropriation of corporate property”, an action that is properly understood to be oppressive or derivative in nature?

[ 175 ] Rick and DMI argue that the claim made with respect to the alleged “misappropriation of corporate property” is a claim that can only be pursued by a derivative action and not by way of an oppression remedy.

[ 176 ] On the other hand, the plaintiffs quote M. Koehnen [73] “To preclude oppression actions because they are derivative in nature defeats the purpose of the oppression remedy. They further rely on Malata Group (HK) Ltd. v. Jung [74] . They submit that the Court of Appeal explicitly recognized that an oppression action might be founded in situations where directors in a closely held corporation engage in “self-dealing” to the detriment of the corporation and its shareholders and creditors.

[ 177 ] As the Court of Appeal observed in Malata, “there is no bright-line distinction between the claims that may be advanced under the derivative action section of the Act and those that may be advanced under the oppression remedy provisions. Owing to this overlap, a court cannot determine which is the appropriate avenue for a claim to proceed through the simple application of a rule such as the rule in Foss v. Harbottle .” [75]

[ 178 ] Accordingly, in disputes involving closely held companies with relatively few shareholders (as in this case), there is less reason to require the plaintiff to seek leave of the court. The small number of shareholders minimizes the risk of frivolous lawsuits against the corporation, thus weakening the main rationale for requiring a claim to proceed as a derivative action.

[ 179 ] Also informative is C. I. Covington Fund Inc. v. White, [2000] O.J. No. 4589 (S.C.J.) in which Madam Justice Swinton observed at para. 41:

A number of oppression cases turn on the fact that there has been conduct by directors or majority shareholders that amounts to self-dealing at the expense of the corporation or other corporate stakeholders…for example there was oppression because the directors unfairly removed assets from the corporation so as to prevent the payment of a corporate debt and to benefit themselves.

[ 180 ] Swinton J. said in reaching her conclusion at para. 46 and 47:

Section 248(3) of the OBCA confers a broad discretion on the Court in determining an appropriate remedy, including “any interim or final order it thinks fit”. The purpose of the remedy is to rectify the oppression. The provision has been used to make compensation orders against individual directors where their conduct has been found oppressive in small, closely held corporations such as Delta, and they have personally benefited, for example, by the removal of assets from the corporation.

[ 181 ] Recently, the Ontario Court of Appeal had another opportunity to review the debate of “oppression remedy or derivative action” in Rea v. Wildeboer [76] . The general issue raised in that appeal was whether a complainant may assert by way of oppression remedy proceeding, a claim that is by nature a derivative action for a wrong done solely to the corporation, thereby circumventing the requirement to obtain leave to commence a derivative action. The Court of Appeal reasoned that the oppression remedy is designed to recover for wrongs done to the individual complainant by the company or as a result of the affairs of the company being conducted in a manner that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of the complainant. The oppression remedy is a personal claim. [77]

[ 182 ] So it has been said that: “a wrongful act may be harmful to both the corporation and the personal interests of a complainant and, as a result, there has been considerable debate which has tended to say that the distinction remains murky”. [78] Yet, the Court of Appeal said in Rea, the statutory distinctions remain in effect. [79]

[ 183 ] My review of the literature and authorities supports the conclusion that the claims advanced are derivative in nature. Nevertheless, I will approach the evidence using the test for oppression in order to determine whether the plaintiffs have successfully established their claim.

(B) Test for Oppression:

[ 184 ] “Oppression” claims must be assessed in the context of the facts.

[ 185 ] The plaintiffs bear the onus to prove oppression by:

(a) Pleading as an act of oppression the specific reasonable expectation upon which the plaintiffs relied; (b) That those expectations were reasonably held for each of the alleged acts; and (c) That the alleged wrongful act caused the breach and the plaintiffs’ harm, i.e. that the plaintiff suffered damage caused by the oppressive act.

(i) Reasonable expectations?

[ 186 ] Therefore at the outset, the plaintiffs must identify the expectations that they claim have been violated by the conduct at issue and establish that the expectations were reasonably held. The question becomes whether the plaintiffs reasonably held the particular expectation.

[ 187 ] The Supreme Court of Canada recognized that some of the factors useful in determining whether a reasonable expectation existed that have emerged from the caselaw include: general commercial practice; the nature of the corporation; the relationship between the parties; past practices; steps the claimant could have taken to protect itself; representations and agreements, and the fair resolution of conflicting interest between corporate stakeholders. [80]

[ 188 ] The plaintiffs submit that their expectations were:

(a) the property owned by the corporation would remain an asset of the corporation until sold for a profit to be shared by all shareholders; (b) the shareholders would receive management fees on a pro-rated basis as agreed upon initially to facilitate income to Daney prior to any sale; and (c) the directors of DMI would provide full, fair and accurate information to property appraisers and other experts in order to maximize the resale value of the property.

[ 189 ] The Court of Appeal has stressed the importance of particularity in pleading allegations of oppression. Addressing a claim against a director, the court wrote [81] :

(a) There must be specifically pleaded acts against a specific director which could provide the basis for a finding that the company acted oppressively. Proper pleading requires specified acts and participation in decisions “in an identified way”; and (b) There must be pleading on which the court could decide that the oppression alleged could properly be rectified by a monetary order against a director, personally.

[ 190 ] So the issue is what specific oppressive act has been pleaded against Daney as director before October 11, 2000 and Rick after that date, as the basis for a finding that DMI acted oppressively toward the plaintiffs?

(ii) Pleadings:

[ 191 ] There is an important feature in oppression remedy cases and that is the pleadings. Bald allegations with no particulars of any wrong done to the interest of the plaintiffs themselves or otherwise are not sufficient.

[ 192 ] Rick and DMI submit that the only allegations of oppression to which they should be required to respond are those that were specifically pleaded namely:

(a) The creation of Newco; (b) The amending amending agreement dated December 21, 2000; and (c) The assignment of the mortgage from Libro to 147.

[ 193 ] They say any other allegations that were not pleaded ought not to be considered.

[ 194 ] Examples of “new allegations that were not pleaded” and as submitted by the plaintiffs in paragraph 99 of their written closing argument are:

(a) An alleged failure to “fully disclose” the Newco transaction at the shareholders meeting of November 8, 1999; (b) Appraisal reports were not disclosed to the shareholders; (c) Wilfully providing false and misleading information to property appraisers in order to secure “low end” valuations to serve the personal interests of Daney. (d) The failure to notify the plaintiffs in a timely fashion of the assignment of Libro mortgage to 147 on June 14, 2002. (e) The failure to notify the plaintiffs in a timely fashion of the subsequent sale on July 18, 2002. (f) The conduct of Daney and DDI attempting to divert or appropriate to Daney directly or indirectly, all or a substantial part of the equity in the property, rather than providing the minority shareholders with their pro-rated share of the equity in and profits from the property.

[ 195 ] Although I agree with counsel for DMI and Rick that the only alleged wrongful acts to which a response is required are those set out in paragraph 192 above, for the sake of completeness, I will assess the new allegations under the test for oppression in any event.

[ 196 ] Oppression is an equitable remedy. First, it seeks to ensure fairness – what is “just and equitable”. It gives a court broad, equitable jurisdiction to enforce not just what is legal but what is fair. [82]

[ 197 ] Second, like many equitable remedies, oppression is fact specific. What is just and equitable is judged by the stakeholder’s objectively reasonable expectations, in context, and with regard to the relationships at play.

[ 198 ] Further, the oppression remedy recognizes that a corporation is an entity that is made up of and affects various individuals and groups, some of whose interests may conflict with others. However, directors owe a fiduciary duty to the corporation and only the corporation.

[ 199 ] The plaintiffs claim that DMI’s directors breached their fiduciary duty to the corporation. They must therefore establish a prima facie case that there has been a tangible departure from the standards of fair dealing, and a violation of the conditions of fair play in respect of the business and affairs of the corporation.

[ 200 ] The concept of a director’s fiduciary duty is but one subset of guidelines and principles to be considered under the oppression remedy.

(iii) Whether the plaintiffs reasonably held their particular expectations?

[ 201 ] In order for a corporation to maintain its asset (i.e. the property), a director must conduct himself in such a manner to ensure the viability of maintaining the debt owed on this asset.

[ 202 ] In order to assess the conduct of the director at all material times, this court must not only review the conduct of the director but also that of the plaintiffs. Such an approach is necessary given that the remedy sought by the plaintiffs is an equitable remedy.

(C) Analysis:

[ 203 ] For the following reasons, I am satisfied that the evidence establishes on a balance of probabilities that Peter and Onorio attempted to renegotiate the 1994 shareholder’s agreement and tried to get a reduction or elimination of the Mara debt owed by Peter, by refusing to agree to discharge the second mortgage in favour of Libro.

[ 204 ] Even if a postponement had been presented, there is no doubt that Peter and Onorio would have attempted to extract some benefit during negotiations. The fact that they now say they would have signed a postponement had it been offered is questionable.

[ 205 ] As a result of the position taken by Onorio and Peter in the summer of 1999, Daney had to protect DMI’s best interest by completing the deal with Fiberglas. It was for this reason Newco was incorporated.

[ 206 ] In other words, the creation of Newco in 1999 was the only way that Daney, as director of DMI could find a way to close the deal with Fiberglas for the benefit of DMI. That also meant that Daney was the only shareholder of DMI risking his personal financial affairs by providing his personal guarantee for the $1.3 million indebtedness to Libro.

[ 207 ] The creation of Newco in and of itself cannot be seen as oppressive, given that it was clearly in DMI’s best interest to close with Fiberglas.

[ 208 ] As the renewal of Newco’s mortgage was nearing, Daney no longer wanted to be the only shareholder personally liable on the mortgage. Again, that cannot be viewed as oppressive conduct in any way.

[ 209 ] As of October 11, 2000, Rick became the director of DMI. None of the plaintiffs wanted to take charge. But for Gina, none of the plaintiffs did anything to help Rick.

[ 210 ] Unfortunately, Daney as a director of DMI, allowed Newco to pay the $1.3 million indebtedness with Libro, while DMI paid Newco on account of the $4.1 million assigned to Newco. This resulted in a diversion of the benefit of the Fiberglas settlement to Daney as the sole shareholder and director of Newco, a situation that lasted for almost a year. That was clearly wrong. Daney’s conduct in this respect certainly did not assist in alleviating the plaintiffs’ lack of trust and confidence in him.

[ 211 ] On October 23, 2000 (twelve days post his resignation as director of DMI), Daney resolved to return to DMI the entire benefit of the Fiberglas settlement. That was the amending agreement. [83]

[ 212 ] On November 27, 2000, the shareholders authorized Rick to do “whatever he deems necessary to obtain a renewal of the financing”. Daney, as a shareholder and no longer a director, had no obligation contractually or by operation of law to remain the sole shareholder posting a personal guarantee.

[ 213 ] The plaintiffs claim that the amount paid to Daney by DMI for his continued personal guarantee and to continue acting as property manager was too rich and not in DMI’s best interest.

[ 214 ] Libro’s mortgage was already more than three months in default as of December 21, 2000. What would have been reasonable for Rick to do? Perhaps he could have interviewed other managers and ascertained the going rate for that type of work.

[ 215 ] The Supreme Court of Canada in BCE Inc. stated that “courts should give appropriate deference to the business judgment of directors”, as long as it lies within a range of reasonable alternatives. [84]

[ 216 ] The onus is on the plaintiffs to lead some evidence of the range of reasonable alternatives to Rick. There is no evidence of what was an appropriate payment to Daney in consideration for the renewal of his personal guarantee. Donna said that even $1 would have been too much. Clearly an unreasonable suggestion. The plaintiffs have failed to establish what reasonable expectations they had in that respect.

[ 217 ] With the continued litigation and the plaintiffs’ allegations of fraud Libro had resolved that it was no longer interested in remaining a spectator to the family feud. The evidence does not show that Libro’s decision was in any way a ploy devised to cause harm to the plaintiffs.

[ 218 ] The evidence demonstrates that but for Daney’s actions in diverting the benefit of the Fiberglas settlement to himself, in fact the plaintiffs are the ones who conducted themselves inappropriately and against DMI’s best interest. It was the plaintiffs’ conduct that showed a complete lack of regard for DMI’s welfare. Some examples are as follows:

(a) Onorio and Peter conducted themselves in a way to attempt to squeeze Daney into agreeing to a reduction or elimination of the Mara debt owed to DMI; (b) Onorio and Peter tried to get Daney to reduce his 42% share in the company; (c) Gina admittedly hired the imposter Taylor; (d) Onorio met with two individuals connected to Shaw (Terry Johnnie and Earl McKinnon) two or three times before the August 29, 2001 shareholders’ meeting. Onorio admitted that he was likely with Peter when Peter gave the appraisal of $1.4 million to Shaw. Neither Onorio nor Peter could explain why they did that even though they say that they wanted the highest price for the sale of the property and even though they say they were prepared to provide their personal guarantees on the Libro mortgage. This of course strains credulity; (e) No one admitted to hiring Shaw, but the evidence from the August 29, 2001 meeting demonstrates that the plaintiffs were clearly trying to obstruct or at the very least delay any sale of the property, by asking DMI to deal with the Shaw offer. The Shaw offer was drafted in such a way that it was not a real offer but rather a promise to make an offer if certain information was provided; (f) The plaintiffs took no concrete steps to redeem the mortgage at any time, a right they had.

[ 219 ] In an attempt to bolster their claim of oppressive conduct in their closing submissions the plaintiffs advanced the following new claims:

i. An alleged failure to “fully disclose” the Newco transaction at the shareholders meeting of November 8, 1999. This allegation is contrary to the evidence that the creation of Newco was disclosed at the November 8, 1999 meeting and contrary to the Statement of Claim which alleged no disclosure at all. ii. An allegation that appraisal reports were not disclosed to the shareholders. There is no requirement in the Shareholders’ agreement or by operation of law that shareholders are entitled to the appraisal reports. In any event, Gina did get the Otto appraisal from Rick in October of 2000. iii. An allegation that false and misleading information was wilfully given to property appraisers in order to secure ‘low end” valuations to serve Daney’s personal interests. The evidence does not establish any material misleading information to Les Otto. iv. The failure to notify the plaintiffs in a timely fashion of the assignment of Libro mortgage to 147 on June 14, 2002. Rick was of the view that the plaintiffs were aware of the notice of power of sale and chose not to tell them that 147 was the vendor as opposed to Libro, because he felt it was in the best interest of the corporation. 147, in his view and not unreasonably, was a friendlier vendor than Libro. Again, I cannot find that this was oppressive in any way. v. The failure to notify the plaintiffs in a timely fashion of the subsequent sale on July 18, 2002. Rick informed the plaintiffs of the sale as soon as he learned of it. There was no failure on Rick’s part. vi. The conduct of Daney and DDI attempting to divert or appropriate to Daney directly or indirectly, all or a substantial part of the equity in the property rather than providing the minority shareholders with their pro-rated share of the equity in and profits from the property. The evidence establishes that an offer was made by Daney to the plaintiffs by letter dated October 1, 2003 to participate in purchasing the property back from Nunes. The plaintiffs chose not to participate.

[ 220 ] For all of these reasons, the plaintiffs have failed to establish on a balance of probability that the defendants, Daney and/or Rick, acted in an oppressive manner.

[ 221 ] The action in oppression against all defendants must be dismissed.

PROPERTY ACTION:

(A) Conspiracy:

[ 222 ] In opening, the plaintiffs’ counsel asserted that a “sham” was perpetrated by the defendants thereby causing injury to the plaintiffs.

[ 223 ] The claim alleges that the defendants “met, planned and conspired to injure the plaintiffs” [85] and “conspired together to affect the said result in a way calculated to do damage to the plaintiffs” [86] . They add that the defendants’ actions constituted “a wanton and outrageous disregard of the plaintiffs’ rights…” [87]

[ 224 ] The plaintiffs state in their closing submissions that the “plan” or the “conspiracy” was that Libro would assist Daney in creating a default to enable Libro to proceed by way of power of sale on the DMI property, which would in turn allow Daney to take an assignment of the Libro mortgage for the sole purpose of ultimately selling the property for substantially less than its true value. This, it is said, was designed to damage and injure the plaintiffs by depriving them of their beneficial ownership of the property without their approval and consent.

(i) Conspiracy claim against Libro and Daney:

[ 225 ] The plaintiffs have alleged that the defendant Daney and Libro have “met, planned and conspired” to injure them in their respective capacities as minority shareholders and as mortgagees of the property.

[ 226 ] The plaintiffs’ claim is that the February 28, 2002 meeting between MacKenzie, Kennes, Daney, D’Ascanio and Van Bavel constituted the first step in the conspiracy that engineered the default by which allowed Libro to proceed by way of power of sale on the DMI property.

[ 227 ] As outlined in the chronology set out above Libro loaned $1.3 million to Newco on October 4, 1999 to fund the payment of $1.05 million to Fiberglas to retire DMI’s debt and pay property taxes of approximately $250,000. Fiberglas assigned the DMI mortgage to Newco, which in turn assigned it to Libro as security for the loan. In addition, Libro received an unlimited personal guarantee from Daney.

[ 228 ] In Canada Cement Lafarge Ltd. v. British Columbia Lightweight Aggregate Ltd. [88] Justice Estey described the test for the tort of conspiracy as follows:

(1) Whether the means used by the defendants are lawful or unlawful the predominate purpose of the defendants’ counsel is to cause injury to the plaintiffs; or, (2) Where the conduct of the defendants is unlawful, the conduct is directed towards the plaintiff (alone or together with others) and the defendants should know in the circumstances that injury to the plaintiff is likely to and does result.

[ 229 ] Where intentional misconduct is alleged, full particulars are required in the pleadings. [89]

[ 230 ] The fresh consolidated statement of claim has the following claims with respect to the claim in conspiracy:

62. The defendants met, planned and conspired to injure the plaintiffs in their respective capacities as Minority Shareholders and DMI creditors and as mortgagees of the property. The plaintiffs further state that the defendants conspired, as aforesaid, in order to frustrate the plaintiffs’ attempts to seek relief from the Oppression Action by the series of transactions in July and August of 2002 relating to the Fiberglas mortgage and power of sale thereunder, and the financing provided by St. Willibrord, the effect of which was to remove the beneficial ownership of the property from DMI without the approval or consent of the plaintiffs, and to vest the value of the property in Daney and/or DDI.

63. The defendants conspired together to effect the said result in a way calculated to do damage to the plaintiffs.

64. St. Willibrord knew of the intention of all or some of the defendants to injure the plaintiffs, and countenanced or facilitated the infliction of such injury.

65. As a result of the actions of the defendants the plaintiffs have suffered substantial damages represented by the elimination of their mortgage interest in the property and by the substantial diminution in value of their shareholding interest in DMI.

66. The consideration for which the property was conveyed ultimately to 105, in trust and then to 153 pursuant to the series of transactions referred to above was substantially less than the true value of the property, to the knowledge of the defendants.

67. Neither St. Willibrord, nor 147, gave notice to DMI, as debtor under the mortgage held by St. Willibrord, as assignee, nor to the plaintiffs, as charges under the shareholder’s mortgage. The assignment and the subsequent sale of the property by 147 to 105, in trust and by 105, in trust to 153 were therefore void or voidable. The plaintiffs plead and rely upon the provisions of the Conveyancing and Law of Property Act, R.S.O. 1990, c. C. 34, and in particular s. 53(1) thereof.

68. The conduct of St. Willibrord and 147 in effecting, countenancing and facilitating the transaction referred to above was oppressive and in bath faith, and the July 2002 and August 2002 transactions and conveyances should be set aside.

[ 231 ] The pleadings here fail in many respects, including the failure to plead whether the conspiracy is as a result of unlawful or lawful conduct.

[ 232 ] Upon review of the evidence of the witnesses attending the February 28, 2002 meeting, there is no evidence that Libro’s actions were unlawful.

[ 233 ] The fact that Daney did not want to renew his guarantee is in no way unlawful. Nothing in law would have obliged Daney to renew his personal guarantee. The fact that the plaintiffs and especially Onorio and Peter, continued to press for some concession by Daney or DMI, makes Daney’s refusal to renew even more comprehensible.

[ 234 ] The plaintiffs submit that Daney’s “admission” that he “got the ball rolling” with respect to the “assignment” at the February 28, 2002 meeting, is the “smoking gun” permitting an inference that a conspiracy indeed occurred.

[ 235 ] Even if I were to accept that the assignment was in fact discussed at the February 28 meeting, I am unable to find that the purpose of Libro’s decision was to injure the plaintiffs.

[ 236 ] Libro’s primary interest was to extricate itself from the family fight, through the exercise of a lender’s normal mortgage remedy when a loan is in default: a power of sale.

[ 237 ] In my view, there is no evidence to suggest that the predominate purpose of Libro’s conduct, was to cause injury to the plaintiffs.

(ii) Conspiracy claim against Aldo, 147 and Daney?

[ 238 ] With respect to any claim of conspiracy against Aldo, the plaintiffs’ closing submissions are silent on that point. Aldo’s evidence was credible and forthright. His conduct was not in any way contrived or of a conspiratorial nature. I believe him when he says that he was simply repaying an old friend who he owed from a long time ago, when Daney had helped him.

[ 239 ] The claim alleges that Nunes’ companies 105 and 153 were acting as Daney’s “alter-ego”. The same allegation is leveled at 147 which held the vendor take-back mortgage upon 147’s sale of the property to 105.

[ 240 ] The pleadings do not reflect, nor does the evidence support a finding that Daney in any way controlled 105 and 153.

[ 241 ] There is neither pleading nor any evidence that would support a finding that 147 held a “beneficial interest” or a “beneficial ownership” in 105 and 153 or that they were related persons or that they were subsidiaries or affiliates of the other.

[ 242 ] Nunes denied that he acted as Daney’s alter-ego. I believe him when he said that because of the certificate of pending litigation registered against the property and the continued litigation among the family members, he no longer was interested in the property. His decision to sell the property can only be viewed as being reasonable given the circumstances.

(B) Analysis:

[ 243 ] The plaintiffs appear to suggest that 147 was in essence Daney’s alter ego.

[ 244 ] The shareholder’s agreement executed by the shareholders of 147 dated June 10, 2002 [90] provided at para 8 the following:

8. upon each of JOHN and ALDO and JOAN being released from their respective obligations under the Credit Union Loan to 147 and the discharge of any security posted by each of them to support the Loan to 147, JOHN and ALDO and JOAN shall each forthwith surrender all of their respective shares in 147 for cancellation or otherwise as 147 may direct and JOHN and ALDO and JOAN and 147 shall deliver to each other mutual releases of any and all claims arising from this Agreement or otherwise.

[ 245 ] The plaintiffs submit that this is precisely what was anticipated so that in the end only Sharon would be left as shareholder and director of 147. In other words, 147 was the alter ego of Daney.

[ 246 ] Even if I accept that 147 was Daney’s alter ego, it remains that the claim of conspiracy must fail, given that the sale by 105 through 153 back to 147 was lawful. There is no evidence that Nunes had the direct intent to cause harm to the plaintiffs, a necessary prerequisite to a successful claim.

[ 247 ] The plaintiffs knew that Libro’s loan was in default. They had ample opportunity to seek legal advice from their several lawyers about their options and obligations under power of sale proceedings.

[ 248 ] The evidence establishes that the plaintiffs did nothing or failed to act with dispatch to exercise their legal rights. By the time they ought to have finally realized what was happening, it was too late, given that Libro had had enough of the strife and was not prepared to renew the financing.

[ 249 ] Accordingly, since there was no agreement to extend the loan, Libro had the legal right to sell the property under power of sale. Daney’s evidence was that he was concerned about Libro selling the property. He wanted to control the sale, if he could, given that his personal guarantee was at risk. If a property manager was appointed with all of the costs associated with a sale, Daney was concerned that Libro could seek any shortfall from him on his personal guarantee.

[ 250 ] Daney looked to his friends and other members of his family for assistance. That is when 147 was created. Aldo and Joan were mortgaging their matrimonial home; John was also mortgaging his home; Sharon assigned a $300,000 term deposit to Libro and mortgaged her property. They all signed personal guarantees.

[ 251 ] Aldo asked to be director of 147 in order to control his family’s exposure, which is sensible.

[ 252 ] The plaintiffs as second mortgagees had until June 1, 2002 to redeem the loan. They chose to do nothing. On June 3, 2002, Libro and 147 formalized the assignment of the first mortgage to 147.

[ 253 ] There is nothing in the plaintiffs’ statement of claim or in their closing submissions that would suggest that this assignment was unlawful or contrived. This is hardly surprising given that the assignment was lawful.

[ 254 ] Even on the plaintiffs’ ‘alter ego’ theory, Daney as sole guarantor of the first mortgage entitled him to the assignment. In any event, the assignment was post any right of redemption, which the plaintiffs chose to ignore.

[ 255 ] For all of these reasons, no unlawful conspiracy is made out on the evidence. The only thing that is clear is that the plaintiffs failed to protect their own interests.

NO PROOF OF ANY DAMAGES:

[ 256 ] Even if a tort claim had been made out on the facts, the plaintiffs have failed to advance any proof of damages or cohesive theory respecting damages.

COUNTERCLAIM BY DMI FOR $400,000:

[ 257 ] DMI claims the sum of $400,000 from the plaintiffs arising from the loss of the Nunes’ offer of $1.7 million dated August 23, 2001.

[ 258 ] DMI asks me to conclude that the plaintiffs hired Shaw, just as they had hired Taylor to stop the Nunes purchase. The plaintiffs, on the other hand, submit that it could have been Daney who hired Shaw.

[ 259 ] The evidence falls far short of demonstrating that Daney hired Shaw. Quite the contrary in fact: Daney was suspicious of the legitimacy of the Shaw offer during the August 29, 2001 meeting.

[ 260 ] The evidence is overwhelmingly clear that Onorio and Peter had no regard for DMI’s wellbeing. Their actions involving Beaudet, the lawyer for Fiberglas and providing the $1.4 million appraisal to Shaw when they met with him before the shareholder’s meeting are two examples of their disregard for DMI.

[ 261 ] Having said that, I am not prepared to conclude that the plaintiffs hired Shaw specifically to cause the loss of an opportunity to sell the property to Nunes at $1.7 million. In my view, although there is some evidence that might support an inference that one or more of the plaintiffs hired Shaw, I am not persuaded on a balance of probabilities one, some or all of the plaintiffs did so and accordingly, I dismiss the counterclaim.

[ 262 ] In any event, there is no evidence to demonstrate what steps DMI took to seek an extension on the Nunes offer.

[ 263 ] Accordingly, the counterclaim must be dismissed.

DISPOSITION:

[ 264 ] For these reasons, the plaintiffs’ claims are dismissed.

COSTS:

[ 265 ] If the parties are unable to agree on the issue of costs, a hearing for same shall be scheduled by the trial coordinator at the request of counsel.

Justice J. N. Morissette

Released: August 2, 2016

SCHEDULE “A”

PLAINTIFFS:

Company names:	OWNED by:	RELATIONSHIP
790668 Ontario Inc.(790)	Peter Frezza	Uncle to Daney D’Andrea
Frezza Management Inc.(FMI)	Onorio Frezza	Uncle to Daney D’Andrea
Elio Frezza	Uncle to Daney D’Andrea
Gina D’Andrea-Vozza	Sister to Daney D’Andrea
Donna D’Andrea-Hogan	Sister to Daney D’Andrea
Tara Frezza	Onorio’s daughter
Julia Frezza	Onorio’s daughter
Michael Frezza	Onorio’s son

DEFENDANTS

D’Andrea Management Inc.(DMI)	Plaintiffs + Daney, Rick & their mother
D’Andrea Development Inc.(DDI)	Daney D’Andrea
Rick D’Andrea	Brother of Daney
1317539 Ontario Inc.(Newco)	Daney D’Andrea
1476335 Ontario Inc.(147)	Sharon D’Andrea	Wife of Daney
Aldo Rotondi	Initial shareholder and director of 147, friend of Daney
St-Willibrord Community Credit Union Limited(Libro)	Libro

Other companies and individuals involved:

1052534 Ontario Inc.(105)	Jose Nunes	Interested purchaser of property
1536962 Ontario Inc.(153)	Jose Nunes	Same
632155 Ontario Inc.(632)	Daney’s mother
Fiberglas Canada Inc.	Owen’s corning Canada Inc.	Vendor of property
Sharon D’Andrea	Daney’s wife

COURT FILE NO.: 39929 DATE: 2016/08/02 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: 7790668 Ontario Inc., Frezza Management Inc., Elio Frezza, Gina D’Andrea-Vozza, Donna D’Andrea Hogan, Onorio Frezza, Tara Frezza, Julia Frezza and Michael Frezza Plaintiffs

• and - D’Andrea Management Inc., Daney D’Andrea, D’Andrea Developments Inc., Rick D’Andrea, 1317539 Ontario Inc., 1476335 Ontario Inc., 1052534 Ontario Ltd, Aldo Rotandi, Jose Nunes, 1536962 Ontario Ltd., St. Willibrord Community Credit Union Ltd., now operating as Libro Financial Group Defendants REASONS FOR JUDGMENT Morissette J. Released: August 2, 2016

[1] Para. 99 of the Plaintiffs’ closing submissions. [2] Exhibit 6 [3] The plaintiffs, 790668 Ontario Inc. owned by Peter Frezza (Daney’s uncle); Frezza Management Inc., owned by Onorio Frezza (Daney’s uncle), Elio Frezza, (Daney’s uncle), Gina D”Andrea-Vozza (Daney’s sister), Donna D’Andrea-Hogan (Daney’s sister), Onorio’s children (Daney’s cousins). (see schedule A) [4] Exhibit 7 [5] Exhibit 17 [6] Exhibit 9 [7] Exhibit 70 [8] Exhibit 30 [9] Exhibit 153; [10] Exhibit 122; [11] Exhibit 32; [12] Exhibit 155 [13] Exhibit 35 and 36 [14] Exhibit 84 [15] Exhibit 140 [16] Exhibit 96 [17] Exhibit 89 [18] Exhibit 90 [19] Exhibit 91 [20] Exhibit 92 [21] Exhibit 97 [22] Exhibit 34 [23] Exhibit 45 [24] Exhibit 126 [25] Exhibits 176 and 177 [26] Exhibit 178 [27] Exhibit 63 [28] Exhibit 66 [29] Exhibit 45 [30] Exhibit 78 [31] Exhibit 172 [32] Exhibit 67 [33] Exhibit 68 [34] idem [35] Exhibit 100 [36] Exhibit 73 [37] Exhibit 136 [38] Exhibit 75, 76 [39] Exhibit 103 [40] Exhibit 79 [41] Exhibit 108 [42] Exhibit 109 [43] Exhibit 111 [44] Exhibit 112 [45] Exhibit 113 [46] Exhibit 189 [47] Exhibit 114 [48] Exhibit 115 [49] Exhibit 116 [50] Exhibit 117 [51] Exhibit 165 [52] Exhibit 170 [53] Exhibit 222 [54] Exhibit 167, 168, and 171 [55] Exhibit 247 and 248; Van Bavel did not testify for obvious reasons but the declaration was stipulated as accurate and true. [56] Exhibit 258 (Incorporated in 1993) [57] Exhibit 263 [58] Exhibit 207 and 265 [59] Exhibit 120 [60] Exhibit 268 [61] Exhibit 250 [62] Exhibit 214 [63] Exhibit 215 [64] Exhibit 270 [65] Exhibit 262 [66] Exhibit 144 [67] Exhibit 188 [68] Exhibit 174 and 227; The hospital group made a $2.2 million offer on November 12, 2001 and retracted that offer on January 23, 2002. [69] Exhibit 174 and 227; [70] Exhibit 15 [71] Exhibit 45 [72] Exhibit 78 Endorsement of Hockin, J. [73] Markus Koehnen, Oppression and Related Remedies (Thomson Carswell, 2004) at pp. 445-447 [74] 89 O.R. (3d) 26(C.A.) at para 26 . [75] (1843), 67 E.R. 189 [76] 2015 ONCA 373 [77] Ibid at para 19 [78] Markus Koehnen, Oppression and Related Remedies (Toronto: Carswell, 2004) [79] Ibid Rea : para 21 [80] BCE Inc. v. 1976 Debentureholders , 2008 SCC 69 , [2008] S.C.J. 37 at para 72 [81] Budd v. Gentra Inc . , 1998 5811 (ON CA) , [1998] O.J. 3109(C.A.) [82] Wright v. Donald S. Montgomery Holdings Ltd . (1998), 1998 14805 (ON SC) , 39 B.L.R. (2d) 266 (Ont.Ct. (Gen Div.)) at p. 273 [83] Exhibit 45 [84] BCE supra at para. 40 [85] Paragraph 62 of the fresh consolidated statement of claim [86] Paragraph 63 of the fresh consolidated statement of claim [87] Paragraph 72 of the fresh consolidated statement of claim [88] 1979 426 (BC SC) , 103 D.L.R. (3d) 587 , 48 C.P.R. (2d) 201 [89] Rule 25.06(8) of the Rules of Civil Procedure [90] Exhibit 222