1939163 Ontario Limited v. Greenhow

Ontario Reports

Ontario Superior Court of Justice

Perell J.

December 30, 2020

153 O.R. (3d) 418 | 2020 ONSC 8142

Case Summary

Civil procedure — Abuse of process — Minority shareholder of family company commencing action for an oppression remedy in 2017 against majority shareholder and asserting a derivative claim without obtaining leave — Plaintiff's holding company commencing action in debt in 2019 against family company — Defendant in 2017 action moving to stay 2019 action as abuse of process — 2017 and 2019 actions consolidated except for derivative action, which was struck as misconceived and ill-advised.

Corporations — Derivative actions — Minority shareholder of family company commencing action for an oppression remedy in 2017 against majority shareholder and asserting a derivative claim without obtaining leave — Plaintiff's holding company commencing action in debt in 2019 against family company — Defendant in 2017 action moving to stay 2019 action as abuse of process — 2017 and 2019 actions consolidated except for derivative action, which was struck as misconceived and ill-advised — Business Corporations Act, R.S.O. 1990, c. B.16, s. 246.

Corporations — Oppression — Minority shareholder of family company commencing action for an oppression remedy in 2017 against majority shareholder and asserting a derivative claim without obtaining leave — Plaintiff's holding company commencing action in debt in 2019 against family company — Defendant in 2017 action moving to stay 2019 action as abuse of process — 2017 and 2019 actions consolidated except for derivative action, which was struck as misconceived and ill-advised.

J was the widow of P's first cousin. In 2004, P and his cousin formed a property management enterprise from two companies and, along with J, built a successful business before the cousin's death in 2007. In 2015, the two companies were merged into a single corporation ("Amalgamated"), with J holding 62.5% of the shares and P holding the remaining 37.5%. After its formation, Amalgamated began to wind down and after liquidating its assets was left with about $550,000 in cash. In 2017, P commenced an action for an oppression remedy and asserted a derivative claim on behalf of Amalgamated against J, claiming that J owed Amalgamated about $500,000 for overpayments made to her. The statement of claim indicated that leave to commence the derivative action would be sought. J denied that she owed anything to Amalgamated and asserted that P owed the corporation $1 million. She counterclaimed for an oppression remedy and for a corporate winding up. In 2019, P's holding company sued Amalgamated for the payment of the balance outstanding on two loan debts assigned to the holding company. J asserted that the claims advanced in the 2019 action were statute-barred under the Limitations Act, 2002 and were an attempt by P to reassert the claims that J argued were statute-barred in the 2017 action. J moved to have the 2019 action stayed as an abuse of process.

Held, the motion should be dismissed.

It was inappropriate to stay or dismiss the 2019 action. The better approach was to consolidate the 2017 action and the 2019 action to avoid a multiplicity of proceedings and a waste of judicial resources. It appeared that both J and P were entitled to assert oppression remedy claims. The factual footprint of both actions was the same and the witnesses would be the same. Ultimately, both actions were about how much money should be in the treasury of Amalgamated and how the money should be distributed. The pleadings in both actions were struck with leave to replead in the consolidated action. However, the derivative action was struck from the 2017 action without leave to amend. The derivative action was misconceived and ill-advised because P's allegations of oppressive conduct were complaints that could have been resolved by a winding up application. P still had not obtained leave to bring the derivate action and if he applied for leave, it would not be granted. P was not acting in good faith and it was not in the interests of the corporation to prosecute an action against itself. There was a further order disqualifying P's current lawyers of record. That firm's office was the same as the head office of Amalgamated. The disqualification was based on conflicts from a variety of grounds including the possible use of confidential information and the likelihood of some of its members being witnesses in the consolidated action.

Cases referred to

1186708 Ontario Inc. v. Gerstein, [2017] O.J. No. 875, 2017 ONSC 1217, 275 A.C.W.S. (3d) 768, 66 B.L.R. (5th) 71 (Div. Ct.), affg [2016] O.J. No. 1234, 2016 ONSC 1331, 264 A.C.W.S. (3d) 776, 64 B.L.R. (5th) 318; Canadian Imperial Bank of Commerce v. Green (2015), 135 O.R. (3d) 334, [2015] 3 S.C.R. 801, [2015] S.C.J. No. 60, 2015 SCC 60, 391 D.L.R. (4th) 567, 478 N.R. 202, J.E. 2015-1921, 346 O.A.C. 204, 44 B.L.R. (5th) 1, 77 C.P.C. (7th) 1, 260 A.C.W.S. (3d) 25, EYB 2015-259361, 2015 SOACQ para. 10,054, 2016 CCSG para. 51,536, 2016 BCLG para. 79,099, 2016 OCLG para. 51,912, 2016 CCLR para. 201,256, 2015EXP-3510, 2016 CSLR para. 900-621, 2016 ACLG para. 79,675; Ernst & Young Inc. v. Essar Global Fund Ltd. (2017), 139 O.R. (3d) 1, [2017] O.J. No. 6723, 2017 ONCA 1014, 420 D.L.R. (4th) 23, 54 C.B.R. (6th) 173, 286 A.C.W.S. (3d) 658, 2018 BCLG para. 79,236, 2018 OCLG para. 52,049, 2018 CCLR para. 201,393, 2018 ACLG para. 79,812; Foss v. Harbottle (1843), 2 Hare 461, 67 E.R. 189; Hercules Managements Ltd. v. Ernst & Young, 1997 345 (SCC), [1997] 2 S.C.R. 165, [1997] S.C.J. No. 51, 146 D.L.R. (4th) 577, 211 N.R. 352, [1997] 8 W.W.R. 80, J.E. 97-1151, 115 Man. R. (2d) 241, 31 B.L.R. (2d) 147, 35 C.C.L.T. (2d) 115, [1997] ILR para. G-1014, 71 A.C.W.S. (3d) 169, 1997 SOACQ para. 10,004, 1997 BCLG para. 78,136; Peoples Department Stores Inc. (Trustee of) v. Wise, [2004] 3 S.C.R. 461, [2004] S.C.J. No. 64, 2004 SCC 68, 244 D.L.R. (4th) 564, 326 N.R. 267, J.E. 2004-2016, 49 B.L.R. (3d) 165, 4 C.B.R. (5th) 215, 134 A.C.W.S. (3d) 548, R.E.J.B. 2004-72160, 2004 SOACQ para. 10,008, 2004 CCSG para. 50,840, 2005 BCLG para. 78,403, 2004 OCLG para. 51,216, 2004 CCLR para. 200,560, 2005 CSLR para. 900-103, 2004 ACLG para. 78,979; Rea v. Wildeboer (2015), 126 O.R. (3d) 178, [2015] O.J. No. 2651, 2015 ONCA 373, 384 D.L.R. (4th) 747, 253 A.C.W.S. (3d) 87, 2015 SOACQ para. 10,056, 2015 CCSG para. 51,503, 2015 BCLG para. 79,066, 2015 OCLG para. 51,879, 2015 CCLR para. 201,223, 2015 ACLG para. 79,642

Statutes referred to

Business Corporations Act, R.S.O. 1990, c. B.16 [as am.], ss. 134 [as am.], 246(1), (2), (2.1)

Limitations Act, 2002, S.O. 2002, c. 24, Sch. B [as am.]

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 6.01

MOTION to stay an action as an abuse of process.

David N. Delagran, for plaintiffs 1939163 Ontario Limited and Paul Greenhow.

Darryl T. Mann and Jennifer L. Siemon, for defendant Jasmine Greenhow.

Douglas Christie, for plaintiff Greenhow Holdings Inc.

PERELL J.: —

What's it all about, when you sort it out,

Alfie?

Are we meant to take more than we give?

Or, are we meant to be kind?

And if only fools are kind, Alfie, then I guess,

it is wise to be cruel.

[Burt Bacharach, Alfie]

A. Introduction

[1] This motion before the court involves a cruel dispute between in-laws. They are suing each other in two actions: (1) Action No. CV-17-576255 (the "2017 Action"); and (2) Action No. CV-19-630016 (the "2019 Action").

[2] In the 2017 Action, the plaintiffs are: (1) Paul Greenhow; and (2) 1939163 Ontario Limited (the "Amalgamated Corp."), which is an amalgamation of Green Estates Investment Holdings Ltd. ("Green Estates") and of BRW Management Group Ltd. ("BRW Management"). Paul Greenhow is the minority shareholder (37.5 per cent) of the Amalgamated Corp., which is a corporation under the Ontario Business Corporations Act.[^1]

[3] In the 2017 Action, the defendant is cousin-in-law Jasmine Greenhow. She is the majority shareholder (62.5 per cent) of the Amalgamated Corp. She is the widow of James Greenhow, who was Paul Greenhow's first cousin and his best friend.

[4] In the 2017 Action, Paul Greenhow sues for an oppression remedy, and he brings a derivative action on behalf of the Amalgamated Corp. -- for which he has yet to obtain leave as required by the Ontario Business Corporations Act.

[5] In defending the 2017 Action, Jasmine Greenhow asserts that the derivative action is a nullity and that the claims are statute-barred under the Limitations Act, 2002.[^2] In the 2017 Action, she counterclaims against Paul Greenhow and against the Amalgamated Corp. for, among many things, an oppression remedy and for a corporate winding up.

[6] In the 2019 Action, the Plaintiff is Greenhow Holdings Inc. ("Greenhow Holdings"), which is Paul Greenhow's corporation. The defendant in the 2019 Action is the Amalgamated Corp. In the 2019 Action, Greenhow Holdings, as the assignee lender of two loan debts of the Amalgamated Corp., sues for payment of the balance outstanding on the two loans.

[7] The Amalgamated Corp. has not yet defended the 2019 Action because Jasmine Greenhow has not retained a lawyer to represent the Amalgamated Corp., nor has she obtained an Order that she may represent the corporation.

[8] In the motion now before the court, Jasmine Greenhow seeks to have the 2019 Action stayed as an abuse of process. She asserts that the claims advanced in the 2019 Action are statute-barred under the Limitations Act, 2002 and are an attempt by Paul Greenhow to reassert the claims that she asserts are statute-barred in the 2017 Action.

[9] Yes indeed, it may be observed that: (a) in the 2017 Action, Paul Greenhow brings a derivative action -- without leave -- on behalf of the Amalgamated Corp.; and (b) in the 2019 Action, Paul Greenhow's corporation sues the Amalgamated Corp. Thus, Paul Greenhow is simultaneous suing on behalf of a corporation that he is suing in another action.

[10] In the 2017 Action, Jasmine Greenhow now brings a motion. It is somewhat of a simplification, but the purpose of Jasmine Greenhow's motion is to stay or dismiss the 2019 Action and to allow the 2017 Action to proceed. More precisely, Jasmine Greenhow seeks the following relief:

(a) In the Action bearing Court File No. CV-17-576255 (the "2017 Action"):

(i) All of the claims asserted and the relief sought for or on behalf of the Plaintiff/Defendant by Counterclaim, 1939163 Ontario Limited ("193") be struck on the basis that the Plaintiff/Defendant by Counterclaim, Paul Greenhow ("Paul"), has failed to comply with the mandatory statutory pre-conditions to obtain leave to bring a derivative action pursuant to the Business Corporations Act (the "OBCA") and that any attempt by Paul to address this failure is now statute-barred, as are any claims to pursue the Alleged Debts, referred to herein;

(b) If necessary, Jasmine be granted leave to intervene in the Action bearing Court File No. CV-19-630016 (the "2019 Action");

(c) The 2019 Action be struck or dismissed on the basis that it is statute-barred, scandalous, frivolous, vexatious and/or an abuse of process of the Court on the grounds that:

(i) All of the claims made by the Plaintiff, Greenhow Holdings Inc. ("Paul's Company" or "His Company"), in respect of the Alleged Debts are statute-barred; and/or

(ii) Paul, through His Company, is attempting to litigate a matter that is already before the Court and/or has commenced the 2019 Action while another proceeding is pending in Ontario in respect of the same subject matter; and

(d) In the further alternative to the relief sought in paragraph 1(c) above, that the 2019 Action be stayed pending the determination of the 2017 Action.

[11] On this motion, the position of Paul Greenhow and the Amalgamated Corp. is that Jasmine Greenhow's motion should be dismissed and that the 2019 Action should be given prominence and proceed first. His corporation, Greenhow Holdings, supports that position.

[12] For the reasons that follow, I make the following order:

(a) In the 2017 Action, the derivative claim shall be struck out without leave to amend.

(b) In the 2017 Action, the claim and the counterclaim shall be struck in their entirety with leave to amend.

(c) In the 2019 Action, the Statement of Claim shall be struck in its entirety with leave to amend.

(d) The 2017 Action and the 2019 Action shall be consolidated into the 2017/2019 Consolidated Action.

(e) In the 2017/2019 Consolidated Action, the plaintiffs shall be Paul Greenhow and Greenhow Holdings and the defendants shall be Jasmine Greenhow and the Amalgamated Corp.

(f) In the 2017/2019 Consolidated Action, the plaintiffs shall have 20 days from the release of these Reasons for Decision to serve and file a Statement of Claim, failing which the 2017 Action, the 2019 Action, and the 2017/2019 Consolidated Action shall be deemed to have been discontinued with costs to be determined by motion to the court.

(g) In the 2017/2019 Consolidated Action, if the plaintiffs deliver a Statement of Claim, the defendants may not be noted in default until after 20 days from the service of the Statement of Claim.

(h) In the 2017/2019 Consolidated Action, Paul Greenhow and Greenhow Holdings may be represented by Rubin & Christie LLP or by such other law firm as they may retain save and except Beard Winter LLP.

(i) Beard Winter LLP is disqualified from acting as lawyer of record in the 2017 Action and in the 2017/2019 Consolidated Action.

B. What's it All About?

[13] To understand the above Order and the explanation for it that follows, it is helpful at the outset to explain what this cruel litigation is really all about.

[14] Ignoring the prospects that the legal costs may make the litigation uneconomic and that Paul and Jasmine may be judgment proof, what the 2017 Action and the 2019 Action are really all about is that:

-- The Amalgamated Corp. has approximately $550,000 in cash. If all its debts have been paid, that cash would be distributed to the shareholders, in which case, Jasmine Greenhow would receive approximately $344,000 and Paul Greenhow would receive $206,000.

-- However, in the 2017 Action, Paul Greenhow claims that Jasmine Greenhow owes the Amalgamated Corp. approximately $500,000 for overpayments made to her. If that sum is repaid, then the Amalgamated Corp. would have $1 million to distribute but it would all go to Paul Greenhow and Greenhow Holdings because in the 2017 Action and the 2019 Action, Paul Greenhow and Greenhow Holdings allege that the Amalgamated Corp. must pay them as lenders with outstanding loans. Paul Greenhow claims that he is owed approximately $700,000 for unpaid shareholder's loans, and Greenhow Holdings claims it is owed approximately $1.1 million for two assigned corporate loan debts, which the corporation purchased for $150,000.

-- However, Jasmine Greenhow denies that she owes the Amalgamated Corp. and rather asserts that it is Paul Greenhow who owes the corporation $1 million. She denies that the Amalgamated Corp. has any creditors. If Jasmine Greenhow's allegations are true, then Paul Greenhow should pay the Amalgamated Corp. $1- million and then the approximately $1.5 million would be distributed so that Jasmine Greenhow would receive approximately $1 million and Paul Greenhow would receive approximately $500,000 back.

C. Factual and Procedural Background

[15] I begin the description of the factual and procedural background to this motion by observing that there was a great deal of vexatious, scandalous and argumentative allegations in the affidavits filed for this motion. Affidavits, however, are not the place for insults, condemnations and polemics, and in what follows I shall give appropriate weight to the improper material. I also observe that there were no cross-examinations of the often diametrically opposed accounts of the events, and, thus, the ultimate truth of the allegations remains to be determined. My findings of fact below are made solely for the purposes of this interlocutory motion.

[16] Jasmine Greenhow is the widow of the late James Greenhow who died in 2007. She formerly was an Ontario resident. She now lives in Scottsdale, Arizona. She is the President, a Director, and the majority shareholder of the Amalgamated Corp. holding a 62.5 per cent interest.

[17] Paul Greenhow is an Ontario resident. He is a chartered and forensic accountant at the firm that he co-founded, Colangelo, Greenhow Forensic & Valuation Accountants. He is the Secretary-Treasurer, a Director, and the minority shareholder of the Amalgamated Corp. holding a 37.5 per cent interest. He is the sole Officer and Director of Greenhow Holdings.

[18] In 2004, Paul Greenhow and James Greenhow formed Green Estates and BRW Management as a property management enterprise in Hamilton, Ontario. Paul and James were first cousins and best friends. Paul and James along with Jasmine Greenhow built a successful property management business.

[19] On February 1, 2007, James Greenhow died, and Jasmine Greenhow, then seven months pregnant with their first child, inherited his shares of Green Estates and BRW Management.

[20] From 2007 to 2015, the predecessors of the Amalgamated Corp. carried on what apparently was a successful business. There is, however, a serious dispute between the parties about who was in charge of the financial bookkeeping of these businesses. Paul Greenhow and Jasmine Greenhow accuse each other of manipulating the financial records and of financial improprieties.

[21] Paul Greenhow alleges that by year-end 2013, in accordance with the financial statements of Green Estates and of BRW Management, which he alleges were accurate and not challenged by Jasmine Greenhow until recently and after-the-fact, the businesses owed him approximately $700,000 ($273,486 + $425,513) for his shareholder's loans. Further, he alleges that Jasmine Greenhow owes the corporations approximately $500,000 ($234,863 + $271,257) for shareholder's advances that had overtopped her shareholder's loans.

[22] On July 11, 2015, the Amalgamated Corp. was formed as an amalgamation of Green Estates and BRW Management. Under the Amalgamation Agreement, the head office of the Amalgamated Corp. is 130 Adelaide Street West, Suite 701, Toronto, which, as it happens, is the office of Beard Winter LLP, who are the lawyers of record for Paul Greenhow in the 2017 Action. There is a dispute between the parties about whether Jasmine Greenhow objected to having Beard Winter LLP's office be the headquarters of the business and she asserts that Beard Winter LLP was not authorized to admit service of the 2019 Action's Statement of Claim on behalf of the Amalgamated Corp.

[23] Paul Greenhow alleges that at the time of the amalgamation, in addition to the Amalgamated Corp.'s indebtedness to him, the Amalgamated Corp. owed Matt Pritchard $94,107 and Bayscape Consulting Inc. ("Bayscape Consulting") $596,996 for loans made to Green Estates and to BRW Management. He alleges that Mr. Pritchard and Bayscape Consulting had respectively made loans to Green Estates and BRW Management that had not been repaid. He alleges that Bayscape Consulting's debt was subsequently reduced by a $250,000 payment.

[24] After its formation, the Amalgamated Corp. began to wind down. It is now an inactive corporation. It has liquidated its assets and it has approximately $550,000 in cash. That money is held in trust at the law firm of Hinchey & Sertic. That firm was the conveyancing solicitors for the sale of the Amalgamated Corp.'s assets.

[25] Jasmine Greenhow denies that she has any indebtedness to the Amalgamated Corp., and she alleges that Paul Greenhow manipulated the financial records of the corporation. She alleges that Paul Greenhow played a significant role in supervising the business's accountant and that he directed the accountant as to how financial documentation and information should be reflected in the financial statements. She says that she trusted and relied on Paul Greenhow's representations that the mistakes in the financial records would be corrected. She says that her reliance was misplaced and that she was deceived.

[26] Paul Greenhow denies that he manipulated the financial records, and he alleges that after approving the financial statements for more than 12 years, in August 2014, Jasmine began to question the shareholder account positions and asked the accountant for Green Estates and BRW Management to restate the Financial Statements, but the accountant declined to do so.

[27] In any event, the parties seemed unable to deal with the trust money held by Hinchey & Sertic, and in 2017, Paul Greenhow retained Beard Winter LLP and the 2017 Action was commenced by him. He also asserted a derivative claim on behalf of the Amalgamated Corp. against Jasmine Greenhow.

[28] More precisely on May 31, 2017, the Statement of Claim in the 2017 Action was issued. The plaintiffs are Paul Greenhow and the Amalgamated Corp. The claim of the Amalgamated Corp. is brought by Paul Greenhow as a derivative action. The Statement of Claim indicates that leave to commence the derivative action will be sought. The defendant is Jasmine Greenhow. Before commencing the action, Paul Greenhow did not provide Jasmine Greenhow notice of his intention to commence a derivative action.

[29] For present purposes, the pertinent parts of the Statement of Claim in the 2017 Action are set out below:

The plaintiffs claim:

(a) An interlocutory Order granting leave of this Honourable Court to the plaintiff, Paul Greenhow, to commence and continue this action against the defendants as a derivative claim on behalf of the plaintiff, 1939163 Ontario Ltd.;

(b) [. . .]

(c) damages against Jasmine Greenhow for breach of fiduciary duty, conversion, and oppression in the amount of $600,000;

(d) a declaration that the business or affairs of 1939163 Ontario Ltd. have been carried on or conducted by the Defendant, Jasmine Greenhow in a manner that is oppressive, unfairly prejudicial to and unfairly disregards the interests of the Plaintiff, Paul Greenhow;

(e) a declaration that the powers of Jasmine Greenhow as a director of 1939163 Ontario Ltd. have been exercised in a manner that is oppressive, unfairly prejudicial to and unfairly disregards the interests of the Plaintiff Paul Greenhow;

(f) a declaration that the Defendant, Jasmine Greenhow has breached fiduciary duties owed to the Plaintiff, 1939163 Ontario Ltd. and Paul Greenhow;

(g) an interim, interlocutory order for the payment into court of all funds currently held in trust by the law firm Hinchey & Sertic;

2. 1939163 Ontario Ltd. (the "Company") is an Ontario corporation having its head offices in Toronto. The Company was founded by Articles of Amalgamation on July 11, 2015. The amalgamating companies were Green Estates Investment Holdings Ltd. ("Green Estates") and BRW Management Group Ltd. ("BRW").

3. The Defendant Jasmine Greenhow is an individual residing in the State of Arizona and is an officer and director of the Company, and one of two shareholders of the Company, holding 125 common shares.

4. Together, Paul and Jasmine hold all of the outstanding shares in the Company.

5. In or about 2004, Paul joined an existing business venture with his cousin James Greenhow which involved the purchase of residential and commercial real estate properties in Hamilton, Ontario (the "Business"). In furtherance of this venture, Paul and James, inter alia, were shareholders of Green Estates and BRW. During the relevant periods of time, Jasmine, Paul and James were the officers, directors and shareholders of these companies.

6. The real estate acquisitions and operations of BRW and Green Estates were financed by private, family, shareholder and institution debt (bank debt). During Paul's involvement with Business, Paul made numerous shareholder loans to both BRW and GE, as set out further below.

7. In or about February 1, 2007, James died of cancer. Jasmine was James' spouse and heir and inherited his interest in BRW and Green Estates.

8. During the lifespan of the Business, for personal purposes, Jasmine drew money from BRW and Green Estates as shareholder advances.

9. As at December 31, 2013, the shareholder loan/draw positions for BRW were as follows: (a) Jasmine (- $271,257.00); (b) Paul + $425,513.

10. As at December 31, 2013, the shareholder loan/draw positions for Green Estates were as follows: (a) Jasmine (-$234,863.00); (b) Paul: $273,486.00

11. When BRW and Green Estates were amalgamated in 2015, the shareholder positions in these companies were consolidated on the balance sheet for the Company.

12. In early 2015, the parties anticipated that all remaining properties owned by the companies would be sold and the companies potentially wound up. However, it was evident to Paul that the net proceeds of sale from the remaining properties, after taxes, would not be sufficient to satisfy all liabilities of the companies. In addition to the liability to Paul on his shareholder loan, the Company had, as at December 31, 2013 additional liabilities to lenders including: (a) Matt Pritchard $94,107.00; (b) Bayscape Consulting Inc. $596,996.00.

13. Since December 31, 2013, Matt Pritchard has been repaid $0.00 and Bayscape Consulting Inc. has been repaid $250,000.00.

14. Accordingly, it would be necessary for Jasmine to repay her shareholder advances. There would not be sufficient retained earnings in the companies to set off against her liability to the companies.

15. Paul states, and the fact is that the Company has insufficient equity to pay its liabilities without requiring Jasmine to repay her shareholder advance to the Company in cash. She has failed to make any such repayment.

16. The Plaintiffs state that Jasmine owes them a fiduciary duty of utmost good faith, including, inter alia, a duty not to prefer her own interests to those of the Company and its shareholders.

17. Paul states, and the fact is that, in breach of her obligations to the Company, Jasmine has exercised her powers as officer, director and majority shareholder in a manner which to prevent the Company from carrying out its obligations to its creditors and shareholders. These steps include, but are not limited to:

(a) failing to repay her shareholder advances totalling approximately $506,120.00 when she knew there was insufficient free cash flow in the Company to pay creditors;

(b) failing to acknowledge or authorize the payment of the Company's debts;

(c) failing to call a meeting of directors and shareholders authorizing the Company to release funds from the trust account of the real estate solicitor, prepare financial statements and pay creditors, make all required Canada Revenue Agency filings and wind up the Company.

25. In so doing, Paul states that Jasmine has preferred her personal interests to those of the Company and its shareholders.

26. As a result of these breaches of duty, the Company is currently deadlocked, and has been prevented from paying its debts and winding up.

[30] Pausing here, it shall be helpful in understanding the analysis later in these Reasons for Decision to keep in mind that in the 2017 Action, Paul Greenhow alleges that in breach of her obligations to the Amalgamated Corp. and as oppressive conduct, Jasmine Greenhow prevented the corporation from carrying out its obligations by failing to repay her shareholder advances of approximately $500,000 and failing to authorize the payment of the Amalgamated Corp.'s debts.

[31] In response to the 2017 Action, on November 3, 2017, Jasmine Greenhow delivered an Amended Statement of Defence and Counterclaim. For present purposes, the pertinent parts of the Defence and Counterclaim are set out below:

1. The Defendant, Jasmine Greenhow ("Jasmine"), admits the allegations contained in paragraphs 2, 3, 4, 5, 6, 9, 19 and 20 of the Statement of Claim.

2. Jasmine denies the remainder of the allegations contained in the Statement of Claim unless expressly admitted herein. Jasmine further denies that the Plaintiffs are entitled to the relief sought in paragraph 1 of the Statement of Claim.

3. Jasmine states that the Plaintiff, Paul Greenhow ("Paul"), has not obtained leave of the Court to bring a derivative action on behalf of the Plaintiff, 1939163 Ontario Limited ("193"), and therefore, all claims on behalf of 193 are a nullity.

4. Jasmine further states that the claims of Paul personally in this action are derivative in nature and not properly the subject of an oppression remedy claim.

5. Jasmine reserves the right to bring a motion to stay the proceedings and/or to strike all or portions the Statement of Claim.

6. In the alternative, Jasmine denies that Paul is entitled to leave to bring this action as a derivative action because, as will be explained in more detail below:

(a) as a Director of 193, she was not provided with notice of Paul's intention to apply for a derivative action;

(b) Paul is not acting in good faith; and,

(c) it is not in the best interest of 193 that this action be brought.

13. Jasmine denies that following each fiscal year the shareholder loan balances were disclosed in the financial statements of each of the Companies. [ . . .]

14. For the 2007 year-end financial statements for BRW, Paul directed Ezio the accountant to reduce the amount payable by BRW to Jasmine in her shareholder loan account by $767,898.00 and to create five new payable entries in BRW's financial statements. Paul directed the accountant to indicate a shareholder loan by him of $222,898.00, a loan by Bayscape Consulting Inc. ("Bayscape") for 200,000.00, and three other loan entries, which totaled $767,898.00.

16.a By 2009, Jasmine's shareholder account showed her owing approximately $400,000. On multiple occasions Jasmine protested the accuracy of the balance of her shareholder account, but was brushed off by Paul and Ezio.

17. Jasmine recently discovered that the information provided by Paul to the accountant for BRW to make the adjustments to BRW's financial statements for the 2007 year-end was not correct. In particular:

(a) only a portion of the amount Paul indicated he loaned to BRW was transferred to BRW's bank account;

(b) only a portion of the amounts Paul indicated BRW paid to him were actually paid by BRW;

(c) Paul failed to charge himself his portion of the asset management fees previously charged to Jasmine's shareholder account;

(d) BRW did not receive the full amount or any of the amounts listed as having been loaned to it by the other lenders; and,

(e) such further and other errors as may be advised prior to trial.

18. Jasmine has further recently discovered that the information provided by Paul to the accountant in other years for the financial statements of the Companies was also incorrect.

19. As such, Jasmine pleads that the financial statements for 193 do not accurately reflect the state of the shareholder loans and advances of Jasmine and Paul.

20. With respect to paragraphs 12 and 13 of the Statement of Claim, Jasmine denies that: (a) she owes any amounts to 193; and, (b) 193 owes any amounts to Paul.

21. Jasmine pleads that, in fact, (a) Paul has outstanding shareholder advances that he owes to 193 in the amount of $250,000.00; and, (b) Jasmine is owed the sum of $1,000,000.00 by 193 for her shareholder loans.

22. In the alternative, if Paul is entitled to bring a derivative action against Jasmine and Jasmine owes money to 193, which are not admitted but denied, Jasmine denies that 193 owes any amounts to Bayscape, Matt Pritchard or Paul, as alleged by Paul and 193 is no longer operational.

23. Jasmine therefore pleads that the action against her by 193 is not in the best interest of 193 and Paul is not acting in good faith.

24. With respect to paragraph 15 of the Statement of Claim, Jasmine denies that any amounts are owed by 193 to Bayscape and puts the Plaintiffs to the strict proof thereof.

25. Jasmine states that Bayscape loaned money to Paul personally and that none of the money loaned by Bayscape was deposited directly into BRW's bank account. In the summary provided by Paul to the accountant for the December 31, 2007 financial statements, Paul indicated that he personally borrowed $100,000.00 from Bayscape in 2006 and another $100,000.00 in 2007.

26. Jasmine was never introduced to anyone at Bayscape, she never received any statements or receipts from Bayscape and she never entered into any agreements with Bayscape on behalf of the Companies.

27. In any event, Jasmine states that, if Bayscape did loan money to BRW, which is not admitted but strictly denied, that loan came due more than two years prior to the issuance of the Statement of Claim and, therefore Bayscape's claim for payment from BRW, which is not admitted but strictly denied, is statute-barred.

28. With respect Matt Pritchard, Jasmine states that this loan ("Pritchard Loan") was due on August 31, 2008 and as such, any claim by Matt Pritchard for the Pritchard Loan is statute-barred.

29. In any event, Jasmine states that Paul was paid amounts by BRW to pay back the Pritchard Loan and Paul failed to pay the Pritchard Loan. Had Paul paid back the Pritchard loan in 2008, the total amount owing would have been $50,750.00.

30. With respect to paragraph 21 of the Statement of Claim, Jasmine denies that 193 has any outstanding liabilities to Bayscape, Matt Pritchard or Paul and puts the Plaintiffs to the strict proof thereof. Jasmine states that, in fact, 193 is owed the sum of $250,000.00 from Paul.

31. With respect to paragraph 24 of the Statement of Claim, Jasmine denies that she breached any of her obligations to 193 or Paul and puts the Plaintiffs to the strict proof thereof. Jasmine further denies that she has acted in any manner which has prevented 193 from carrying out any of its obligations and puts the Plaintiffs to the strict proof thereof.

32. Jasmine denies that she has acted in any way that has oppressed the interest of the Plaintiffs and puts the Plaintiffs to the strict proof thereof.

33. Jasmine denies that Paul had or should have had any expectation that Jasmine would pay 193 any amounts when it is inactive and puts Paul to the strict proof thereof.

34. Jasmine denies that she has breached any of her fiduciary duties to the Plaintiffs and puts the Plaintiffs to the strict proof thereof.

35. In the further alternative, if 193and Paul have suffered damages or are owed any amounts, which is not admitted but expressly denied, Jasmine pleads that she entitled to a set off those amounts against what she is owed by 193 and what Paul owes to 193.

36. Jasmine pleads and relies on Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.

37. Jasmine requests that this action be dismissed with costs payable to her on a substantial indemnity scale.

38. Jasmine counterclaims against Paul and 193 for:

(a) a declaration that Paul, in his capacity as an officer and director of 193 has caused 193 to act in a manner towards Jasmine that has been and continues to be oppressive, unfairly prejudicial to, and which unfairly disregards, her interests pursuant to sections 207 and 248 of the Business Corporations Act, R.S.O, as amended ("OBCA");

(b) a declaration that Paul, in his capacity as an officer and director of 193, has acted in a manner towards Jasmine that has been and continues to be oppressive, unfairly prejudicial to, and which unfairly disregards, her interests pursuant to sections 207 and 248 of the OBCA;

(c) an Order for an independent auditor to be appointed to review the financial records of the Companies to determine the value of the shareholder advances owing by Paul to 193 and the shareholder loans owed by 193 to Jasmine;

(d) such interim orders necessary for the preservation and disclosure of documents in order for the auditor to review the financial records of the Companies;

(e) an Order requiring Paul to repay his shareholder advances to 193;

(f) an Order that 193 be wound up pursuant to sections 207 and/or 248 of the OBCA;

(g) damages for oppression in the amount of $1,000,000.00 pursuant to section 248 of the OBCA;

44. Jasmine repeats and relies upon all of the allegations contained in her Statement of Defence.

45. Jasmine states that, based on Paul's educational background and his historical involvement with the financial records of the Companies, she reasonably expected that:

(a) Paul would accurately advise the Companies' accountant about the financial information for the Companies;

(b) Paul would review the financial statements for the Companies to ensure they were accurate;

(c) Paul would return his shareholder advances to 193 once it ceased operations; and,

(d) such further and other reasonable expectations as may be advised prior to trial.

46. Jasmine pleads that Paul's conduct has been inconsistent with her reasonable expectations in that:

(a) the financial statements for the Companies are not and in the past have not been accurate;

(b) the financial statements inaccurately state that Jasmine owes 193 money;

(c) the financial statements inaccurately state that Paul is owed money by 193;

(d) the financial statements inaccurately fail to indicate that Paul owes 193 money; and,

(e) such further and other conduct as may be advised prior to trial.

47. Jasmine states that her interests have been oppressed, unfairly prejudice and unfairly disregarded by the actions of Paul for himself and as an officer and director of 193.

48. As a result of Paul's oppressive actions, Jasmine pleads that an independent auditor needs to be appointed to review the financial statements and backup documentation for the Companies in order to determine the amount of Paul's outstanding shareholder advances.

49. By virtue of Paul's oppressive conduct, Jasmine has suffered damages in the amount of $1,000,000.00.

[32] Thus, in her defence in the 2017 Action, Jasmine Greenhow denies that there were corporate debts to Bayscape Consulting and to Mr. Pritchard. She alleges that Bayscape Consulting made a loan to Paul Greenhow personally and that BRW Management paid Paul Greenhow the amounts required to retire Mr. Pritchard's loan.

[33] In the 2017 Action, Jasmine Greenhow by way of a counterclaim seeks damages from Paul Greenhow for payments and transactions improperly entered into by him and for his oppressive conduct. Further, Jasmine Greenhow pleads that the alleged debt owing to Mr. Pritchard matured on August 31, 2008 and that an action to collect the debt is statute-barred. She alleges that Mr. Pritchard has not been paid since December 31, 2013 and thus any claim to collect the debt had to be brought before December 31, 2015. She also claims that the debt claim of Bayscape Consulting, if it exists, is also statute-barred.

[34] On November 23, 2017, Paul Greenhow and the Amalgamated Corp. served a Demand for Particulars, and on December 4, 2017, Jasmine Greenhow responded to the Demand for Particulars.

[35] For reasons unknown to me, Paul Greenhow did not deliver a Statement of Defence to the Counterclaim until the summer of 2019, and in the meantime, on May 1, 2018, Paul Greenhow caused Greenhow Holdings to purchase: (a) the accounts receivable of Mr. Pritchard for $50,000; and (b) the accounts receivable of Bayscape Consulting for $100,000.

[36] On May 4, 2018, Greenhow Holdings issued a notice to the Amalgamated Corp. that Mr. Pritchard and Bayscape Consulting had assigned their claims to Greenhow Holdings.

[37] In October 2018, Paul Greenhow and Jasmine Greenhow attended a mediation in an effort to settle their differences. The mediation session was not successful.

[38] On January 15, 2019, Greenhow Holdings demanded in writing that the Amalgamated Corp. pay its indebtedness for the loans originally made by Mr. Pritchard and Bayscape Consulting. Greenhow Holdings demanded payment of $922,254 plus per diem interest of $274.58.

[39] On July 11, 2019, Paul Greenhow and the Amalgamated Corp. delivered their Defence to the Counterclaim in the 2017 Action.

[40] On October 29, 2019, the Statement of Claim in the 2019 Action was issued. The Plaintiff is Greenhow Holdings Inc. The Defendant is the Amalgamated Corp. The law firm Rubin & Christie LLP is the lawyer of record for Greenhow Holdings. The Statement of Claim is brief, and I shall set it out in full:

1. The plaintiff claims:

a. damages for the repayment of monies had and received by the defendant in the sum of $1,000,904.00;

b. prejudgment and postjudgment interest pursuant to contractual rates of interest of 10% and 12% per annum;

2. The plaintiff is a private Ontario corporation carrying on business in the City of Toronto and elsewhere as the provider of refinancing for debt incurred by the defendant.

3. The defendant is a private Ontario corporation which formerly carried on ownership, management and rehabilitation of commercial real estate property business in the Province of Ontario.

4. Prior to articles of amalgamation, the defendant consisted of two Ontario corporations named BRW Management Group Ltd. and Green Estates Investment Holdings Ltd. (the "Previous Corporations").

5, The Previous Corporations entered into specific loan agreements whereby the Previous Corporations received loans from Matt Pritchard and Bayscape Consulting Inc.

6. At the time of amalgamation, the Previous Corporations had not repaid the said loans. The said loans therefore became a liability of the defendant.

7. As at April 30, 2018, the defendant corporation, was indebted to Matt Pritchard for the sum of $154,002.00 and to Bayscape Consulting Inc. in the sum of $700,837.00.

8. On or about May 1, 2018 the plaintiff purchased the accounts receivable of Matt Pritchard and Bayscape Consulting Inc. under written Debt Purchase Agreements both dated May 1, 2018.

9. On or about May 4, 2018 the plaintiff issued a Notice of Assignment of the debts to the defendant.

10. On or about January 15, 2019 the plaintiff issued a written Demand for Payment to the defendant for the sum then due and owing of $922,254.00 with per diem interest of $274.58, As of the date of this claim, the per diem total has amounted to $78,650.00 (see paragraph 11 below). Thus, the total sum due and owing to the plaintiff on the purchased loans is $1,000,904 as at October 28, 2019.

11. The Loan Agreements specified interest rates in the amount of 10 per cent and12 per cent and were set out fully in the aforementioned Demand for Payment as follows: [ . . . ]

12. The defendant has neglected or refused to pay the sum due to the plaintiff notwithstanding the demand for payment.

[41] In his October 8, 2020 affidavit for the motion now before the court, Paul Greenhow explains why he had his corporation commence the 2019 Action.

3. Simply put, the 2019 Action arises from the fact that I personally and through the corporate plaintiff caused the debts of 193 to be repaid and assigned to the plaintiff. My intention is to move for summary judgment in the 2019 action. If successful, the judgment would bring the funds held in trust for 193 to zero and eliminate the need for the 2017 action. [ . . . ]

4. It is my intention to move for summary judgment on the debt assignment as soon as possible. If successful, I believe that this judgment would render the 2017 Action moot as there would be nothing left to fight about. This would save years and a great deal of money.

[42] I pause here to remark that since Paul Greenhow paid only $150,000 for accounts receivable that he submits now have a value of approximately $1 million that it is conclusory and perhaps false to say that he caused the accounts receivable to be repaid and assigned. Another possible conclusion is that as a Director and Officer of the Amalgamated Corp., he settled those debts for the Amalgamated Corp. for $150,000 and that he wishes to be reimbursed by the Amalgamated Corp. In the analysis and discussion below, in the context of Mr. Greenhow's derivative claim, I shall return to this topic of Paul Greenhow's claim for $1 million as the assignee of Mr. Pritchard and Bayscape Consulting.

[43] Returning to the 2019 Action, the Statement of Claim was served on the Amalgamated Corp. by serving a copy at the head office of the corporation, which, as noted above, is the office of Beard Winter LLP, who are acting for Paul Greenhow in the 2017 Action but not in the 2019 Action.

[44] Jasmine Greenhow was aware of the service, but she disputed that the Amalgamated Corp. has been served. Notwithstanding her protests, Greenhow Holdings' lawyers advised her lawyers that the Amalgamated Corp. would be noted in default. There was a barrage of correspondence between the parties and eventually despite protest from Paul Greenhow's lawyers, a case conference was arranged.

[45] On August 20, 2020, there was a chamber's appointment before Justice Ramsay. Justice Ramsay set a timetable for Jasmine Greenhow's motion in the 2017 Action to have, among other things, the 2019 Action stayed. The motion was scheduled for December 1, 2020. In her file direction, Ramsay J. states:

This matter came before me for a Chambers appointment under rule 50.13 in the face of possible default proceedings, for directions, and to fix a timetable for any necessary Motions in the 2017 Action [This Action] and the 2019 Action.

There are procedural issues to be addressed in these proceedings including regularizing the 2017 action (if it is a nullity), representation of a corporate party, and a determination of whether the two proceedings should be tried together, consolidated (if duplicative), or whether one or the other should be stayed.

[46] In the run up to the motion, Jasmine Greenhow delivered affidavits dated September 23, 2020 and October 19, 2020. She was not cross-examined. Paul Greenhow delivered affidavits dated October 8, 2020 and October 9, 2020. He was not cross-examined.

[47] On December 7, 2020, Jasmine Greenhow's motion in the 2017 Action is argued, and I reserved judgment.

[48] As final observation, in the 2017 Action, the parties have not exchanged affidavits of documents and examinations for discovery have not been scheduled. In the 2017 Action, as we approach 2021, leave to commence a derivative claim has not been sought. In the 2019 Action, as noted above, the Amalgamated Corp. has not yet entered an appearance.

D. Discussion and Analysis

[49] By 2017, the Amalgamated Corp. was no longer carrying on business and its approximately $500,000 of assets had been ingathered. From a dispute resolution perspective, all that was required in 2017 was a corporate winding up and not the misconceived 2017 Action.

[50] The above description of the factual and the procedural background to this motion reveals that as vehicles to resolve the disputes between Paul Greenhow and Jasmine Greenhow both the 2017 Action and the 2019 Action were a design for the procedural train wreck that is now before the court.

[51] In 2017, what Paul Greenhow ought to have done was bring a winding up application pursuant to the Ontario Business Corporations Act. Although it might be somewhat redundant to the winding up statutory cause of action, perhaps he could have added his oppression claim as a minority shareholder complainant. However, in 2017, Paul Greenhow did not bring a winding up application and his derivative action was misconceived and ill-advised.

[52] I say that his derivative claim in the 2017 Action was misconceived and ill-advised because: (a) his allegation of oppressive conduct that Jasmine Greenhow had been overpaid by the Amalgamated Corp. was a complaint that could have been resolved by a winding up application; and (b) his allegation of oppressive conduct and the basis of the derivative claim that Jasmine Greenhow had caused the Amalgamated Corp. to not pay the accounts receivable of Mr. Pritchard and Bayscape Consulting was a complaint that could also have been resolved in a winding up application.

[53] I also describe the derivative action as peculiar because why Paul Greenhow, who is protected by the corporate veil, felt that he personally was oppressed by the Amalgamated Corp. not paying Mr. Pritchard and Bayscape Consulting escapes me, particularly because had the Amalgamated Corp. paid Mr. Pritchard and Bayscape Consulting, then there would be no money left to repay his shareholder's loan claim and there would be no surplus to be returned to the shareholders of the Amalgamated Corp.

[54] Moreover, in the immediate case, it is a bizarre derivative claim because typically a derivative action involves someone suing on behalf of a corporation that is not prosecuting a claim against a third party or not defending a claim brought by a third party; however, in the immediate case, Paul Greenhow is seeking to have the Amalgamated Corp. pay Paul Greenhow's own claim and also Mr. Pritchard's and Bayscape Consulting's loans made to the Amalgamated Corp., which claims have been assigned to Paul Greenhow's corporation.

[55] In any event, in the 2017 Action, Paul Greenhow's derivative claim on behalf of the Amalgamated Corp. if not stillborn is untenable. Paul Greenhow did not obtain leave to bring a derivative action. To date, he has not even applied for leave and if he applied for leave, he would not be granted it.

[56] A shareholder cannot sue for a wrong done to the corporation.[^3] Pursuant to s. 246(1) of the Ontario Business Corporations Act, however, with leave of the court, a shareholder can bring a derivative action and sue in the name and on behalf of a corporation for a wrong done to a corporation. While sometimes the claims may have overlapping aspects, there is a distinction between the statutory remedies of oppression and derivative action; the oppression remedy is for a personal claim and the derivative action is for a wrong suffered by the corporation.[^4] The derivative claim requires leave of the court to be brought.

[57] Section 246(1) of the Ontario Business Corporations Act states:

Derivative actions

246(1) Subject to subsection (2), a complainant may apply to the court for leave to bring an action in the name and on behalf of a corporation or any of its subsidiaries, or intervene in an action to which any such body corporate is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of the body corporate.

[58] Sections 246(2) and (2.1) of the Ontario Business Corporations Act establishes the prerequisites for a derivative action as follows:

(2) No action may be brought and no intervention in an action may be made under subsection (1) unless the complainant has given fourteen days' notice to the directors of the corporation or its subsidiary of the complainant's intention to apply to the court under subsection (1) and the court is satisfied that,

(a) the directors of the corporation or its subsidiary will not bring, diligently prosecute or defend or discontinue the action;

(b) the complainant is acting in good faith; and

(c) it appears to be in the interests of the corporation or its subsidiary that the action be brought, prosecuted, defended or discontinued.

(2.1) A complainant is not required to give the notice referred to in subsection (2) if all of the directors of the corporation or its subsidiary are defendants in the action.

[59] In the immediate case, Paul Greenhow did not give the directors of the corporation fourteen days' notice of his intention to apply to the court for authorization to bring a derivative action.

[60] No action may be brought by way of derivative action unless the court is satisfied that: (a) the directors of the corporation will not bring the action; (b) the complainant is acting in good faith; and (c) it appears to be in the interests of the corporation that the action be brought.[^5]

[61] Given the peculiar circumstances that Paul Greenhow is, in effect, seeking to use a derivative action so that the Amalgamated Corp. pays its debts including debts to Paul Greenhow, I find that Paul Greenhow is not acting in good faith and it is not in the interests of the corporation to prosecute an action against itself.

[62] While I make no finding beyond what is necessary for the purposes of the motion now before the court, if it is not a breach of fiduciary duty, it is not acting in good faith for a Director of a corporation to purchase a $1 million debt of the corporation for $150,000 and then to sue the corporation for $1 million.[^6] Such a director should not be given leave to prosecute a derivative claim.

[63] I therefore conclude that the derivative action claim should be struck from the 2017 Action without leave to amend.

[64] Before moving on to discuss the other claims in the 2017 Action, it is necessary to make clear that my decision to strike the derivative claim is not based on any claims against the Amalgamated Corp. being statute-barred including the oppression remedy claims. Whether the shareholder's claims to be repaid shareholder's loans or whether the assigned claims of Mr. Pritchard and Bayscape Consulting Corp. or whether the oppression remedy claims are statute-barred are questions yet to be answered and cannot be answered based on the record now before the court.

[65] Before moving on, it is also necessary to make clear that my decision to strike the derivative claim is not based on Jasmine Greenhow's argument based on the Supreme Court of Canada's decision in Canadian Imperial Bank of Commerce v. Green[^7] or Penney J.'s decision in 1186708 Ontario Inc. v. Gerstein,[^8] about orders nunc pro tunc when a limitation period has intervened. I have not determined that a limitation period has intervened in the immediate case, but more to the point, I simply conclude that on its merits, leave will not be granted to Paul Greenhow to prosecute a derivative claim.

[66] I turn now to the other claims in the 2017 Action and the 2019 Action.

[67] In the circumstances of the immediate case both Paul Greenhow and Jasmine Greenhow would appear to be entitled to assert oppression remedy claims, and I see no basis to strike these claims, although they will need to be repleaded. On the record for this motion, although there have been no cross-examinations and the ultimate truth remains to be determined, there may have been corporate wrongdoing by one, the other, or both of Paul Greenhow and Jasmine Greenhow.

[68] With respect to the 2019 Action, however, it is readily apparent that the matter of Mr. Pritchard's and Bayscape Consulting's loans are already issues in the competing oppression remedy claims in the 2017 Action and, therefore, there is traction to Jasmine Greenhow's argument that the 2019 Action is an abuse of process especially now that Paul Greenhow's corporation is the assignee of Mr. Pritchard's and Bayscape Consulting's loans to Amalgamated Corp.

[69] That said, in my opinion, it would be inappropriate to stay or dismiss the 2019 Action. Rather, I think the better approach is to consolidate the 2017 Action and the 2019 Action. Rule 6.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 permits the court to order the consolidation of proceedings that have questions of law or fact in common. Rule 6.01 states:

6.01(1) Where two or more proceedings are pending in the court and it appears to the court that,

(a) they have a question of law or fact in common;

(b) the relief claimed in them arises out of the same transaction or occurrence or series of transactions or occurrences; or

(c) for any other reason an order ought to be made under this rule,

the court may order that,

(d) the proceedings be consolidated, or heard at the same time or one immediately after the other; or

(e) any of the proceedings be,

(i) stayed until after the determination of any other of them, or

(ii) asserted by way of counterclaim in any other of them.

(2) In the order, the court may give such directions as are just to avoid unnecessary costs or delay. . .

[70] The factual footprint of both actions is the same. The witnesses would be the same. Although they may be witnesses, it is not necessary to join Mr. Pritchard or Bayscape Holdings as parties because Greenhow Holdings is their assignee. The 2017 Action raises the issues that would be the claim and the defence to the 2019 Action. A multiplicity of proceedings with the spectre of inconsistent results and a waste of judicial resources is avoided if the actions are consolidated.

[71] Paul Greenhow's submissions that the issues in the 2017 Action do not overlap with the issues in the 2019 Action are without merit. Paul Greenhow's oppression remedy claim is largely based on the allegation that the Amalgamated Corp. was not paying its debts and the creditors are Paul Greenhow and Greenhow Holdings by assignment from Mr. Pritchard and Bayscape Consulting. (I also note that in his affidavit for the motion before the court, Paul Greenhow reveals that he personally paid some of the consideration paid for the assignment of the loan debts.) The circumstances of the alleged loans by Mr. Pritchard and Bayscape Consulting and to whom those loans were made is the subject matter of both the 2017 Action and the 2019 Action.

[72] Ultimately what both actions are all about is how much money should be in the treasury of the Amalgamated Corp. and how that money should be distributed. Pursuant to the competing oppression remedy claims, both Paul Greenhow and Jasmine Greenhow are claiming all of the treasure. What both actions are actually about is whether Paul Greenhow and Jasmine Greenhow are meant to take more than they gave.

[73] I, therefore, shall consolidate the actions. As part of this approach, I shall strike the pleadings in both the 2017 Action and the 2019 Action but with leave to the parties and to replead in the 2017/2019 Consolidated Action. With respect to the 2017/2019 Consolidated Action, it is possible that the assigned claims of Mr. Pritchard and Bayscape Consulting now owned by Greenhow Holdings are statute-barred, but as I have already noted, it is not possible to decide that issue now and that issue can be pleaded and addressed in the 2017/2019 Consolidated Action.

[74] In the 2017/2019 Consolidated Action, Paul Greenhow and Greenhow Holdings may be represented by Rubin & Christie LLP, who are the current lawyers of record for Greenhow Holdings. I however disqualify Beard Winter LLP, who are the current lawyers of record for Paul Greenhow and on behalf of the Amalgamated Corp. in the 2017 Action from acting. Given the peculiar nature of the 2017 Action, the law firm has conflicted itself from acting in the consolidated action on a variety of grounds including the possible use of confidential information and the likelihood of some of its members being witnesses in the 2017/2019 Consolidated Action.

E. Conclusion

[75] For the above reasons, I make the Order set out in the introduction to these Reasons for Decision.

Motion dismissed.

Notes

[^1]: R.S.O. 1990, c. B.16.

[^2]: S.O. 2002, c. 24, Sch. B.

[^3]: Foss v. Harbottle (1843), 2 Hare 461, 67 E.R.189; Hercules Managements Ltd. v. Ernst & Young, 1997 345 (SCC), [1997] 2 S.C.R. 165, [1997] S.C.J. No. 51.

[^4]: Ernst & Young Inc. v. Essar Global Fund Ltd. (2017), 139 O.R. (3d) 1, [2017] O.J. No. 6723, 2017 ONCA 1014; 1186708 Ontario Inc. v. Gerstein, [2016] O.J. No. 1234, 2016 ONSC 1331, affd [2017] O.J. No. 875, 2017 ONSC 1217 (Div. Ct.); Rea v. Wildeboer (2015), 126 O.R. (3d) 178, [2015] O.J. No. 2651, 2015 ONCA 373.

[^5]: 1186708 Ontario Inc. v. Gerstein, ibid., at para. 35 (S.C.J.).

[^6]: Directors owe a statutory duty to the corporation to act honestly and in good faith with a view to the best interests of the corporation: Ontario Business Corporations Act, s. 134. They owe common law fiduciary duties, among other things, to avoid conflicts of interest and to avoid abusing their position to gain personal benefit: Peoples Department Stores Inc. (Trustee of) v. Wise, 2004 SCC 68, [2004] 3 S.C.R. No. 461, [2004] S.C.J. No. 64, at paras. 35 to 39.

[^7]: (2015), 135 O.R. (3d) 334, [2015] 3 S.C.R. 801, [2015] S.C.J. No. 60, 2015 SCC 60.

[^8]: Supra, note 4.