Court File and Parties

COURT FILE NO.: CV-20-00644241-00CL DATE: 20221011

ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST)

BETWEEN:

GEORGE VASTIS Plaintiff (Defendant to the Counterclaim)

– and –

HELEN VASTIS Plaintiff

– and –

CHRISTOS KOMMATAS Defendant (Plaintiff to the Counterclaim)

– and –

CALLDRON GAS BARS LTD. and 1195705 ONTARIO INC., carrying on business as OLD PRO DRIVING RANGE Defendants (Defendants to the Counterclaim)

COUNSEL: Kevin W. Fisher, James Beesley, and Eli Bordman, for George Vastis, Plaintiff (Defendant to the Counterclaim) and Helen Vastis, Plaintiff

James M. Wortzman and Catherine E. Allen, for Christos Kommatas, the Defendant (Plaintiff to the Counterclaim) and Calldron Gas Bars Ltd. and 1195705 Ontario Inc., carrying on business as Old Pro Driving Range, Defendants (Defendants to the Counterclaim)

HEARD: February 28, 2022, March 1, 2, 3, 4, 7, 8, 9, 10, 11, 23, 24 and 25, 2022, and May 9, 2022

REASONS FOR JUDGMENT

Dietrich J.

[1] George Vastis and Christos Kommatas were part of the same Greek community in the Greater Toronto Area. They met at a social event and became friends. In the mid-1980s, Mr. Vastis invited Mr. Kommatas, who had a dry-cleaning business, to join him in a business focused on acquiring land for the purposes of building gas stations. Mr. Vastis had experience in the gas station business, as well as connections to large oil companies that could assist with financing acquisitions and construction.

[2] In 1984, Mr. Vastis and Mr. Kommatas incorporated Calldron Gas Bars Ltd. (“Calldron”). Each became a 50 per cent shareholder, an officer and a director of Calldron.

[3] Soon after they became business partners, they became family. In 1988, Mr. Vastis’ son Bill Vastis (“Bill”) married Mr. Kommatas’ only child, Kathy Kommatas (“Kathy”).

[4] Calldron’s principal business was acquiring parcels of land on which it would build gas stations. It would then lease the land and gas station to a large oil company. Between 1985 and 2009, Calldron acquired five parcels of land that it still owns, and there are gas stations on three of the parcels. Though there are other disputes between Mr. Vastis and Mr. Kommatas in this action, the principal dispute arises with regard to the value of those parcels of land for the purposes of bringing their business relationship to an end. The lands, collectively, have a current value estimated to be in excess of $90 million.

[5] Following the death of his wife, in 1991, Mr. Vastis married Helen Vastis (“Ms. Vastis”) in 1991. They have two children together. Mr. Vastis has three children from his first marriage. Following the marriage, in addition to continuing to work full-time as a lawyer, Ms. Vastis began to assist Mr. Vastis in the business. In this action, Ms. Vastis seeks remuneration for her work, and she seeks a remedy for alleged oppressive conduct by Calldron.

[6] In 1996, Mr. Kommatas and Mr. Vastis incorporated 1195705 Ontario Inc., which carried on business as Old Pro Driving Range (“Old Pro”). Each of them became a 50 per cent shareholder, an officer and a director.

[7] Old Pro took over the operation of a driving range built in 1993 on land acquired by Calldron in Mississauga, Ontario, which was initially intended for a gas station. That driving range was eventually replaced with another driving range built on land that Calldron acquired in Brampton, Ontario in 1988 (the “Driving Range”).

[8] Each of Mr. Vastis and Mr. Kommatas regularly took a share of the cash receipts from Old Pro. This income was not recorded on the financial statements for Old Pro and was not reported for income tax purposes. There were other irregularities in the reporting of the Companies’ income. Mr. Kommatas claims to have no knowledge of these financial irregularities.

[9] Though Mr. Vastis attempted to negotiate shareholders’ agreements with Mr. Kommatas for each of Calldron and Old Pro (collectively, the “Companies”) in 1995, 2005 and 2019, there are no shareholders’ agreements between them. The businesses were operated informally, based on mutual trust and confidence.

[10] A dispute arose between Mr. Vastis and Mr. Kommatas soon after Mr. Vastis was diagnosed with cancer in 2017, and while he was undergoing treatment. Following the cancer diagnosis, on the advice of his doctor, Mr. Vastis began to plan for the succession of Calldron.

[11] In the course of his succession planning, Mr. Vastis came to appreciate that the Vastis family could become minority shareholders in the Companies if Mr. Vastis left a share of the Companies to Bill and, ultimately, Mr. Kommatas left all of his shares to Kathy. In that event, Bill and Kathy, together, would own more than 50 per cent of the Companies, which would put Mr. Vastis’ other four children at a disadvantage. Mr. Vastis asked Mr. Kommatas to enter into a voting trust agreement that would preserve the status quo regarding control between the Vastis family and the Kommatas family following the death of Mr. Vastis.

[12] Mr. Kommatas was unwilling to participate in Mr. Vastis’ proposed succession planning. This unwillingness led to discussions, followed by plans, to dissolve the business relationship between Mr. Vastis and Mr. Kommatas.

[13] Mr. Vastis and Mr. Kommatas could not agree on a division between them of the five parcels of land. They have now come to court as bitter adversaries. Each brought an application in which he alleges, among other things, that the other, as an officer and director of the Companies, engaged in oppressive conduct prejudicial to him. These applications were converted into this action by order of Gilmore J. dated October 19, 2021.

[14] Ms. Vastis is also a plaintiff in the action. She asserts that she is a shareholder in the Companies by virtue of a gift of shares from Mr. Vastis by Deeds of Gift dated July 16, 2020. She too alleges that Mr. Kommatas, as an officer and director of Calldron, engaged in oppressive conduct against her, for which she seeks a remedy. She also seeks remuneration from Calldron for the services she provided.

[15] That Mr. Vastis and Mr. Kommatas can no longer work together in the Companies is an understatement. Their various efforts to divide the Companies’ assets equally between them have failed, as have their efforts to agree on the value of the Companies’ assets. The tension between the families is extremely high. Mr. Vastis has threatened violence against Mr. Kommatas, and Mr. Vastis alleges that he has been denied access to his grandchildren, who are children of Bill and Kathy.

[16] In this action, Mr. Vastis seeks an order permitting him to purchase Mr. Kommatas’ shares in the Companies at market value. He also seeks to be remunerated for his management of the Companies for more than three decades, as agreed between Mr. Kommatas and him.

[17] Mr. Kommatas seeks an order for the appointment of a receiver, a wind up and liquidation of the Companies’ assets, and a division of the net proceeds between the shareholders. Mr. Kommatas seeks to be held blameless in respect of the accounting irregularities in the Companies.

[18] For the reasons that follow, I find that a just and equitable remedy to address the allegations of oppression and the deadlock between the shareholders, and to determine the fair market value of the assets of the Companies, is a wind up and liquidation of the Companies’ assets through a court-supervised process. In this process, either shareholder would be free to make an offer to purchase any of the assets. A receiver is required not only to facilitate the sales process, but also to manage the distribution of the net proceeds of sale, which will include addressing historical accounting irregularities, income tax reporting, unpaid dividends, and shareholder loan accounts.

[19] Regarding the other claims, for the reasons that follow, I find that Mr. Vastis is entitled to compensation for his management of the Companies. I find that Ms. Vastis is not a shareholder, employee, or officer of the Companies and that she is not entitled to a remedy for alleged oppressive conduct, or compensation from the Companies. I find that Mr. Kommatas is not excused from any liability, including tax liability, that may arise as a consequence of the Companies’ accounting irregularities and to the failure to report income.

Background Facts

[20] Mr. Vastis and Mr. Kommatas do not agree on many things, but the following facts are either agreed or uncontroverted:

(a) On incorporation of each of the Companies, each of Mr. Vastis and Mr. Kommatas acquired 50 per cent of the shares.

(b) The Companies were, as of 2019, essentially, debt-free.

(c) Until their falling out, each of Mr. Vastis and Mr. Kommatas, on behalf of the Companies, had the authority to unilaterally instruct the Royal Bank of Canada (“RBC”) on the bank accounts held by the Companies. There were two RBC bank accounts, one for Calldron and another for Old Pro.

(d) While operating the Companies, Mr. Vastis and Mr. Kommatas made significant business decisions together.

(e) Each of them paid $18,000 toward Calldron’s first acquisition of a parcel of land (on Eglinton Avenue West, in the City of Toronto). Each was eventually repaid this amount from Calldron profits.

(f) Mr. Vastis was primarily responsible for Calldron’s leasing arrangements and the Companies’ bookkeeping and financial matters. Ms. Vastis assisted Mr. Vastis with the leases and other work related to the real estate.

(g) Mr. Kommatas worked full-time in his dry-cleaning business until 1996, when he sold it and began to spend more time working for the Companies. Mr. Kommatas worked at both driving ranges operated by Old Pro. He maintained the grounds, did landscaping and yardwork, and he also worked shifts in a customer-facing role.

(h) Neither Mr. Vastis nor Mr. Kommatas received any compensation for their work at the Companies. They agreed that because Mr. Vastis managed the operations of the Companies’ businesses, he would ultimately be entitled to compensation for these efforts when the Companies were sold or wound up.

(i) Until their falling out, Mr. Vastis and Mr. Kommatas split the cash receipts from the driving range operations between them.

(j) Mr. Vastis and Mr. Kommatas, and for a shorter period of time, their respective spouses, had Calldron credit cards, on which they incurred expenses, including personal expenses. All expenses incurred on these credit cards were paid by Calldron, and personal expenses were charged to the respective shareholder loan accounts of each of Mr. Vastis and Mr. Kommatas.

(k) Robert Jackson (“Mr. Jackson”) is a Chartered Professional Accountant, who provided accounting advice and services to Calldron and Old Pro for more than 30 years. Mr. Jackson also prepared the tax returns for the Companies, Mr. Vastis, Ms. Vastis, Mr. Kommatas and Mr. Kommatas’ spouse Basiliki (Bessie) Kommatas (“Ms. Kommatas”) until 2019. Since 2019, Mr. Kommatas and Ms. Kommatas have had their tax returns prepared by another accountant, James Belisiotis (“Mr. Belisiotis”).

(l) Mr. Vastis was diagnosed with cancer in 2017. Shortly thereafter, Ms. Vastis took over many of Mr. Vastis’ executive functions. It was around this time that she was given a Calldron credit card.

(m) In 2019, Mr. Vastis and Mr. Kommatas began to discuss an end to their business relationship and a division of the assets held by the Companies. By this time, Mr. Vastis had obtained estate planning advice from his lawyer, David Goodman, which caused him to ask Mr. Kommatas to agree to a voting trust or power-sharing agreement that would preserve the status quo whereby each of the Vastis family and the Kommatas family would continue to have equal voting rights in the Companies following Mr. Vastis’ death.

(n) Mr. Kommatas had no interest in signing such an agreement or getting involved in Mr. Vastis’ estate planning.

(o) To assist Mr. Vastis and Mr. Kommata in their goal to end their business relationship, Mr. Jackson recommended a division of the Companies’ underlying assets between Mr. Vastis and Mr. Kommatas through the use of a tax-deferral-driven “butterfly” transaction. Efforts between Mr. Vastis (with the assistance of Ms. Vastis) and Mr. Kommatas to divide the assets between them, including a severance of the largest and most valuable property in Brampton, Ontario, and an equal division of the underlying assets in the Companies were ultimately unsuccessful.

(p) Each of Mr. Vastis and Mr. Kommatas blames the other for the lack of success in dividing the Companies’ assets fairly between them. Each engaged in conduct that the other describes as oppressive. During 2019 and from January 2020 to October 2020, the Companies made no distributions to the shareholders.

(q) The last meeting between Mr. Vastis and Mr. Kommatas occurred on September 16, 2019, when Mr. Vastis presented his handwritten offer (the “Final Offer”) proposing a division of the Companies’ assets between them.

(r) In two separate Deeds of Gift, each dated July 16, 2020, Mr. Vastis purported to make a gift of each of his 50 common shares in the capital of Calldron, and his 50 common shares in the capital of Old Pro, to Ms. Vastis. The Deeds provided that Mr. Vastis and Ms. Vastis would hold the shares “jointly such that each shall have an equal and undivided interest in the [shares] which shall pass absolutely and without reservation to the last of them to die.” Mr. Kommatas refused to permit these share transfers to be recorded in the Companies’ minute books.

(s) On March 14, 2020, after receiving correspondence from Mr. Kommatas and from Ms. Vastis, RBC sent a letter to Mr. Vastis and Mr. Kommatas expressing concern about being caught in the middle of the dispute between them, and advising that the Companies’ accounts would be converted to “deposit only” accounts and would be closed if Mr. Vastis and Mr. Kommatas could not reach an agreement.

(t) On September 29, 2020, RBC wrote to Mr. Vastis and Mr. Kommatas to advise that it would be closing the bank accounts for the Companies due to a dispute between the shareholders.

(u) When RBC froze the accounts, and Mr. Kommatas refused to sign a joint banking resolution to allow them to be unfrozen, Mr. Vastis personally paid the expenses of Old Pro, including employee wages, until these banking arrangements were resolved.

(v) When Mr. Vastis brought a motion to address the matter of the RBC accounts, Mr. Kommatas consented to an Order made by Cavanagh J. in December 2020 to which a “Joint Confirmation” signed by both parties, was attached. The Joint Confirmation required Mr. Vastis and Mr. Kommatas to jointly provide instructions to RBC. The Joint Confirmation remains operative.

(w) In January 2021, through his counsel, Mr. Kommatas gave notice that he would cease to have any direct involvement in any aspect of the operations of the Companies. Up until that time, Mr. Kommatas continued to go to the Driving Range and to take 50 per cent of the cash receipts.

(x) Mr. Vastis, with the assistance of Ms. Vastis, has continued to manage 5495 Eglinton Avenue West, Toronto, Ontario and operate the Companies.

(y) The parties agreed on the value of two of the parcels of land on which two of the gas stations are situated, being 5495 Eglinton Avenue West, Toronto, Ontario (the “Eglinton Avenue West Property”) and 480 Derry Road, Mississauga, Ontario (the “Derry Road Property”). In 2021, Mr. Vastis and Mr. Kommatas had agreed that each would take one, and the person who took the less valuable one would receive a payment from Calldron equal to the difference in value. However, this deal fell through.

The land owned by Calldron

[21] In February 1985, Calldron acquired the first of the five parcels of land that Calldron still owns, the Eglinton Avenue West Property. In the same year, Calldron constructed a gas station on this land. It constructed a second building on the land in 1987, where Calldron had its office. Country Style Donuts leased space in the building as well, until 2017. In 2018, Starbucks took over the entire building, and Calldron moved its office. In the move, Calldron discarded some of its corporate records.

[22] Calldron also owns a parcel of land, municipally known as 9980 Mississauga Road (at the Southwest corner of Bovaird Drive and Mississauga Road), in Brampton, Ontario (the “Brampton Property”), which it acquired in a transaction that closed on January 5, 1988. The Brampton Property is approximately 98 acres in size. Petro Canada provided financing to build a gas station on the property. The gas station occupies approximately two acres of the Brampton Property. Petro Canada has a land lease to operate the gas station, with an option to increase the leased premises. Old Pro operates the Driving Range on approximately 25 acres of the Brampton Property. Calldron moved its office to a building on the Driving Range, and the remainder of the land is leased to farmers, to Bell Mobility, for cell towers, and to One Pattison, for billboard signage. The Brampton Property is subject to an administrative freeze imposed by the City of Brampton pending inclusion of the land in the regional secondary plan. The freeze prevents rezoning, further development and severance. The Brampton Property is, by far, the most valuable property of all the lands held by Calldron. In 2019, the Brampton Property was appraised at $63 million. In 2021, it was appraised at not less than $80 million.

[23] Calldron also owns the Derry Road Property, the purchase of which closed in July 1989. Esso financed the construction of a gas station on this property. In 1996, Calldron added more land to the parcel, obtained site plan approval, and added a carwash. Esso (Couche-Tard Inc. Circle K) has leased this land since 1992.

[24] Between 2007 and 2009, Calldron acquired parcels of land, municipally known as 10365 Highway 7, and 10733 Highway 7, Halton Hills, Ontario, totalling approximately 340 acres (collectively, the “Acton Property”). The titles to these two properties have merged. On the 10365 Highway 7 portion of the Acton Property, Calldron and Old Pro began to develop a high-end golf course (the “Golf Course”). Calldron has invested approximately $5 million in this development, the completion of which would require a significant investment of time and money. The 10733 Highway 7 portion of the Acton Property is vacant agricultural land (the “Farm Property”).

Old Pro

[25] Old Pro does not own any real estate. Its business is the operation of the Driving Range. Robert Ware became general manager of the Driving Range around 2005. His salary is paid by Old Pro. Old Pro has other employees and is profitable. In 2020, Old Pro had revenue of approximately $500,000.

[26] Old Pro does not have a lease or any other right with Calldron to operate on the Brampton Property.

[27] Mr. Vastis and Mr. Kommatas split the cash receipts from the Driving Range on a weekly basis or more frequently. This income was not reported to Mr. Jackson. Accordingly, it was not included in the financial statements for Old Pro, or reported on the tax returns for Old Pro, Mr. Vastis or Mr. Kommatas.

[28] Old Pro had a bank account with the Toronto-Dominion Bank (the “TD Bank Account”). Based on documentary evidence, it appears that the TD Bank Account was opened on February 3, 2016, and closed on August 16, 2019. The statements for the TD Bank Account were sent to Mr. Vastis’ home address. Mr. Jackson testified that he was not aware of the TD Bank Account.

[29] Old Pro operated two Moneris payment terminals at the Driving Range, which its customers used to make credit or debit card purchases. The payments processed through the use of one of the Moneris payment terminals were deposited into the TD Bank Account.

The bank accounts and accounting for certain expenses

[30] Prior to signing the Joint Confirmation in 2019, either Mr. Vastis or Mr. Kommatas was authorized to access the RBC account for either of the Companies, and to instruct RBC on matters relating to either account.

[31] Mr. Jackson testified that he was aware of the two RBC accounts held by the Companies. He included transactions involving these two accounts in the trial balances and general ledgers that formed the basis for the annual financial statements for the respective Companies. The expenses charged to Calldron on the Calldron credit cards (other than the credit card issued to Ms. Kommatas) were paid directly by Calldron.

[32] Mr. Jackson also testified that he was not aware of the TD Bank Account, or that the deposits into that account from a Moneris terminal at Old Pro were not reported to him. Accordingly, this income was not reported on the tax returns for Old Pro, Mr. Vastis or Mr. Kommatas.

[33] Bank drafts drawn on the TD Bank Account reflect a payment to each of Mr. Vastis and Mr. Kommatas of $70,000 on April 21, 2017; a payment to Mr. Vastis and Mr. Kommatas, jointly, of $140,000 on February 9, 2018; a payment to each of Mr. Vastis and Mr. Kommatas of $40,000 on July 6, 2018; a payment to Mr. Vastis and Mr. Kommatas, jointly, of $60,000 on November 2, 2018; and a payment of $25,000 to each of Mr. Vastis and Mr. Kommatas on June 4, 2019; and a payment of $40,000 to Calldron on July 2, 2019. On August 16, 2019, the remaining balance of $4,393.38 was paid by bank draft to Old Pro.

[34] There was a second bank account of which Mr. Jackson waws unaware. This account was a Joint Bank Account held by Mr. Vastis and Mr. Kommatas personally (the “Joint Bank Account”). The Joint Bank Account was opened by Mr. Vastis and Mr. Kommatas together. Together, they closed it on May 13, 2019. Mr. Vastis testified that amounts paid to Mr. Vastis and Mr. Kommatas, personally, as opposed to the Companies, were deposited into the Joint Bank Account. According to Mr. Vastis, these payments could have included rental payments, or proceeds from the sale of land. This income was not included in the financial statements for the Companies or in the tax returns for the Companies or Mr. Vastis or Mr. Kommatas.

[35] Mr. Vastis testified that the Joint Bank Account was kept in case Calldron needed money, in which case funds could be transferred from the Joint Bank Account to Calldron.

[36] Mr. Vastis also testified that, from time to time, certain equalization payments were made to Mr. Vastis or to Mr. Kommatas from the Joint Bank Account. An equalization calculation and payment was necessary, from time to time, to ensure that the amounts paid out to each of the shareholders on account of business expenses charged to Calldron were equal. Mr. Vastis kept a handwritten ledger which showed the difference between the total amounts paid to each shareholder on account of his business expenses. These expenses included business expenses charged to the Calldron credit cards, as well as vehicle leases, gas, insurance, cell phone and like charges. When Ms. Vastis took over a number of Mr. Vastis’ duties at the Companies in 2017, Ms. Vastis’ credit card expenses were treated the same way, as if they were Mr. Vastis’ expenses, and Calldron paid the monthly charges incurred on her card. Unbeknownst to Mr. Vastis, Mr. Kommatas had arranged for Ms. Kommatas to also have a Calldron credit card for a period of time. Mr. Kommatas would pay Ms. Kommatas’ monthly Calldron credit card charges using his own Calldron credit card.

[37] Mr. Vastis’ handwritten ledgers in evidence (for the years 2000 to 2019) show a column for each of “George Vastis” and “Chris Kommatas.” Each column shows the number of the cheque issued by Calldron to each shareholder as reimbursement for business expenses, a description of the business expenses charged, and the amount of the charge. At the end of each column is a total, followed by a calculation to show the difference between the two totals, being the equalization amount. The equalization amount would then be paid to or credited to the shareholder whose expenses were less in that year as compared to the other shareholder.

[38] Based on the documentary evidence, amounts other than equalization amounts were also paid to the shareholders from the Joint Bank Account. Each of them received cheques drawn on the Joint Bank Account totalling hundreds of thousands of dollars.

[39] Mr. Vastis’ evidence is that he would meet with Mr. Kommatas on an annual basis to review the ledger so that each could see exactly what expenses were paid by Calldron for each of them, and each of them would know the equalization amount owing to one or the other of them at the end of that year. Mr. Vastis testified that this practice was in place for more than 20 years. Mr. Vastis sometimes signed the ledger statement at the bottom. Mr. Kommatas did not. Mr. Kommatas denies that these annual meetings ever took place, though his evidence is inconsistent on this point.

[40] Mr. Kommatas testified that he never saw the ledgers, and he did not have “a clue” about them. He also testified that he had no knowledge of how the Joint Bank Account was operated. However, Mr. Kommatas did not dispute that there were equalization payments. He testified that the business partners had a system whereby “each took so much and then equalized.” He also testified that “George Vastis squared up with me and a cheque was issued,” but he could not recall the account from which it was paid. When it was suggested to Mr. Kommatas that the equalization payment was made from the Joint Bank Account, he claimed that he “forgot about it.” The cheques drawn on the Joint Bank Account and payable to Mr. Kommatas were cashed. Mr. Kommatas admitted that he deposited the equalization cheques into his bank account. Mr. Vastis’ evidence is that when it came to reviewing the ledgers, “[they] did it together.”

[41] Each of Mr. Vastis and Mr. Kommatas received hundreds of thousands of dollars from the Joint Bank Account and the TD Bank Account by way of bank draft, equalization payment, or cheque. They do not deny that they did not report this income to the taxing authority. Mr. Kommatas testified many times that he relied on Mr. Vastis to ensure that all income from the business was disclosed to Mr. Jackson so that Mr. Jackson could properly prepare the tax returns for the Companies and for the shareholders.

The attempts to value and divide the Calldron assets

[42] When it became apparent to Mr. Vastis that Mr. Kommatas would not engage with him in a process that would protect the Vastis family from becoming minority shareholders in the Companies if Mr. Vastis died and left his shares in the Companies to his children equally, Mr. Vastis decided that he could no longer work with Mr. Kommatas in the Companies. Mr. Vastis then turned his mind to dividing the assets of the Companies between Mr. Vastis and Mr. Kommatas. Mr. Vastis consulted Mr. Jackson for advice on options to divide the assets between the shareholders.

[43] Mr. Jackson prepared for Mr. Vastis a handwritten note dated May 24, 2019, in which he set out three options for the division of underlying assets of Calldron between the two shareholders. These options included a) an option in which each of the shareholders would roll his 50 per cent share of the Calldron assets into his own holding corporation, which would continue to own 50 per cent of Calldron; b) an option whereby all the Calldron assets would be sold, and the net proceeds would be distributed equally between the shareholders; and c) an option whereby the Calldron assets would be divided equally between a new holding company for each of Mr. Vastis and Mr. Kommatas, but the Brampton Property would need to be severed first so that one part of it could be transferred to each of the two new holding companies. According to Bill’s testimony, Mr. Jackson’s note was discussed at a Vastis family meeting. Bill testified that, at that meeting, Mr. Vastis said that he would be happy with any of these options because his goal was to separate from Mr. Kommatas. Mr. Vastis testified that he discussed this document with Ms. Vastis but never discussed it with any of his children.

[44] On May 29, 2019, Mr. Jackson prepared a memorandum to Mr. Vastis and Mr. Kommatas in which he detailed the butterfly transaction whereby the Calldron assets would be transferred, on a tax deferred basis, to two new holding corporations, one owned by each of them. In the result, each of them, through their corporation, would own one-half of the Calldron assets. However, Mr. Jackson explained that to affect the transfers, the Brampton Property would need to be severed into two parts.

[45] Mr. Jackson prepared a further memorandum to Mr. Kommatas alone, dated June 4, 2019, explaining the butterfly transaction in greater detail, and the steps that would need to be undertaken. Mr. Jackson testified that on June 4, 2019, he met with Mr. Kommatas, Ms. Kommatas and Kathy to review the memorandum with them.

[46] In June 2019, Mr. Vastis retained appraisers to prepare reports on the value of the real properties held by Calldron. Mr. Vastis’ counsel, David Goodman, advised Mr. Kommatas’ counsel, Martin Goose, of this retainer by letter dated June 12, 2019. Mr. Goodman also confirmed to Mr. Goose that Mr. Vastis and Mr. Kommatas had agreed to split their common corporate assets through a butterfly transaction.

[47] Ms. Vastis testified that she also met with Mr. Kommatas and Kathy to discuss the butterfly transaction. Mr. Vastis and Ms. Vastis both testified that they believed that both shareholders were onside with the butterfly transaction. Accordingly, Ms. Vastis then began to work on the application to sever the Brampton Property and to remove from the title to that property all encumbrances, including old mortgages that had not been discharged, and letters of credit.

[48] On July 19, 2019, Ms. Vastis called Mr. Kommatas to let him know that the appraisal reports were expected the following week. Ms. Vastis’ testified that Mr. Kommatas responded with anger and said that he did not wish to proceed with the split of the real properties and that he wanted whatever land Mr. Vastis wanted. Mr. Kommatas denies that this call ever took place. Mr. Vastis testified that the call did take place and that he was in Ms. Vastis’ presence when she made the call. Mr. Vastis refers to this call in one of the discussions he had with Bill, which Bill surreptitiously recorded. Bill relied on the audio recording when giving his testimony.

[49] Around this time, Mr. Kommatas and his family went on a family vacation to Italy to celebrate Ms. Kommatas’ birthday. While there, they discovered that their Calldron credit cards had been cancelled.

[50] Mr. Vastis testified that he cancelled the credit cards on August 16, 2019, because he and Mr. Kommatas had agreed that they were going to split the Calldron assets and that, going forward, each of the shareholders would be responsible for their own personal expenses. Before Mr. Vastis cancelled Mr. Kommatas’ credit card, he had discovered that Mr. Kommatas had gone to RBC and obtained a counter cheque. Mr. Kommatas then used that cheque to pay his credit card bill for July 2019, when Calldron had stopped reimbursing the shareholders for the credit card charges, unless the charges were actual business expenses.

[51] On August 21, 2019, Mr. Goodman wrote to Mr. Goose again to advise that the last of the appraisals would be available in two or three weeks.

[52] Mr. Goose responded by letter dated August 26, 2019, in which he took issue with Mr. Vastis’ unilateral decision to cancel Mr. Kommatas’ and Ms. Kommatas’ Calldron credit cards and operating lines of credit, and he demanded that they be reinstated.

[53] On September 5, 2019, Mr. Goodman, sent a without prejudice letter to Mr. Goose setting out an executive summary of six appraisals of the land owned by Calldron and confirming that Mr. Kommatas had received a complete set of the appraisals. The appraisals showed a combined value for the Acton Property of $6,740,000; a value for the Derry Road Property of $2,900,000; a value for the Eglinton Avenue West Property of $4,000,000; a value for the Brampton Property gas station of $2,800,000; and a value for the remaining Brampton Property of $46,300,000 (at $475,000 per acre). The total appraised value for all the lands was $62,740,000.

[54] In his letter, Mr. Goodman reiterated that in order to affect a butterfly transaction, the Brampton Property would need to be severed into two parts to separate the north portion, including the gas station, from the south portion, so that one portion could be transferred to the new holding company that each shareholder would incorporate for the transaction. In the letter, Mr. Goodman proposed, “[t]hat we agree on ‘who gets what’” and then suggested that Mr. Kommatas could have first choice from among the first four properties listed in the letter (the Acton Property and the three gas stations), and then Mr. Vastis could choose the next two properties from the remaining three. Whoever chose the gas station on the Brampton Property would then take the north portion of that property on which the gas station was situated. The other would get the south portion.

[55] Mr. Vastis asserts that Mr. Goodman’s September 5, 2019 without prejudice letter was not an offer but a proposal on how to agree to reach an agreement. He also submits that Mr. Goodman was not authorized to send this letter to Mr. Goose, and that Mr. Vastis was not copied on it.

[56] Mr. Goose responded by letter dated September 11, 2019. He stated that Mr. Kommatas could not make a decision on his choice of real properties until he conferred with a planner and surveyor to assure himself of the acreages that would be available to him.

[57] Mr. Vastis took Mr. Kommatas’ response to Mr. Goodman’s letter to be a stall tactic. Mr. Vastis then engaged a corporate lawyer, Robert Picard, at Gardiner Roberts, to negotiate an agreement between Mr. Vastis and Mr. Kommatas that would protect Mr. Vastis’ family from becoming a minority shareholder in the Companies following Mr. Vastis’ death. Mr. Picard was unsuccessful in persuading Mr. Kommatas to agree to a shareholders’ agreement or even a banking resolution.

[58] Mr. Jackson testified that he prepared another memorandum to Ms. Vastis and Mr. Kommatas setting out certain tax attributes of the butterfly transaction.

[59] Mr. Vastis testified that when Mr. Kommatas did not provide a meaningful response to the September 5, 2019 letter, he prepared the Final Offer, which he presented to Mr. Kommatas at a meeting between them on September 16, 2019. The handwritten offer set out two options. Option “A” would result in Mr. Vastis receiving 50 per cent of the Brampton Property (the north half), including the gas station, and the Eglinton Avenue West Property, including the gas station. Mr. Kommatas would receive 50 per cent of the Brampton Property (the south half), and the Acton Property (both parts, including the Golf Course and the Farm Property). Regarding the Derry Road Property, including the gas station, either shareholder could buy the other’s one-half interest in it, or it would be sold on the open market, and they would split the net proceeds. The handwritten offer noted the joint obligations regarding the Brampton Property and terms regarding adjustments to ensure that certain income from the properties (e.g., rent derived from the billboards, the Bell tower, and the farm land) would be equalized. The handwritten offer also provided that the Old Pro business would continue until either the north or south portion of the Brampton Property was sold. Option “A”, in principle, would have resulted in each of Mr. Vastis and Mr. Kommatas receiving one-half of the value of the underlying assets in Calldron. Based on the values set out in the Final Offer, each of Mr. Vastis and Mr. Kommatas would receive real properties, or proceeds from the sale of real properties, or both, of approximately $31.4 million. However, in the Final Offer, Mr. Kommatas was not given any choice in the properties he would receive.

[60] Option “B” as set out in the Final Offer, is described as “Dissolution (Open Market) (Any Body Mach the Price and Buy it for himself) [sic] .”

[61] The Final Offer included a “deadline for this offer” of September 20, 2019, at 5:00 p.m.

[62] On September 17, 2019, Mr. Vastis called Bill regarding the Final Offer. In the voicemail message that Mr. Vastis left for Bill, an audio recording of which was admitted into evidence, Mr. Vastis encouraged Bill to arrange a discussion among Kathy, Mr. Kommatas and himself (Bill) to encourage Mr. Kommatas to accept the Option “A” of the Final Offer. Mr. Vastis explained that it would mean that each of them would get one-half of the value of the underlying assets of Calldron. In the message, Mr. Vastis stated that he wanted the gas station on the Eglinton Avenue West Property, and the gas station on the Brampton Property because these were “like his babies”, which he had “built with [his] bare hands”. He added that he also needed the income from the gas stations, “to keep him alive”, referring to the $1,000 per day cost of his cancer treatments. During the call, Mr. Vastis told Bill that if Mr. Kommatas did not accept this offer, he would go to “Plan B”, which was “liquidation.”

[63] Sometime prior to September 19, 2019, Mr. Kommatas retained Jared Wortzman of Teplitsky Colson LLP. Mr. Wortzman wrote to Mr. Goodman on September 19, 2019 regarding the September 5, 2019 letter sent by Mr. Goodman. In his letter, Mr. Wortzman did not acknowledge or respond to the Final Offer. Mr. Wortzman wrote in response to Mr. Goodman’s letter only and stated that Mr. Kommatas accepted the proposed offer, and he chose the Brampton Property gas station, which entitled him to the north portion of the Brampton Property as well. Mr. Wortzman asked that Mr. Vastis confirm his two selections.

[64] Mr. Wortzman maintained that the September 5, 2019 without prejudice letter was a firm offer, which Mr. Kommatas accepted, and he asserted that he would bring a motion to enforce the settlement.

[65] Around this time, Mr. Vastis revised his will to include a gift of his shares in the Companies to Ms. Vastis, and he advised Bill that he had been removed as a beneficiary of Mr. Vastis’ will.

[66] On September 28, 2019, Mr. Jackson sent another memorandum to Mr. Vastis and Mr. Kommatas. In that memorandum, he confirmed that the Canada Revenue Agency (the “CRA”) would require an actual delivery of land as opposed to an undivided interest in land in order to give effect to the butterfly transaction. In other words, the Brampton Property would need to be severed if the parties wished to pursue the butterfly transaction.

[67] Sometime after that memorandum was sent, Mr. Kommatas sought accounting advice from his own accountant, Mr. Belisiotis.

[68] Mr. Vastis called a Calldron directors’ meeting in December 2019 to discuss the separation of the assets. The items listed on the agenda included, among others, an agreement to prevent power-shifting to either the Vastis family or the Kommatas family; the sale of the Brampton Property; the butterfly re-organization of capital, appraisals, and severance of the Brampton Property; the “divorce”; and future of the corporation (liquidation, buyout, salary). The directors meeting never took place.

[69] In January 2020, Mr. Belisiotis contacted Mr. Jackson to discuss the possibility of a dividend payment to the shareholders for fiscal 2019. In February 2020, there were numerous communications among Mr. Wortzman, Mr. Belisiotis and Mr. Jackson regarding the financial statements for the Companies.

[70] Eventually, it became known to both Mr. Vastis and Mr. Kommatas that a severance of the Brampton Property would not be possible owing to the administrative freeze affecting the Brampton Property and the need for committee of adjustment approval. They accepted that these approvals would not likely be given. Mr. Kommatas nonetheless maintained his position that he had an enforceable settlement based on Mr. Wortzman’s letter of September 19, 2019. It was not until October 2020 that Mr. Kommatas abandoned that position.

[71] Without the severance, the butterfly transaction that would result in an equal division of the assets between the shareholders was not possible.

[72] In March 2020, Mr. Kommatas began to engage with some of the tenants. He wrote to them to advise them that he was a 50 per cent owner of Calldron and asked them to forward the details of their leases to him. He also provided them with an additional business email address for himself and asked to be copied on correspondence to Calldron.

[73] On May 25, 2020, on Mr. Vastis’ instructions, Kevin Fisher of Gardiner Roberts wrote a letter to Mr. Wortzman in which he canvassed various matters including corporate governance, payment of expenses, and dividends. Mr. Fisher also asked that Mr. Kommatas stop attending at Old Pro to take 50 per cent of the cash proceeds on each visit. Mr. Fisher confirmed that Mr. Vastis was depositing the remaining cash proceeds in Calldron’s RBC Bank Account. Mr. Fisher also asked about Mr. Kommatas’ “exit plan” and advised that Mr. Vastis would consider buying Mr. Kommatas’ shares.

[74] In September 2020 Mr. Fisher assisted Mr. Vastis and Ms. Vastis to negotiate the Joint Confirmation for RBC so Mr. Vastis would not have to continue to pay the obligations of Calldron and Old Pro personally.

The oppression applications

[75] On July 20, 2020, Mr. Vastis and Ms. Vastis brought an application against Mr. Kommatas and the Companies alleging, among other things, oppressive conduct. Included in the relief sought were the appointment of a receiver/manager or a monitor, an order that the shares held by Mr. Kommatas be sold to Mr. Vastis and Ms. Vastis, or alternatively, an order that the Companies be wound up, or an order that a liquidator or receiver/manager of the Companies be appointed for the purposes of winding up the affairs of the Companies and distributing the property. Subsequently, Mr. Vastis and Ms. Vastis abandoned their request for the appointment of a receiver.

[76] On September 11, 2020, Mr. Kommatas brought an application against Mr. Vastis and the Companies alleging, among other things, oppressive conduct. Included in the relief sought by Mr. Kommatas were an order for the mandatory sale of all real property owned by the Companies, an order for directions on the disposition of the sale proceeds, an order winding up the Companies, and an order, if necessary, appointing a receiver to manage and operate the Companies and to oversee the sale of the Companies’ assets.

[77] The parties were at an impasse. Each testified that they can no longer work together.

Positions of the Parties

Mr. Vastis

[78] Mr. Vastis submits that Mr. Kommatas, through his conduct as a director and officer of Calldron and Old Pro has acted in an oppressive manner contrary to Mr. Vastis’ reasonable expectations as a shareholder. Mr. Vastis submits that the appropriate remedy for such conduct is an order requiring Mr. Kommatas to sell his shares in Calldron and Old Pro to Mr. Vastis and Ms. Vastis for an amount equal to 50 per cent of the appraised value of all of the real estate assets owned by Calldron. Further, Mr. Vastis submits that an amount should be deducted from the appraised value of Mr. Kommatas’ shares on account of compensation owing to Mr. Vastis and Ms. Vastis for their executive services provided to the Companies over 30 years without compensation.

[79] Mr. Vastis opposes an order directing a liquidation. He submits that a prudent sale of the Brampton Property is not possible at this time because of the administrative freeze. If a sale were forced as part of a receivership, he submits that the Brampton Property would be sold at a significant discount. Mr. Vastis also submits that the appointment of a receiver and a wind up of the Companies is not a suitable remedy because it is expensive and time-consuming. He would be prejudiced based on his shorter life expectancy because of his cancer diagnosis.

[80] Mr. Vastis also seeks an order confirming Ms. Vastis’ shareholding in the Companies as a result of the Deeds of Gift.

Ms. Vastis

[81] Ms. Vastis submits that she is a legal or beneficial owner of shares in the Companies. As such, she submits that she has standing to allege that Mr. Kommatas, through his conduct as a director and officer of Calldron and Old Pro, has acted in an oppressive manner contrary to her reasonable expectations as a shareholder and that she is entitled to a remedy for this conduct. She agrees with Mr. Vastis that the appropriate remedy is an order requiring Mr. Kommatas to sell his shares in Calldron and Old Pro to Mr. Vastis and her for an amount equal to 50 per cent of the appraised value of all of the real estate assets owned by Calldron. She agrees with Mr. Vastis that an amount should be deducted from such appraised value on account of compensation owing to Mr. Vastis and to her for their executive services provided to the Companies over 30 years without compensation.

[82] Ms. Vastis also agrees with Mr. Vastis that a liquidation of the assets by a receiver is not a suitable remedy for the same reasons he cites.

Mr. Kommatas

[83] Mr. Kommatas submits that he was oppressed by Mr. Vastis’ conduct as an officer and director of the Companies, including Mr. Vastis’ financial mismanagement. Mr. Kommatas submits that he in no way oppressed Mr. Vastis or Ms. Vastis.

[84] Mr. Kommatas also submits that Ms. Vastis was not an officer or director of either of the Companies and has no standing to bring a claim in oppression. He contends that the alleged gift of shares from Mr. Vastis to Ms. Vastis is void and must be set aside, and Ms. Vastis is not entitled to the compensation she is seeking from the Companies because there was never any agreement that the Companies would pay her for her contributions.

[85] Mr. Kommatas also submits that Mr. Vastis’ proposed remedy, which would require Mr. Kommatas to sell his shares in the Companies based on an appraisal of the land owned by Calldron, ought to be rejected.

[86] He contends that this approach will not result in fair market value for the purposes of a buy out because the bulk of the assets of the Companies is real property, and the only fair way to determine its fair market value is to expose it to the market. He submits that Mr. Vastis’ proposed remedy fails to consider the annual revenues earned from the Driving Range. Further, the liabilities of the Companies would need to be factored into the calculation of the fair market value of his shares. However, the financial statements are unreliable because they do not include all of the income earned by the Companies. Further, because tax was not paid on the unreported income, the Companies are potentially exposed to tax liability, interest and penalties, all of which would need to be factored into the fair market value of his shares. In addition to the liabilities, Mr. Kommatas submits that there are unpaid dividends that would also need to be taken into account.

[87] In the result, Mr. Kommatas submits that the just and equitable remedy is a court-ordered wind up of the Companies, which would include a sale on the open market of all the Companies’ underlying assets. In this way, both parties would receive their fair share. Mr. Kommatas submits that this process requires the expertise of a receiver, which would be supervised by the court. Mr. Kommatas further submits that the process is fair to Mr. Vastis in that he would not be precluded from purchasing any of the underlying assets in the court-supervised sales process.

[88] Mr. Kommatas submits that Mr. Vastis, alone, should be held accountable for any liability for any unpaid taxes, interest or penalties arising from the Companies’ failure to report income because Mr. Kommatas was unaware that income was not being reported. He submits that he relied on Mr. Vastis exclusively regarding all accounting matters.

Ms. Vastis’ Claims

Can Ms. Vastis bring a claim for a remedy for oppressive conduct?

[89] To proceed with a claim for oppression, a party must meet the definition of “claimant” under s. 245 for the Business Corporations Act, R.S.O. 1990, c. B.16 (the “OBCA”). In that section, a claimant is:

(a) a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a corporation or any of its affiliates,

(b) a director or an officer or a former director or officer of a corporation or any of its affiliates,

(c) any person who, in the discretion of the court, is a proper person to make an application under the Part.

[90] Ms. Vastis and Mr. Vastis submit that Ms. Vastis is a joint owner or beneficial owner of the shares of the Companies issued to Mr. Vastis and is therefore a claimant under the OBCA.

[91] Ms. Vastis submits that she became a joint owner of Mr. Vastis’ shares when the Deeds of Gift were executed on July 16, 2020.

[92] Mr. Kommatas submits that the Deeds of Gift did not accomplish a transfer of an interest in Mr. Vastis’ shares in Calldron and shares in Old Pro to Ms. Vastis. I agree. The Articles of Incorporation for Calldron, dated November 8, 1984, and the Articles of Incorporation for Old Pro, dated October 4, 1996, each provide that “no share of the Corporation shall be transferred to any person without consent of the Directors of the Corporation expressed by a resolution passed by the Directors or by an instrument or instruments in writing signed by all the Directors.” Mr. Kommatas has not consented to the transfers of the shares of the Companies from Mr. Vastis to Ms. Vastis, and there is no resolution or other instrument signed by the directors consenting to the share transfer. The purported share transfer to Ms. Vastis by the Deeds of Gift is therefore ineffective.

[93] Alternatively, Ms. Vastis asserts that she is a beneficial owner of shares in the Companies either as a result of the Deeds of Gift or because Mr. Vastis has, as he testified, gifted these shares to Ms. Vastis under his last will and testament. I disagree. There is nothing in the Deeds of Gift to suggest that Mr. Vastis is conveying to Ms. Vastis a beneficial interest in the shares while reserving to himself legal ownership. There is no language to suggest that Mr. Vastis holds the shares on trust for Ms. Vastis. A gift of the shares under Mr. Vastis’ will does not assist Ms. Vastis. Unless otherwise specifically stated in the will, Mr. Vastis’ will speaks as of the date of his death only. The shares would not vest in her until Mr. Vastis’ death, and only then if he had not revised his will to make a gift of the shares to someone other than Ms. Vastis, and only if Ms. Vastis survived him. Accordingly, I find that Ms. Vastis is not a shareholder of the Companies.

[94] Ms. Vastis contends that even if she is not a shareholder of the Companies, she is a de facto officer of the Companies. She submits that she “stepped into the shoes” of Mr. Vastis as of April 2017 when Mr. Vastis became ill and that she has acted in that role ever since. Both Mr. Vastis and Ms. Vastis testified that she has been assisting Mr. Vastis in his business since 1991.

[95] The evidence demonstrates that Ms. Vastis has indeed been very involved in the Companies’ business. Her legal experience proved valuable in negotiating the leases with the tenants, applying for a severance of the Brampton Property, managing tenant relationships, and arranging for appraisals, among other services. Mr. Kommatas does not dispute that Ms. Vastis provided these services.

[96] However, Mr. Kommatas disputes that Ms. Vastis is or was ever an officer of either of the Companies. The only documentary evidence of Ms. Vastis’ role as an officer of Calldron is a “Notice of Distress” issued to one of the tenants, Country Style Donuts, on June 17, 2017. It is signed by Ms. Vastis on behalf of Calldron. Under her signature, there is a statement: “I have authority to bind the Corporation.” This statement alone does not make her an officer of Calldron. RBC declined to take instructions from Ms. Vastis on behalf of the Companies because she was not an officer of the Companies according to their records.

[97] I find that Ms. Vastis took on many responsibilities in the Companies, especially following Mr. Vastis’ cancer diagnosis, and I find that Mr. Kommatas was fully aware of the work she was doing, and in fact, benefited from much of it. However, she was not a duly appointed officer of the Companies. On the evidence, I do not find that Mr. Kommatas acquiesced to her role as a de facto officer. On March 14, 2020, he wrote to RBC and specifically stated: “Helen has no legal authority to give direction of the company.” As a licensed lawyer with many years of experience in municipal and real estate law, having worked for the City of Hamilton and the Region of Hamilton-Wentworth before that (for nearly 30 years), Ms. Vastis would have known, or ought to have known, that to become an officer, the directors of the Companies would have had to appoint her as such, and document that appointment. That step was not taken. Accordingly, I find that Ms. Vastis was neither an officer, nor a de facto officer of the Companies.

[98] Section 241(2) of the OBCA states that a remedy is available where the conduct is oppressive or unfairly prejudicial to or unfairly disregards the interests of “any security holder, creditor, director or officer.” I find that Ms. Vastis has not met her burden to show that she falls into any of these categories.

[99] In the further alternative, Ms. Vastis submits that she is a “proper person to make an application” under the OBCA, and the court should exercise its discretion to permit her to make an application. Ms. Vastis argues that the oppression remedy is intended to be remedial in nature and to be given a broad and liberal interpretation. She asserts that she should have an opportunity to have her claim tried based on justice and equity.

[100] In Markus Koehnen, Oppression and Related Remedies, 1sted. (Toronto: Carswell, 2004), at p. 42, the author states:

Although relief for oppression is available only if suffered as a “security holder, creditor or officer,” this requirement may not apply to winding-up under the just and equitable rule. When dealing with just and equitable winding-up proceedings, the applicant can rely “on any circumstances of justice or equity which affect him in his relations with the company, or … with the other shareholders. The circumstances rendering a winding-up just and equitable need not be connected with the plaintiff’s capacity as a security holder, etc. This is particularly relevant for purposes of Canadian corporate legislation because most corporate statutes provide that, where it is just and equitable to wind-up a corporation, the court may wind-up the corporation or may resort to the remedies under the provision of the constating statute. [Citations omitted.]

[101] Ms. Vastis has not articulated the circumstances of justice or equity which affect her in her relations with the Companies in the context of a winding up that would cause me to exercise my discretion to permit her to pursue her oppression claim as a “proper person” to bring an application. In fact, Ms. Vastis opposes a winding-up order.

[102] For the foregoing reasons, I find that Ms. Vastis does not meet the definition of claimant under the OBCA, and her claim for a remedy for oppressive conduct must fail.

Is Ms. Vastis entitled to compensation for her services?

[103] Ms. Vastis submits that it was agreed that she would provide her services to the Companies, but she would not be paid a salary. She testified that Mr. Vastis frequently reminded her that in doing so, she would be “sacrificing salary for equity.” Ms. Vastis testified that she understood this to mean that she would be rewarded for her efforts once the underlying value in the Companies was realized, and she relied on that representation.

[104] Ms. Vastis did not invoice the Companies for her time, nor did she keep track of the hours spent or the work done for the Companies. At trial, she could not say what level of compensation she was seeking, only that it would need to be discussed and agreed upon by the shareholders and her.

[105] Mr. Kommatas submits that the Companies have no obligation to pay Ms. Vastis any compensation. Mr. Kommatas testified that Ms. Vastis has no written or oral contract with the Companies to pay her compensation. He asserts that any agreement Ms. Vastis may have made regarding compensation for her work at the Companies was between Mr. Vastis and Ms. Vastis, and he was not a party to it.

[106] I agree with Mr. Kommatas. Ms. Vastis has not met her burden to show that there was any agreement between the Companies and herself to remunerate her for her work. Again, as an experienced lawyer, one would have expected that if Ms. Vastis expected to be paid by the Companies, she would have insisted on a written agreement setting out the terms on which she would provide her services.

[107] On the evidence, any agreement Ms. Vastis made regarding remuneration for her services was made with Mr. Vastis only. It is not binding on the Companies.

Mr. Vastis’ and Mr. Kommatas’ Claims for a Remedy for Oppressive Conduct

[108] Mr. Vastis and Mr. Kommatas are claimants for the purposes s. 245 of the OBCA. They are shareholders of the Companies as well as officers and directors.

[109] Section 248(2) of the OBCA provides that where the court is satisfied that in respect of a corporation or any of its affiliates,

a) any act or omission of the corporation or any of its affiliates effects or threatens to effect a result,

b) the business or affairs of the corporation or any of its affiliates are, have been or are threatened to be carried on or conducted in a manner; or

c) the powers of the directors of the corporation or any of its affiliates are, or have been or are threatened to be exercised in a manner,

that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of any security holder, creditor, director or officer of the corporation, the court may make an order to rectify the matters complained of.

[110] Mr. Vastis alleges that Mr. Kommatas, as an officer and director of the Companies, exercised his powers in a manner that was oppressive and unfairly prejudicial to him, and disregarded his interests, both of which were contrary to Mr. Vastis’ reasonable expectations. The alleged conduct includes, among other conduct, Mr. Kommatas a) interfering with a relationship with a tenant by writing to it and asking for a copy of the lease, and asking to be copied on all correspondence to Calldron; b) interfering with the Companies’ relationship with RBC in a threatening way, resulting in a freezing of the Companies’ bank accounts; c) objecting to the cancelling of the Companies’ credit facilities; d) refusing to enter into a shareholders’ agreement; e) refusing to release the Companies’ minute books and to agree to address corporate governance issues, even on a temporary basis, and instead insisting on the enforcement of an alleged settlement; and f) refusing to consent to a transfer of shares from Mr. Vastis to Ms. Vastis and refusing to record the same in the corporate records for the Companies.

[111] Mr. Kommatas alleges that Mr. Vastis, as an officer and director of the Companies, carried on the business of the Companies in a manner that was oppressive or unfairly prejudicial or unfairly disregarded Mr. Kommatas’ interests and legitimate expectations, all of which was contrary to Mr. Kommatas’ reasonable expectations. This alleged conduct includes, among other conduct, a) cancelling Mr. Kommatas’ and Ms. Kommatas’ Calldron credit cards without notice and while the Kommatas family was in Italy celebrating Ms. Kommatas’ birthday; b) attempting to unilaterally discharge all of RBC’s security and cancel all corporate lines of credit and operating lines; c) surreptitiously depleting cash reserves by purchasing a GIC with corporate funds at a different branch of RBC; d) continuing to pay for Mr. Vastis’ car and insurance, and a car and insurance for Mr. Vastis’ daughter, but discontinuing car and insurance payments for Mr. Kommatas and Ms. Kommatas; e) unilaterally deciding, in 2020, that the cash proceeds from the Driving Range would not be divided equally between Mr. Vastis and him; f) unilaterally deciding to cease work on the development of the Golf Course on the Acton Property; g) evading corporate taxes and putting the Companies and Mr. Kommatas at risk in the process; h) breaching his fiduciary duty to provide full and accurate information to Mr. Jackson so that accurate financial statements could be prepared; i) failing to provide Mr. Kommatas with unrestricted access to or copies of leases; j) instructing Mr. Jackson not to cooperate with Mr. Kommatas or his accountant Mr. Belisiotis; and k) failing to make timely distributions of cash reserves in 2019, 2020 and 2021.

[112] For the following reasons, I find that each of Mr. Vastis and Mr. Kommatas as an officer and director, carried on certain affairs of the Companies in ways that were oppressive, unfairly prejudicial or that unfairly disregarded the interests and reasonable expectations of the other. Each of them can fairly be said to have ignored or paid no attention to certain of the interests of the other or to have treated the interests of the other as being of no importance. Further, even without a finding of oppression, this Court has authority to order a winding up of a corporation when it is just and equitable to do so.

Law

[113] Section 248 of the OBCA also provides this court with broad discretion to make interim or final orders where, among other things, the directors have acted in a way that is oppressive, unfairly prejudicial or unfairly disregards the interests of other directors or stakeholders. Subsection 248(3) of the OBCA sets out a non-exhaustive list of remedies available to the court if oppression is found, including both the power to require a corporation to purchase the shares of a security holder, and the power to order a winding up of the corporation under s. 207 of the OBCA.

[114] Clause 207(1)(b)(iv) of the OBCA provides that a corporation may be wound up by order of the court where the court is satisfied that it is just and equitable for some reason, other than the bankruptcy or insolvency of the corporation. As stated by McEwen J. in Libfeld v. Libfeld, 2021 ONSC 4670, at para. 150, a finding of oppression is not a pre-condition to a winding-up order.

[115] In BCE Inc. v. 1976 Debentureholders, [2008] 3 SCR 560, 2008 SCC 69, at para. 68, the Supreme Court of Canada held that in assessing whether a remedy for the conduct complained of is available, the court must ask:

(1) Does the evidence support the reasonable expectation asserted by the claimant?; and

(2) Does the evidence establish that the reasonable expectation was violated by conduct falling within the terms “oppression”, “unfair prejudice” or “unfair disregard” of a relevant interest?

[116] In BCE, at para. 67, the Supreme Court stated: “Oppression carries the sense of conduct that is coercive and abusive and suggests bad faith. ‘Unfair prejudice’ may admit of a less culpable state of mind, that nevertheless has unfair consequences. Finally, “unfair disregard” of interests extends the remedy to ignoring an interest, as being of no importance, contrary to the stakeholders’ reasonable expectations.”

Analysis

[117] Mr. Vastis and Mr. Kommatas formed their business relationship on the basis of a personal relationship and mutual trust and confidence. Relationships between equal shareholders based on ties of family or friendship may be governed by different standards than that of arm’s-length shareholders: Ferguson v. Imax Systems Corp. (1983), 1983 CanLII 1646 (ON CA), 43 O.R. (2d) 128 (C.A.), at p. 138, leave to appeal refused (1983), 2 O.A.C. 158. In Chiaramonte v. World Wide Importing Ltd. (1996), 1996 CanLII 7987 (ON SC), 28 O.R. (3d) 641 (Gen. Div.), at p. 19, Adams J. observed that, in considering the relationship between the principals in such closely-held corporations, a court will distinguish the strategic positioning of the parties in anticipation of litigation from a more common sense evaluation of what has happened and what, if anything, needs to be done.

[118] In Scottish Cooperative Wholesale Society Ltd. v. Meyer, [1959] A.C. 324 (H.L.), at p. 342, the court referred to oppressive conduct as conduct that is “burdensome, harsh and wrongful.” In my view, none of the conduct legitimately complained of by either Mr. Vastis or Mr. Kommatas rises to the level of coercive or abusive. It can certainly be argued, as Mr. Kommatas did, that a failure to provide accurate information to the company’s accountant so that proper financial statements could be produced, and a failure to report income that puts the company and a shareholder at risk of tax arrears and penalties are wrongful and, in that sense, oppressive. However, in this case, I find that Mr. Kommatas was complicit in the failure to provide accurate information to Mr. Jackson, the failure to report income, and the resulting tax evasion, which I will address in further detail below. Accordingly, I do not find this conduct to be oppressive as against him.

[119] Conduct that is unfairly prejudicial is conduct that is unjust and inequitable: Wind Ridge Farms Ltd. v. Quadra Group Investments Ltd. (1999), 180 Sask. R. 230 (C.A.). I find that some of the conduct of each of Mr. Vastis and Mr. Kommatas, as an officer and director, falls into this category. Regarding Mr. Kommatas’ conduct, as alleged by Mr. Vastis, I find that it was unjust of Mr. Kommatas to threaten RBC with allegations that it was in breach of its Code of Conduct in its dealings with the Companies. Following that letter, RBC converted the Companies’ accounts to “deposit only,” which, in turn, prevented the Companies from paying their expenses, including employee wages. In order to keep the Companies operating and to pay the employees at Old Pro, Mr. Vastis had to pay those expenses personally until Mr. Kommatas agreed to sign the Joint Confirmation. Mr. Kommatas refused to sign the Joint Confirmation until Mr. Vastis brought a motion seeking the court’s assistance. I also find that Mr. Kommatas’ conduct in refusing to release the minute book for Calldron from his lawyer’s custody so that the parties could address corporate governance matters, which had never been properly addressed in the history of the company, was unfairly prejudicial to Mr. Vastis. Mr. Vastis needed to regularize the minute book for the purposes of proceeding with the butterfly transaction and the division of the underlying assets of Calldron between the shareholders at a time when that solution appeared to be a viable resolution to the conflict between the shareholders. It was unjust and incorrect for Mr. Kommatas to assert that the minute book and Calldron were his, and unfair of him to stand in the way of progress toward a division of the assets of the Companies, for the benefit of both shareholders. It was reasonable for Mr. Vastis to expect that normal commercial practices would be adhered to.

[120] I also find Mr. Kommatas’ conduct in refusing to consent to the share transfers to Ms. Vastis by Deeds of Gift to be unjust and inequitable. The Deeds of Gift were done as part of Mr. Vastis’ succession planning at a time when he been diagnosed with cancer and was undergoing treatment. Mr. Kommatas testified that it was his right to refuse to consent to the transfer because he did not want a “stranger partner” in the business. However, the transfer was structured under the Deeds of Gift such that Ms. Vastis would not have legal title to all Mr. Vastis’ shares until his death, and only then if she survived him. Following Mr. Vastis’ death, the Companies would have a new shareholder regardless. It was unfair of Mr. Kommatas to refuse to consent to a succession plan that would not likely have had any impact on the business until Mr. Vastis’ death, at which time a change of shareholder would be inevitable. It was reasonable for Mr. Vastis to expect that his business partner would consent to a share transfer as part of a typical succession plan.

[121] Succession planning at that stage in Mr. Vastis’ life was very important for him and his family. Mr. Kommatas was very much aware of Mr. Vastis’ concerns about succession and Mr. Vastis’ desire to maintain the status quo regarding voting rights as between the Vastis family and the Kommatas family. Mr. Kommatas would have known that by not consenting to the share transfer, the effect on Mr. Vastis’ succession plan would be unfairly prejudicial and serious. Conduct that disregards the interests of complainants does not need to breach any legal right to be oppressive: Pente Investment Management Ltd. v. Schneider Corp. (1998), 1998 CanLII 5121 (ON CA), 42 O.R. (3d) 177 (C.A.), at pp. 201-202.

[122] I do not find Mr. Kommatas’ conduct in writing to a tenant and requesting a copy of the lease to be oppressive, especially after Mr. Vastis declined to give Mr. Kommatas ready access to the leases. I also do not find Mr. Kommatas’ conduct in objecting to the cancellation of credit facilities and refusing to enter into a shareholders’ agreement to be conduct that is unfairly prejudicial, unjust or inequitable to Mr. Vastis, or even beyond Mr. Vastis’ reasonable expectations given the factual matrix of this case.

[123] Regarding Mr. Vastis’ conduct as alleged by Mr. Kommatas, I find that Mr. Vastis unfairly disregarded Mr. Kommatas’ interests when Mr. Vastis, without notice, cancelled Mr. Kommatas’ and Ms. Kommatas’ Calldron credit cards while they were overseas on a family vacation. Mr. Vastis also unfairly disregarded Mr. Kommatas’ interests when he did not, in a timely way, accommodate Mr. Kommatas’ request to review the leases, and when he continued to pay certain personal expenses for his own vehicles but not for Mr. Kommatas’ vehicle, with the result that it was repossessed. All of this conduct had a detrimental effect on Mr. Kommatas and violated his reasonable expectation that he would be treated as an equal shareholder.

[124] I also find that Mr. Vastis’ conduct was unjust and inequitable when he made unilateral decisions on behalf of the Companies, including the decision that the cash receipts from Old Pro would be deposited into the RBC Bank Account, as opposed to being divided equally between the shareholders as had been the practice, and when he unilaterally decided that Calldron would cease development of the Golf Course when significant business decisions had typically been made jointly, by both directors.

[125] I also find that Mr. Vastis’ decision not to make distributions of cash reserves in 2019, 2020 and 2021 was contrary to Mr. Kommatas’ reasonable expectations. Mr. Vastis had other sources of income and Mr. Vastis was aware that Mr. Kommatas did not. It was reasonable for Mr. Kommatas to expect that he would continue to receive distributions from the Companies after they had agreed to divide the underlying assets of the Companies between them, and Calldron was no longer paying the personal expenses of either shareholder. It was unjust that Mr. Kommatas was forced to bring a motion to compel a distribution of cash reserves. See: 820099 Ontario Inc. v. Harold E. Ballard Ltd. (1991), 3 B.L.R. (2d) 113 at 123, at pp. 185-186 (Ont. Gen. Div.), aff’d (1991) 3 B.L.R. (2d) 113 (Ont. Div. Ct.), where the court held that reasonable expectations merit enforcement and provide a framework in which to determine what is fair.

[126] I do not find that Mr. Vastis’ conduct in arranging to discharge all of RBC’s security and to cancel corporate letters of credit was oppressive. The evidence was that the mortgages were old mortgages that had been paid but never discharged, that there were no operating lines of credit and the letters of credit no longer served any purpose. This security had to be removed from the title to the properties in order to proceed with the severance of the Brampton Property and the butterfly transaction. The purchase of a GIC at another branch of the RBC was not oppressive conduct. The GIC is an asset of Calldron purchased with Calldron funds. Prior to the Joint Confirmation, either shareholder had authority to instruct RBC. The purchase of the GIC does not appear to have reduced cash reserves such that meaningful distributions could not continue to be made to the shareholders.

[127] I will return now to Mr. Kommatas’ allegations that Mr. Vastis engaged in oppressive conduct by breaching his fiduciary duty to provide full and accurate information to Mr. Jackson. Mr. Kommatas alleges that, as a result of that breach, accurate financial statements could not be prepared, resulting in tax evasion, which put the Companies and Mr. Kommatas at risk. As noted, I find that Mr. Vastis was not solely responsible for the failure to provide full and accurate information to Mr. Jackson and the failure to report all income earned in the Companies.

[128] Both Mr. Vastis and Mr. Kommatas are directors of the Companies. Each of them has a duty to ensure the accuracy of the financial statements.

[129] Mr. Jackson testified that he attempted to meet with Mr. Vastis once or twice a year but that Mr. Kommatas was not interested in the accounting details. Mr. Kommatas did not always attend the meetings. Mr. Jackson testified that he would, nonetheless, prepare draft financial statements for each of the directors, and if Mr. Kommatas was not at the meeting, Mr. Jackson would ask Mr. Vastis to deliver the draft to Mr. Kommatas. Mr. Jackson testified that sometimes the envelope containing the financial statements would remain on Mr. Kommatas’ desk and appeared to be untouched.

Mr. Kommatas’ Credibility

[130] In his testimony, Mr. Kommatas was not always honest or truthful, and his evidence was not reliable. He claimed to have no recollection of events when it was convenient for him to do so. For example, in his cross-examination, he claimed to have forgotten all about the Joint Bank Account and that he “had no clue” about it.

[131] When reminded that he had participated in opening the Joint Bank Account, Mr. Kommatas claimed that he simply “followed George Vastis” but that it was all Mr. Vastis’ idea. He had no credible explanation for why he had unilaterally written a cheque on the account. He admitted under cross-examination that Mr. Vastis and he attended at the RBC together to close the Joint Bank Account in May 2019 and that they split the balance. Mr. Kommatas also admitted under cross-examination that he had received cheques on that account totalling tens of thousands of dollars.

[132] Mr. Kommatas was frequently evasive in his testimony. Under cross-examination, Mr. Kommatas failed to answer questions asked of him, or failed to provide a responsive answer. Instead, in position-motivated responses, he would repeat the same statement – that he trusted Mr. Vastis; and that he hoped that Mr. Vastis was doing the right thing and providing all the financial information to Mr. Jackson. Mr. Kommatas repeated this statement or a facsimile of it, countless times during his testimony, even when it was completely unresponsive to the question asked. Even when I clarified the question for Mr. Kommatas to ensure he understood it, and directed him to answer that question, often, he did not. When I educated him on the risk that the court could draw an adverse inference from his failure to answer the question asked, Mr. Kommatas still did not answer the questions in a forthright manner.

[133] Regarding the TD Bank Account, Mr. Kommatas admitted that he went to the Bank with Mr. Vastis to open the account and that they both had signing authority. He testified that he did so on Mr. Vastis’ direction. His answers on cross-examination about whether he could obtain statements from the TD Bank at any time, whether he told Mr. Belisiotis that he did not know about the account, and whether he recalled having received substantial amounts from the TD Bank Account were all non-responsive.

[134] Mr. Kommatas maintained throughout the trial that he “had no clue” that the income he was receiving from the Joint Bank Account and the TD Bank Account was unreported income. He went to great lengths during the trial to attempt to persuade the court of his lack of knowledge regarding the income from these accounts. Mr. Kommatas testified that he relied on Mr. Vastis completely when it came to the financial management of the company and he trusted Mr. Vastis to report all of the income earned to Mr. Jackson, who would include it on the financial statements and in their respective tax returns.

[135] Mr. Jackson testified that Mr. Kommatas attended very few meetings with him. Mr. Kommatas would drop off his tax slips or have Bill, his investment advisor, send them to Mr. Jackson. When Mr. Kommatas was asked in cross-examination whether Mr. Jackson sent financial statements to him each year, he responded, “These papers never came to my attention.” As between the evidence of Mr. Jackson and Mr. Kommatas on the delivery of annual financial statements to Mr. Kommatas, or having those statements brought to his attention, I prefer the evidence of Mr. Jackson. Mr. Jackson testified in a forthright manner and answered the questions asked of him.

[136] Mr. Kommatas is a director of both Companies and has a responsibility to review the financial statements. Mr. Kommatas testified that he operated his own dry-cleaning business for many years before he worked full-time at Old Pro. He admitted that when he ran his own business, he was the director of the company, he had an accountant, the accountant prepared financial statements based on information provided to him by Mr. Kommatas, and the business filed tax returns.

[137] It is not credible that he would rely on Mr. Vastis exclusively when it came to reviewing the financial results of their business.

[138] In many years, Mr. Kommatas and Mr. Vastis were taking tens of thousands of dollars out of the Joint Bank Account and the TD Bank Account. They were also taking Old Pro cash receipts at least weekly. No tax slip was issued to them in respect of any of these funds, and the amounts taken were not included in their personal tax returns. It is not credible that Mr. Kommatas would not notice when he signed his tax returns that these amounts were not included in his income. When asked in cross-examination whether he reviewed his tax return to see whether the cash receipts he took from Old Pro were included, he again stated, “Whatever George Vastis did, I was trusting him. I hope he did the right thing.”

[139] However, Mr. Kommatas is no stranger to tax evasion. In cross-examination, he admitted that he and Mr. Vastis sold a residential property on Mississauga Road in 2003 for $6 million, which they owned personally. Mr. Kommatas admitted that he got $3 million as his share. On further cross-examination, Mr. Kommatas admitted that he claimed a principal residence exemption in respect of this property even though he did not live there. As such, he evaded income tax on his share of the capital gain in the property.

[140] For these reasons, I do not find Mr. Kommatas to be a credible witness. I find that he was not being truthful in his denial of the Companies’ accounting practices, which included a failure to disclose funds that belonged to the Companies but were diverted into the hands of Mr. Vastis and Mr. Kommatas personally.

Valuation Issues

[141] Each of Mr. Vastis and Mr. Kommatas seeks a remedy for oppression that necessitates a valuation of the underlying assets of the Companies. Each retained a valuation expert to appraise some or all of the land held by Calldron.

[142] On December 30, 2021, Mr. Vastis retained Ellens & Associates Inc. (“Ellens”) to appraise the Eglinton Avenue West Property, the Derry Road Property, the Brampton Property, and the Acton Property (the Golf Course and the Farm Property). Matt Van Huizen gave expert evidence in respect of the Ellens appraisals.

[143] Mr. Kommatas retained Lebow, Hicks Appraisal Inc. (“Lebow”) to appraise the Brampton Property comprised of i) the gas station (1.16 acres); and ii) future development land (96.72 acres). Lois Hicks gave expert evidence in respect of the Lebow appraisal. Ms. Hicks also critiqued the Ellens appraisal of the Brampton Property and the Acton Property.

[144] Mr. Kommatas retained Neil Warshafsky, CCIM, Broker, to prepare an opinion on each of the Brampton Property and the Acton Property. Mr. Warshafsky opined on the price each property would sell for, and he provided the methodology to market and sell each property to garner that price.

[145] There is considerable disparity in the valuations and the approaches taken by the appraisers.

Expert Evidence

The Ellens Valuations

[146] In its individual reports, each dated January 2022, Ellens concluded that, subject to certain assumptions and limiting conditions, the market value estimates of each of the properties were as follows:

(1) The Eglinton Avenue West Property as at January 15, 2022: $5,100,000.

(2) The Derry Road Property as at January 15, 2022: $3,500,000.

(3) The Acton Property (10365 Highway 7 - Golf Course portion) as at January 15, 2022: $5,450,000, subject to “Hypothetical Assumption”[^1]

(4) The Acton Property (10733 Highway 7 - Farm Property portion) as at December 31, 2021: $2,570,000.

(5) The Brampton Property (excluding a two-acre parcel of land on which the gas station is situated), and on the assumption that the Driving Range has been removed and noting that the land is subject to two impediments: i) a proposed 400 series highway within the development area of the Brampton Property; and ii) the need for a determination of the scope and location of a nearby shale deposit, as at December 31, 2021: $62,800,000.

The Lebow Valuation

[147] In its report dated January 7, 2022, subject to certain assumptions, and contingent and limiting conditions, Lebow estimated the current market value of the Brampton Property as at December 20, 2021 to be not less than:

Future Development Land (96.72 acres): $76,213,400 Gas Station: (1.16 acres): $3,880,000

[148] In the section of its report dealing with Limiting Conditions and Assumptions, Lebow noted that the Brampton Land was improved with a driving range and improvements associated with the driving range, which Lebow found to be non-contributory to value. However, it noted that both the farmland and Driving Range improvements were interim uses until the land could be developed. Lebow assumed that the on-site improvements did not have any impact on the value.

[149] Ms. Hicks reviewed the Ellens Report at the request of Mr. Kommatas’ counsel. In respect of the Ellens appraisal of the Brampton Property, not including the gas station, Ms. Hicks testified that Ellens made a critical valuation error in its report because it used an incorrect unit of measure. In her opinion, the unit of measure ought to have been the price per usable acre. In the result, she testified that this approach led to an understated valuation. In addition, she testified that the Ellens Report provided insufficient land use planning analysis to properly analyze the property and the comparable sales. Included in the alleged insufficient analysis, among others, Ms. Hicks referred to the assumption that the costs of removal of the Driving Range could be deducted from the overall market value conclusion, the assumption that the proposed 400 series highway would be an impediment (without any discussion of the impact), and the assumption that the shale deposit would be an impediment (without mention of the Region of Peel’s proposed plan amendment to delete shale protection policies); the identification of the property as vacant agricultural, which is inconsistent with the highest and best use of the lands, which, in her view, is future development. Ms. Hicks noted that the Ellens Report was made for internal decision-making purposes and not for sale/purchase decisions or for litigation support. Ms. Hicks’ opined that all these factors result in an undervaluation of the current market value.

[150] Regarding the gas station on the Brampton Property, Ms. Hicks testified that the Ellens Report provided insufficient land use planning analysis to properly analyze the Brampton Property and the comparable sales. Among other alleged deficiencies, Ms. Hicks noted the following in support of her view that the Ellens Report value for the gas station is lower than current market value:

• Ellens added expansion lands of .84 acres to the gas station, but the dates of the right to the expansion lands have lapsed.

• Ellens identified the property rights appraised for the gas station as fee simple as opposed to a leased fee.

• The capitalization rate investigation, reporting and analysis relies on several dated indicators and geographically-unrelated investment properties, resulting in an inappropriate capitalization rate selection.

• The Ellens Report was prepared for Calldron for internal decision-making purposes and not for sale/purchase decisions or litigation support.

Neil Warshafsky’s Report

[151] Mr. Warshafsky’s opinion letter is dated January 7, 2022, and at that time, he described the real estate market for the subject lands as “bullish.” Mr. Warshafsky had the benefit of the Lebow report on the Brampton Property. He opined that the sale price of the Brampton Property would be in excess of $80,000,000 based on his marketing strategy and program from initial listing to closing. He also opined that a potential buyer would not achieve a draft plan of subdivision and zoning approvals until 2027; the impact of the proposed 400 series highway could be “minimal to nil”; and the shale deposit policy would not affect the timing or scope of a sale of the Brampton Property.

[152] Regarding the Acton Property, Mr. Warshafsky opined that the Property would sell for a price “much greater” than the appraised values set out in the Ellens Report, notwithstanding that development process approvals are still required. Mr. Warshafsky further opined that the right buyer may have a use for the Acton Property in its current state and would therefore pay a premium for it.

[153] In terms of marketing the properties, Mr. Warshafsky recommended an approach based on the broadest and greatest exposure through the Multiple Listing Service, whereby the properties would be introduced to many qualified buyers or through brokers to others in a position to buy.

The Remedy

[154] Having found conduct that was unfairly prejudicial or that unfairly disregarded the interests of each of Mr. Vastis and Mr. Kommatas, I am permitted to make an order to rectify the matters complained of. In my view, the appropriate remedy is a wind up of the Companies and a liquidation of the assets. As noted, even without a finding of oppression, the court may order a winding up where the business partners are in a deadlock and they can no longer work together.

Remedies Sought by the Parties

[155] In their respective applications seeking a remedy for oppression, initially, each of Mr. Vastis and Mr. Kommatas sought the appointment of a receiver. However, around December 2021, Mr. Vastis disclosed that he was no longer seeking the appointment of a receiver, and amended his application accordingly.

Mr. Vastis

[156] Mr. Vastis now seeks an order directing a valuation of Mr. Kommatas’ shares of the Companies, and an order permitting him to purchase Mr. Kommatas’ shares at their market value, as determined by an appraiser. On December 17, 2019, Mr. Vastis, through his counsel, Robert Picard, suggested a buyout of Mr. Kommatas’ shares. In the alternative, he suggested a shareholders agreement, which would allow for continuity, dispute resolution, and structured disengagement scenarios based on agreed conditions or criteria. Mr. Kommatas declined both.

[157] Mr. Vastis argues that the appointment of a receiver is an extraordinary remedy that should only be used in rare circumstances and should not be used where a more suitable remedy is clearly available. Mr. Vastis contends that a more suitable remedy is available – a buyout of Mr. Kommatas’ shares.

[158] Mr. Vastis submits that an independent appraiser, selected by the court, could be engaged to determine the value of Mr. Kommatas’ shares. This remedy would eliminate the need for a receiver or other court officer, and result in greater efficiency, less opportunity for conflict, and a less costly process. Mr. Kommatas would be paid fair market value for his shares and Mr. Vastis would continue to manage the Companies as the sole owner-manager. It would bring to an end any need for further cooperation between the parties respecting the Companies.

[159] Mr. Vastis asserts that Calldron should be valued based on the value of its real estate assets, of which Mr. Kommatas would receive 50 per cent. Mr. Kommatas would also receive 50 per cent of what he would otherwise be entitled to as a 50 per cent shareholder up to the date of closing, including the amount set out in his shareholder loan account.

Mr. Kommatas

[160] Mr. Kommatas asserts that the only remedy for the oppression conduct in this case is an order for a winding up and sale of the Companies’ assets through a court-supervised process.

[161] Mr. Kommatas submits that a forced buyout of his shares would not be appropriate in this case because the true value of the Companies lies in their underlying assets, which is principally land. Mr. Kommatas is open to a liquidation of his interest in the Companies. However, the determination of his 50 percent interest is not a straightforward exercise. He submits that the only fair means to determine the fair market value of the lands, some of which have unique attributes, is to expose them to the market, through a court-supervised process, to discover what a willing purchaser is prepared to pay. Mr. Kommatas is also concerned that a forced buyout would give Mr. Vastis an opportunity to delay and attempt to find ways to pay less than fair market value, which would keep the parties locked in litigation for years.

[162] Mr. Kommatas also submits that the valuation of the Companies involves more than a determination of the value of the lands owned by Calldron. He contends that Old Pro is a business that earns revenue and has value. Further, any share valuation would need to factor in the Companies’ liabilities, including liability for unpaid tax, unpaid dividends and the shareholder loan accounts.

[163] In sum, Mr. Kommatas seeks an order appointing a court-appointed receiver to facilitate a listing and sale of the underlying assets of the Companies on the open market, to investigate and manage the Companies’ liabilities, any unpaid dividends, and the shareholder loan accounts, and to distribute the net proceeds to the shareholders.

Analysis

[164] In Landford Greens Ltd. v. 746370 Ontario Inc. (1993), 12 B.L.R. (2d) 196 (Ont. Gen. Div.), at para. 22, Ground J. held that under corporate or partnership legislation, the just and equitable grounds to wind up an entity require the irreparable breakdown in trust and confidence between the partners, which renders the situation virtually impossible for the venture to continue.

[165] To determine what is just and equitable in the circumstances, the following, as stated by Lord Wilberforce in Ebrahimi v. Westbourne Galleries Ltd., [1973] A.C. 360 (H.L.), at p. 379 is expositive:

The foundation of it all lies in the words “just and equitable” and, if there is any respect in which some of the cases may be open to criticism, it is that the courts may sometimes have been too timorous in giving them full force. The words are a recognition of the fact that a limited company is more than a mere legal entity, with a personality in law of its own: that there is room in company law for recognition of the fact that behind it, or amongst it, there are individuals, with rights, expectations and obligations inter se which are not necessarily submerged in the company structure. That structure is defined by the Companies Act and by the articles of association by which shareholders agree to be bound. In most companies and in most contexts, this definition is sufficient and exhaustive, equally so whether the company is large or small. The “just and equitable” provision does not, as the respondents suggest, entitle one party to disregard the obligation he assumes by entering a company, nor the court to dispense him from it. It does, as equity always does, enable the court to subject the exercise of legal rights to equitable considerations; considerations, that is, of a personal character arising between one individual and another, which may make it unjust, or inequitable, to insist on legal rights, or to exercise them in a particular way.

[166] In the case of Mr. Vastis and Mr. Kommatas, there has been a serious failure of expectations on both sides. In Animal House Investments Inc. v. Lisgar Development Ltd., 2007 CanLII 82794 (ON SC), 87 O.R. (3d) 529 (S.C.), at para. 57, Wilton-Siegel J. stated:

… a Court will only exercise its discretion to order a “just and equitable” winding-up if the disharmony has resulted in a sufficiently serious failure of expectations of the parties to warrant such equitable relief. In order to satisfy this test of a serious failure of expectations, an applicant must demonstrate that the parties regarded, or would have regarded if they had turned their minds to it at the time of formation of the business association, the particular circumstances resulting from the disharmony to constitute the termination or repudiation of the business relationship among them.

[167] D.M. Brown J. (as he then was), expanded on this analysis in Falus v. Martap Developments 87 Limited, 2012 ONSC 2301, 2 B.L.R. (5th) 292, at para. 43:

Often the “just and equitable” principle has been used to wind up a company in circumstances where a dominating or more powerful shareholder attempts to exclude another or to force another out of the relationship. But the concept goes further, applying where the relationship between the parties has reached a deadlock or where the relationship has broken down because of incompatibility or quarrelling: “continued quarrelling, and such a state of animosity as precludes all reasonable hope of reconciliation and friendly co-operation is sufficient to justify the order.” Consequently, the case law indicates that where in essence a corporation resembles a partnership, if the relationship of trust and confidence between the partners in corporate guise has broken down and the continuation of the business between them operating as equal partners is not possible, judicial intervention under OBCA s. 207 is appropriate. [Footnotes omitted.]

[168] It is more than apparent that Mr. Vastis and Mr. Kommatas are at an impasse. They are equal shareholders in the Companies and have no shareholders’ agreements. They have stopped working together and stopped communicating with each other, other than through counsel. The relationship inter se has become one of a lack of cooperation, distrust, and spiteful conduct. Mr. Vastis has threatened Mr. Kommatas with violence.

[169] Mr. Vastis and Mr. Kommatas disagree on many things. However, they are agreed that the fracture in their business relationship is irreparable, and the trust and confidence they once shared is broken.

[170] In Basegmez v. Akman, 2018 ONSC 812, 141 O.R. (3d) 549 (Div. Ct.), at para. 31, Myers J. described the liquidation remedy as one that is “expeditious, interdependently run, and measures fair market value in the marketplace.” Myers J. preferred the liquidation process over a forced buyout of the shares because the latter creates an opportunity for the buyer to “delay and try to avoid paying fair market value in a process that will see the parties locked into litigation to-and-fro for years.”

[171] Mr. Vastis raises the issue of costs. I agree that proceeding with a court-appointed receiver is likely to be more expensive than simply retaining an appraiser to determine the value of the Companies’ shares based on the value of the land owned by Calldron. However, in fashioning a remedy, cost is only one factor to consider. Further, a remedy that includes the costs of a receiver can be executed in a way to maximize the value of the assets to be marketed and sold and to, potentially, reduce tax by exploiting available tax planning strategies. Further, as noted, the process will involve more than marketing and selling the land. The determination of the Companies’ liabilities and a fair and equitable distribution of the proceeds, in my view, require the experience of and the resources available to a receiver. In the case of Mr. Vastis and Mr. Kommatas, where the animosity between them is palpable, and there is a growing history of distrust and enmity, there is a real risk that greater costs could be incurred in the absence of court supervision. In my view, they will both benefit from the experience and neutrality of a court-appointed receiver who reports to the court.

[172] In Naneff v. Con-Crete Holdings Ltd. (1995), 1995 CanLII 959 (ON CA), 23 O.R. (3d) 481 (C.A.), at paras. 31-33, the Court of Appeal for Ontario held that a fair and appropriate remedy in the oppression context may not run counter to the parties’ reasonable expectations or give them something that could never have formed part of those expectations. In their negotiations, Mr. Vastis and Mr. Kommatas’ were largely focused on finding ways to divide the Companies’ assets equally between them. However, there was also discussion of a liquidation of the assets if the shareholders could not agree on an equal division.

[173] While Mr. Vastis no longer wants a liquidation of the Companies’ assets, it cannot be said that liquidation was not within his reasonable expectation. Such a solution is set out in his Final Offer as “Option B.” In the voicemail message left for Bill, Mr. Vastis says he will “go for liquidation.”

[174] Also, on the agenda that Mr. Vastis prepared in anticipation of a meeting on December 9, 2019, Mr. Vastis included in the “solutions” the “sale of Mississauga Road property.” Though no meeting was held on December 9, 2019, Mr. Vastis admitted that he included “liquidation” because he wanted to put “all ideas on the agenda.”

[175] In a letter dated June 19, 2020 from Mr. Vastis’ counsel to Mr. Kommatas’ counsel, Mr. Fisher acknowledges that Mr. Vastis’ Final Offer “contained several different ways to approach either an asset split, a buyout or a winding up of the companies and sale of the assets.” In the same letter, Mr. Fisher states that “[t]here are likely only 2 practical alternatives, a buyout or sale.”

[176] A wind up and liquidation remedy is one that was in the reasonable expectation of each of Mr. Vastis and Mr. Kommatas.

[177] A public sale with the interested parties having a right to bid has the advantage of exposing the property to the marketplace, which is precisely Mr. Kommatas’ aim, but it also gives Mr. Vastis an opportunity to buy the land he wants. As McEwen J. observed in Libfeld, at para. 462, this type of process “allows for a fair means of protecting one’s investment and ensuring a fair return.”

[178] A receiver is well-equipped to oversee the sale of the land held by Calldron, to conduct such other investigation as is necessary, and to report to the court. The appointment of a receiver to facilitate a wind up and liquidation in this case is just and equitable.

Compensation for Mr. Vastis

[179] Mr. Kommatas does not dispute that Mr. Vastis took on the lion’s share of the management of the Companies’ businesses, especially while Mr. Kommatas was working full-time at his dry-cleaning business. Mr. Kommatas also does not dispute that at the outset of their business relationship, Mr. Vastis and he agreed that Mr. Vastis would be compensated for his management services when the property was sold. Mr. Kommatas testified that the agreed upon compensation would be $250,000, and Mr. Kommatas does not dispute that Mr. Vastis is entitled to this amount. He testified that he accepted that Mr. Vastis could take that amount, but he did not know whether Mr. Vastis had taken it.

[180] Mr. Vastis’ evidence on his own compensation was unclear. He testified that he recalled having the discussion with Mr. Kommatas that the amount that he and Mr. Kommatas agreed on was not fixed, but it was agreed that Mr. Vastis would get compensation on the sale of the real estate. In cross-examination, he testified that Mr. Kommatas and he discussed the matter at the beginning of their business partnership, but he could not recall whether the agreed amount was $200,000 or $250,000, or whether it was agreed that he would get that amount per year, or some equity in the real estate for all of his work on the leases. Mr. Vastis conceded that no agreement in this regard was ever finalized. At one point, he testified that he would waive this compensation but later retracted that statement. Based on the record, I find that Mr. Vastis is entitled to compensation in the amount of $250,000 for his management of the Companies.

Disposition

[181] An order pursuant to s. 207(1)(b)(iv) of the OBCA shall issue for a winding up and liquidation of the Companies.

[182] Both Mr. Vastis and Mr. Kommatas shall be permitted to participate in the bidding process in the sale of the underlying assets of the Companies, which shall be conducted by a court-appointed receiver.

[183] If Mr. Vastis and Mr. Kommatas cannot agree on the receiver to facilitate the wind up and sale process and distribute the proceeds, they may seek direction from a judge on the Commercial List.

[184] Both Mr. Vastis and Mr. Kommatas are claimants, but Ms. Vastis is not a claimant, for the purposes of s. 245 of the OBCA. Therefore, Ms. Vastis is not entitled to a remedy for any alleged conduct by the Companies that was oppressive or unfairly prejudicial to her or that unfairly disregarded her interests.

[185] Ms. Vastis is not entitled to any remuneration from the Companies for the services she provided.

[186] Mr. Vastis is entitled to $250,000 as compensation for executive services provided to the Companies, which amount shall be deducted from the share of the liquidation proceeds payable to Mr. Kommatas.

[187] Mr. Kommatas is not exempt from responsibility or liability for any unreported taxes or unpaid tax liability (including interest and penalties) owing by one or both of the Companies as a consequence of the failure of the directors and officers to report all income earned in the Companies.

Costs

[188] In my view, success in this trial is divided. The parties are strongly encouraged to agree on the matter of costs. In the event that they cannot, they may arrange a 9:30 a.m. scheduling appointment before me.

Dietrich J.

Released: October 11, 2022

[^1]: The appraiser notes that the work to complete the Golf Course is not yet finished, and a golf course is not operating on the land. The appraiser notes that it is beyond the expertise of the appraiser to itemize and provide a value for the improvements as currently constructed. “Therefore, it is a Hypothetical Assumption of this report that the existing improvements have been removed and the site is vacant. Should the Hypothetical Assumption not be in place, the value would be significantly different.”