Court File and Parties

COURT FILE NO.: CV-22-687465 DATE: 20230227 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: SANJIV JOSHI and XPERT LAW INC. Plaintiffs – and – DAVID GRACE, 563973 ONTARIO LIMITED and OLYMPIA ATHLETIC CAMPS LIMITED Defendants

Counsel: Daniel Z. Naymark and Dillon Collett, for the Plaintiffs Monica Unger Peters, for the Defendants

HEARD: February 9, & 10 2023

Papageorgiou J.

Background

[1] The defendant, David Grace (“Grace”) is 82 years old and has dedicated his life to teaching adolescents, first as a teacher, and for the past 50 years as the founder and operator of a camp for children. This camp is the business owned by the defendant, Olympia Athletica Camps Limited (“Olympia”). Olympia is a wholly owned subsidiary of 563973 Ontario Limited (“Parent Co.”). Olympia and Parent Co. are collectively referred to herein as the “Companies”.

[2] Olympia’s Purpose Statement indicates that:

Olympia is a world class, dynamic, upbeat, physically and emotionally safe community of positive vibrations of upliftment and inspiration that grows. Everyday Heroes go on their own heroic journey to discover their core heart desires, qualities, values and guidance. They honor their journey by expressing this heart-set into their everyday interactions. This not only uplifts themselves, but also serves to inspire others to live their own heart-infused heroic path. Thus, they become the true heroes of their own story, giving lasting fun, friendship and fulfillment.

[3] Xpert Law Inc. (“Xpert”) is wholly owned by Sanjiv Joshi (“Joshi”). Xpert purchased 50 % of the shares in Parent Co. on March 31, 2022. Xpert is a corporation which conducts searches, and discharges for the other company owned by Joshi, Xpert Credit Control Solutions (“Xpert Credit”).

[4] Joshi and Xpert have brought an oppression remedy pursuant to s. 248(3) of Business Corporations Act, R.S.O. 1990 “the OBCA ”. They claim that they had a reasonable expectation to be involved in the management of Olympia and Parent Co. and that they have been unfairly excluded. Their interlocutory motion for reinstatement was originally returnable on January 16, 2023.

[5] For the reasons set out in my decision dated January 13, 2023, the initial motion was adjourned to permit Joshi to file materials in response to Grace’s affidavit delivered on or about January 3, 2023 and to permit him to conduct further cross examination of Grace. At that time I imposed a number of terms as a condition of the adjournment which involved the provision of books and records to the Moving Parties as well as temporary reinstatement of Joshi. I will discuss these terms more fully at the end of this decision.

[6] After this adjournment, Joshi delivered a further affidavit on January 20, 2023. Grace was cross-examined on January 26 and Joshi was cross examined on January 27, 2023. After these cross examinations, both parties delivered further affidavits. Joshi’s affidavit, dated February 2, 2023 set out his position on Grace’s alleged non-compliance with the terms I ordered. Conversely, Grace’s dated February 5, 2023 was in response to Joshi’s February 2, 2023 affidavit. Grace’s counsel took the position that these affidavits are untested by cross-examination and that I should not consider them. Joshi’s counsel took the position that I should consider them both.

[7] In the exercise of my discretion, I am taking these affidavits into account but with less weight since they have not been tested by cross-examination.

[8] I note that the Caselines record comprises over 8,000 pages, inclusive of caselaw and compendiums. It is impossible to address every issue, fact and circumstance which has been raised within this large record, but I have addressed the most relevant ones.

[9] The parties have had a fulsome opportunity to make their cases.

[10] The motion returned before me on February 9 and 10, 2023. At that time, Joshi’s new position was that Grace should be excluded from management altogether, that Grace should be stripped of his title of Director for both Olympia and Parent Co. and that Joshi should be permitted to solely manage Olympia’s and Parent Co’s affairs as their sole Director. He further claims that Grace failed to comply with the terms which I ordered on January 13, 2023, that the parties can no longer work together, and that Olympia’s affairs are better managed by him.

[11] Grace in turn alleges that Joshi, together with his wife and brother-in-law, took advantage of a naïve and trusting man, being himself. He alleges that Joshi, acting as Grace’s mortgage broker, business and investment advisor, and his wife, acting as Grace’s lawyer, breached their fiduciary duties owed to Grace, and acted dishonestly for their own financial gain.

Decision

[12] For the reasons that follow I am dismissing the Moving Parties’ motion and vacating all terms ordered by me on January 13, 2023.

The Issues

[13] This motion involves the following issues:

a. Have the Moving parties demonstrated a prima facie case? b. Do the Moving Parties come before this court with clean hands? c. Have the Moving Parties demonstrated irreparable harm? d. Which party does the balance of convenience favour?

The RJR MacDonald Test

[14] The well-known test for an interlocutory injunction as set out in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 SCR 311, has three elements: (1) a serious issue to be tried or, for some situations, a strong prima facie case; (2) irreparable harm; and (3) the balance of convenience favouring the granting of the injunction: RJR-MacDonald Inc..

[15] In general, where the relief requested is prohibitory, the first criterion is “a serious issue to be tried”, and where the relief requested is mandatory, the first criterion is a strong prima facie case: see R. v. Canadian Broadcasting Corp., 2018 SCC 5, [2018] 1 S.C.R. 196, at paras. 13-15; Romijay Enterprises Ltd. v. 11 Yorkville Partners Inc., 2017 ONSC 2388, 138 O.R. (3d) 24, at para. 24.

A. Have the Moving Parties Demonstrated a Prima Facie case?

[16] There is some disagreement in the caselaw as to whether the first criterion for an injunction in an oppression action requires the moving party to show a substantial issue to be tried or a strong prima facie case.

[17] Most of the cases cited before me applied the strong prima facie case test: Gazit (1997) Inc. v. Centrefund Realty Corp., [2000] O.T.C. 638 (S.C.), at para. 77, as cited in Nada v. Basada, 2020 ONSC 2940, at para. 13, Le Maitre Ltd. v. Segeron (2007), 33 B.L.R. (4th) 224 (Ont. S.C.), at para. 31, Gal v. Lavine, 2012 ONSC, 99 B.L.R. (4th) 297, at paras. 25-26.

[18] Where the Order sought merely seeks to preserve the status quo, some courts have applied the serious issue to be tried test: Romijay, at para. 24.

[19] When the motion was originally brought, the Moving Parties claimed that they were only seeking to restrain Grace from interfering with their participation in the Camp’s business and restrict his access to the Camp’s corporate records. They argued that this relief would preserve the status quo prior to Joshi’s removal from management; as such, the relief sought is prohibitory only and as such, the “serious issue to be tried” standard ought to apply.

[20] However, in Connelly v. Connelly-McKinley Ltd., 2010 ABQB 515, [2010] A.J. No. 907, at para. 6 the Court rejected such an argument:

The relief the applicants seek is restoration of a past status. I would have to direct specific actions to achieve that end. Characterizing the application as one prohibiting the respondents from interfering with the applicants' ability to perform their jobs, when stripped of the unnecessary and tortuous negatives, is actually an application to reappoint. That is a positive or mandatory direction. … where the application can be viewed as either prohibitory or mandatory, more or less equally it behooves the Court to insist on the more onerous standard being met, if that standard is to have any force.” [emphasis added.]

[21] The amended Order presented to me goes much farther than reinstatement and seeks the complete removal of Grace as a Director of both Companies, that Grace be removed from all positions of management responsibility and that Joshi be appointed in his place as a Director and officer of Olympia with authority to manage Parent Co. and Olympia’s business affairs on an interlocutory basis—although he does request in the alternative that he merely be reinstated.

[22] In my view, the strong prima facie test is applicable either way: Nada, at para. 15.

Reasonable Expectations

[23] The parties agree that reasonable expectations of shareholders “are the bedrock of the oppression remedy.” The parties must first establish that a breach of such reasonable expectation has occurred in order to consider whether the conduct complained of amounts to ‘oppression’, ‘unfair prejudice’ or ‘unfair disregard.’”: Marot v. Marot, 2019 ONSC 866, 22 R.F.L. (8th) 349, at paras. 45-46.

[24] In their factum, the Moving Parties assert that Joshi had a reasonable expectation that he and his team (including his wife, Meena Lakhanpal (“Lakhanpal”) and a consultant he hired, Mary Butcher (“Butcher”) would be actively involved in all aspects of Parent Co. and Olympia’s affairs, including all operational and financial matters.

[25] In order to succeed on the first RJR criterion, the Moving Parties must demonstrate a strong prima facie case that this was the case.

[26] The Supreme Court in BCE Inc v. 1976 Debentureholders, Re, 2008 SCC 69, [2008] 3 S.C.R. 560, at para. 72, directed at para. 72, “[f]actors that are useful in determining whether a reasonable expectation exists include: general commercial practice; the nature of the corporation; the relationship between the parties; past practice; steps the claimant could have taken to protect itself; representations and agreements; and the fair resolution of conflicting interests between corporate stakeholders.” The business reality of how the parties interacted is also important: BCE, at paras. 53-59.

[27] I will now address the relevant factors in this case.

Corporate Structure

[28] Parent Co. owns all of the shares of Olympia. Grace and his former wife, Mary Grace (“Mary”) were equal shareholders of Parent Co.

[29] They were both Directors of both corporations. With respect to Olympia, Grace was the sole Director and held the position of President while Mary held the position of Secretary Treasurer.

[30] Olympia’s constating documents provided that there could only be one Director.

How the parties met

[31] Olympia’s camp is operated at 2400 Limberlost Road & 1010 East Limberlost Road, Oxbow Lake Road, Lake of Bays, Ontario (the “Limberlost Property”). The Limberlost Property runs along valuable lakefront property comprising over 40 acres on the shores of Oxbow Lake. Grace has operated this camp on the Limberlost Property for the last 50 years. The Moving Parties produced a draft valuation dated 2021 which indicates that the Limberlost Property has a value of approximately $8,000,000.

[32] Grace says that this camp was always intended to be a social enterprise rather than a profit maximizing commercial venture. Throughout its history, profits have been meagre.

[33] Grace lives at the camp and earns $100,000 annually.

[34] Until COVID-19, the business ran itself, but the government mandated closures prevented the camp from opening in 2020 and there was reduced capacity in 2021. He turned to experts for assistance.

[35] One of the experts consulted is Joshi who is mortgage broker and owner of Xpert.

[36] Joshi’s evidence when cross-examined demonstrates that he is a highly sophisticated businessman who engages in a variety of businesses. His company, Xpert Credit manages approximately $30 million in portfolios. Individuals who do not wish to keep their money in traditional investments like GIC’s and mutual funds advance money to his company and he lends these out as either a first, or second mortgage, or even as construction financing.

[37] Grace initially met Joshi through his wife, Lakhanpal who is a lawyer and represented the Companies in various litigation matters.

Joshi’s role as mortgage broker and debtor

[38] In his capacity as mortgage broker, Joshi arranged for a mortgage for Olympia in the amount of $3,400,000 in March 2021. This mortgage was increased to $3,650,000 in March, 2022.

[39] Olympia lent a total of $1,460,000 to Xpert Credit from the mortgage proceeds (the “Xpert Loans”). This total amount was composed of $1,240,000 from the mortgage proceeds as well as $220,000 Grace’s personal funds. Xpert Credit advanced $1,000,000 on June 15, 2021 at an interest rate of 8 % and the balance on December 28, 2021 at an interest rate of 8 % for $200,000 and 6 % for $260,000. Xpert Credit executed promissory notes.

The negotiations in respect of Xpert’s purchase of shares in Parent Co.

[40] Grace and Joshi spoke at length about the history and purpose of the Companies and believed that Joshi wished to carry on his legacy. Their relationship became a trusted friendship with each visiting each other’s homes where they had many meals together.

[41] Sometime during the fall of 2021, Joshi and Grace began discussing Joshi’s purchase of shares in Parent Co. and the parties had a number of meetings to work out the details. Grace says that in their discussions, Joshi advised him that he and his wife Mary would be personally liable for Olympia’s liabilities and that its creditors would be able to obtain judgment and execute against their personal assets.

[42] The notes which Joshi took at a meeting which he had with Grace and Grace’s ex-wife on January 12, 2022 appear to be the underlying basis for the way in which the price for Mary’s shares was calculated.

[43] Therein, and as Joshi summarizes in his affidavit, Joshi calculated the value of Olympia’s assets and its liabilities.

[44] The notes show that the only asset which he considered of any value was the Limberlost Property owned by Olympia.

[45] Joshi valued it at $8,000,000 based upon a draft 2021 valuation. He then calculated the total value to be $7,187,618 after real estate commission fees, less existing debts and liabilities which he calculated to be $5,587,618. He concluded by indicating that Olympia would have to sell the Limberlost Property for $9,187,618 to take into account capital gains taxes in the amount of $2,000,000 to break even. The notes conclude with Joshi indicating that he would pay $300,000 cash for Mary’s shares, or $100,000 each year for five years.

[46] I am inferring that the details in this note were also discussed with Grace and Mary because Joshi indicates that they were discussing the potential for him to invest and the kind of offer which Joshi discussed at that time was based upon these calculations. It would only make sense that to persuade Grace and Mary as to the reasonableness of his offer, he would also outline his calculations in respect of Olympia’s worth.

[47] It is beyond this motion or the documentation before me to be able to verify the calculations in Joshi’s notes, but there is one important and glaring omission and error. Joshi failed to include the loan receivable owed to Olympia from his own company, Xpert Credit in the amount of $1,460,000 as an asset. He is an astute businessman and would certainly have been aware that this receivable was part of Olympia’s assets.

[48] Both Grace and Mary are elderly. Grace trusted Joshi implicitly. In my view, even though Joshi is correct that Mary has never complained about the price he paid for her shares or alleged that the transaction was unconscionable, and even though both Grace and Mary obtained independent legal advice, this omission is significant in the context of an oppression remedy where Joshi is asking the Court to exercise its equitable jurisdiction on his behalf on the basis of fairness.

[49] Indeed, it is also odd that Joshi would make any offer at all given the calculations which he prepared. His notes stated: “Very risky venture ahead—not sure whether it’s going to reopen—uncertain/poor management of infrastructure etc. debts looming; risky deal.”

The Share Purchase Agreement

[50] In March 2022, Xpert purchased 50 % of the shares in Parent Co. from Grace’s ex-wife Mary pursuant to a share purchase agreement dated March 31, 2022 (the “SPA”) for $420,000. This agreement closed in escrow on March 31, 2022 but was not actually completed until May 3, 2022.

[51] Subsequently, Joshi became a Director of Parent Co. and Secretary Treasurer of Olympia and Parent Co., while Grace remained the President of Olympia and Parent Co. Joshi’s wife, Lakhanpal and a consultant hired by Joshi, Butcher, became involved in Olympia’s operations. Lakhanpal and Butcher were remunerated.

[52] There was no job description or any agreement about what Joshi’s role entailed, but it is undisputed that he engaged in a number of activities together with Lakhanpal and Butcher which I will discuss below.

[53] One of the significant difficulties in this case is the fact that Joshi had no defined role within Olympia. He was never a Director and although he was involved in Olympia’s operations and was appointed Treasurer and Secretary, there was no formal job description. In many ways, he is asking this Court to create and define what his role was when he could have provided that clarity himself in advance.

[54] There is a great deal of conflict in Grace’s and Joshi’s evidence as to what they intended and what transpired after the SPA closed. The most reliable evidence is what the parties put in writing at the time, what the contemporaneous documents reveal, and what they actually did.

The SPA/ Steps Joshi could have taken to protect himself

[55] The SPA did not contain any provisions whereby Xpert would obtain any rights to appoint Directors of Olympia or whereby Joshi or anyone else would have a right to manage Olympia jointly with Grace. There was no mention of Olympia at all in any of the concluded agreements.

[56] Indeed, Olympia’s Articles provided that there could be only one Director of Olympia. Joshi and Xpert were aware of these Articles, having admitted in his affidavit that he obtained Olympia’s books and records and conducted due diligence prior to the closing of the SPA.

[57] As well, the Moving Parties obtained independent legal advice from their lawyer, Hero Salih, in respect of the SPA and the SPA which contained the following entire agreement clause:

This Agreement (including the documents and instruments referred to herein that are to be delivered at the Closing) constitutes the entire agreement among the parties and supersedes any prior understandings, agreements or representations by or among the parties, or any of them, written or oral, with respect to the subject matter of this Agreement.

[58] Joshi’s counsel prepared the SPA and there are 20 documents in the closing book. Grace signed the SPA as the Director of Parent Co. Joshi could have, but never negotiated any agreements with Grace that would address his role within Olympia, provide that he would become a Director of Olympia, or the necessary changes to Olympia’s Articles to allow for the appointment of a second Director.

[59] In addition to being represented by his own counsel for the transaction, Joshi’s wife Lakhanpal was a lawyer. Joshi is also a sophisticated businessman. Although he denies having any interest in her law firm, there are emails from an email account which he holds with her law firm and which identify him as an employee.

[60] Joshi asserts that despite there being no documented agreements to this effect, it had always been agreed that Olympia’s Articles would be amended so that he could be appointed a Director of Olympia, even though there is no mention of this in any of the concluded agreements or in the 20 documents contained in the closing book.

[61] As support for this alleged understanding, he references a series of emails between him and Hero Salih (his lawyer) which occurred immediately after the completion of the transaction in May 2022. By email dated May 5, 2022, Ms. Salih writes:

Congratulations on your purchase! We have received all executed documents and officially released closing documents from escrow yesterday. Victor is working on compiling the closing book to you at this time.

Please let me know if you have any questions or wish to discuss your next business venture.

[62] Although Ms. Salih ultimately also became the corporate counsel for the Companies at Joshi’s recommendation, this email appears to have been written in her capacity as his counsel on the transaction since it was not copied to Grace.

[63] On May 5, 2022, Joshi replied to Ms. Salih as follows:

Thank you! Can you please send me the documents that I require for the change in banking information ASAP as I am meeting with Dave tomorrow. Secondly, I assume you will be filing the 1A—there is another change to be recorded, which is the registered business address of the corporation. Can the lawyers of the corporation hold the registered business address? Since you will be the corporation’s counsel for corporate matters, and if it is possible, then please change the address to your firm’s address. I will be the Treasurer and Secretary of the corporations. [Emphasis Added]

Secondly, I will now require you to draft a shareholders agreement between Dave and myself. We can discuss this separately over a call but the essentials are that I will like to include a shotgun clause, first right of refusal and buyout option.

If there is anything else that is missing let me know.

[64] On May 6, 2022, Ms. Salih writes:

We do not normally utilize our office address as the registered head office address for our clients. This procedure will be an extra charge of $400 a year plus hourly rates of our clerks for any additional paperwork or maintenance. Please let me know if you wish to proceed with the above and I will send in a request to our executives for approval.

Victor will send you the documents for the Bank amendment shortly.

[65] On May 6, 2022 Ms. Salih’s partner responded as follows:

As per Hero's email below, the post-closing document for the transaction as well as the Form I Notices of Change appointing you as director, secretary and treasurer of 563973 Ontario Limited and as secretary and treasurer of Olympia Athletic Camps Limited have been sent to yourself and David Grace at 1davegrace1@gmail.com via Docusign. Note that an additional Form 1 will need to be prepared electing you as a director of Olympia Athletic Camps Limited will be filed once the articles of amendment for Olympia Athletic Camps Limited are filed increasing the minimum number of directors allowable on the Board (it is currently set at 1 director). Please sign and return the documentation via Docusign at your earliest convenience and advise David of same. Should you have any questions or wish to discuss, please do not hesitate to contact me. Thank you. (A951)

[66] None of these communications were copied to Grace and in my view, their contents suggest that they were all exchanged in Ms. Salih’s and her firm’s capacity as Joshi’s counsel in respect of the SPA. There is no evidence in the record as to when exactly Ms. Salih became the Companies’ corporate counsel, but Joshi’s May 5 email above indicates that she “ will be” the corporation’s counsel for corporate matters. The way this is written clearly indicates that she was not yet the corporation’s corporate counsel when these emails were exchanged.

[67] There is no written documentation, not even any notes of conversations, whereby Grace ever agreed that he would change Olympia’s Articles, or whereby the process of formally changing the Articles was ever commenced to appoint Joshi a Director of Olympia.

[68] I add that the record before me includes hundreds of documents, notes and emails etc., and there are no contemporaneous documents supporting that any of these issues had ever been specifically discussed with Grace or agreed to. Indeed, Joshi does not even give evidence in his affidavits that any such conversations took place. The most that he attests to is that he understood he would be “actively involved in the business affairs as co-manager” and that he “understood and expected that [he] would be a full partner in every sense of the word.” But even these words “co-manager” or “partner” do not appear in any of Joshi’s comprehensive notes or in a single email.

[69] Joshi is an astute and experienced businessman, and he admits in his affidavit that, “Grace and I never once reviewed or discussed the technical legal definitions of President, General Manager and Secretary-Treasurer in carrying out our respective duties.”

[70] In my view, Joshi could have protected himself and obtained written agreements as to the matters which he now asserts but he did not. Despite their strong relationship at the time, he must have understood that there was a risk that he and Grace would not ultimately be able to agree as to his role, and that they would not be able to agree on the terms of a unanimous shareholders agreement or his appointment as a Director of Olympia.

[71] There are only a handful of documents where Joshi is referred to as a Director of Olympia. The first reference is contained in documents which TD Bank prepared and attached to an email dated May 30, 2022, which documents were prepared in order to give Joshi signing authority with respect to Olympia’s bank account. Joshi points out, and it is true that it appears that Grace did sign this document. Grace says that he unwittingly signed this document and was under the impression that Joshi was applying for joint authority and signed it because of his sincere belief and trust in Joshi. The contemporaneous documents support Grace’s evidence.

[72] Grace was never copied with any of the emails which Joshi sent to TD which eventually resulted in this signed document. In that regard, the first email is from Joshi to TD Bank on May 26, 2022 where Joshi signs as a “Director” of Olympia (which he was not) and which was only copied to his wife Lakhanpal. The email states:

Please find attached the signed package for you to set up the signing authority for me. Please note that I am the sole signing authority going forward. Can you please suggest who can I contact to issue corporate credit card, debit card, online access, to be set up…[Emphasis added.]

[73] Grace’s affidavit notes that Joshi improperly attempted to rescind his signing authority and the documentation backs that up. There is no record anywhere of Grace ever having agreed that Joshi would be the sole signing authority going forward and this email is not copied to Grace. It is odd that as early as May 26, 2022, a few months after he became a shareholder of Parent Co., Joshi was seeking to have sole signing authority for Olympia. And TD prepared this document based upon Joshi’s representation that he was already a Director as per his signature line. Absolutely none of this email correspondence with TD Bank was copied to Grace or indeed anyone else at Olympia, apart from Joshi’s wife Lakhanpal. Not even Hero Salih who had become Olympia’s corporate counsel was copied.

[74] It is also troubling that Joshi’s affidavit states that his email correspondence with TD was merely to add him as a signing authority when his email clearly sought that he be made the sole signing authority. As well, his affidavit states that TD sent an email to both he and Grace on May 30, 2022 advising that a corporate resolution was required adding him formally as a Director. There is an email dated May 30, 2022, but it was not copied to Grace and indeed it did not say anything about a formal resolution being required to add Joshi as a Director; the exchange of emails suggests that TD already thought that Joshi was a Director, presumably because that is the basis upon which he initiated the conversation.

[75] It is very concerning that he misstates the contents of documents which he appends to his affidavit.

[76] He says in his affidavit that he assumed Ms. Salih was preparing the formal paperwork but there is no evidence that this was the case either; I repeat, it is odd that none of this was ever copied to Ms. Salih.

[77] In Joshi’s affidavit, he says that on April 29, 2022, Greg Rogers sent an email to his wife Lakhanpal, confirming that he would be named as a Director and Owner of Olympia in the Camp’s next newsletter and this is also referenced in their factum. The email does not say anything of the sort, although there is one text where it appears Greg Rogers refers to a potential upcoming announcement of a partnership in a newsletter but there are no other details and it is not clear what this is with reference to.

[78] There is one organizational chart which does describe Joshi as an Owner/Director. However, there is no evidence as to who prepared this chart. Further, it is uncertain what “Director” means in that chart and whether it means “Director” in the sense of being on the Board of Directors. There are several job descriptions for staff which appear to be attached to the organizational chart which use the word “Director” as part of their title, and these staff did not sit on the Board of Directors. There is no evidence that Grace saw this chart.

[79] What is interesting is that one of the terms requested by Joshi’s counsel when the January 13, 2023 motion was adjourned was to restore Joshi’s position as “Camp Director”. This use of the term “Director” is used in the colloquial way, as opposed to the formal Board of Director meaning.

[80] There is also one document which appears to have been prepared by Olympia which clearly references Joshi as a Director. It is a letter dated July 1, 2022 sent to people on its subscription list. This letter listed Grace and Joshi as Owners and Directors. There is no evidence as to who prepared it and it is not signed by Grace.

[81] In any event, he never did become a Director.

Joshi’s Activities

[82] As noted in BCE, the oppression remedy is not merely based upon the formalities of a business, but is based upon fairness and as such takes into account the business realities of the parties’ dealings.

[83] For the four months that Joshi was a Secretary/Treasurer, these are the types of activities which Joshi engaged in: he, Butcher and Lakhanpal obtained an email account; he had access to Olympia’s IT platform; he attended meetings where they discussed the organizational structure and; he assisted with financial management, strategic planning, infrastructure, human resources and health and safety management.

[84] In the course of their work, Joshi and his team reported on their views as to various financial irregularities and improper business practices. Some of these were structural issues, such as (a) lack of financial controls; (b) widespread distribution of credit cards among Olympia’s employees with little to no control on their spending; (c) personal credit cards were being used and expenses were being reimbursed with little to no approval or auditing; (d) an absence of written policies and procedures or process documentation and; (e) the absence of any inventory controls.

[85] As well, they concluded that camp kitchen staff were running a catering business using Olympia staff time, materials and food inventory, for which they were paid in cash.

[86] Butcher did not provide an affidavit but set out these concerns in a report prepared by Butcher which is attached to Joshi’s affidavit.

[87] While Joshi suggests that this is evidence of significant impropriety, Olympia and Parent Co., were solely owned by Grace and his wife for approximately 50 years. While these business practices may not have been the kind that a truly profit seeking enterprise with multiple unrelated owners would have, they did not view these Companies in this way. And so they were operated in a more informal manner without the kinds of controls one might see in a large corporation.

[88] Of course, once there was a third party investor involved (Xpert and Joshi), these practices needed to be addressed and it was appropriate for Butcher to make recommendations. However, the expectation that all of these things would be turned around overnight is unrealistic.

[89] Once these issues were brought to Grace’s attention, the parties had a meeting and they began implementing reasonable financial controls including a budget for the kitchen, inventory controls, expense verification and approval mechanisms, formal job descriptions for employees, and written employment agreements and policies and procedures.

[90] There is no evidence that Grace or anyone at Olympia fought the implementation of these controls.

[91] I add that the record supports that most of the work that Joshi references as having been done as a result of his involvement was not done by him personally but by Butcher and Lakhanpal, who were paid for their time. I base this on the fact that most of the communications in respect of these matters are from them. Joshi apparently continued his own professional activities as a mortgage broker and lender during this time.

[92] There are a number of Joshi’s activities over those four months which Grace did not challenge at the time, but which he now takes issue with. He has commenced his own separate proceeding against Joshi and Xpert Credit and also against Lakhanpal.

[93] Grace has alleged that Joshi was in a position of trust and confidence and that he breached his fiduciary duty by engaging in a “deliberate, concerted, and multi-phased scheme to exploit the defendants’ wealth, and steal managerial control and ownership of Parent Co and Olympia.” The essence of his overall claim is that Joshi and Xpert were involved in “a long con”.

[94] Although not all of Grace’s allegations are proven as yet, Grace has raised some significant issues of concern with Joshi’s actions which are sufficiently established on this record.

The Construction Contract with OSMI

[95] Joshi arranged for Olympia to enter into a construction contract with his brother-in-law’s construction company, OSMI for $1,200,000 in April 2022 which was to be completed in or around August 2022. Grace admits that he did a walk-through of Olympia’s premises with the OSMI builder, but he did not know the purpose of the walk through and no decisions were made or instructions given by him. Consistent with this, Grace did not sign any contract with OSMI; Joshi did.

[96] There is no evidence that Joshi sought any competing bids.

[97] Joshi admitted when cross examined that he knew that Olympia had been operating at a negative cash flow position for years and they were in dire financial circumstances.

[98] It is surprising that Joshi would have entered into such a significant contract in the context of a business that he felt was in such financial distress, particularly without having Grace sign the contract or without seeking competing bids.

[99] As well, Joshi was only appointed Secretary Treasurer of Olympia by resolution dated May 7, 2022. The contract with OSMI is dated April 7, 2022 and Joshi signed it purporting to have the authority to do so when he did not as of that date.

[100] Grace does not allege that the work was deficient and although he admits that the contractor should be paid, he has expressed concerns about the quantum. These concerns were based upon conversations with unknown persons who estimated that the work should only have cost somewhere in the range of $300,000 to $400,000.

[101] There are limited pictures of the work which was done and there is no affidavit from the builder. This issue is also the subject of another proceeding, and it is beyond the scope of this motion to evaluate whether this work was done, and whether the negotiated contract was fair and reasonable, but the pictures provided in the record do not support that the work was as significant as the price suggests.

[102] There are two photographs of two workers who appear to be shingling a roof and then multiple pictures of a bathroom which was in need of repair, all from different perspectives, a picture of a floor which appeared to require some grouting, a picture of a floor and closet and bathroom which appeared to be in need of baseboard work, some pictures of some furniture in a single room which is covered, perhaps because the walls would be painted, a picture of a sink with paper towels in it, a picture of a ladder leading up to a roof, a photo of what appears to be a dining room, and some photos of the exterior of some buildings which do not show any work being done. There is also a LinkedIn photo of a single room which appears to have been renovated and indicates that it was looking like a whole new building.

[103] I note that there are only two pictures of two workers actually doing work which is on a roof.

[104] OSMI forwarded an invoice to Olympia for the full contract price plus HST in the total amount of $1,356,000 on August 8, 2022, which is months before the contract indicated the work would be completed. The invoice does not reference the stage of completion and requested payment as soon as possible. Two weeks later, OSMI registered a lien.

The $250,000 cheque to Xpert in June 2022

[105] Joshi requested and obtained a cheque from Grace in the amount of $250,000 on June 20, 2022 which he says was to pay expenses Xpert was incurring on its own because Olympia did not have the cashflow. Grace has given evidence that he felt pressured to write this cheque and he has raised concerns about whether this money was actually spent on Olympia’s business. Joshi attached an invoice dated August 8, 2022 to his affidavit which was not sent to Olympia and which purports to support this money having been spent on Olympia’s business. It shows that the bulk of these were incurred after the cheque was written. Grace has also raised concerns about the sufficiency of back up for these expenses. For example, while the invoice from Joshi includes expenses for cleaning services, Grace says that it was he who retained and paid for these services and has attached his own invoice for this. Joshi claims that he paid for his cleaning services in cash which is also odd. As well, Grace points out that there are three cash receipts dated August 8, 2022, which overlap: one for the period May 1, 2022 to August 6, 2022, the other for the period of May 9, 2022 to August 6, 2022 and the third for the period July 1, 2022 to August 6, 2022.

[106] There is no way to evaluate on this record whether these expenses were incurred and legitimate, but the assertion that Xpert had to obtain an advance form Olympia to pay expenses it was incurring because Olympia did not have the cashflow makes no sense since the money to pay Xpert’s allegedly incurred expenses came from Olympia—who Joshi said had no cashflow.

[107] It is concerning that Joshi was purporting to run Olympia’s expenses through Xpert and many in cash at that; Grace would not be able to verify them as a result.

[108] As well, as a result of the terms which I ordered on January 13, 2023, the Moving Parties obtained banking records for Olympia, which they have referred to, which show that in July 2022, Olympia had approximately $750,000 in its bank account. It is unlikely that this money magically appeared in July since Olympia is a seasonal business and receives payment for camps it holds during the summer prior to the summer months.

[109] I add that if Joshi felt that Olympia’s finances were so precarious that it did not have the cashflow to pay ongoing expenses, how did he ever think it would be able to pay the $1,200,000 OSMI construction contract?

[110] I have already set out some other concerns above related to his communications with TD Bank where he misrepresented himself as a Director and sought sole signing authority, his failure to include the loan to Xpert Credit as an asset of Olympia when he negotiated with two elderly people, as well as the fact that $1,000,000 of the loan to Xpert Credit was due one year after Olympia’s mortgage became due. This timing gave (and continues to give) Joshi significant leverage over the Companies.

Joshi’s instructions to Hero Salih

[111] Despite Joshi’s failure to document in writing and negotiate what his role was or would be, the record does support overall that Joshi’s team was beginning to play a growing role with Olympia. However, Grace says that this was because Joshi was inserting himself and his team into all operations. Although he was initially happy with Joshi’s help, over time Joshi engaged in aggressive, threatening and intimidating interactions with the staff (there is evidence below which supports that), he demanded that staff report to him instead of Grace, he imposed onerous new duties, interfered with camp fees and the camp chef resigned because of Joshi’s treatment, and made decisions on his own as if it was his own business, often without Grace’s input. The documentary record supports that, in particular Joshi’s dealings with OSMI and TD Bank.

[112] While Grace intended to rely on Joshi for business operations knowledge and expertise, over time it became apparent that Joshi did not share his vision.

[113] He also says that it became clear that Joshi was trying to unilaterally change Olympia’s mission, organization and culture.

[114] It is possible that if Grace’s trust in Joshi had not been compromised, Grace may have ultimately completed arrangements whereby Joshi would have become a full partner and formal Director of Olympia, with a management role that could not be altered unilaterally by Grace. However, that had not yet occurred when the main reason for their dispute materialized, which I will discuss below.

[115] The precipitating cause for the breakdown in the parties’ relationship appears to be a telephone call Grace says he had with Olympia’s in-house counsel, Hero Salih on July 21, 2022. Recall, Ms. Salih was previously Joshi’s counsel and he brought her in to become Olympia’s inhouse corporate counsel.

[116] The first email from Ms. Salih to Grace on July 21, 2022 reads as follows:

I hope this email finds you well. We have made several attempts to reach your regarding Olympia Athletica Limited and 563973 Ontario Limited. I have left you numerous voicemails and unfortunately not heard back.

Could you please let me know the best time to call you and I will accommodate your schedule so that we can connect. There are a number of urgent matters that we must address at this time.

[117] Grace telephoned Ms. Salih immediately following this email on July 21, 2022. Ms. Salih advised him that on May 13, 2022 she had a telephone call with Joshi wherein Joshi allegedly asked her to prepare an agreement whereby Grace’s shares in Parent Co. would be transferred to Joshi for “nil consideration” after he passed away instead of flowing through his estate to his daughter.

[118] Although Ms. Salih did not provide any affidavit, her file was provided to the parties. Within that file, there was a typed memo and a handwritten note dated May 13, 2022. The typed note read as follows:

Update- he has done completed a lot of work with construction; He wants: Shareholder agreement with Dave and Sam He would like to have: Dave doesn't really care- it is not breaking even, He wants Sam to take control over the "whole situation" When Dave is no longer in this world- he wants to make sure he has control over the company; He wants to take over Dave's share upon his death.

[119] There is also a handwritten note stated as follows:

Call with 563 [Olympia] with Sam Joshi Needs SHA for 565 Wants to be beneficiary once David dies We act for corporation now they both need ILA Sam he has Mina Doesn’t Dave have family—no only daughter (Rebecca) Sam wants to take control New matter for [unclear] and 563—will need retainer Must seek instructions from David as well No need to talk to him? Sam said already spoke to him? Call Mark Mrokani? May 13, 2022 Purchase of shares-stikeman?

[120] The memo and handwritten notes were put to Joshi during his cross examination, but his counsel refused to have them marked as formal exhibits as Ms. Salih did not identify them. As such they were only marked as exhibits for identification. Given that this is a motion which permits evidence on information and belief, and this memo was found in Ms. Salih’s file and notes that it was written by her, I am satisfied that I may have regard to Ms. Salih’s memo as well as her handwritten note.

[121] After her telephone with Grace, on July 21, 2022, Ms. Salih contacted Hart Nemoy, the lawyer who had acted for Grace in respect of the SPA.

[122] By letter dated July 26, 2022, to Ms. Salih (which had been sent to Ms. Salih in draft for her edits on July 25, 2022, by email, which she provided and are within the record), Mr. Hart confirmed his conversation with Ms. Salih as follows:

...We further understand that your firm is the current corporate solicitor for 563973 and also for Olympia Athletica Camps Limited (“Olympia”) and that the Minute Books for both corporations are in your firm’s possession, having been furnished to you by Sam Joshi. You have advised us that the retainer for both 563973 and Olympia were instructed by David Grace; that your firm’s fee was paid by David Grace; that David Grace is the principal and point of contact for both 563973 and Olympia; that your retainer specifically states that you are to take your instructions from David Grace on behalf of both corporations; and that all communication with respect to 563973 and Olympia have been with David Grace, although Sam Joshi has made attempts to communicate with you on behalf of the corporations.

We were contacted by our client David Grace on July 22, 2022 and advised by him that you had informed him that you had been trying to reach him (without success for some time) to tell him that Sam Joshi had demanded that you prepare a Shareholder’s Agreement containing a provision that the shares in the Corporation belonging to David Grace were to pass to Sam Joshi in the event of David Grace’s decease. We understand that you informed David Grace that this was an extremely unusual demand and that you refused to prepare a Shareholders’s Agreement until you had also discussed and received the same instructions from David Grace, and that when Sam Joshi requested that the corporate Minute Books for both Corporations be released to you, you also refused to do so. David Grace has informed us that he was absolutely shocked and upset to hear what Sam Joshi was demanding and that he advised you that the Shareholder’s Agreement and the release of the Minute Books were not authorized by him and that your firm was not to proceed on Sam Joshi’s instructions.

On David Grace’s instructions, you and I spoke in the afternoon of July 22, 2022 to discuss the situation. You confirmed to me that Sam Joshi had indeed requested you prepare a Shareholder’s Agreement containing the above-referred to provision and that Sam Joshi became annoyed with your refusal to do so and with your refusal to release the Minute Books to him. You also confirmed to me that David Grace was shocked and highly upset upon being told by you of what Sam Joshi was demanding of you and you confirmed to me David Grace’s instructions to you that your firm was not to proceed on Sam Joshi’s instructions and was not to release the Minute Books to Sam Joshi

Firstly, we thank you for your professionalism in this matter. There appears on its face to be some very questionable activity of Sam Joshi, which our client will have to investigate. Our client is in his eighties and has spent most of his life building and operating a first-rate athletics camp. He has a daughter. There is no way he would disinherit her in favour of Sam Joshi.

[123] After the Moving Parties commenced this proceeding, Grace’s lawyer requested that Ms. Salih provide a summary of her conversations with Grace and Joshi. Her email dated September 7, 2022 reads as follows:

Please see the summary of facts regarding my phone discussions with David Grace and Sam Joshi below: When I called David Grace ("David") on July 21, 2022, I advised him that I had been trying to reach him for some time. When David and I spoke, I informed him that Sam Joshi ("Sam") had contacted me on May 13, 2022, and requested that I prepare a Shareholders' Agreement, which would contain a clause that David's shares in the parent company would transfer to Sam upon David's death. Sam stated that David had requested this transfer and had already spoken to David, so Sam was calling me on behalf of David as well. I asked if David had any children or any other potential beneficiaries, as this was an unusual request in my experience. Sam stated that David does indeed have a daughter but that he does not speak with her and they do not have a good relationship. I advised that I would need specific instructions from David in order to proceed with drafting such a term in the Shareholders' Agreement. Additionally, Sam asked that the minute books for both companies be physically given to him. I further advised David that Sam asked that I not inform David of either of these requests. I told David that I responded to Sam, saying that I would not draft such a Shareholders' Agreement or release the minute books to him without also receiving David's instructions to do so, and that Sam became annoyed/upset when you I told him this.

[124] In his initial affidavit, Joshi’s explanation was that there must have been a miscommunication as he only instructed Ms. Salih to prepare a shareholders’ agreement with a standard shotgun clause whereby either shareholder could purchase the others’ shares for fair market value.

[125] There is an email from Joshi to Ms. Salih dated May 5, 2022 where he writes, “I will now require you to draft a shareholders agreement between [Grace] and myself. We can discuss this separately over a call but the essentials are that I will like to include a shotgun clause, first right of refusal and buyout option.” This does support what he says, but it does not mean that he did not say something different to her in the telephone call, which occurred a week later. As well, it does not explain why Ms. Salih (his own former lawyer) would say what she did in 1) her handwritten note and memo to file on the day of the call May 13, 2022; 2) her telephone call to Grace on July 21, 2022; 3) her email to Grace’s counsel on September 7, 2022; and 4) the edits to the email sent to her by Mr. Hart, confirming the contents of her conversation on July 26, 2022.

[126] At the return of the motion on February 9, 2023, Joshi’s counsel attempted to discredit Ms. Salih by arguing that Ms. Salih’s purported telephone conversation with Grace on July 21, 2022, was prompted by a fee dispute which Joshi had been having with her and which culminated with his email to her on the same date which stated: “I want an immediate attention to this matter, failing which I will be forced to take the next steps.”

[127] I am not persuaded by this argument. Ms. Salih had previously been Joshi’s lawyer and represented him in respect of the SPA. The fee dispute they were having was not significant. It began on June 9, 2022, when Ms. Salih’s associate advised that they had applied the $10,000 account receivable to Joshi’s account but that $28,457 was still owing. Joshi replied that the invoice was incorrect and that there was an agreement to cap the fee at $18,000. Then a conversation commenced whereby Ms. Salih referenced a conversation where she advised that the fee estimate would be exceeded and that Joshi agreed he would pay whatever their fees were. It makes little sense that Ms. Salih would fabricate a conversation with him on May 13, 2022 as well as all subsequent communications, as a result of a fee dispute which appears to be over $18,000. And if she did, she would have had to backdate her handwritten note and memo to file.

[128] Joshi’s counsel also argues that I should infer that Ms. Salih has recognized some culpability for inaccurate communications at the least or outright lies at the worst, because she would not provide an affidavit and indicated that she felt the need to contact LawPro. When she was again contacted by Grace and Joshi’s counsel, in December 2022 and January 2023, respectively, her counsel advised that she was on a personal leave of indefinite duration and would not be able to respond. Again, I am not persuaded that this means that Ms. Salih fabricated anything. Ms. Salih’s previous retainer by Joshi placed her in a conflict of interest.

[129] Although there is no direct evidence from Ms. Salih, r. 39.02(4) permits affidavits based upon information and belief which in my view permits this court to take into account both Ms. Salih’s oral communications with Grace as well as the extensive written communications noted above. Joshi did not object to any of the documents referencing Ms. Salih’s communications, apart from her handwritten note and memo to file. [1]

[130] I add that in my January 13, 2023 decision, I gave Joshi leave to bring a motion to strike out paragraphs of Grace’s affidavit which he felt improper; he brought no such motion.

[131] While it would have assisted Grace to obtain direct evidence from Ms. Salih, he already had significant damaging documentary evidence about Joshi’s conversation with Ms. Salih. It was Joshi who needed evidence from Ms. Salih to dispute the documentary evidence. He could have sought to examine her as a witness on a pending motion. He did not.

[132] Both parties placed hearsay evidence, or evidence on information and belief before this Court. With the exception of Ms. Salih’s file materials, neither party objected to any of the evidence before me or asserted that I could not rely on it.

[133] In my view, the materials before are sufficient for the purposes of this motion to show that Joshi attempted to direct Ms. Salih to draft a unanimous shareholders agreement whereby Grace’s shares would devolve to him upon Grace’s death.

[134] It is beside the point that Grace would have been required to sign this unanimous shareholders agreement and that he may have obtained independent legal advice if he did so. Up until this point in time, Grace implicitly trusted Joshi and entered into a number of transactions because of this trust. Although it is not possible on the record before me to determine most of the issues with any finality, Grace’s evidence with respect to the loans to Xpert Credit was that he did not specifically read the promissory notes, that they had a conversation whereby Joshi agreed that if Olympia needed the money he would immediately pay it back, and he did not see that the main loan in the amount of $1,000,000 would not be repayable until 2024, well after the mortgage was due in March 2023. It is quite possible that Grace would not have read any unanimous shareholders agreement because he trusted Joshi so much.

Do Grace’s Actions constitute oppression?

[135] On July 27, 2022, Grace deactivated Joshi’s Olympia email account, along with those of Lakhanpal and Butcher, shut off their access to the Camp’s IT infrastructure as well as Olympia’s books and records, and advised Camp staff not to have any dealings with them. The timing supports that this was because of his July 21, 2022 conversation with Ms. Salih.

[136] Joshi has argued that the unilateral shut-out of one operating shareholder by another is a classic form of oppression. Indeed, courts regularly find that that sort of violation of expectations is oppressive and unfairly disregards or prejudices the interests of the excluded shareholder: Thomas Scullion et al. v. Paul Munro et al., 2016 ONSC 116, at paras. 6-9; Bayliss v. Harris, [1993] O.J. No. 2655 (Ont. Gen. Div.) at paras. 29-31; Hu v. Sung (2009), 63 B.L.R. (4th) 286, at para. 72 (Ont. S.C.); Hartnell v. Stauffer Motors Ltd., 1999 CarswellOnt 3778 (Div. Ct.), at paras 26-28; Ayotte v. Beaulne, 2016 ONSC 4928, at paras. 2-5; Lajoie v. Lajoie Brothers Contracting Ltd. (1989), 45 B.L.R. 113 (S.C.), at para. 15.

[137] Most of the cases cited involve the classic situation of persons in a long-term relationship and involve situations where the parties have entered into unanimous shareholders’ agreements or have longstanding and clearly defined roles. No case was presented to me where a shareholder of a parent corporation, who was appointed an officer of a subsidiary for four months, who was not a Director and could not be one because of the Articles, without any unanimous shareholders, was able to be reinstated, let alone oust a founder of a subsidiary.

[138] The SPA which Joshi negotiated did not give him any rights to be an equal partner with Grace in respect of Olympia. At all times, he was aware that Grace was and could be the only Director of Olympia until Olympia’s Articles were amended. As such, although he was a Secretary Treasurer, he could be removed by Grace’s unilateral decision.

[139] It is interesting that, once Joshi was removed, he proposed a specific co-management agreement. He could have done this when he made his initial investment.

[140] In my view, the four months of work he did (mostly through Lakhanpal and Butcher) while he maintained all of his other businesses, and his investment of $420,000 in Parent Co. did not create any reasonable expectation that he had any permanent right to manage Olympia’s affairs, let alone give him the right to oust the founder who had created and managed the Companies for fifty years.

[141] The course of conduct, at most, shows that the parties were working towards the possibility that Joshi would become Grace’s successor if Grace agreed to amend the Articles to create another Director position and if the parties entered into a formal unanimous shareholders’ agreement which clearly defined their roles.

[142] However, until that arrangement materialized, Grace had the legal right to take the action that he did, particularly once he learned of Joshi’s communications with Ms. Salih; it would be impossible for him to trust Joshi afterwards.

[143] In his affidavit Joshi states that “Parent Co and Olympia are effectively in a state of deadlock as a formal matter, presenting practical issues in dealing with ongoing issues including litigation against them.” If that is the case, it is a circumstance which Joshi went into with his eyes wide open.

[144] The oppression remedy is an equitable remedy based upon fairness. Joshi has not established a prima facie case that he has been treated in a manner which warrants the interim order he seeks.

B. Does Joshi come to court with clean hands?

[145] As well, in my view, Joshi does not come to court with clean hands for the following reasons: i) his communications with Ms. Salih, as set out above; ii) his failure to include the loan receivable in the amount of $1,460,000 in Olympia’s assets during his conversation with Grace and Mary in January 2022; iii) communications he had with TD Bank in May 2022 where he misrepresented himself as being a Director of Olympia and wherein he sought to make himself the sole signing authority without copying Grace on the emails; iv) his entering into a construction contract with his brother-in-law’s company OSMI for $1,356,000 when he knew that Olympia’s finances could not bear it, without seeking any competing bids, and without seeking Grace’s authorization; v) his prior negotiation of a loan from Olympia to his company Xpert Credit in the amount of $1,000,000 which was not repayable for one year after the mortgage which he arranged came due.

C. Irreparable Harm

[146] In any event, in my view, Joshi cannot establish that he will suffer any irreparable harm if the injunction is not granted.

[147] First, Joshi is an investor in a business; courts are accustomed to calculating business losses. This business is actually less complex than most. Olympia’s income is revenues from campers and the expenses generated from the Camp’s operations. It has a small staff.

[148] Second, Joshi’s total investment is $420,000 in Parent Co. Grace has made a with prejudice offer to purchase Joshi’s shares for $600,000 which represents an almost 50 % return on his investment in less than a year.

[149] But Joshi does not want this. For reasons which are not yet apparent, he prefers instead to spend what I expect (based on the extensive record before me) are already tens of thousands if not hundreds of thousands of dollars on legal expenses to litigate so that he can become the sole Director of the Companies. The ultimate relief he seeks in his Statement of Claim, which was issued on September 19, 2022, is a court order that he be permitted to buy Grace out.

[150] The Moving Party’s overall position in this lawsuit is perplexing. Joshi says he invested in these Companies as a favour to Grace because he “loves” him, and still does. He has had the opportunity to recoup his investment plus an almost 50 % return, but instead wishes to oust Grace so that he can make all decisions about Olympia and Parent Co. on his own, without Grace’s oversight. Joshi is a mortgage broker who has other full time businesses which are ongoing. He has not provided any evidence that he has some particular passion about children or children’s camps which might explain his position and his actions. Mary Butcher’s email of February 2, 2023 advises that the financial future of Olympia looks bleak.

[151] None of this adds up.

[152] I am inferring that there must be some other significant value within the Companies and their assets (perhaps the Limberlost Property or some corporate opportunity in respect of this property) which, thus far, has not emerged. I did raise this with Joshi’s counsel during the motion and he became quite offended but there is no other reasonable explanation for Joshi’s actions, as a businessman making rational business decisions. It is interesting that Joshi’s January 12, 2022 handwritten notes wherein he valued Olympia did not even do so on the basis of its value as a going concern; he valued it based on a windup. As noted above, Joshi is a mortgage broker and lender who provides construction financing as part of his work.

[153] Furthermore, even if the Limberlost Property is only worth approximately $8,000,000, as the draft appraisal provides, it could be sold to satisfy any judgment. Joshi’s calculations in his January 2022 notes indicate that Olympia’s total debts were approximately $5.5 million. Accordingly, there appears to be equity of over $2.5 million available to satisfy any judgment despite the fact that there is now a lien by OSMI for $1,365,000 since the loan receivable from Xpert in the amount of $1,460,000 offsets this completely. It is also interesting that the lien in favour of OSMI is almost the same amount as Olympia’s loan receivable from Expert Credit.

[154] His position on January 12, 2022 as evidenced by his note is that there was no value in these Companies. The situation has only gotten worse because of the increased mortgage and the lien by OSMI. Based on Joshi’s own evidence and position, it is unlikely that his claim to damages would be significant. And if he is able to prove his case, there will be a sizable asset there from which he can recover.

[155] Finally, although Joshi has argued that he believed he could turn Olympia’s business prospects around, there is no reason to think that he would have been able to. Joshi has not provided any evidence that he is particularly skilled at running a camp for children. Indeed, this seems to be completely out of his skillset based on this record and the longstanding staff do not like working with him as will be further explained below.

D. Balance of Convenience/Grace’s alleged non-compliance with the terms I ordered.

[156] When the motion was originally adjourned, I imposed terms which included the provision of ongoing access to Olympia’s corporate records as well as restoration of Joshi’s role as a “Camp Director” with primary responsibility for day-to-day operational matters.

[157] Joshi argues that Grace’s alleged non-compliance with these terms is relevant to the balance of convenience.

Alleged failure to provide access to Olympia’s books and records

[158] Joshi claims that he has not been granted full access to the books and records as quickly as he should have. First, I released my decision on January 13, 2023 which was a Friday and late in the day at that. The terms I ordered were not stated to require immediate action which had to begin on the weekend.

[159] Joshi complains that there was a four-day delay in activation of Joshi’s email account which was done on January 17, 2023. First, his calculation includes two days on the weekend. Therefore, this was in fact a two-day delay. I find this kind of overstatement of the evidence, which is quite prevalent in Joshi’s affidavit, quite concerning.

[160] Furthermore, Grace’s evidence was that he did not learn about the Ordered terms until January 17, 2023.

[161] There were some delays in his obtaining access to Olympia’s registration database and as of the date of the motion, Joshi did not have access to all of the documents he requested but there has been an ongoing and steady exchange of information.

[162] This is a small enterprise without many employees; I do not view the delays he references to be material.

[163] Furthermore, I have reviewed multiple communications which have been sent by Olympia staff who have responded on an ongoing basis to multiple requests made by Joshi. The communications demonstrate that there has been ongoing provision of information by staff who have been attempting to answer Joshi’s questions. The last communication from a staff member was as follows:

I am doing the best I can with all the requests both you and Mary are making. I can only do so much in a given time. This is very stressful on me with all the demands and requests expected to be delivered immediately and instantly. I am doing my best. I have acted on some of your requests. I have entered all the 2023 sales. Some of your comments needed no response.

Secret bank account/alleged misappropriation by Grace

[164] Trying to draw conclusions from the provision of piecemeal banking documents on a paper record is a bit like throwing darts in the dark. But I will address the Moving Parties’ arguments and evidence on some of these issues, nonetheless.

[165] As set out above, in Grace’s affidavit sworn December 30, 2023 he disclosed that he had felt pressured by Joshi to write him a check in the amount of $250,000 on June 20, 2022. As a result he opened a new bank account for Olympia to which Joshi would have no access. The Moving Parties make much of this and suggest that he has used this “secret” bank account to divert funds to his own benefit. The obvious point is that Grace disclosed this voluntarily. Furthermore, the Moving Parties’ evidence in support of the conclusion that Grace has misappropriated funds does not withstand seven a light scrutiny.

[166] The Moving Parties reference a bank statement which has the account number blacked out which shows that as at July 2022, Olympia had a bank balance of approximately $750,000. They then compare this to an email from Terry-Ann Chong, Olympia’s bookkeeper, to the Moving Parties dated January 18, 2023 which sets out a list of all of Olympia’s accounts which totals $71,419. The obvious point here is that the email from Olympia to the Moving Parties does not reference the bank account number and so there is no basis to draw the conclusion that the $71,419 is based upon the old bank account and that the remainder of the funds which existed in July 2022 is in a different bank account.

[167] In an email dated February 2, 2023, Butcher indicates that the fall session should have netted $375,000 which should bring the total to approximately $1.1 million. Joshi also provides some estimates as to revenues which he believes Olympia would have earned from the summer and fall programs. The Moving Parties argue that there is a significant amount of money missing.

[168] I note that Olympia’s financial statements for the year ending 2019 shows operating expenses in the approximate amount of $3,000,000. Because of reduced enrollment due to COVID operating expenses were approximately $1,800,00 in 2020. The business is increasing again so it is reasonable to assume that expenses would also be increasing and may be closer to 2019. Joshi provides no basis for his estimate that Olympia would only have incurred $100,000 in payroll from July 14 until August 31 and that time period does not cover the entire period over which expenses have been incurred in any event. He does not even include in his estimate of expenses, the specific expenses that he complains about later in his affidavit including $95,000 for cleaning staff from August to September 23, 2022, food purchased for $300,000 between August and September 2022, transportation expenses incurred from July to September in the amount of $100,000. And again, these expenses do not even cover the entire period to the present time.

[169] If Grace had misappropriated $1.1 million, or more, then how have Olympia’s ongoing operating expenses been paid?

[170] Grace was cross-examined on all of this and was adamant that he did not misappropriate anything. As well, the employee who answered Joshi’s email would have had to have been complicit and there is no evidence in support of that.

[171] Then the Moving Parties reference a listing of all outstanding credit card balances for Grace and other employees which total approximately $120,000. There has been no analysis of what expenses have been paid using these credit cards to confirm that these are not legitimate Olympia expenses. Joshi admits in his affidavit that he does not have details of what the money was spent on. As well, the bookkeeper gave evidence that any personal expenses paid for are accounted back.

[172] There is an email from Mary Butcher dated February 2, 2023, where she provides her analysis of financial controls and what she has concluded are improper expenditures. This is not sworn evidence and Grace has had no opportunity to cross-examine on it. Frankly, what this email shows is that if there are improprieties on behalf of Grace, Joshi will be able to prove them at the end of the day.

[173] The Moving Parties make reference to a $15,000 cheque which Grace paid his lawyers out of Olympia’s bank account. When cross-examined, Grace stated that previous lawyers told him that since he had put money into Olympia he could use Olympia’s bank account to pay his lawyers. Olympia’s balance sheet for 2020 shows that shareholder advances total $625,870. And Grace gave evidence that during the last three years he put an additional $500,000 of his own money in. His accountant told him that he should be paying himself $200,000 to $250,000 while he only receives $100,000.

[174] The Moving Parties’ counsel acknowledged that Grace mistakenly thought he could pay his lawyers using this bank account and that it appears that it was cashed and then paid back but they have not been able to verify this.

[175] The Moving Parties complain about $1,194.77 charged on a Visa for Deerhurst. Grace was cross-examined on this and indicated that for the last ten years, he takes the staff to Deerhurst for dinner as a reward for a job well done. Another expense to Deerhurst in the amount of $997 was for unit leaders.

[176] There are examples of other expenditures which were challenged and Grace provided some explanations when cross-examined.

[177] It is impossible, on the basis of this record, to draw any final conclusions one way or another about all of these matters but I did not find the Moving Parties’ arguments persuasive, particularly in light of the evidence concerning Joshi’s conduct.

[178] Grace did not pay the costs I awarded; that is concerning, and I am taking it into account as part of an overall evaluation.

Who would be the better manager? Current status of Olympia’s operations

[179] To be clear, the test here is not who would be the better manager, in the air. Joshi must first establish a prima facie case that oppression has occurred; only afterwards does the consideration of who would be the better manager matter as part of the balance of convenience.

[180] In any event, overall, taking all considerations into account including Joshi’s concerns about financial controls, in my view Grace would still be the better manager.

[181] In his December 30, 2022 affidavit, Grace’s reveals that he hired an individual named Butch Carter as a replacement for Joshi. Mr. Carter is a professional basketball player and coach who has also dedicated his life to sport and the development of youth.

[182] Although the Moving Parties assert that this was highly improper given that their motion for an injunction was pending when Grace took this action, I disagree since the Moving Parties had no injunction at the time; furthermore, I have concluded that they are not entitled to injunctive relief.

[183] Carter will be able to assist with financial control issues which Joshi is so concerned about and overall management of the camps using his superior understanding of the field.

[184] The Moving Parties complain that Olympia’s property is in a total state of disarray and attach photos to purportedly document this. These consist of a photo of a barn which does not seem to be problematic, a messy tool bench, a messy supply room, what appear to be a second, third and fourth picture of the same room from different perspectives, one photo of a broken and taped up headlamp, a photo of a hallway which is not concerning at all, a shower curtain which has appeared to fall, two photos of an unconcerning Exit sign, a photo of a board up in a hallway, a missing baseboard, five pictures of the electrical room from different angles which may show that some wallpaper has fallen and which is messy, a photo of some panels in some type of storage room which have holes, a number of pictures of what looks like a water heater, some walls of a hallway leading to what appears to be a laundry machine which has scratches, some garbage bags in the laundry room which is also messy, other pictures from the laundry room at a different angle which show it is messy, a messy gym, one fallen screen and various other photos which appear to show some mess.

[185] I note that these pictures appear to be taken from a limited number of rooms which appear to be mostly storage rooms or something similar. One appears to be an electrical room. Most of these photos are not from public facing facilities.

[186] I add that the way these photos have been taken with multiple photos of the same room from different perspectives seems to be contrived to suggest that there is mess all over the camp.

[187] The Moving Parties have a variety of complaints about Parent Co.’s failure to “file or update” property taxes. I am not certain what that means. The concern that actual tax returns have not been filed for 2020 and 2021 is more concerning, but it appears that these businesses have been operating at a loss for the last two years, so no taxes would be owed in any event.

[188] They complain that there is no formal lease agreement between Olympia and Parent Co., and that there has been no reconciliation of Parent Co. and Olympia’s books and accounting records. These businesses are not sophisticated enterprises; they are a camp up north for children and adolescents and Joshi appears to not understand the nature of the business if he is focusing on such things.

[189] Grace is a founder, established this business, ran it for fifty years, lives there, had invested $625,870 as at October 2020 and indicates he invested another $500,000 over the last three years. He earns his only income from these businesses. Joshi’s $420,000 investment in Parent Co. and the time he spent over four months (with most of the work actually having been done by Lakhanpal and Mary Butcher who were paid) does not compare to Grace’s contribution and stake in these Companies. Joshi’s experience in this field does not compare to Grace’s.

[190] Butcher’s note of February 2, 2023 specifically says that it appears that Olympia will be having one of its best years in terms of enrollment; therefore, Grace and his staff are successfully marketing the camp.

[191] Furthermore, the staff at Olympia are very unhappy about Joshi and the way he deals with them, as evidenced by multiple emails. They have complained that Joshi is bombarding them with aggressive and condescending emails and demanding that they take on work with unreasonable timelines.

[192] Here is an example from one employee, Ashley Ing:

I am writing to inform you of the unnecessary stress and anxiety I have experienced during the last several weeks, directly as a result of an unhealthy work dynamic. Specifically, I am referring to the conduct of Sam Joshi and Mary Butcher. There have been several instances and issues that have arisen due to the interactions with him. Such as receiving emails without context that demanded work that was unrealistic, or informing me that certain people were not to be contacted when that was not actually the case.

In particular one zoom meeting was very jarring….The meeting started well and took an unexpected turn when Sam became verbally aggressive towards Butch. The two exchanged words back and forth with Butch remaining calm which Sam attempted to “bully” Butch. I found the exchange to be very unprofessional from Sam Joshi and felt intimidated throughout the rest of the meeting.

This process has resulted in increasing my anxiety above a healthy level, over and above that which would normally result from a professional work environment.

[193] Another, Terry-Ann, wrote:

The emails from Sam and Mary are progressively getting more aggressive…There are the wordings to imply that I am involved or aware of a secret bank account…I take offence to this…They keep asking the same thing over and over…The sheet for 15 attached from today, Mary was quite aggressive on attacking me….I don’t think I should have to put up with this. It is not right. This is just too much.

[194] Donna Weinrauch wrote:

I would like to share some thoughts, feelings and comments

1. Feeling like an object not a person
2. My creditability and honesty constantly being challenged-Sam Joshi looking for something that I did wrong
3. Every email request time consuming, making it difficult to do my regular work
4. Authoritative management style very concerning-some emails very condisending [sic]—especially regarding Butch
5. Never an explanation as to why they need this information
6. Extremely concerned about myself and co-workers
7. Sam and Mary are now ADP Payroll users—they should be able to look up information
8. Stressed each day—anxiety-bombarded with emails-not sleeping
9. Feel like being used—Sam Joshi using us for his own personal gain—not really interested in Olympia Sport
10. Why is Mary Butler allowed to call herself, Director Finance Operations, Olympia Sports Camp—to my kn [sic]
11. Sam Joshi has absolutely no respect for David Grace
12. Concerned for the authority Sam Joshi has given Mary Butler.

[195] Some of these employees are suggesting that the environment that Joshi created and the work he requested have changed the nature of their employment, which they do not accept. Others are afraid to provide their views because of fear of reprisal from Joshi.

[196] It is more than likely that giving Joshi any continued authority over Olympia, let alone sole authority, would lead to the loss of valuable longtime employees and constructive dismissal claims which are implied in the communications I have read.

[197] Grace is certainly not perfect; no one is. These businesses are not run perfectly; none are. These were small, family run businesses for fifty years which got into trouble because of COVID. Up until that time, Grace obviously was able to run these businesses successfully in line with their mission.

[198] It is true that some of Grace’s allegations have not been substantiated on this record; indeed, it would be difficult to establish overall the kind of fraud and breach of duty which Grace is alleging prior to discovery and productions, based upon a paper record. Some examples of allegations which have not been substantiated include: i) his complaints about Joshi’s management of the Chiarella lawsuit; ii) the fact that fees charged on the mortgages arranged by Joshi or his brokerage fees and associated legal fees were predatory. Expert evidence would be required for this but I note that the lender received $575,945 in fees and bonuses which amounts to 1/5 of the advanced funds in 2021. The lender received $451,058 in respect of the 2022 renewal which amounts to approximately 1/8 th of the mortgage funds, the bulk of which had already been advanced in 2021. In total, the mortgage lender received almost $1,000,000 in fees and bonuses and other expenses associated with these two loans which was initially obtained to refinance an existing mortgage which was $1,600,042 at that time; and iii) that Olympia only received $1,600,000 of the mortgage advance. Grace did not factor in the fact that the mortgage arranged by Joshi also paid out the prior existing mortgage.

[199] As well, to the extent that Grace may be wrong about some conclusions, or may not have sufficient evidence at this time to prove them, he candidly says that his lawyer has explained the illogicality of the various transactions.

[200] Nevertheless, some facts are clear.

[201] Prior to Joshi’s and Xpert’s involvement with Olympia, Olympia’s 2020 financial statements show that it had total liabilities of $2,861,908. These were composed of bank indebtedness in the amount of $14,161, accounts payables and accrued liabilities in the amount of $191,218, payroll deductions in the amount of $23,182, customer deposits in the amount of $168,732, a loan payable in the amount of $1,838,744, and amounts due to a shareholder in the amount of $625,870. I note that the discharge statement for the loan payable shows that as of March 2021, the amount owed to the previous mortgagee had gone down to $1,600,042.

[202] Today, the loan payable which is secured by a mortgage has risen to $3,650,000 from $1,600,042, and there is also a lien from OSMI in the amount of $1,356,000. Approximately $3,500,000 has been added to Olympia’s debts. Through his company Xpert Credit, Joshi holds $1,460,000 which could be used to pay some of these amounts, but he negotiated a promissory note for $1,000,000 of this amount to be due in 2024, even though as the mortgage broker who arranged Olympia’s mortgage, he knew Olympia’s mortgage was due in March 2023. He has paid approximately $460,000 of the amount which was due for payment in January 2023 to his lawyer and takes the position that he will not release it to Olympia because of his concerns about Grace’s management.

[203] Joshi has taken the position that only he can save this business; however, in my view the facts demonstrate that his actions have contributed to the deteriorating financial condition.

[204] Even if Joshi could make out a prima facie case and only one of them could manage this enterprise, overall, the balance of convenience favors Grace.

[205] It is certainly an unfortunate situation; it may be that it is too late for anyone to save this enterprise, but ousting Grace and putting Joshi in charge, or even continuing Joshi’s involvement, is not the solution, particularly given all of the concerns outlined above. I have found Joshi’s misstatement of the evidence which he appends to his own affidavit and overstatement of some facts particularly troubling.

Grace’s Cross-Motion

[206] Grace brought a cross-motion for repayment of the debt which Xpert Credit owes Olympia. However, there is no counterclaim in this proceeding where Grace makes any such claim and Xpert Credit is not a party to this action; as such, this motion is not properly before me. Grace must bring a motion in the appropriate manner.

Similar fact evidence

[207] Finally, I wish to address some caselaw that Grace put before me, in particular two Superior Court decisions where allegations of fraud and/or unconscionable transactions were made and where some adverse findings have been made against Joshi and Xpert Credit, Tang v. Xpert Credit, 2022 ONSC 1493 and Mckenzie-Barnswell v. Xpert Credit, 2021 ONSC 4007. Joshi argued that these were inadmissible character evidence where the prejudicial effect outweighs the probative value. Grace argued that these constituted similar fact evidence. Grace may ultimately persuade the trier of fact that these do constitute similar fact evidence, after all discoveries are complete, but at this time, I am not persuaded that they do, and I have not taken them into account.

Conclusion

[208] He who alleges must prove. The Moving Parties have failed to satisfy this Court of the burden which was upon them.

[209] The motion brought by the Moving Parties is dismissed and all of the previous terms I ordered are vacated. Grace may submit his cost submissions to me within 14 days followed by Joshi’s cost submissions 14 days later.

Papageorgiou J. Released: February 27, 2023

Footnotes

[1] The fact that r. 39.01(5) with respect to applications only permits evidence on information and belief and specifies that it is only with respect to non-contentious matters means that r. 39.02(4) does permit such evidence.