Court File and Parties

Court File No.: CV-22-90672 & CV-23-93620
Date: 2025/03/19
Court: Ontario Superior Court of Justice

Between:
Barry Anthony Cullain (Plaintiff/Defendant by Counterclaim)
and
Christopher J. Wilcox, Jordan Nathaniel Wheeler, Rideau Elevator Services Inc., and 12319896 Canada Limited (Defendants/Plaintiffs by Counterclaim)

Appearances:

• D. Kenneth Gibson, for the Plaintiff
• Margot L. Pomerleau, for the Defendants

Heard: September 19, 2024 and January 13, 2025

Reasons for Judgment
Owen Rees

Overview

1In 2015, Barry Cullain, Christopher Wilcox, and Jordon Wheeler went into business together. They incorporated Rideau Elevator Services Inc. and 12319896 Canada Ltd. (‘896). Rideau Elevator is an elevator maintenance company. ‘896 is a holding company. Cullain, Wilcox, and Wheeler built Rideau Elevator into a thriving business. In 2022, ‘896 entered into an agreement to acquire a competitor, Upper Canada Elevators (UCE).

2Shortly afterwards, but before the closing took place, Wilcox and Wheeler surprised Cullain by offering to buy out his shares in Rideau Elevator before the acquisition of UCE was scheduled to close.

3The parties negotiated but were unable to reach mutually agreeable terms on a buyout of Cullain’s shares. As a result, the defendants could not obtain financing to acquire UCE. The deal fell through.

4The defendants then claimed that Cullain retired from Rideau Elevator. Cullain disputes this. He argues that he was pushed out of the management of Rideau Elevator and his employment was terminated without just cause. Wilcox and Wheeler also purported to remove Cullain as a director of Rideau Elevator.

5Cullain commenced an action and brings a summary judgment motion for an oppression remedy under s. 241 of the Canada Business Corporations Act (CBCA) and for wrongful dismissal. His summary judgment motion was heard together with an application for an oppression remedy brought by the defendants.

6The defendants deny that Cullain was oppressed, and they deny that they wrongfully dismissed him. They say he voluntarily retired. But they agree that there was a breakdown amongst the shareholders in the corporations. They also agree that the court should order the corporate defendants to purchase Cullain’s shares. The parties disagree as to the valuation date and the methodology for valuing Rideau Elevator. By contrast, there is no dispute about the valuation of ‘896.

7I conclude that Wilcox and Wheeler unfairly disregarded Cullain’s reasonable expectations by derailing the UCE acquisition and oppressed him by dismissing him as an employee and purporting to remove him as a director of Rideau Elevator. I also conclude that Cullain was wrongfully dismissed as an employee of Rideau Elevator.

Procedural History

8The procedural posture of these proceedings was problematic when they came for a hearing.

9On November 17, 2022, Cullain commenced an action against Wilcox, Wheeler, and Rideau Elevator for wrongful dismissal and for an oppression remedy. Cullain’s action did not name ‘896 as a defendant.

10On January 10, 2023, Wilcox, Wheeler, and Rideau Elevator filed a Statement of Defence and Counterclaim against Cullain. Wilcox and Wheeler sought, among other things, declaratory relief under the oppression remedy in s. 241 of the CBCA.

11On February 17, 2023, Cullain filed a Reply and Defence to the Counterclaim.

12On October 19, 2023, Wilcox, Wheeler, and Rideau Elevator – together with ‘896 – brought an application for an oppression remedy against Cullain. The application principally seeks an order fixing the value of the shares of the corporate defendants and an order for the purchase of Cullain’s shares.

13On December 8, 2023, Cullain brought a partial summary judgment motion for wrongful dismissal against Wilcox, Wheeler, and Rideau Elevator.

14Cullain also served a Notice of Counter-Application seeking an oppression remedy but, through inadvertence, never had it issued. At the hearing, the parties agreed to treat the counter-application as part of Cullain’s summary judgment motion. While this matter was on reserve, it became clear that this was not a wholly satisfactory solution because ‘896 was not a party to the action.

15On January 13, 2025, while this matter was on reserve, I convened a case conference with the parties to resolve the procedural issues. On consent, I stayed the application and added ‘896 as a necessary party to the action. ‘896 was added as a defendant and plaintiff by counterclaim. The parties agreed that the application shall be treated as a summary judgment motion and agreed to have all of the claim and counterclaim determined by summary judgment under r. 20.04(2)(b) of the Rules of Civil Procedure.

Analysis

Law of Summary Judgment

16The court shall grant summary judgment if it is satisfied that there is no genuine issue requiring a trial with respect to the claim or the defence, or the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment: r. 20.04(2).

17There will be no genuine issue requiring a trial when the motion judge is able to reach a fair and just determination of the action on the motion. This is the case when summary judgment allows the judge to make the necessary findings of fact; allows the judge to apply the law to the facts; and is a proportionate, more expeditious, and less expensive means to achieve a just result than a trial: Hryniak v. Mauldin, 2014 SCC 7, para 49.

18Here, as discussed, the parties have agreed to all of the claim and counterclaim being determined by summary judgment. Although the quality of the record filed by the parties left something to be desired, I am satisfied that I can make the necessary findings of fact, apply the law to the facts, and that summary judgment is a proportionate, more expeditious, and less expensive means to achieve a just result than a trial.

19The principles governing the admissibility of evidence on a summary judgment motion are the same as those that apply at trial, save for the limited exception of permitting an affidavit made on information and belief found in r. 20.02(1): Sanzone v. Schechter, 2016 ONCA 566, para 15. The court may, if appropriate, draw an adverse inference from the failure of a party to provide the evidence of any person having personal knowledge of contested facts: r. 20.02(1).

The Oppression Remedy

20Section 241(2) of the CBCA provides that a court may make an order to rectify the matters complained of where:

(a) any act or omission of the corporation or any of its affiliates effects a result,
(b) the business or affairs of the corporation or any of its affiliates are or have been 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 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….

21Oppression is an equitable remedy. The court has a broad equitable jurisdiction to enforce not only what is legal but also what is fair. The court must therefore consider the commercial reality in addition to the law. This is a fact-specific inquiry: BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, paras 58-59.

22The oppression remedy seeks to uphold the reasonable expectations of stakeholders: BCE, at para. 63. As the Supreme Court of Canada put it, “Fair treatment … is most fundamentally what stakeholders are entitled to ‘reasonably expect’”: BCE, at para. 64.

23In considering an oppression remedy application, the court must ask two questions: (1) Does the evidence support the reasonable expectations asserted by the applicants? and (2) Does the evidence establish that their reasonable expectations were violated by conduct falling within the terms “oppression”, “unfair prejudice” or “unfair disregard” of a relevant interest?: see BCE, at para. 95.

24Several classes of individuals qualify for protection under the oppression remedy, including “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”: CBCA, s. 238. There is no question that Cullain, Wilcox, and Wheeler have standing under s. 241(1) as shareholders.

Fact Finding

25Cullain filed affidavit evidence and was cross-examined. Wilcox also filed affidavit evidence and was cross-examined in his personal capacity and as the representative for the corporate defendants. The defendants elected not to file any evidence from Wheeler.

Rideau Elevator is Formed and Becomes a Successful Business

26Cullain worked in the elevator maintenance industry for over 40 years. During the material time, he possessed an Elevating Devices Mechanic, Class A license.

27Cullain first met Wilcox and Wheeler in around 2005 or 2006. They were working as sales representatives for Kone Elevators, and Cullain was a supervisor there.

28In around 2015, the individual parties discussed starting an elevator maintenance, installation, and services company together. They ultimately incorporated Rideau Elevator in 2015 under the CBCA. Each of Cullain, Wilcox, and Wheeler were issued 100 shares of Rideau Elevator, and each were appointed as directors.

29The individual parties also incorporated ‘896 under the CBCA, which was a holding company and owned real property in Embrun, Ontario. Cullain, Wilcox, and Wheeler are equal shareholders in ‘896.

30The shareholders did not enter into a Shareholders Agreement for Rideau Elevator or ‘896. The shareholders never held a shareholders meeting – a point I will return to below.

31Each of the individual parties played different roles at Rideau Elevator. Cullain was Vice President of Operations. At least initially, he performed five or six major inspections per year and around 50 elevator maintenance inspections per month. He was also responsible for managing field operations and for mentoring and teaching new apprentices. Finally, he handled accounts payable and other finances, including filings with the Canada Revenue Agency, and acted as Rideau Elevator’s bookkeeper.

32Wilcox, whose background was in sales and business, was responsible for project management, bidding on tendered work, field work as an apprentice, client invoicing, sales, ordering materials, and all human resources. He holds an Elevating Device Mechanic-In-Training, Class T license. This license requires the supervision of a Class A mechanic.

33Wheeler also had a background in sales and business. His duties in Rideau Elevator include field work, bidding on tendered work, acting as operations management, sales, ordering materials and parts, and client communication. He also holds a Class T license.

34Cullain’s Class A license was necessary for Rideau Elevator to operate. There was an understanding among Cullain, Wilcox, and Wheeler that Class A mechanics would be hired as the company grew. That is what they did.

35Between 2015 and 2021, Rideau Elevator grew into a successful business. By September 30, 2021, it had a total revenue of $2,293,832. The company hired additional Class A licensed mechanics as it grew.

Rideau Elevator Reaches a Deal to Acquire Upper Canada Elevators

36In around 2021, Cullain proposed to Wilcox and Wheeler that they purchase another elevator maintenance company, so that Rideau Elevator could continue to grow. Within the Ottawa market, there were limited targets for acquisition that did not have a unionized workforce.

37Ultimately, Cullain approached the owners of Upper Canada Elevators and negotiated a deal with them to acquire UCE. A share purchase agreement was executed, dated May 4, 2022, in which ‘896 would acquire UCE. The share purchase agreement provided for a closing date of June 30, 2022.

38Cullain’s evidence was that it was a “done deal”. It was Wilcox and Wheeler’s evidence that it was contingent on them obtaining sufficient financing. There is no dispute that financing would be required to carry out the share purchase, but the May 4, 2022 share purchase agreement did not make the acquisition contingent on ‘896 obtaining financing. The parties to the share purchase agreement entered into a share purchase amending agreement, dated July 6, 2022. The relevant amendments extended the closing date to August 31, 2022, and made the closing contingent on ‘896 obtaining financing. In exchange for these amendments, ‘896 paid a $50,000 deposit.

Wilcox and Wheeler Seek to Buyout Cullain

39In May 2022, Cullain, Wilcox, and Wheeler met over a meal at Al’s Steakhouse in Ottawa to celebrate the deal to acquire UCE. At that meeting, Wilcox and Wheeler surprised Cullain by proposing that they buy him out in advance of the UCE acquisition. There is no dispute that this was first raised at the meal to celebrate the deal. On cross-examination, Wilcox admitted that buying out Cullain was his and Wheeler’s idea. Given this, I find that Cullain did not voluntarily seek a buyout of his shares or an exit from the business.

40I find that Cullain was surprised and upset by the proposed buyout. Although he was intending to retire at 65, he was 61 at the time [1] and had just negotiated a deal with UCE. Ultimately, Cullain decided to negotiate a buyout, provided they could reach mutually agreeable terms.

41During their meal at Al’s Steakhouse, Wilcox, and Wheeler offered that Cullain would be paid out, that he could take an agreed-upon amount of dividends over five years, while retaining 10% of Rideau Elevator. They proposed that Cullain would stay on and proceed with the acquisition but that he would only work when he wanted to as a consultant.

42Two weeks later, the individual parties met again. Cullain communicated that he did not wish to remain with the company and wished to be bought out in full, without keeping a 10% stake in Rideau Elevator. Cullain also took the position that if they could not buy him out in full, that he would stay on until they could do so at a future date. Cullain sought a lump sum buyout.

43Negotiations continued.

44Around August 15, 2022, Wilcox and Wheeler sent Cullain a revised letter of intent for his consideration. They offered Cullain $700,000 for his shares. This consisted of $500,000 up front and a further $200,000 in equal monthly salary payments over 30 months, interest-free. He would be required to execute a consulting contract. They offered to make “best efforts” to remove him as a guarantor of company loans.

45In response, Cullain sought: (1) interest of 2.5% on the $200,000; (2) to be removed as guarantor from company loans, rather than Wilcox and Wheeler simply making best efforts to do so; and (3) to negotiate the terms of the consultancy separately.

46Wilcox and Wheeler did not agree. Rather than continue to negotiate, the discussions stalled. There is no evidence that Wilcox and Wheeler made any counterproposals or any further efforts to reach a deal with Cullain before August 31, 2022, the extended closing date of the UCE deal.

Financing Falls Through

47After proposing that Cullain be bought out, Wilcox took over the continued negotiations for the acquisition of UCE and the financing arrangements with Rideau Elevator’s bank, Desjardins Financial.

48I find that Wilcox and Wheeler pushed Cullain aside and, as a result, Cullain withdrew from the day-to-day affairs of Rideau Elevator. I further find that Cullain’s behaviour was not unreasonable in the circumstances, given that they were negotiating a buyout and it was made clear to him that Wilcox and Wheeler wanted control of the company before the UCE deal closed.

49There is some disagreement between Cullain and Wilcox over whether Desjardins had agreed to finance the UCE share purchase before the proposed buyout of Cullain. Cullain, who had initially negotiated financing through Desjardins, testified on cross-examination that it was his understanding that Rideau Elevator was approved for the financing to acquire UCE once the share purchase agreement with UCE was signed.

50Wilcox’s account on cross-examination regarding his discussions with Desjardins about financing the UCE acquisition was vague and he had a poor recollection of events. In any event, he admitted that regardless of whether Desjardins had approved the financing in May 2022, because of the proposed Cullain buyout, financing needed to be obtained again and that it would have to include the Cullain buyout.

51I find that, although there was no commitment letter or loan agreement from Desjardins regarding financing the acquisition of UCE in May 2022, the financing was firm enough that the parties reasonably anticipated Desjardins would provide financing by the time the share purchase agreement with UCE was executed.

52Further, Desjardins did not require Cullain to personally guarantee the financing for the UCE acquisition, but Desjardins would not provide financing without a signed letter of intent between Cullain, Wilcox, and Wheeler setting out the terms of the Cullain buyout.

53Wilcox also explored financing with the Business Development Bank of Canada, ultimately to no avail.

54Because the parties could not reach terms on a buyout of Cullain’s shares, the financing for ‘896’s purchase of UCE fell through.

55The parties continued to discuss Cullain’s buyout after the collapse of the UCE acquisition. I will return to this below in my discussion of the appropriate remedy and valuation.

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Disposition

158Cullain’s motion for summary judgment is granted in accordance with these reasons. The defendants’ motion for summary judgment and counterclaim is dismissed.

159The defendant corporations shall buy Cullain’s shares. Given there is no dispute as to the valuation of ‘896, the en bloc fair market value of the shares of ‘896 is fixed at $182,000.

160The valuation date for Rideau Elevator’s shares is September 30, 2021. If the parties cannot agree to a valuation, they may return before me to have the issue determined.

161Cullain is awarded $114,000 in damages for wrongful dismissal.

Costs

162Cullain is presumptively entitled to costs. If the parties cannot agree, they can each make written submissions to me of no more than 1,000 words within two weeks of the release of these reasons for judgment. These are to be sent to my judicial assistant.

Justice Owen Rees
Released: March 19, 2025

[1] He turned 62 in June 2022.
[2] There is some inconsistency in Wilcox’s evidence about exactly when the defendants say Cullain stopped working. They say he stopped working in the field in early 2018 but elsewhere they say he stopped the majority of his duties by early 2019. Given that I ultimately reject Wilcox’s evidence on this point, I will refer to “by 2019” for simplicity.
[3] Although the UCE share purchase was structured so that it would be acquired by ‘896, the purpose of the acquisition was to benefit Rideau Elevator by growing its business.