Dhaliwal v. Cheema, 2025 ONSC 382

Dhaliwal v. Cheema, 2025 ONSC 382

Court File No.: CV-24-00713514-00CL and CV-24-00718363-00CL
Date: 2025-01-21
Ontario Superior Court of Justice (Commercial List)

Parties

Between:
Sukhdev Dhaliwal
Applicant

– and –

Paramjit Cheema, also known as Paramjeet Cheema, Harchand Dhaliwal, Swaranjit Jhajj, World Wide Carriers Ltd., World Wide ASG Logistics Inc., World Wide Carriers Group of Companies Inc., 2029037 Ontario Inc., World Wide Atlantic Freight Inc., World Wide Transport Inc., World Wide Truck & Trailer Service Ltd., World Wide Carriers Private Ltd., World Wide Carriers US Inc., Popular Freight Systems Inc., 87 Mountainview Road Holdings Inc., 90 Gaylord Road Holdings Inc., 200 Edward Street Holdings Inc., JCD Cartage Inc., 2613853 Ontario Ltd., JCD Universal Productions Inc., JCD Universal Productions Private Limited, JDC Financing Inc., JDC Logistics Inc., JDC Truck & Trailer Sales Inc., Winnipeg Fast Freight Logistics Inc., World Wide Truck Training Academy Inc., World Wide Truckline Inc., World Wide Logistics Inc. and World Wide Equipment Sales Inc.
Respondents

And Between:
Paramjit Cheema, also known as Paramjeet Cheema, Harchand Dhaliwal and Swaranjit Jhajj
Applicants

– and –

Sukhdev Dhaliwal and World Wide Carriers Ltd.
Respondents

Heard: October 30 and 31, 2024
Released: January 21, 2025
Judge: Barbara Kimmel

Counsel:

• Rahool Agarwal, Philip Underwood, Annecy Pang, for Sukhdev Dhaliwal
• Max Muñoz, Sanj Sood, Josh Suttner, for Paramjit Cheema, a.k.a. Paramjeet Cheema, Harchand Dhaliwal, Swaranjit Jhajj

Table of Contents

• The Applications
• Summary of Outcome
• The Evidence and Findings of Fact
• The Start of the Business
• Initial Capital Contributions to the Business
• Registered and Beneficial Shareholdings
• Oral Agreement and Understanding Regarding Beneficial Ownership of the World Wide Group
• Additional Context: Subsequent Events and the Conduct of the Parties
• The Litigation
• The Ownership Application and Interim Injunction Motion
• The Breach Motion and the Access Motion
• The Buy-Out Application
• The Oppression Remedy
• The Ownership Application – Oppression Analysis and Remedy
• The Buy-Out Application – Analysis and Remedy
• Final Disposition
• Costs
• Footnotes

The Applications

These two applications were heard one after the other. They involve a dispute between brothers and brothers-in-law regarding a successful trucking and logistics business operated through various private and closely held companies, which also have significant real estate holdings. This business was operated under the umbrella of the "World Wide Group of Companies", the primary operating company being World Wide Carriers Ltd. ("WWC" or the "Company" or "Corporation").

The ownership application (CV-24-00718363-00CL) was heard first, over the first day and a half of the hearing. It is an oppression application in which Paramjit Cheema, also known as Paramjeet Cheema ("Paramjit"), Harchand Dhaliwal ("Harchand"), and Swaranjit Jhajj ("Swaranjit") seek, among other things:

a. a declaration that the respondent, Sukhdev Dhaliwal ("Sukhdev"), is exercising, and/or is threatening to exercise, his powers as a director of the respondent WWC in a manner that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of the Applicants as directors, officers, and security holders of the Corporation;

b. a declaration that the Special Meeting held on August 29, 2023, removing them as directors of the Corporation, was not lawfully convened and was not a properly called special meeting of the shareholders of the Corporation, and seeking certain interim (previously addressed by the court) and final orders, including:

i. that any and all resolutions passed at the Special Meeting, and any measures taken by Sukhdev to implement those resolutions, are null, void and/or of no force or effect;

ii. unwinding any measures taken by Sukhdev to implement the aforementioned resolutions;

iii. restraining and/or enjoining Sukhdev from acting in accordance with any resolutions passed at the Special Meeting; and

iv. an order restraining and/or enjoining Sukhdev from acting outside of the ordinary course of the Corporation's business,

c. a final order restraining and/or enjoining Sukhdev from taking any actions with respect to the ownership, business, or operation of the Corporation that are prejudicial to the rights and interests of the Applicants, including removing any or all of the Applicants as directors of the Corporation;

d. a declaration that they are each the beneficial owner of 25% of the issued and outstanding common shares of the WWC; and

e. an order directing WWC to forthwith issue share certificates to each of them, and to rectify the WWC shareholder register, to reflect them to each be holding 25% of the Corporation's issued and outstanding common shares.

The original Notice of Application sought other relief, some of which has been rendered moot and is no longer being sought (e.g., the interlocutory relief and the request for the court to order the parties to enter into a Unanimous Shareholders' Agreement, which has been overtaken by the protocol that the parties have since entered into in connection with the buy-out application, discussed below).

The buy-out application (CV-24-00713514-00CL) was heard second, over the second half-day of the hearing. It is an oppression application in which Sukhdev Dhaliwal ("Sukhdev") seeks an order (including related ancillary relief) requiring the others to buy him out of any companies in the World Wide Group in which he holds less than a 50% ownership, and that he buy the others out of any companies in which he owns 50% or more of the shares, to effect a complete separation of his interests from the others. A "counter" application was brought by Harchand, Paramjit, and Swaranjit in response to Sukhdev’s buy-out application (CV-24-00726084-00CL).

Subject to the court’s determination of whether there should be a buy-out of five specific real estate holding companies that are the subject of the buy-out application that remain in dispute, the parties have reached an agreement in the course of these (and other) ongoing proceedings on a protocol that will govern the separation and buy-out of their respective interests in the companies comprising the World Wide Group (the “Protocol”). The parties seek the court’s determination in the buy-out application of whether there should be a buy-out of the following five real estate companies (in which event, they have agreed that the Protocol will apply to these companies as well, with certain provisions in place to allow for properties to be sold or refinanced, if needed to fund the buy-out):

a. 2029037 Ontario Inc. (“202 Ontario”), which owns properties in Etobicoke and Bolton, Ontario;
b. 87 Mountainview Road Holdings Inc. (“87 Mountainview”), which owns a property in Winnipeg;
c. 90 Gaylord Road Holdings Inc. (“90 Gaylord”), which owns a property in St. Thomas, Ontario;
d. 200 Edward Street Holdings Inc. (“200 Edward”), which also owns a property in St. Thomas; and
e. World Wide Atlantic Freight Inc. (“World Wide Atlantic”), which owns a property in New Brunswick and carries on a trucking business in that province.

The determination of the above issues in the ownership application and buy-out application are described as the Immediate Dispute in the Protocol, that the parties agreed would be determined by the court at the October 30 and 31, 2024 hearing.

Summary of Outcome

For the reasons that follow, the ownership application is granted. The buy-out application is also granted, but only insofar as the specific relief detailed above and at the end of this endorsement. The order is limited to the Immediate Issues that the parties agreed in the Protocol they would ask the court to determine.

The Evidence and Findings of Fact

The relief sought in both applications is dependent upon disputed facts. The parties confirmed at the hearing that they are asking the court to make findings of fact and, if necessary, of credibility, based on the written record that they have developed. They have taken the time to develop this record and prepare their written and oral submissions over a lengthy period of litigation and are all desirous of the finality of decisions from the court now on the matters that were argued. I agreed to hear the applications on the basis of this joint request. I am satisfied that the necessary findings of fact can be made based on the evidentiary record before the court, even on points of controversy, and that it is in the best interests of all involved that I do so rather than insisting upon the presentation of viva voce evidence and the further delays that would entail.

The records are voluminous and the written and oral submissions were detailed. All that was presented by the parties has been considered, even if not specifically mentioned in this endorsement. This background section contains the findings of fact derived from the record. Points of controversy are addressed in more detail where they are relevant to the ultimate findings and determinations, either in the general fact finding or in the later sections of this endorsement where they arise in the analysis.

The Start of the Business

Harchand and Sukhdev are brothers. The Applicants Paramjit and Swaranjit are their brothers-in-law. The two brothers, Harchand and Sukhdev, began working together in a trucking business with another individual through a company that Sukhdev had incorporated in the spring of 2003 called ASG Carriers Ltd. (“ASG”). The Dhaliwal brothers parted ways with the other individual after about a year and invited their brother-in-law Paramjit to join them in business. The other brother-in-law, Swaranjit, was invited to join the business in 2005.

All of these individuals are immigrants, and none have any post-secondary education. Only one of them finished high school. They have done well in their trucking and logistics business over the years, but they are not sophisticated business people.

Initial Capital Contributions to the Business

Sukhdev has always been listed as the 100% shareholder of ASG (a company that still exists today, under a different name).

Sukhdev testified that he established WWC in April of 2005 to hold the trucking business and he testified that the trucking business was transferred from ASG to WWC over the course of the next year. No transfer or purchase documents have been produced by any party. There is no evidence about whether there ever were any documents that recorded the transfer of the business to WWC. Sukhdev was the incorporator of both ASG and WWC and was the one who primarily instructed the lawyers who prepared the incorporating documents and the corporate records for these and other companies.

Sukhdev acknowledges that when WWC was established in 2005, half of WWC’s common shares were issued to Harchand, and Harchand was named as a director. WWC's corporate records reflect this. In 2005, Sukhdev and Harchand executed share certificates issuing them each half the shares; no share certificates were issued to either Paramjit or Swaranjit and they were not appointed as directors or officers of WWC at that time.

Sukhdev says the shares of WWC issued to Harchand in 2005 were not reflective of any capital contribution Harchand had made. Sukhdev says he gave half the shares to his brother in 2005 and that his brother gave the shares back to him in 2010. The corporate share register currently shows Sukhdev as the 100% shareholder of WWC and he maintains that the corporate records accurately reflect the shareholdings of WWC and of each of the other companies in the World Wide Group. He maintains that he contributed all of the capital in both ASG and WWC and denies that the others made any capital contributions to the business.

The others disagree. They say that they each contributed cash and a truck that they owned to the business when they joined. Harchand says he does not know why shares in WWC were issued only to him and not to the others. Harchand, Paramjit, and Swaranjit all consistently attest in their affidavits that their contributions were for a beneficial ownership interest in ASG that they understood was carried over into WWC after it was incorporated in 2005 when the business was transferred over, even though this was not documented in writing. They no longer have any historic records of their cash or in-kind contributions to the business dating back to 2003 and 2005. However, their evidence about having made these contributions to the business was not challenged or contradicted.

Sukhdev acknowledged when he was cross-examined that trucks owned by the others might have been used in the business and that they might have provided funds when they joined (and later), but he cannot recall any of the specifics of these contributions. He offers no plausible explanation for why they would have made these contributions of cash and assets if they were not equity buy-ins to the business. The evidence of Harchand, Paramjit, and Swaranjit that they made these contributions of cash and in kind in exchange for an equity interest in the business is the most plausible of possible explanations. They further attest that it was understood and agreed among them and with Sukhdev that, upon each of them joining the family business and making their respective contributions of cash and in kind, they would become an equal shareholder and partner in the business.

The trucks they contributed continued to be used in the business while they remained operational. One of their trucks was in an accident after the transfer of the business to WWC in 2005 and the insurance proceeds were paid to WWC.

Harchand, Paramjit and Swaranjit were not concerned about whether their interests were properly reflected in the legal paperwork and corporate records prepared at the time of WWC's incorporation or subsequently. This only became an issue in the spring and summer of 2023 when the relationship between them and Sukhdev started to fracture.

I find, on a balance of probabilities, that Harchand, Paramjit, and Swaranjit did make contributions of equity to ASG at the times and in the manner that they have each attested to in their affidavits. No plausible explanation has been proffered for why they would have made these contributions if not for the beneficial ownership interests that they claim to have.

In the absence of any independent evidence about the value of the business at the time of their respective contributions, about the precise value of their respective contributions, or about the value of what Sukhdev contributed, since these were four brothers/brothers-in-law starting out in a trucking business together and each making cash and in-kind contributions when they joined, I find that their contributions represented their respective buy-ins for an equal beneficial share of the business. In the absence of any evidence that they were bought out when the ASG business and assets were transferred over to WWC in 2005 (including the trucks that they each contributed and that continued to be used in the business), I further find that all four of their equal beneficial interests in the ASG business were carried over into WWC at that time.

Registered and Beneficial Shareholdings

The trucking and logistics business was expanded into at least fifteen other service and trucking companies in Canada and India as well as real estate holding companies, all operating under the umbrella of the World Wide Group of Companies (the "World Wide Group"). On paper, and over time, the shareholdings of these companies were not always reflected as 25% to each of the brothers and brothers-in-law.

According to the corporate books and records, the current ownership structure of some of the companies relevant to this dispute is as follows:

a. WWC: owned 100% by Sukhdev;
b. 202 Ontario: owned 25% by each brother/brother-in-law;
c. World Wide Transport Inc.: owned 50% each by Swaranjit and Paramjit;
d. World Wide Atlantic Freight Inc.: majority-owned by Sukhdev with smaller shares held by the others;
e. World Wide Carriers US Inc.: owned by Swaranjit through another company;
f. JCD Cartage Inc.: owned by Swaranjit; and
g. World Wide Truck & Trailer Service Ltd.: owned 50% each by Harchand and Sukhdev.

Sukhdev maintains that the current corporate books and records reflect and are determinative of the legal and beneficial shareholdings and interests of all parties in each of the companies within the World Wide Group; he does not claim to be or seek to be a shareholder of any company in which he is not recorded as such.

The others maintain that they are all equal beneficial 25% shareholders of all of the World Wide Group companies, irrespective of what the corporate share registers may reflect today or may have reflected from time to time.

When faced with an inconsistency between their own versions of events and what is recorded in the corporate records and formal share registers, each side attributes these inconsistencies or gaps to mistakes or oversights. These oversights or mistakes are attributed to the fact that this fairly large and complex business was being run by relatively unsophisticated principals.

For example, Sukhdev and Harchand were identified as the two registered shareholders of WWC when it was incorporated. Their brothers-in-law were not identified on the share registry, despite having by that time made contributions in cash and in kind to the business, just as both Sukhdev and Harchand had done. Harchand, Paramjit, and Swaranjit say this was a mistake or oversight.

The share register continued to identify Sukhdev and Harchand as the two 50% shareholders of WWC until 2015, even though documents were prepared by the Corporation's lawyers and signed by Sukhdev and Harchand in 2010 by which Harchand purported to transfer 50% of the shares in WWC to Sukhdev and to resign as a director and officer of WWC. Sukhdev says that this delay of approximately five years in updating the corporate records and minute books to reflect him as the 100% shareholder was a mistake or oversight.

When Harchand and Sukhdev signed the paperwork for the transfer of shares in 2010, WWC had revenues of $10.2 million, gross profits of almost $3 million and shareholder equity of $2.65 million, according to its unaudited financial statements for 2010. There is no evidence that a valuation was done or that any money changed hands at the time of this share transfer, beyond the consideration of $10 reflected in the share purchase agreement that the Corporation's lawyers prepared and both Sukhdev and Harchand signed at that time.

The lawyers prepared the paperwork to effect this transfer of shares and a purported release of all claims by Harchand. Harchand acknowledges that he signed the legal documents that he was given to sign even though he did not necessarily fully understand the rationale for them at the time (just as he did not understand the reason for the original 50/50 shareholding when he and Sukhdev were issued shares in WWC at the time that the Company was established). Harchand's signature on these documents was not witnessed or commissioned. Nonetheless, Mr. Gosel (the Company lawyer who prepared them) says that the documents were translated and explained to Harchand and that Harchand was told to get independent legal advice ("ILA"), but chose not to. This advice was not documented.

While the authenticity of Harchand's signature on the documents is not challenged, I accept his testimony that he did not understand that he was giving up his beneficial ownership of the business (which had grown since his initial contributions were made) for no consideration by signing these documents. The understanding and agreement regarding the continued beneficial ownership of the four brothers/brothers-in-law existed before and continued after these documents were signed, regardless of whose name the shares of WWC were in.

Oral Agreement and Understanding Regarding Beneficial Ownership of the World Wide Group

Share certificates and entries in securities registers are presumptive proof of share ownership: Ontario Business Corporations Act, RSO 1990, c B.16, s. 266(3); see also Glass v. 618717 Ontario Inc., 2012 ONSC 535, at para 111. The presumption under s. 266(3) of the OBCA that the information recorded in the minute book of a corporation is evidence of the facts stated therein may be rebutted by evidence to the contrary.

Corporate records play an important role in governance, are subject to a statutory obligation of accuracy, and are presumed to be accurate, absent compelling evidence to the contrary: see Glass, at paras. 109-112. An oral agreement and understanding regarding the beneficial share ownership is the type of compelling evidence that can rebut the presumption of share ownership.

The court reviewed the jurisprudence on what "facts to the contrary" meant in 2012 in Glass. That jurisprudence remains instructive today as there are only a few cases that have considered this issue directly. Examples of evidence found to be sufficient to displace the presumption include:

a. Where it was admitted that no monies had been received from any of the original subscribing shareholders for their treasury shares: Dunham and Apollo Tours Ltd. (No. 1), at para. 14.

b. Where a minute book had been reconstructed and contained fabricated documents such that it could not be relied upon: Beaudry c. 9050-8151 Quebec Inc., 2002 CarswellQue 2280 (C.S.), at para. 24.

Examples of evidence that was not found to be sufficient to rebut the presumption include:

a. Where there was evidence that the amount of consideration for the shares recorded in the company's financial statements was incorrect, but there was other evidence that sufficient consideration had been paid: Hermans v. Three County Recycling & Composting Inc., 2000 CarswellOnt 3642 (S.C.J.), at paras. 99-110.

b. Evidence of an intention that a person would become a shareholder was not enough where the acts of that person were also consistent with explanations other than being a shareholder and there was no record of them as a shareholder: Anor Management Ltd. c. Brooklo Industries Ltd., [1978] C.S. 731 (Que. S.C.), at paras. 46-55.

The issue in this case is whether there was an unwritten agreement and understanding between the four brothers/brothers-in-law that they would continue to be equal beneficial owners of WWC and its business that rebuts the presumption of the veracity of what is stated in the minute book and share register about the share ownership.

Sukhdev acknowledges that there was an oral agreement and understanding that the four brothers/brothers-in-law were equal shareholders of 202 Ontario, even though the shareholdings in 202 Ontario were not always recorded as equal in the corporate records and share register of that company. Sukhdev says he incorporated 202 Ontario in 2003. The first property was purchased in 2005 for approximately $1.4 million at a time when Sukhdev was the sole shareholder.

The others were not issued shares reflecting their 25% ownership interests in 202 Ontario until 2015. Sukhdev acknowledges that there was an oral agreement that they were all equal 25% beneficial shareholders. He instructed the corporate lawyer Mr. Gosal to update the corporate records in 2015 to reflect this in the context of the transaction that was being undertaken at that time by 202 Ontario to purchase a new property. There is a precedent between these parties and within the same World Wide Group of companies for the parties having an oral agreement about beneficial shareholdings that is not reflected in the corporate records or share register.

202 Ontario is a significant real estate holding company. The current estimated value of its holdings is in excess of $40 million. The properties held by 202 Ontario were purchased with funds advanced by the four brothers/brothers-in-law and funds from WWC's bank account. Sukhdev says these were funds from the individuals that simply flowed through WWC's bank account whereas the others say that WWC contributed to the purchase and its contribution was credited to the four of them because they were all equal beneficial shareholders of both companies, WWC and 202 Ontario, pursuant to the same understanding and agreement.

Sukhdev says that the oral agreement of equal shareholdings was specific to 202 Ontario and the discrepancy in the corporate books and records was eventually rectified in 2015, which he contrasts with the situation for WWC where he says there was no such oral agreement and nothing to rectify.

In contrast, Sukhdev points to legal documents that were prepared on three separate occasions between 2015 and 2019 that, if implemented, would have changed the ownership structure of WWC, as follows:

a. In April 2015, Sukhdev instructed WWC's lawyer, Mr. Gosal, to prepare a draft shareholders' agreement, to be signed if the Applicants later became shareholders. Mr. Gosal has confirmed the shares were never transferred and the draft agreement was never signed.

b. In August 2016, the parties asked WWC's accountant to prepare a proposed structure for joint ownership of the whole Group. He sent a slide deck to the parties showing the "current structure", under which Sukhdev is shown as the sole owner of WWC, and a proposed "new structure", under which an equally-owned company would own all the companies in the Group, including WWC. This plan progressed as far as the incorporation of the new holding company, but no further.

c. In 2018-19, Sukhdev consulted counsel at Miller Thomson to develop a plan for a potential restructuring. Miller Thomson prepared a chart reflecting the structure of the businesses, which showed Sukhdev as the sole shareholder of WWC. WWC's internal accountant (Mr. Bhatti) circulated it to the parties and asked them to write back if they wished to restructure its ownership. The Applicants never did.

Sukhdev testified that he asked the others to contribute capital into WWC to participate in the various restructuring proposals that were considered, but they never agreed to do so and these restructurings were never implemented. He suggests that the fact that these restructuring proposals were prepared and never implemented is evidence that the others never became shareholders of WWC.

The others maintain that they were already equal beneficial shareholders. They say that the same oral agreement applied to both 202 Ontario and WWC and the records were just never rectified for WWC. On their evidence, a further capital contribution from them would not have been required for any of the restructuring proposals. I agree. Contrary to what Sukhdev asserts, it was not inconsistent with the beneficial ownership of the others for them to have declined his later offers to them in 2015 and 2019 to make additional contributions to buy an ownership interest that they already held. The parties are not sophisticated and were, until the events that precipitated this litigation, close family members who conducted their business collectively in an informal manner. All of them testified to not reading or paying attention or understanding documents they signed or received at various times.

Additional Context: Subsequent Events and the Conduct of the Parties

The court may consider the parties' conduct over the years and consider whether there is evidence that the shares of the company were beneficially owned in a manner different than what is recorded in the company's books. That beneficial ownership, if established, can displace the information in the share register. The information recorded in a company's share register may not reflect the parties' true intentions as to who owns the shares of the company: see Evans v. Facey, [2000] O.J. No. 2276, at para. 99.

The management of the World Wide Group of companies and the financial dealings between the companies and between the brothers/brothers-in-law provide some additional context and reinforce the conclusion that the presumption of ownership based on what is reflected in the Company's share register has been rebutted.

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Footnotes

1The parties are identified throughout this endorsement by their first names to avoid confusion between the two Dhaliwal brothers, Harchand and Sukhdev.

2Some of the records relied upon by Harchand, Paramjit, and Swaranjit originated from Mr. Bhatti, an internal bookkeeper who was not ultimately called as a witness. Sukhdev objects to the court considering the truth of the contents of any of this non-witnesses' communications, which Sukhdev maintains are improper hearsay and have not been properly proven (for example, December 20, 2019 email to external counsel in which Mr. Bhatti refers to all directors as the shareholders of each company, which was written at a time they were all directors of WWC). Despite objecting to any reliance upon Mr. Bhatti's emails for the truth of their contents, Sukhdev himself relies on emails sent by Mr. Bhatti for his own purposes. In any event, the written communications from Mr. Bhatti that Sukhdev objected to have not been relied upon in the determination of ownership. There is enough other evidence that supports the existence and persistence of the oral agreement of equal beneficial ownership of WWC and the other companies in the World Wide Group to rebut the presumption of ownership based on the share registers.