Court File and Parties

Court File No.: CV-24-00732898-00CL Date: 2025-09-26 Superior Court of Justice – Ontario (Commercial List)

Re: Arieh Tokayer, in his capacity as Estate Trustee of the Estate of Harold Tokayer, Applicant

And: Antonio Verduci and Versan Steel Fabrication Inc., Respondents

Before: Justice J. Dietrich

Counsel: Gregory Sidlofsky, Yana Fox, for the Applicant Marco Drudi, for the Respondents

Heard: September 12, 2025

Reasons for Decision

Introduction

[1] Arieh Tokayer, in his capacity as Estate Trustee (the "Estate Trustee") of the Estate of Harold Tokayer, seeks oppression remedy relief against Antonio Verduci as director and officer of Versan Steel Fabrication Inc. ("Versan") pursuant to s. 248 of the Business Corporations Act (Ontario) R.S.O. 1990, c. B.16 (the "OBCA"). The Estate Trustee also asserts a breach of natural justice.

[2] The underlying alleged oppression relates to the valuation of 50% of the shares of Versan held by Harold Tokayer (the "Shares"). Under the relevant Shareholders Agreement, Versan is entitled to purchase the Shares following Mr. Tokayer's death for a value as determined pursuant to that agreement. The Estate Trustee alleges that the valuation was carried out in a manner which violated its right to natural justice and that Mr. Verduci provided incorrect information or provided information not in good faith to the valuator, resulting in an artificially low valuation of Mr. Tokayer's shares.

[3] As a remedy for the alleged oppression and breach of natural justice, the Estate Trustee seeks an order revaluing the Shares based on information set out in a valuation estimate put forward by the Estate Trustee.

[4] Although additional claims including breach of fiduciary duty were raised in the Estate Trustee's notice of application, those claims were not advanced at the hearing.

[5] For the reasons set out below, the application by the Estate Trustee is dismissed.

Background

The Parties

[6] Harold Tokayer, who is deceased, owned a 50% interest in Versan. Mr. Verduci owned the remaining 50% of Versan.

[7] Versan is in the metal fabrication business, primarily manufacturing steel products and structures used in construction projects.

[8] Prior to Mr. Tokayer's death, Mr. Verduci and Mr. Tokayer were the sole officers and directors of Versan.

[9] On March 12, 2024, Mr. Tokayer passed away, and Mr. Verduci became the sole remaining officer and director of Versan.

[10] For ease of reference, I will refer to Harold Tokayer as Mr. Tokayer and Arieh Tokayer (Mr. Tokayer's brother) as the Estate Trustee.

[11] Although the Estate Trustee, Mr. Tokayer's brother, worked at Versan, he was not involved in management, nor did he become an officer or director of Versan following Mr. Tokayer's death.

The Shareholders Agreement

[12] On September 1, 2019, Mr. Tokayer and Mr. Verduci entered into a shareholders agreement governing their interests in Versan (the "Shareholders Agreement").

[13] At a high level, the Shareholders Agreement provided that if either Mr. Tokayer or Mr. Verduci passed away, Versan had a right to elect to purchase the shares held by the deceased shareholder in accordance with the Shareholders Agreement. There is no dispute that Versan made the relevant election as permitted under the Shareholders Agreement. The dispute revolves around the determination of the purchase price for the Shares.

[14] Article XII of the Shareholders Agreement is entitled 'Rights of Survivors'. Section 12.02 of the Shareholders Agreement provides:

12.02 Notwithstanding the provisions of Article 12.01 hereof, the Corporation shall have the option at any time before or within thirty (30) days of the time notice is given pursuant to Article 12.01 hereof or if no such notice is given, within thirty (30) days after the expiration of the ninety (90) day option period referred to in Article 12.01 to notify the estate of the deceased individual or Shareholder listed in Column "B" in Article 12.01 above by notice in writing of its desire to purchase not less than all the Shares of said party for the Purchase Price ; in which event the Corporation shall purchase and the said party shall sell all the said Shares. … (emphasis added)

[15] The Shareholders Agreement stipulates that the Purchase Price for purposes of 12.02 (as well as other provisions of the Shareholders Agreement) is to be determined as follows:

13.01... (a) within thirty (30) days of receipt by the Corporation of the financial statements prepared by the Accountants for each fiscal year of the Corporation the Shareholders shall meet and use their best efforts to stipulate the value of each class of Shares on a per share basis;

(b) the valuation pursuant to paragraph 13.01(a) above shall be in the form of Schedule "C" attached hereto, signed by all the Shareholders, filed into the Share Register of the Corporation by the Secretary thereof and shall be the basis for determining the Purchase Price during the succeeding twelve (12) month period; and

(c) the purchase price for each class of Shares shall be determined by multiplying the purchase price per share by the number of such class subject to the transaction of purchase and sale.

13.02 If the Shareholders fail to file a valuation in accordance with the provisions of article 13.01 hereof, the most recent filed valuation shall be used as the basis for determining the Purchase Price at any given time, provided however that if no valuation has been filed within twelve (12) months preceding the applicable Completion Date, then the Corporation shall require the Accountants to prepare such a valuation . For the purpose of preparing any such valuation, the Accountants shall value the Corporation as an ongoing business in accordance with generally accepted accounting principles and may retain the services of one or more professional valuators at the expense of the Corporation as the Accountants in their sole discretion decide. All information required by the Accountants or any professional valuators so retained by them shall be provided by the officers and directors of the Corporation forthwith upon request and in good faith. The valuation of the Accountant pursuant to this article 13.02 shall be final and binding upon all the Shareholders, the Corporation and all parties having an interest therein, and shall for the purposes of this Agreement be a valuation in accordance with and subject to the provisions of article 13.01 hereof. (emphasis added)

[16] There is no dispute that a valuation as contemplated by s. 13.01 of the Shareholders Agreement did not exist and so, the Purchase Price for Mr. Tokayer's shares was to be determined by the provisions of s. 13.02 of the Shareholders Agreement.

[17] The Accountants referenced in s. 13.02 of the Shareholders Agreement is defined in that agreement to mean "such Accountant or firm of Accountants as may from time to time be appointed by the Directors or Shareholders as the accountant or auditor of the Corporation in accordance with the provisions hereof."

[18] There is no dispute that Mr. Grignano was the Accountant as referred to in the Shareholders Agreement. He was the longstanding accountant for not only Versan, but also for Mr. Tokayer and Mr. Verduci. Since Mr. Grignano does not have experience in valuations, he retained Jim Muccilli, a Chartered Business Valuator with Crowe Soberman LLP ("Crowe"), to conduct the valuation.

The Crowe Report

[19] Mr. Grignano retained Crowe as he thought they were best suited for the task – he estimated that he had worked with Mr. Muccilli five to ten times for other clients over the past 10 years. Mr. Grignano provided information to Mr. Muccilli and attended various meetings with Mr. Muccilli and Mr. Verduci. Mr. Grignano gave evidence that he did not observe any bad faith conduct by Mr. Verduci or Mr. Muccilli.

[20] Mr. Muccilli's affidavit evidence is that Mr. Verduci gave him all information he requested, and he submits that he was not influenced by Mr. Grignano or Mr. Verduci to reduce the fair market value of the Shares.

[21] Mr. Muccilli also provided evidence that he did not speak to the Estate Trustee in preparing the valuation as he understood the Estate Trustee was not involved in management of Versan.

[22] The resulting report dated September 4, 2024 (the "Crowe Report") determined that the fair market value of the Shares was $1,130,000. Section 13.02 of the Shareholders Agreement states that the Crowe Report value is to be the final and binding valuation.

The Estate Trustee's Concerns with the Crowe Report

[23] It is undisputed that neither the Estate Trustee nor anyone on their behalf was given the opportunity to provide input to Crowe, address questions from them, comment on information provided, attend meetings, or give feedback on the assumptions made in the Crowe Report. The Estate Trustee also was not provided a draft of the Crowe Report to review or given an opportunity to comment on the draft report. However, I note that the Estate Trustee did not ask for an opportunity to provide input on the report prior to its completion.

[24] Along with the lack of input, the Estate Trustee takes issue with the Crowe Report on three primary bases as set out below, and also claims that Mr. Verduci did not act in good faith when he made certain 'self serving' statements to Crowe, including Mr. Muccilli's notes that Mr. Verduci attributed 80% of Versan's goodwill to himself, and attributed 20% to Versan, and that Mr. Verduci saw the future as 'bleak', in part due to big concerns over the economy. The Estate Trustee did not put forth any evidence to dispute these statements, but he claims that there is also no basis to support them.

[25] More particularly, the Estate Trustee's three main complaints with the Crowe Report involved assumptions relating to holdback amounts, gross up of related party expenses, and the application of a minority discount.

Holdback Assumptions

[26] In valuing holdback amounts on two construction projects referred to as the Crosslinx Eglinton Crosstown LRT and the Mirvish Development, Mr. Verduci advised Crowe in writing that there was risk associated with the amounts.

[27] For Crosslinx Eglinton Crosstown LRT, Mr. Verduci noted:

"Eglinton LRT is significantly delayed as there a lot of issues on the stations due to poor management from Crosslinx side. Still working on deficiencies, substantial completion not achieved yet, all our contacts on the job are no longer there – high uncertainty on collection as we have followed up multiple times with the client and no indication on when HB will be released/substantial completion will be achieved".

[28] For the Mirvish Development, Mr. Verduci noted:

"There is a lot of uncertainty on collection of this Holdback for Mirvish Village given that the owner is in financial distress and has obtained additional financing throughout the job however, it is still insufficient to complete the job (publicly documented in the news - Westbank reputation currently tarnished amongst trades). February draw was the last payment we received. We are currently struggling to collect March, April and May progress billings which we will likely have to engage our lawyers to collect similar to earlier this year when the customer had 300K+ in overdue invoices. Our exposure will continue increasing because we are to continue work on the job per the contract even if we are having trouble collecting. We can file lien [sic] against the job as other trades have already done. Legal costs would have to be considered."

[29] The Estate Trustee does not rely on any specific evidence to argue that these statements by Mr. Verduci were incorrect. Rather, the Estate Trustee says that there was no basis for such statements given the amounts at issue are holdback amounts and protected under the Construction Act, R.S.O. 1990, c. C.30 (or its predecessor the Construction Lien Act, R.S.O. 1990, c. C.30).

[30] Further, the Estate Trustee says that Crowe improperly discounted these receivables when Crowe wrongly relied on Mr. Verduci's statements without independent verification.

Normalization of Related Party Expenses

[31] Veranto Alloys, a company controlled by Mr. Verduci, provides most of the installation services for Versan. Mr. Verduci provided information to Crowe that, based on certain invoices received from other installers, Veranto Alloys performed the installation work at approximately 22-23% discount compared to market rates.

[32] The Estate Trustee disagrees with the analysis provided by Mr. Verduci and says that there was no basis to say it is true. He argues that the comparison invoices are based on a 'select' and small sample of other contractors and are not a proper comparison. Further, the Estate Trustee indicated that based on his knowledge, the costs were priced into Versan jobs. He also submitted that the suggestion the rates were below market was unjustified and self-serving.

[33] The Estate Trustee also takes issue with the fact that Crowe increased the amounts paid to Veranto Alloys to reflect certain assumptions regarding a purchaser either performing the subcontractor work inhouse or contracting with a third party to perform the relevant work.

Minority/Marketability Discount

[34] Although not based on any statement made by Mr. Verduci, the Estate Trustee also takes issue with Crowe's application of a minority discount. The Crowe Report indicated that the discount for the minority interest held, or the liquidity of the investment would be in the range of 15% to 20% and, therefore, utilized the midpoint of 17.5%.

The Acuity Report

[35] The Estate Trustee relies on an Estimate Valuation Report of Acuity Capital Partners dated June 17, 2024, (the "Acuity Report") which estimates that the fair market value of the Shares is $2,459,000 and $2,000,000 if a minority discount is applied.

[36] Both the Acuity Report and Crowe Report are Estimate Valuation Reports prepared in accordance with the Canadian Institute of Chartered Business Valuators Practice Standards for Estimate Valuation Reports.

[37] Mr. Verduci takes issue with the Acuity Report and specifically with the qualifications of the author of the report, Nikola Zivkovic. Mr. Zivkovic admitted that he did not prepare the report based on generally accepted accounting principles as set out in the Shareholders Agreement.

[38] The main differences between the Crowe Report and the Acuity Report are that the Acuity Report (i) assumes the holdbacks are risk free; (ii) does not gross up the amounts paid to Veranto Alloys as it is assumed those amounts are at market rates; and (iii) applied a minority discount of 20%, but indicated that the inclusion or exclusion of a minority discount is to be determined by the Court.

Issues

[39] The two issues to be determined are whether (i) the Estate Trustee is appropriately entitled to relief under s. 248 of the OBCA (the "Oppression Remedy") and, if so, what that relief should be; and (ii) the principles of natural justice applied to the preparation of the Crowe Report, and if so, were they violated?

Analysis

Oppression Remedy

[40] There is no dispute that Mr. Tokayer, as a 50% shareholder in Versan can be a proper complainant for purposes of the Oppression Remedy under s. 245 of the OBCA.

[41] The Supreme Court of Canada mandates a two-step inquiry to assess claims under the Oppression Remedy. The Court must first determine (i) whether the evidence supports the reasonable expectation asserted by the claimant and; if so, (ii) it must determine whether the evidence establishes that the reasonable expectation was violated by conduct that falls within the term's "oppression" or "unfair prejudice": see BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, [2008] 3 S.C.R. 560 [BCE] at para. 68.

[42] The concept of reasonable expectations is objective and contextual. The question is whether the claimant's expectation is reasonable having regard to the facts of the specific case, the relationships at issue, and the entire context, including the fact that there may be conflicting claims and expectations: see BCE at para. 62.

[43] As the oppression remedy is a fact-specific enquiry, Courts are to consider a number of factors including, (i) general commercial practice; (ii) the nature of the corporation; (iii) the relationship between the parties; (iv) past practice; (v) steps the claimant could have taken to protect itself; (vi) representations and agreements; and (vii) the fair resolution of conflicting interests between corporate stakeholders: see BCE at paras. 59 and 71-72.

[44] The Estate Trustee claims that, as a 50% shareholder, Mr. Tokayer had a reasonable expectation that: (i) Mr. Verduci would answer questions and provide documents in good faith to the valuator; (ii) the Estate Trustee would have an opportunity to be involved in the preparation of the Crowe Report; and (iii) the Estate Trustee would have an opportunity to challenge or raise concerns with the Crowe Report prior to its finalization.

[45] Mr. Verduci does not dispute that Mr. Tokayer had a reasonable expectation that Mr. Verduci, as an officer and director of Versan, would comply with the Shareholders Agreement and would provide all information to the Accountants or any professional valuators so retained by them (i.e. Crowe) upon request and in good faith. This expectation is grounded in s. 13.02 of the Shareholders Agreement.

[46] The Estate Trustee alleges that Mr. Verduci violated this expectation because he provided inaccurate and self-serving statements to Crowe. These statements included noting that the holdbacks at issue were subject to risk, that the amounts paid to Veranto Alloys were at below market rates, that the future looked bleak, and attributing the majority of the company's goodwill to himself.

[47] It may be that Crowe could have done more work to verify these statements and the impact they had on Versan's valuation, however, the question of whether Crowe has prepared the Crowe Report in accordance with the applicable valuation standards is not before me. What is before me is whether Mr. Verduci's alleged incorrect, self-serving and bad faith statements to Crowe violated Mr. Tokayer's reasonable expectations. I am not persuaded based on the record before me that these statements were inaccurate or not made in good faith.

[48] I acknowledge that holdback amounts are entitled to certain protections under applicable legislation, however, that does not mean they are risk free. Mr. Verduci disclosed to Crowe that the amounts were 'holdback' amounts, and that work was continuing for at least one of the customers, but also expressed his concern regarding collectability and provided the reasons behind his concerns. I also note that Mr. Verduci asked Crowe if these holdback receivables could be treated separately with 50% provided to the Estate Trustee if and when they were collected. However, Crowe, relying on the provisions of the Shareholders Agreement, indicated that this was not how they were to value the Shares. I am not persuaded that the Estate Trustee has shown that the statements regarding the holdback amounts were not made in good faith or are inaccurate.

[49] I am also not persuaded on the record before me that any information Mr. Verduci provided to Crowe regarding the rates of the amounts paid to Veranto Alloys was incorrect or was not provided in good faith. I acknowledge that the Estate Trustee was not aware of any discussion that installation costs were being charged below market rates, however, the evidence demonstrates that the Estate Trustee was not involved in management of the business.

[50] On the issue of the inclusion of a minority discount in the Crowe Report, there is no allegation that any statement or action by Mr. Verduci led to its addition.

[51] I am not persuaded that Mr. Verduci violated Mr. Tokayer's reasonable expectation that Mr. Verduci would provide accurate information to the valuator in good faith.

[52] I do not agree with the Estate Trustee that there existed a reasonable expectation that the Estate Trustee would be involved in the valuation (in the information gathering phase or the review phase). Section 13.02 of the Shareholders Agreement is clear that the Accountants or the valuator employed by them would make information requests to the officers and directors of Versan. This process was followed. Again, the Estate Trustee was neither an officer nor a director and was not involved in management of Versan.

[53] The Shareholders Agreement was structured to determine the Purchase Price for the shares in a simple and straightforward way. The initial position in s. 13.01 of the Shareholders Agreement was that Versan and the shareholders were to meet and use their best efforts to jointly stipulate the value each year. This value was to be the basis for determining the Purchase Price of the Shares. If this valuation was not completed, then s. 13.02 provides that the normal accountants of Versan were to determine the value of the shares, and if needed, they could obtain the assistance of an expert.

[54] The valuation was to be final and binding on the shareholders and on any parties having an interest in the matter. There was no process built into the Shareholders Agreement to address reviews or objections by the shareholders or a representative of the estate of the deceased shareholder to the valuation.

[55] As such, I am not persuaded that the expectation that the Estate Trustee would be involved in the preparation, or the review of the Crowe Report was reasonable in the circumstances.

[56] Accordingly, the Estate Trustee's request for relief under the Oppression Remedy is dismissed.

Alleged Breach of Natural Justice

[57] The Estate Trustee submits that he was entitled to the benefit of the principles of natural justice in the process Crowe employed which resulted in the Crowe Report. The Estate Trustee's basis for this submission is that Crowe was acting as a 'decision maker'.

[58] Specifically, the Estate Trustee relies on Malton v. Attia, 2016 ABCA 130, 398 D.L.R. (4th) 350 [Malton] at paragraphs 35 to 41 for the principle that a fair trial must comply with the rules of natural justice, being that the adjudicator must be disinterested and unbiased and the parties be given adequate notice and opportunity to be heard.

[59] However, the principals of natural justice apply to a fair trial: see para. 35 of Malton. As set out in KMH Cardiology Centres Incorporated v. Lambardar Inc., 2022 ONSC 7139 [KMH Cardiology] at paragraphs 28 to 32, parties often contract to have an issue decided by an 'expert' rather than an arbitrator or judge of the Court. Justice Myers in KMH Cardiology explains the difference between an expert and an arbitrator or judge as follows:

28 The issue raised by the landlord involves the role of an "expert" appointed under a contract or lease to resolve disputes. The term "expert" in this context refers to someone who is not intended to be an arbitrator or a judge of the court.

29 Arbitrators and judges are neutral officials who resolve disputes on evidence. The evidence is submitted pursuant to rules and established procedures. There can be more or less formality as the parties may agree or the law provides.

30 Judges and arbitrators are not supposed to bring their own personal knowledge to bear on the facts. Rather, they conduct an adversarial hearing in which the parties arm them with the evidence they need to decide the issues joined by the parties. If special expertise is required to understand a technical or esoteric area, the parties will provide the arbitrator or judge with expert evidence to help him or her draw appropriate inferences that may exceed his or her knowledge.

31 There are appeals available in court proceedings and there can be appeals provided in an arbitration.

32 Experts, by contrast, are people appointed to solve a problem themselves based on their own knowledge and expertise. They do not necessarily hear any evidence or submissions from the parties. There can be as much or as little process as the parties agree upon. The expert is expected to decide the issues based on his or her own understanding of what is involved. He or she is an agreed expert in the field after all. There is no appeal.

33 An expert decision is typically fast and inexpensive. Even if it takes longer that one hopes, it will virtually always be far more efficient and affordable than any form of arbitration or litigation. [Emphasis added].

[60] In this case, the Shareholders contracted to select these Accountants to resolve the issue of valuation and, as stated, the Accountants were entitled to hire experts as necessary. The Accountants and the valuator hired by the Accountants were to bring their own knowledge and expertise to determining the issue. Crowe, therefore, acted as an expert – not an adjudicator. Counsel for the Estate Trustee failed to provide me with case law to support the proposition that the principles of natural justice apply to experts in this context.

[61] Rather, as recently stated by Justice Steele in LPF NRStor Holdings LTP v. NRStor Incorporated, 2025 ONSC 2514 at paragraph 30: "There are commercial reasons for parties' choosing to send disputes to an accountant or other expert." As noted by Kimmel J. in CLEAResult Canada Inc. v. Santomero, 2024 ONSC 6054, at para. 54: "Courts have recognized that commercial agreements to refer certain disputes to independent experts are a deliberate indication of the parties' intentions to swiftly and efficiently resolve such disputes outside the context of civil proceedings, which can be slow and expensive and create commercial uncertainty."

[62] In this case, the shareholders of Versan, Mr. Tokayer and Mr. Verduci, chose to refer the issue of valuation to an expert – specifically, the Accountants and whichever expert the Accountants chose to engage. I agree with the comments above that having done so is an indication of the deliberate intention of the parties to swiftly and efficiently resolve the matter.

[63] The principles of natural justice are not engaged when a decision is being made by an expert in this manner – rather the provisions of the contract, in this case the Shareholders Agreement, determine the process that is triggered.

[64] The process set out in the Shareholders Agreement was followed. The Accountants correctly engaged Crowe. Mr. Verduci, as the sole officer and director of Versan, provided Crowe with the information requested in good faith.

[65] The parties to the Shareholders Agreement – Mr. Verduci and Mr. Tokayer – agreed that the resulting report would not be subject to appeal and would be final and binding. As set out in Saputo Inc. et al v. Dare Holdings Ltd. et al, 2012 ONSC 4981 at paragraphs 4 to 8, even if the valuator considered matters that should not have been considered or failed to consider matters he should have, such mistakes do not engage Court intervention. Court review of the report would only be appropriate if the valuator went beyond his contractual mandate. Here, there is no allegation that the Crowe Report went beyond the mandate set out in the Shareholders Agreement.

[66] Accordingly, I am not persuaded that the alleged breach of the principles of natural justice in preparing the Crowe Report is a valid basis to set aside that report.

Disposition

[67] For the reasons set out above, the Estate Trustee's application is dismissed.

[68] If the parties are not able to resolve costs of this matter, the Respondents may email costs submissions of no more than three double-spaced pages to the Commercial List office within 15 days of the date of this endorsement. The Estate Trustee may deliver responding submissions of no more than three double-spaced pages within 15 days following the delivery of the Respondent's submissions. No reply submissions are to be delivered without leave.

The Honourable Justice J. Dietrich

Date: September 26, 2025