Papp v. Papp, 2026 ONSC 4167

CITATION: Papp v. Papp, 2026 ONSC 4167

COURT FILE NO.: CV-25-34788

DATE: 20260717

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

MICHAEL PAPP and MICHAEL PAPP AS TRUSTEE OF THE MICHAEL PAPP FAMILY TRUST

Applicants

– and –

GEORGE PAPP, GEORGE PAPP, AS TRUSTEE FOR THE GEORGE PAPP FAMILY TRUST, PAPP PLASTICS & DISTRIBUTING LIMITED, 2100570 ONTARIO INC., HASTINGS PAINTING CORPORATION, AUTOMOTIVE SYNERGIES INC., CANADIAN ARTESIAN SPRINGS LIMITED, and MOLD MAKERS INTERNATIONAL INC.

Respondents

Andrew Faith and Yulia Mykhaylychenko, for the Applicants

David Silver and Esther Mendelsohn, for the Respondents, George Papp and George Papp, as Trustee for the George Papp Family Trust

Nick Hollard for Deloitte Restructuring Inc., Court Appointed Monitor, Deloitte Restructuring Inc., of Papp Plastics & Distributing Limited, 2100570 Ontario Inc., Hastings Painting Corporation, Automotive Synergies Inc., Canadian Artesian Springs Limited, and Mold Makers International Inc.

HEARD: May 12, 2026

REASONS FOR DECISION ON MOTION

HORVAT J.:

1Michael Papp and George Papp are each 50 percent shareholders in the respondent corporations. They are also brothers. Michael brings this application against George alleging, among other things, oppression of his shareholding interests. George commenced an action against Michael alleging the same and brings this motion seeking to convert Michael’s application to an action and consolidate Michael’s proceeding with his. George and Michael cannot agree on anything, including whether their proceedings should be consolidated and heard together. For the sake of the corporate parties, they did agree that the appointment of a monitor was necessary.

2I agree with George that the issues in both Michael’s application and George’s action require a trial with oral evidence and should be heard together. Michael’s application shall be converted to an action. The issues in both proceedings are intertwined and require a full evidentiary record for a fair and just resolution, including assessments of credibility. Having the proceedings heard separately, and potentially before different decision makers, would risk inconsistent results and be a strain on an already overburdened judicial system.

3For these reasons, I grant George’s motion to convert Michael’s application to an action and consolidate that proceeding with his own action.

BACKGROUND

4Michael and George are the equal and sole shareholders of the various corporate parties. They hold their respective shareholding interests through their respective family trusts or personally.

5On April 14, 2025, Michael commenced this application against George and the corporate entities. Michael’s application alleges that George misappropriated corporate funds by overdrawing and by using corporate funds for personal expenses over the course of fifteen years, and that George failed to arrange for the proper storage of precious metals of the corporate parties. Some of those precious metals are now missing. The application is grounded in claims of oppression, conversion, misappropriation of corporate funds, breaches of fiduciary duties and dishonesty. The application seeks:

(a) a declaration that George oppressed Michael;

(b) an order appointing a valuator to value each of the corporate parties;

(c) an order appointing a forensic accountant to investigate George’s use of corporate funds;

(d) an order that George disgorge funds he allegedly misappropriated from the corporate parties;

(e) damages for the alleged lost opportunity costs arising from the alleged misappropriation of corporate funds by George; and

(f) that George purchase Michael’s shares in the corporate parties.

6On April 29, 2025, Michael obtained an injunction:

(a) restraining the use of corporate funds to pay personal expenses;

(b) restraining the withdrawal of funds from the corporate parties for personal use;

(c) requiring cheques issued in favour of Michael or George or their family members or trusts to require both of their signatures; and

(d) restraining capital expenditures to $100,000 unless approved by both brothers.

7On August 11, 2025, Michael brought a motion for the appointment of Deloitte Restructuring Inc. as monitor of the corporate parties. George agreed that a monitor should be appointed but disagreed that Deloitte should be the monitor.

8On August 21, 2025, Deloitte was appointed as the monitor for the corporate parties. Deloitte has overseen the operation of the corporate parties since and helps to address operational issues when Michael and George cannot agree.

9On September 12, 2025, Michael served a fresh as Amended Notice of Application seeking the same relief related to separating his corporate interests from George’s but asking for the option to buy George out of some of the corporate parties instead of being bought out of all of them.

10On October 23, 2025, Deloitte’s powers were expanded to permit it to direct the corporate parties to retain a human resources professional and financial controller, direct the resolution of disputes related to their operations, and to initiate, prosecute and seek recovery of the precious metals. This order was made on consent.

11On January 8, 2026, George delivered a responding application record alleging that Michael engaged in the same problematic conduct that Michael alleges George engaged in.

12On February 9, 2026, Michael delivered a reply record.

13On February 23, 2026, George commenced an action against Michael and the corporate parties under court file number CV-25-34788. He seeks a declaration that Michael breached his fiduciary duties, leave to bring a derivative action, remedies for oppression, the appointment of an inspector to audit the finances for two of the corporate parties, and damages, among other relief. In his Action, George alleges that Michael was improperly reimbursed by the corporate parties for personal expenses, misappropriated corporate credit card loyalty points belonging to the corporate parties, exposed the corporate parties to tax liability, excluded George from the management and profits of certain corporate parties, engaged in self-dealing, and failed to arrange for the proper storage of the precious metals.

14On February 27, 2026, George delivered a 16-volume motion record seeking an order converting this application to an action under r. 38.10 and consolidating it with the Action under r. 6.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“Rules”).

15On May 1, 2026, Deloitte served its Fourth Report. Deloitte stresses in its report the harm that is being done to the corporate parties as a result of this shareholders’ dispute and opines that “the only effective solution would be for the shareholders to disentangle their respective interests and ownership in the Companies at the earliest opportunity.”

16On May 22, 2026, I was appointed case management judge for this application and for George’s Action.

17The written record in this application, including the responding and reply records, totals over 5,000 pages and contains several expert reports. Cross-examinations have not been conducted in the application. A statement of defence has not been served in the Action.

ANALYSIS

18The following issues are before me:

(a) Should the application be converted to an action?

(b) If so, should Michael’s action be consolidated with George’s action?

19For the reasons that follow, I find that Michael’s application should be converted to an action and should be consolidated with George’s action and dealt with together.

Should the Application be Converted to an Action?

20Michael argues that his application should not be converted to an action but rather should be scheduled urgently for a hearing on a paper record. I disagree. In order for the court to make a fair and just determination of the issues raised in Michael’s application, and George’s responding record, a trial and a full evidentiary record, including oral evidence is required.

21A proceeding may be brought by way of an application when the Rules authorize it or “in respect of any matter where it is unlikely that there will be any material facts in dispute requiring a trial”: r. 14.05(3)(h) of the Rules. In this case, proceeding by way of application is authorized under s. 248 of the Business Corporations Act, R.S.O. 1990, c. B.16, and Michael’s application should not be converted to an action without “good reason.” While the ultimate question is does the balance of convenience favour converting the application to an action, the court should consider the following non-exhaustive list of factors:

(a) material facts in dispute;

(b) complexity of the issues;

(c) necessity of pleadings and discovery;

(d) importance and nature of the relief sought;

(e) requirement of a trial to determine credibility; and

(f) whether there is a genuine issue for trial.

See: Dell v. The Corporation of the Town of Niagara on the Lake, 2023 ONSC 1610, at para. 21; Jalilnattajamiri v. Jalilnattajamiri, 2025 ONSC 1302, at paras. 49-52. Sekhon v. Aerocar Limousine Services Co-Operative Ltd., 2013 ONSC 542, at para. 51, citing McKay Estate v. Love (1991), , 6 O.R. (3d) 511 (Gen. Div.), aff'd (1991) 6 O.R. (3d) 511 (C.A.) at para. 6; Gojkovich v. Buhbli Organics Inc., 2023 ONSC 2738, at paras. 69-70; Przysuski v. City Optical Holdings Inc., 2013 ONSC 5709, at paras. 5-10.

22Having reviewed the affidavits filed on Michael’s application, almost all, if not all, of the material facts are in dispute between Michael and George. The allegations made against George include breaches of fiduciary duties, oppressive and dishonest conduct, and misappropriation, putting credibility directly at issue. George denies engaging in these acts, and challenges nearly every assertion made by Michael. He then makes allegations of oppression against Michael in his responding record.

23Michael argues that any material facts in dispute can be resolved through cross-examination. I disagree. Transcripts will only be of limited assistance to the trier of fact. Asking a judge to review what will likely be hundreds of pages of transcripts cannot replace seeing and hearing the witnesses during a trial. Oral evidence in a trial setting will be required to enable a judge to fairly adjudicate the dispute and assess credibility issues. Further, Michael’s notice of application states at paragraph 28 that the full extent of the alleged misappropriation by George remains unknown. This naturally implies that further production and discovery will be necessary and that the full record is not before the court in written form.

24The serious allegations raised by each brother against the other naturally raise reputational concerns and credibility issues that must be resolved with oral evidence. Credibility issues will likely be central to the adjudication of the main issues between the brothers.

25Michael argues that the significant length of the records on the application allows the court to make the necessary findings, including resolving credibility issues because everything is before the court. I disagree. The considerable length of the written record in this case only supports the finding that a proper trial is necessary to resolve the issues between Michael and George fairly and fully. Credibility issues and assessments will need to be resolved in this case. These credibility issues cannot be resolved on the written record before the court. There are simply too many interwoven issues before the court that require resolution.

26The issues in Michael’s application require a full evidentiary record, including oral evidence from both the parties and their experts. While not every application that is supported by expert evidence must be converted to an action, given the complexity of the issues in this case, and that competing expert reports are included in the written record, further supports the need for a trial and oral evidence: Przysuski, at para. 15, quoting Collins v. Canada (Attorney General) (2005), , 76 O.R. (3d) 228 (S.C.), at paras. 43-45. Credibility issues will be central to the ultimate determination of this dispute.

27Michael argues that if his application is converted to an action with a resulting trial, then the matter will be delayed, causing prejudice to him. I note that a judge hearing an application may decide that the entire application, or any issue, proceed to a trial. In this case, the application would then be treated as an action: r. 38.10(1)(b); r. 38.10(2). My decision on this motion, if I were to decide not to convert Michael’s application to an action, would not be binding on the judge hearing the application and they too would have the discretion to find that they are unable to decide it without a trial.

28I acknowledge Michael’s concerns about delay with the conversion of his application to an action and the impact of any delay on the corporate parties. Shareholder fights, particularly where the shares are equally held by two parties, are destructive to the corporations. This is especially so where the shareholders put their own interests above the best interests of the corporations. Michael has not demonstrated any prejudice that would result if his application was converted to an application that outweighs the need for a fair and determination at a full trial with oral evidence. Delays are always a risk in the judicial system, particularly with civil proceedings. Michael’s concerns about delay may be mitigated by the imposition of strict timelines and continued case management to ensure that the case moves forward efficiently and as quickly as the realities of the judicial system will allow.

29While some of the relief sought by Michael in his application may be dealt with by way of interim and urgent motions, the substance of his claims – oppression, misappropriation and lost opportunity – require a full evidentiary record for determination. Given the nature of these allegations, the balance of convenience favours determining them at a trial with oral evidence. In these circumstances, there are good reasons to convert Michael’s application to an action and there are genuine issues requiring a trial.

30The next question is whether Michael’s action should be consolidated with George’s action and the two heard together, or one after the other.

Should Michael’s action be consolidated with George’s action?

31Consolidating the application and the action and having the two proceedings heard together at the same trial is the most efficient and cost-effective procedure for the determination of the issues. Having the actions heard together and by the same judge will avoid inconsistent or conflicting decisions that have the potential of bringing the administration of justice into disrepute.

32Proceedings may be consolidated, heard at the same time, or one after the other, where they have common questions of law or fact, the relief claimed arises out of the same transaction or events, or for any other reason that the order ought to be made: r. 6.01(1) of the Rules. It is trite to say that consolidating proceedings that have common questions of fact, or arise from the same events, avoids a multiplicity of proceedings, promote expeditious and inexpensive determination of disputes and avoids inconsistent judicial findings: r. 1.04(1) and (1.1) of the Rules.

33The relief sought by each brother is similar. Both Michael and George seek: (i) declarations that the other breached his fiduciary duties; (ii) remedies for oppression under the Ontario Business Corporations Act; (iii) disgorgement; (iv) relief with respect to the precious metals; (v) some form of accounting; and (vi) damages for the others’ expense reimbursements. These claims arise from the same factual matrix. Each brother seeks damages from the other related to funds that each alleges the other misappropriated. There will be significant overlap in the evidence and the witnesses. The issues are intertwined. Consolidating the proceedings is the only practical solution when consideration is given to the potential for inconsistent decisions and the need to protect scarce judicial resources.

34No cross-examinations have been conducted in the application, and a statement of defence has yet to be served in the action. If the proceedings are consolidated now, efficiency and legal costs savings to the parties would be maximized.

35Further, as the parties to this proceeding have found, given the length of time that they have waited to have this motion heard and decided, judicial resources are valuable. Having two proceedings move forward on different paths that involve essentially the same issues, and the same dispute would cause an unnecessary strain on the system.

36Any potential prejudice to Michael related to delay if the two actions are consolidated is muted when balanced with judicial economy, efficiency and the risk of inconsistent results. The most efficient use of the court’s resources is to deal with all the issues between the brothers that are related to the corporate parties at once and in one trial or proceeding. This is preferred over a piecemeal approach of the two actions proceeding on different paths.

COSTS

37Both Michael and George filed costs outlines. George was entirely successful on this motion and is entitled to his costs. I am presumptively of the view, considering the factors identified in r. 57.01(1), that an award of costs on a partial indemnity scale in the amount of $16,068.09, inclusive of HST and disbursements, is fair and reasonable.

38If there are offers to settle that should be considered, however, then the parties may each provide written costs submissions, not to exceed three pages, double-spaced (not including any offers to settle) within 20 days.

CONCLUSION

39For these reasons, George’s motion is granted and the following orders are made:

(a) the application in court file no. CV-25-34788 shall be converted into an action;

(b) the proceedings under court file nos. CV-25-34788 and CV-26-36170 are consolidated into one proceeding to continue under Court File No. CV-25-34788;

(c) if the parties cannot agree on an expedited timetable for the exchange of pleadings in the consolidated action, then: (i) Michael shall serve a statement of claim by August 7, 2026; (ii) George shall serve a statement of defence and counterclaim by August 21, 2026; and (iii) Michael shall serve a reply and defence to counterclaim by September 4, 2026;

(d) The pleadings identified in (c) shall be filed with the court and uploaded to Case Center within seven days of being served; and

(e) The parties shall exchange discovery plans and use best efforts to agree on a timetable for the consolidated action by August 14, 2026. If the parties cannot agree on a discovery plan and/or timetable, then a case conference may be scheduled before me through trial co-ordination.

Jacqueline A. Horvat

Justice

Released: July 17, 2026

CITATION: Papp v. Papp, 2026 ONSC 4167

COURT FILE NO.: CV-25-34788

DATE: 20260717

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

MICHAEL PAPP and MICHAEL PAPP AS TRUSTEE OF THE MICHAEL PAPP FAMILY TRUST

Applicants

– and –

GEORGE PAPP, GEORGE PAPP, AS TRUSTEE FOR THE GEORGE PAPP FAMILY TRUST, PAPP PLASTICS & DISTRIBUTING LIMITED, 2100570 ONTARIO INC., HASTINGS PAINTING CORPORATION, AUTOMOTIVE SYNERGIES INC., CANADIAN ARTESIAN SPRINGS LIMITED, and MOLD MAKERS INTERNATIONAL INC.

Respondents

reasons for decision on motion

Horvat J.