A former employee and founding member of a coffee company and its related worker co‑operative sought damages for failure to redeem “sweat equity” credits earned through reduced cash wages.
The plaintiff alleged entitlement to redemption of Class B shares and pursued an oppression remedy under the Ontario Business Corporations Act, as well as relief under the Co‑operative Corporations Act.
The court held that the plaintiff’s sweat equity constituted an option or warrant to acquire shares rather than an existing shareholding, and that he had standing as a complainant but no entitlement to redemption.
The court found no oppressive conduct because the internal pay scale and resulting reduction of sweat equity value were adopted through a fair process in which the plaintiff participated.
The action was dismissed and the corporations were not required to redeem the sweat equity credits.
