Evans v. Facey et al., [2000] O.T.C. 433 (SupCt)

• Judge: Sutherland, J.
• Court: Superior Court of Justice of Ontario (Canada)
• Case Date: June 16, 2000
• Jurisdiction: Ontario
• Citations: [2000] O.T.C. 433 (SupCt)

Evans v. Facey, [2000] O.T.C. 433 (SupCt)

MLB headnote and full text

Temp. Cite: [2000] O.T.C. TBEd. JL.002

Alva Evans (plaintiff) v. Winston Facey and 1139918 Ontario Inc. (defendants)

(Court File No. 98-CV-149059SR)

Indexed As: Evans v. Facey et al.

Court of Ontario

Superior Court of Justice

Sutherland, J.

June 16, 2000.

Summary:

The defendant Facey was initially the sole director and shareholder of the defendant corporation, operating a restaurant. The plaintiff claimed that he and Facey had an oral agreement by which the plaintiff would receive one third of the corporation's shares in exchange for his payment of the corporation's retail sales tax arrears to enable the restaurant to obtain a liquor licence. The plaintiff paid the tax arrears. A share certificate showing the plaintiff as the owner of one third of the company's shares was prepared, but never signed. The parties' relationship deteriorated. The plaintiff brought an action seeking a finding under s. 248 of the Ontario Business Corporations Act (OBCA) that Facey had oppressed the plaintiff, a declaration that the plaintiff was the beneficial owner of one third of the corporation's shares, and an order appointing an inspector and directing an investigation of the corporation's affairs. The defendants denied that there was a contract. They asserted fraudulent misrepresentation, unilateral mistake and fundamental breach based on Facey's alleged belief that the plaintiff had promised to work full time in the restaurant. The defendants also contended that there was no completed contract because the remuneration to be paid to the plaintiff for working in the business was never tied down. The defendants counterclaimed for a declaration that the plaintiff was not a security holder, an order requiring the plaintiff to repay a $700 deposit in respect of a bar cooler which had been repossessed at the plaintiff's request, damages for various business disruptions and punitive damages.

The Ontario Superior Court held that there was a contract under which the plaintiff was to receive one third of the corporation's shares. While there was uncertainty about the rate to be paid to the plaintiff for work done for the restaurant it did not vitiate the contract as it was never a significant matter. The court found that the plaintiff never represented that he would work full time in the restaurant and that, even if that representation had been made and not met, that would not deprive Facey of all or substantially all of the benefits of the agreement. The court declared that the plaintiff was the beneficial owner of one third of the shares of the defendant corporation. As such he could claim for an oppression remedy under the OBCA. The court concluded that Facey had oppressed the plaintiff and unfairly disregarded his interests. As a remedy, the court ordered Facey to purchase the shares beneficially owned by the plaintiff. Facey could pay the plaintiff for his shares by paying their value as determined by arbitration or by paying the sum of $20,000. In respect of the counterclaim, the court ordered the plaintiff to repay the corporation $700 for the deposit paid on the bar cooler which had been repossessed at the plaintiff's request. The court also awarded the corporation $2,000 punitive damages arising from the plaintiff's actions in that regard. The amounts awarded on the counterclaim could be set off against the amount payable by Facey for the plaintiff's shares. The plaintiff was also granted judgment against Facey for $780, the amount owed on a loan from the plaintiff to Facey.

Company Law - Topic 2169

Shareholders - Shareholders' rights - Inspection or investigation - See paragraphs 119 to 120.

Company Law - Topic 2170

Shareholders - Shareholders' rights - To rectify oppressive or unfairly prejudicial act - See paragraphs 103 to 105.

Company Law - Topic 2170.1

Shareholders - Shareholders' rights - Oppressive acts - Remedies - See paragraphs 112 to 123.

Company Law - Topic 7013

Fundamental changes and shareholders' rights - Rights of minority or dissenting shareholders - Oppression - What constitutes - See paragraph 105.

Company Law - Topic 8417

Winding-up legislation - Winding-up order - Oppression remedy - See paragraph 117.

Company Law - Topic 9783

Actions against corporations and directors - Action for oppressive conduct - Persons entitled - See paragraphs 99 to 101 and 103.

Company Law - Topic 9785

Actions against corporations and directors - Action for oppressive conduct - Oppression, prejudice or disregard of interests - See paragraphs 103 to 105.

Company Law - Topic 9798

Actions against corporations and directors - Action for oppressive conduct - Appointment of auditor, inspector or receiver - See paragraphs 119 to 120.

Contracts - Topic 3730

Performance or breach - Fundamental breach - What constitutes a fundamental breach -See paragraph 95.

Contracts - Topic 5644

Unenforceable contracts - Uncertainty and vagueness - Vague undertaking - See paragraph 94.

Damage Awards - Topic 2027.1

Exemplary or punitive damages - Unconscionable conduct - See paragraph 111.

Cases Noticed:

Muljadi v. O'Brien (1990), 75 O.R.(2d) 270 (Gen. Div.), refd to. [para. 97].

Csak v. Aumon (1990), 69 D.L.R.(4th) 567 (Ont. H.C.), refd to. [para. 100].

Bayliss v. harris, [1993] O.J. No. 2655 (Gen. Div.), refd to. [para. 101].

Footitt et al. and Gleason et al., Re (1995), 25 O.R.(3d) 729 (Gen. Div.), refd to. [para. 116].

Naneff v. Concrete Holdings Ltd. et al. (1995), 85 O.A.C. 29; 23 O.R.(3d) 481 (C.A.), refd to. [para. 116].

Daniels and Fielder et al., Re (1988), 65 O.R.(2d) 630 (H.C.), refd to. [para. 123].

Counsel:

Marcel Banasinski, for the plaintiff;

Greg McKenzie, for the defendants.

This action and counterclaim were heard on June 10, 11, 15, 28 and 30, and July 2 and 6, 1999, before Sutherland, J., who released the following judgment on June 16, 2000.

Please note: The following judgment has not been edited.