Sound Advice Inc. v. 358074 Ont. Ltd., (1984) 5 O.A.C. 288 (DC)

Judge:Southey, Hollingworth and Smith, JJ.
Court:Superior Court of Justice of Ontario
Case Date:May 29, 1984
Jurisdiction:Ontario
Citations:(1984), 5 O.A.C. 288 (DC)
 
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Sound Advice Inc. v. 358074 Ont. Ltd. (1984), 5 O.A.C. 288 (DC)

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Dunwoody Limited, Trustee of the Estate of Sound Advice Inc. (a bankrupt) v. 358074 Ontario Limited and Burt

(No. 121/83)

Indexed As: Sound Advice Inc. (Bankrupt) v. 358074 Ontario Ltd. and Burt

Ontario Divisional Court

Southey, Hollingworth and Smith, JJ.

October 3, 1984.

Summary:

The corporation which was the major shareholder of 358074 Ontario Limited went bankrupt. Its trustee in bankruptcy applied for an order that 358074 Ontario be wound-up. The Motions Court judge dismissed the application. The trustee appealed.

The Ontario Divisional Court allowed the appeal and issued the winding-up order.

Company Law - Topic 8405

Winding-up legislation - Winding-up order - Grounds for - Insolvency - The Ontario Divisional Court held that a solvent company may be woundup if its substratum had failed - See paragraph 14.

Company Law - Topic 8408

Winding-up legislation - Winding-up order - Grounds for - Misconduct by director - The Ontario Divisional Court ordered that a company be wound-up because of misconduct by its director, where he (1) authorized the company to pay him excessive salaries, dividends and unsecured personal loans (2) caused the company to spend unreasonable sums for luxury items and to transfer their ownership to him (3) caused the company or its affiliates to lose its real estate holdings and its shares in other corporations and (4) caused the company to provide benefits to a corporation owned by him - See paragraphs 8 to 10.

Company Law - Topic 8408

Winding-up legislation - Winding-up order - Grounds for - Misconduct by director - The Ontario Divisional Court held that in determining whether to wind-up a company because of its director's misconduct, where interlocking, closely-held corporations are controlled by a common director, the court may examine the past and present conduct of the common director in managing all corporations to assess the propriety of that conduct - See paragraph 11.

Company Law - Topic 8409

Winding-up legislation - Winding-up order - Grounds for - Failure of objects - The Ontario Divisional Court held that a company could be wound-up because its main object or business purpose has failed i.e. where two of its operating subsidiaries are bankrupt, two are inactive and some of its real property has been sold by the mortgagee - See paragraph 14.

Cases Noticed:

R.J. Jowsey Mining Co. Ltd., [1968] 2 O.R. 549, ref'd to. [para. 6].

Loch et al. v. John Blackwood, Limited, [1924] A.C. 783, ref'd to. [para. 10].

R.C. Young Insurance Limited, [1955] O.R. 598, ref'd to. [para. 10].

B. Love Ltd. v. Bulk Steel & Salvage Ltd. (1982), 38 O.R.(2d) 691, ref'd to. [para. 10].

In Re Waipuna Investments Property Ltd., [1956] V.L.R. 115, ref'd to. [para. 11].

Scottish Co-Operative Wholesale Society Ltd. v. Meyer and Another, [1958] 3 All E.R. 66, ref'd to. [para. 11].

Re R.J. Jowsey Mining Co. Ltd., [1969] 2 O.R. 549, aff'd. [1970] S.C.R., ref'd to. [para. 11].

Dominion Steel Corp. Ltd., [1927] 4 D.L.R. 337, ref'd to. [para. 14].

Re German Date Coffee Company, [1882] 20 Ch. D. 169, ref'd to. [para. 14].

Ebrahimi v. Westbourne Galleries Ltd. et al., [1972] 2 All E.R. 492, ref'd to. [para. 16].

Re Graham and Technequip Ltd. (1981), 32 O.R. 297, ref'd to. [para. 16].

Statutes Noticed:

Business Corporations Act, S.O. 1982, c. 4, sect. 206(1) [para. 5].

Counsel:

L. Klug, for the applicant (appellant);

J.D. Dean, for the respondents.

This appeal was heard before Southey, Hollingworth and Smith, JJ., of the Ontario Divisional Court on May 29, 1984, whose decision was delivered by Hollingworth, J., and released on October 3, 1984.

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