Tahmasebi v. Hamid 2021 Ont SCJ
Two 50% shareholders of a corporation: one operated the corporation; the other was a silent investor. The silent investor brought an oppression action claiming that the operating shareholder did not maintain accurate financial and accounting records and charged personal expenses to the corporation. The judge held that a failure to maintain adequate financial records constituted oppressive conduct and also concluded that the operating shareholder was running significant personal expenses through the books of the corporation. The judge rejected the explanation that these expenses were offset against an agreed-upon salary of $8,000 per month, given that the salary was paid in cash. The judge, however, concluded that a CPL that the silent investor had obtained and registered was improper. That investor adduced no evidence at trial that material payments were made to the property using corporate funds. The judge awarded significant damages for the oppression, but directed a reference to determine whether the operating shareholder suffered any damages as a result of the improper registration of the CPL.
Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.