Facts placed matter towards extreme end of misconduct spectrum

Ontario civil | Business Associations | Legal proceedings involving business associations | Practice and procedure in proceedings involving corporations

Applicant, in his capacity as estate trustee, was successful in application for finding of oppression and breach of fiduciary duty. Application judge ordered wind-up of corporation subject to granting respondents opportunity to elect to purchase shares of applicant estate. Submissions were made as to costs. Applicant awarded substantial indemnity costs of $184,368. Facts placed matter towards extreme end of misconduct spectrum. There were findings of serious and unmistakable breaches of mandatory statutory provisions governing conflict of interest, abdication of duty as directors, self-dealing and breach of fiduciary duty. Individual respondents utterly confused their family’s interests with those of corporation whose separate and distinct interest they were duty-bound to preserve and protect as a first priority. Seriousness of breaches of duty found, obstructive early conduct of litigation, and failure of respondents to take any steps to own up to existence of problem when it was clearly raised and evident statutory breaches were plain and apparent all supported award of substantial indemnity costs. Obligation was to be paid out of shareholder’s share of proceeds of liquidation in winding-up process if not already paid and proceeds of liquidation were to be adjusted such that costs of litigation were borne solely by individual respondents and not charged directly or indirectly to proceeds of liquidation to be distributed to applicant.

Zanardo v. DiBattista Gambin Developments Limited (2018), 2018 CarswellOnt 17923, 2018 ONSC 6379, S.F. Dunphy J. (Ont. S.C.J. [Commercial List]); additional reasons (2018), 2018 CarswellOnt 13727, 2018 ONSC 4905, S.F. Dunphy J. (Ont. S.C.J.).

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