Respondent blatantly preferred his family’s interests to those of corporation

Ontario civil | Business Associations | Specific matters of corporate organization | Shareholders

Deceased and respondent began building homes and founded DBG Inc. was founded as vehicle to house their joint business venture. Since deceased’s death, operations of DBG Inc. had been strictly family affair with respondent. Deceased entered into memorandum of agreement to deal with succession issues. Deceased’s wife’s untimely death ten days after left estate’s cash-flow insolvent from very beginning and estate was required to borrow funds to make cash contribution to DBG Inc.. DBG Inc. purported to assume W Inc.’s shareholders loan payable to estate. GD Inc. was incorporated in 2016 to pursue acquisition of property and respondents were sole officers and directors. Estate brought oppression application regarding loan and acquisition of property. Application granted. There was breach of fiduciary duty and self-dealing. Deceased chose to place great deal of trust in his business partner to protect interests of his estate within their joint business enterprise and time demonstrated that trust to have been misplaced. Respondent blatantly preferred his family’s interests to those of corporation as whole and other individual respondents had utterly failed to act independently and could not be relied upon as guarantors. Idea that it would somehow be inappropriate for DBG Inc. to pursue “apartment-style” development despite cash hoard that was years in building while new, freshly-incorporated company funded by DBG Inc. could do so, using DBG’s employees and facilities beggared belief. Selfdealing and breach of fiduciary duty occurring in connection with property resulted in casual appropriation to benefit of respondents of almost half of cash reserves of DBG Inc. and appropriation to respondents of only acquisition undertaken during eight years that earnings have been banked and reserves built up for stated purpose of undertaking acquisition.

Gambin Estate v. Di Battista Gambin Developments Limited (2018), 2018 CarswellOnt 13727, 2018 ONSC 4905, S.F. Dunphy J. (Ont. S.C.J.).

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