Executive Summary: Key Legal and Evidentiary Issues

• The plaintiff sought default judgment under Section 248 of the Ontario Business Corporations Act based on oppressive conduct by a co-director.

• The court assessed whether the plaintiff and cross-claimant qualified as "complainants" entitled to relief.

• Evidence showed diversion attempts of corporate income, failure to pay agreed rents, and threats toward another director.

• The court considered the fiduciary obligations of directors and breaches thereof under the oppression remedy framework.

• Default judgments were granted based on deemed admissions and unchallenged affidavit evidence.

• Remedies included removing the offending director, forcing a share sale, and awarding judgment for financial shortfalls.

Facts and outcome of the case

The case concerns a shareholder and director dispute within 2416022 Ontario Ltd., a corporation owning a farmhouse and farmland in Kawartha Lakes, Ontario. Lorenzo Orsetto, along with John and Ricardo Biggoni (also known as Rick Biggoni), were directors, officers, and shareholders of the company. After initial cooperation, the relationship deteriorated, particularly due to John Biggoni’s actions which included withholding rental payments, diverting corporate income for personal gain, and threatening a fellow director, Lorenzo.

Lorenzo and Rick provided substantial shareholder loans to finance the company's purchase of the farmland and farmhouse. They entered into a shareholders' agreement detailing ownership percentages and operational roles. Over time, John stopped paying agreed rental fees for use of the farmland, diverted farmhouse rent for his own use, and committed acts of intimidation against Lorenzo. John also initiated a lawsuit against the corporation and his fellow directors but failed to prosecute it properly, resulting in its dismissal and cost awards against him.

John did not defend against the new lawsuit filed by Lorenzo and Rick, leading to his being noted in default. At the hearing, the court analyzed whether Lorenzo and Rick had reasonable expectations as shareholders and directors that were violated by John’s conduct, and whether such conduct amounted to oppression, unfair prejudice, or unfair disregard under the Ontario Business Corporations Act.

Justice Mathai concluded that Lorenzo and Rick held reasonable expectations that corporate income would not be misappropriated, that directors would act in the company's best interest, and that no threats or intimidation would occur between directors. John’s actions were found oppressive, unfairly prejudicial, and a breach of fiduciary duty.

As a result, the court granted default judgment in favor of Lorenzo and Rick. John was removed as a director, officer, and signing officer of 2416022 Ontario Ltd. The court ordered John to sell his shares to Lorenzo and Rick at fair market value, deducting outstanding debts and court-awarded costs. Further, Lorenzo and Rick were authorized to complete all corporate paperwork necessary for John’s removal and the share transfer without his involvement. The court reserved jurisdiction to supervise the valuation and sale process of John’s shares.