Executive Summary: Key Legal and Evidentiary Issues

• Just-and-equitable winding up under s. 207 of the OBCA granted due to shareholder deadlock and governance failure

• Fundamental changes required unanimity; no Casting Voter was ever appointed, leaving non-fundamental disputes unresolved

• Prolonged impasse over appointing corporate counsel and activating the dispute-resolution clause evidenced breakdown of mutual confidence

• Operational harm shown by stalled Collingwood project (Taylor’s Creek conveyance) and unresolved Port Dover leasing dispute

• Court applied Animal House/Ebrahimi principles: unmet reasonable expectations, prejudice, and no practical path forward short of winding up

• Orders: wind up the two NewCo corporations; appoint Alvarez & Marsal Canada Inc. as Sales Officer, Ingenuity LLP as corporate counsel; costs to Applicants

Background and parties
Two applicant holding companies, controlled by brothers Danny and Peter Finoro, sought relief against their joint venture partner’s company and two equally owned development corporations (“NewCo”). Each of the three shareholder holding companies held one share, making all owners equal. The principals had previously worked together in other ventures, and the new companies operated as real estate development vehicles holding five properties in Port Dover, Collingwood, Elmira, and Simcoe.

Shareholder agreement and governance structure
The shareholder agreement required unanimity for fundamental changes, including acquiring or disposing of real property and dissolving the corporations. For non-fundamental disputes, the agreement contemplated a Casting Voter, but none was ever appointed. Without unanimity on fundamental matters and without a Casting Voter for the rest, the corporations had no functioning decision-making backstop.

Disputes and operational deadlock
The parties disagreed for years over appointing corporate counsel and a Casting Voter. Conflicts crystallized around the Collingwood project, where a condition of draft plan approval required conveyance of the Taylor’s Creek lands to the municipality. Counsel conflicts derailed that routine step, causing delay and risk to approvals and exposing potential liability concerns. A Port Dover leasing opportunity (Quanset property) also stalled amid disagreement over access and the appropriate lessee. The court noted further relationship deterioration originating from the winding up of a related venture (Lunor) and found that the business could not move forward absent litigation on even basic steps.

Legal framework and test
The court proceeded under s. 207(1)(b)(iv) of the Ontario Business Corporations Act, which permits winding up where it is “just and equitable.” Relying on authorities including Animal House Investments and Ebrahimi, the court emphasized the need to assess reasonable expectations, whether they were met, prejudice arising from the failure, and whether winding up is the only adequate remedy. The judge also referenced jurisprudence on breakdowns in mutual confidence and deadlock leading to inevitable detriment to corporate value.

Court’s analysis
The court found that the parties’ expectations—cooperation on fundamental decisions and implementation of the dispute-resolution machinery—were not met. The absence of a Casting Voter, inability to agree on corporate counsel, and insistence on positions only softened once litigation began showed an inoperable governance framework. The resulting prejudice included jeopardy to the Collingwood approvals process, lost opportunities (including a potential sale discussion), and ongoing gridlock. Given the unanimity requirement for fundamental actions and the history of stalemates, the court concluded there was no viable path forward.

Disposition and orders
The court ordered that the two NewCo corporations be wound up on a just-and-equitable basis. It directed a rateable distribution of net assets among the three shareholders. Alvarez & Marsal Canada Inc. was appointed Sales Officer to conduct the wind-up, and Ingenuity LLP was appointed as corporate counsel for the process. Costs were awarded to the Applicants, with a schedule for written submissions set out in the reasons. The judgment was released on August 28, 2025, by Fowler Byrne J.