Executive Summary: Key Legal and Evidentiary Issues

• Dispute over whether Paul Ferguson effectively and irrevocably resigned as president and director of 2210985 Ontario Limited pursuant to the Minutes of Settlement and related documents.
• Contested allegation that Sean Sutherland repudiated the Share Purchase Agreement (SPA) by failing to pay the first instalment, and whether Ferguson validly accepted that repudiation.
• Central issue as to whether Ferguson’s resignation and Sutherland’s status as sole director and president were conditional upon completion of the SPA or stood independently.
• Questions about the adequacy of corporate records provided by Ferguson, and Sutherland’s assertions of undisclosed liabilities and amounts allegedly owing by Ferguson to the company.
• Assessment of irreparable harm and whether Ferguson, as a minority shareholder and former officer, required interlocutory and mandatory injunctive relief given the protections under the Business Corporations Act.
• Evaluation of the balance of convenience between maintaining Sutherland’s control as majority-backed director and president versus temporarily reinstating Ferguson and imposing co-management and banking restrictions.

Background and corporate structure

2210985 Ontario Limited (“221”) owns and operates sand pits, extracting sand and selling it to the mining industry. The company was incorporated by the Sutherland family in 2009, with both Paul Ferguson and Sean Sutherland appointed as directors in 2010. Over time, the shareholdings evolved so that, prior to May 2025, the voting structure was: Ferguson with 34 votes, Christopher Rantanen with 10 votes, Sutherland’s mother Diane Sutherland with 40 votes, and Sean Sutherland with 16 votes, giving Sutherland and his mother combined majority control. Ferguson had previously become president of 221 following an earlier internal dispute in which he alleged that Sutherland and Sutherland’s mother had wrongly received corporate funds, leading to Sutherland’s removal as officer and director and Ferguson’s appointment as president. That dispute is background only; the events giving rise to this motion began in 2025.

Share sale negotiations and execution of the SPA

In April 2025, Sutherland met with Ferguson and Rantanen about the need for significant capital investment in one of the pits to increase production. According to Sutherland, both Ferguson and Rantanen were not interested in contributing further capital, which led to discussions about Sutherland purchasing their shares. Sutherland asserts that a shareholders’ meeting took place on May 15, 2025, with Ferguson and Rantanen present, and with Sutherland attending both personally and as proxy for his mother. At or around this time, share purchase agreements (SPAs) were prepared and signed for Sutherland’s acquisition of the Ferguson and Rantanen shares. Under the Rantanen SPA, the purchase price was $125,000 with closing set for September 1, 2025. A clause required Rantanen to resign as officer and director effective May 15, 2025; this clause had originally tied the resignation to closing but was amended by handwritten change and initials, and Ferguson appears to have witnessed this SPA. Under the Ferguson SPA, the purchase price was $408,000, payable 50% on October 1, 2025 and the balance on January 15, 2026. In clause 7.10, Ferguson agreed to resign as officer and director effective as of the closing date, and Rantanen appears to have witnessed this agreement.

Resignations, corporate changes and Minutes of Settlement

Sutherland deposed that on May 29, 2025, he met again with Ferguson and Rantanen and that both signed additional resignation and appointment documents, though these documents were dated May 15, 2025. Ferguson signed documents resigning “forthwith” as president and director; Rantanen similarly resigned “forthwith” as secretary and director. They also signed a corporate resolution accepting their resignations and electing Sutherland as the sole director of 221. Sutherland then appointed himself president and secretary of the company. By August 2025, a dispute had arisen as to whether Ferguson had in fact resigned as president and director, leading Ferguson’s side to take steps to impose “deposit only” restrictions on 221’s bank account. In response, on September 2, 2025, Sutherland commenced an application against Ferguson and 221, seeking to restrain Ferguson from holding himself out as an officer or director, to compel the delivery of corporate records and property, and, if required, to have Sutherland appointed sole director. Two days later, through counsel, the parties entered into written Minutes of Settlement resolving that application. The Minutes of Settlement are central to the dispute. They provided that Ferguson would sign an irrevocable acknowledgment confirming his resignation as president and director of 221 and Sutherland’s appointment as president and sole director effective May 15, 2025; that Ferguson would write to a major customer and to the bank, confirming Sutherland as sole officer and director; that Ferguson would deliver all corporate records within 10 days; and that the Ferguson SPA would be amended to set a revised purchase price of $450,000, with $225,000 due on September 17, 2025 and the balance on closing December 1, 2025. In accordance with these Minutes, Ferguson signed an Acknowledgment “irrevocably” confirming his resignation and Sutherland’s appointment, effective May 15, 2025.

Non-completion of the SPA and breakdown of the relationship

The SPA, as amended, ultimately did not close as scheduled. Sutherland asserts that Ferguson failed to produce full and complete records within the 10-day window required by the Minutes of Settlement, and that although Sutherland had transferred funds to his counsel to pay the September 17, 2025 instalment, he could not complete his due diligence by that date. Through counsel, Sutherland requested an extension of time for the first instalment and asked for further information about 221’s obligations. Additional information was provided by Ferguson’s counsel on September 25, 2025, but no response was given concerning the requested extension. Sutherland did not pay the first instalment by the due date. On November 11, 2025, Sutherland’s counsel wrote to Ferguson’s counsel, stating that Sutherland had completed a review of 221’s finances and had discovered undisclosed liabilities and more than $450,000 allegedly owing from Ferguson to 221. According to Sutherland, Ferguson never addressed or answered these financial concerns.

Ferguson’s claim and injunctive motion

On December 2, 2025, new counsel for Ferguson informed Sutherland’s counsel that Ferguson considered Sutherland’s failure to pay the first instalment a repudiation of the SPA, and that Ferguson accepted that repudiation and now sought reinstatement as director and president of 221. Ferguson then issued a statement of claim on December 11, 2025 against Sutherland and 221. In it, he sought declarations that the SPA was at an end, without legal effect, and that Sutherland had breached the SPA; a declaration that Ferguson had validly accepted the repudiation; an order setting aside Ferguson’s resignation as officer and director; injunctions flowing from those declarations; and damages and other relief. The next day, December 12, 2025, Sutherland caused a Notice of Meeting to be delivered scheduling a shareholders’ meeting for December 23, 2025 to affirm his election as director. Despite Ferguson’s counsel demanding that the meeting be cancelled, the meeting proceeded, and Sutherland’s election as director effective May 15, 2025 was affirmed. Against this backdrop, Ferguson brought the interlocutory motion that is the subject of the decision. He asked the court for: (a) an interlocutory injunction restraining Sutherland and 221 from carrying on the business of 221 without Ferguson’s involvement as co-director and president; (b) an order re-appointing him as president of 221 pending the litigation; and (c) an order restricting the company’s banking arrangements to “deposit only.” During argument, Ferguson also presented proposed co-management terms under which he and Sutherland would “jointly and severally” manage the business, jointly negotiate and sign contracts, and resort to a “shadow board” in case of disagreement.

Legal test for interlocutory and mandatory injunctions

The parties agreed on the legal test for this type of interlocutory relief, which in this context required Ferguson to demonstrate: (1) a strong prima facie case, meaning a strong likelihood of success in the main proceeding; (2) irreparable harm if the injunction were not granted; and (3) that the balance of convenience favoured granting the injunction, such that the harm to Ferguson without relief would outweigh any harm to Sutherland and 221 if relief were granted. The court emphasized that aspects of the relief sought were mandatory in nature, especially Ferguson’s reinstatement as director and president and the imposition of joint management structures. Relying on Supreme Court of Canada guidance in R. v. Canadian Broadcasting Corp. (CBC), the judge noted that mandatory interlocutory injunctions, which compel a party to take positive steps and often effectively restore a prior state of affairs, are harder to obtain. Courts are cautious about such orders at the interlocutory stage because they are burdensome and may, in substance, amount to final relief before trial.

Assessment of the strong prima facie case requirement

On the first branch, the court focused on the Minutes of Settlement and Ferguson’s irrevocable Acknowledgment. The judge held that, by their terms, Ferguson had irrevocably resigned as of May 15, 2025, and that the acknowledgment of his resignation was not expressed to be conditional upon completion of the SPA. The document could have made the resignation contingent on closing, but it did not. As of September 2025, Sutherland and his mother collectively controlled the majority of the shares and votes in 221, and Sutherland had been operating the company since May 15, 2025 in line with the wishes of the majority shareholders. In light of those documents and the shareholding position, the judge was not persuaded that there was a “strong likelihood” that Ferguson would succeed at trial in resiling from his irrevocable acknowledgment of resignation or in having it set aside.

Irreparable harm and protections under corporate law

On irreparable harm, the court recognized that “irreparable” refers to the nature of the harm, not just its size, but concluded that Ferguson had not met this threshold. Ferguson argued that Sutherland had a history of not acting in 221’s best interests and that he was in a conflict position by contracting with the company. However, the court found these harms speculative at this stage. Importantly, the judge observed that Ferguson, as a minority shareholder, enjoys protections and remedies under the Ontario Business Corporations Act, including statutory mechanisms to address conflicts of interest and oppressive conduct. Those statutory remedies weighed against the need for extraordinary interim relief and suggested that any harm could be addressed through established corporate law processes rather than drastic interim orders.

Balance of convenience and corporate control

On the balance of convenience, the court considered both Ferguson’s proposed regime of co-management and the current reality that Sutherland was the sole director and president, supported by the majority shareholders. Ferguson effectively sought to constrain the company’s operations by judicially imposing shared governance—requiring joint decision-making on operations and contracts, a shadow board to break deadlocks, and restrictions on banking so that the account would be “deposit only.” The judge found that such mandatory and intrusive interim orders would significantly disrupt the ongoing business and corporate governance of 221. Given that Sutherland was already in office in accordance with the expressed wishes of the majority shareholders and was seeking to continue and grow the business, the court held that the balance of convenience did not favour granting the injunction. Maintaining the current management structure pending trial was found less harmful overall than the extensive restructuring Ferguson sought on an interlocutory basis.

Outcome, successful party and monetary consequences

Having found that Ferguson failed to demonstrate a strong prima facie case, had not established irreparable harm, and could not show that the balance of convenience favoured his position, the court dismissed the motion for an interlocutory injunction. As a result, Sutherland remained the sole director and president of 221 pending the determination of the underlying action, and the company’s banking and management arrangements were left unchanged. On costs, the court held that Sutherland, as the successful party on the motion, was entitled to his costs, but did not fix a specific amount. Instead, the judge ordered a timetable for written submissions on costs—Sutherland to serve submissions within 15 days and Ferguson to respond within 10 days thereafter. Because no quantum was set in this decision, the exact total monetary amount of costs or any other award in favour of Sutherland cannot be determined from this judgment alone.