Executive Summary: Key Legal and Evidentiary Issues

• Motion centered on whether counsel for the corporate respondent could properly act jointly for the corporation and its directing mind in an oppression and derivative action context.
• Alleged conflict of interest arose from the claim that the interests of S.V.S. Auto Parts Ltd. as a separate legal entity diverged from those of its majority shareholder/director, Vicken Haneshian, and his company, 2751724 Ontario Inc.
• The court examined whether this was an internal corporate dispute among current shareholders and directors that would require separate legal representation for the corporation.
• Evidence showed the applicant was no longer a shareholder and that the sole director/officer controlled both corporate shareholders, leading to a finding of aligned, not competing, interests.
• The judge applied the high threshold for removing a party’s chosen counsel, requiring proof of a real conflict or risk of “real mischief,” which was not established on the record.
• No proof of actual or likely prejudice, breach of professional duty, or misuse of confidential information by counsel was found, resulting in dismissal of the removal motion and reserved/undetermined costs.

Background and parties

The case arises from a dispute over control and alleged misconduct involving S.V.S. Auto Parts Ltd., a corporation based in Cambridge, Ontario. The applicant, Sarkis Bedrian, claims to have started S.V.S. and later transferred his 51% Class A common shares to 2751724 Ontario Inc. (“275”) under a share purchase agreement dated around August 1, 2023. After this transfer, 275 and Vicken Haneshian each held 50% of the shares of S.V.S., with Mr. Haneshian acting as the sole director and officer of S.V.S. and as the sole shareholder, director, and officer of 275. Other respondents included Mr. Haneshian’s brother, Sevag Haneshian, and their mother, Sose Haneshian.

Share transfer and allegations of oppressive conduct

Following the share transfer, Mr. Bedrian alleged that he had effectively been defrauded of his shares and shut out of the business. He claimed that Mr. Haneshian breached his fiduciary duties as director of S.V.S. by self-dealing and running the company’s affairs in a manner that was oppressive, unfairly prejudicial, and unfairly disregarded his interests. The application, commenced on June 13, 2025, sought oppression remedies and leave to bring a derivative action under sections 248 and 246 of the Ontario Business Corporations Act. The relief claimed included setting aside the transfer of his 51% shareholding to 275, removing Mr. Haneshian from the board of S.V.S., or alternatively a buy-out of his interest at fair market value, alongside claims for employment-related compensation.

Nature of the corporate and derivative claims

In his materials, Mr. Bedrian alleged that corporate funds of S.V.S. were being used for the personal benefit of Mr. Haneshian and that corporate assets or opportunities had been diverted to other corporations controlled by him. The derivative component sought leave to pursue these claims in the name of S.V.S., effectively placing the company both as a formal respondent and as the intended beneficiary of any recovery if leave were granted. At the time of this decision, however, leave to bring a derivative action on behalf of S.V.S. had not yet been granted, and the court treated those requests as still pending.

Procedural history and the present motion

A case-management endorsement directed that two preliminary motions be heard before the main application or any further motions proceeded. The first was the applicant’s motion to have Stephanie Tonner (Dempsey) granted a right of audience to represent him, which was heard in August 2025 and dismissed. The second was the present motion, in which Mr. Bedrian, now self-represented, sought to remove the respondents’ chosen counsel, Andrew Beney and Pavey Law LLP, as lawyer of record for the corporate respondent S.V.S. Auto Parts Ltd., though he did not object to their continued representation of the individual and related corporate respondents.

Argument for removal of counsel and alleged conflict of interest

On the removal motion, Mr. Bedrian argued that it was inherently a conflict for one lawyer to represent both S.V.S. and Mr. Haneshian, given that the company is a separate legal entity and might have interests that differ from those of its controlling director and shareholder. He emphasized that a lawyer owes duties of loyalty and confidentiality to each client, and argued that counsel could not properly obtain and act on instructions from the majority shareholders and directors where those instructions might be adverse to the corporation’s best interests. Relying on authorities such as Mottershead v. Burdwood Bay Settlement Company, he contended that in litigation involving allegations of oppressive conduct and misuse of corporate assets, the corporation should have independent counsel, and he suggested that he and Ms. Tonner (Dempsey) were better positioned to obtain competent representation for S.V.S. because, in his view, his interests aligned more closely with those of the company.

Response of the corporate and individual respondents

The respondents opposed the motion, arguing that no actual conflict of interest or breach of professional duty had been proven. They maintained that the fraud and oppression allegations were unsupported by the evidence, and stressed that Mr. Bedrian was no longer a shareholder of S.V.S. after the share sale to 275. From their perspective, there was no internal shareholder or director dispute among current owners of the company. They also noted that Pavey Law had been retained only for purposes of this litigation, and had not acted for S.V.S. during the period when Mr. Bedrian was a shareholder, reducing the risk of historical conflict or misuse of prior confidential information.

Legal framework on conflicts of interest and removal of counsel

In assessing the motion, the court emphasized that a litigant’s choice of counsel is a fundamental right that should not be interfered with absent compelling reasons. Removal of counsel requires demonstration of a real or serious conflict of interest, or a situation where continued representation would work a more serious injustice or risk of “real mischief” in the litigation. The judge canvassed scenarios where disqualification may be justified, including where a lawyer acts simultaneously as counsel and witness, where a lawyer owes competing duties of confidentiality and representation to opposing parties, or where a lawyer attempts to represent both a corporation and its majority controllers in an internal corporate dispute involving clashing factions of directors or shareholders. In such internal disputes, courts have indicated that a corporation may require its own, distinct legal representation to ensure that its board as a whole receives independent advice and that confidential information is properly managed.

Distinguishing internal corporate disputes and the role of the sole director

The court ultimately found that the present case did not fit the internal-dispute pattern seen in prior authorities. A key factual distinction was that S.V.S. had a single director, Mr. Haneshian, and only two shareholders: Mr. Haneshian personally and 275, a company entirely owned and controlled by him. As a result, he was effectively the sole directing and beneficial mind behind S.V.S. As the OBCA provides, it is the directors who manage or supervise the management of the corporation’s business and affairs, and here, all such management power rested with one individual. The judge accepted that, in these circumstances, instructions given by Mr. Haneshian to counsel were, in substance, the instructions of all shareholders, officers, and directors of S.V.S. and 275. There was no set of minority directors or shareholders whose interests were in conflict with a majority bloc, and thus no structural split that would prevent counsel from fulfilling their duty to the corporation through its board.

Findings on conflict, confidentiality, and prejudice

On the evidence, the court found no basis to conclude that Pavey Law or Mr. Beney were in a conflict of interest or that they could not advise the corporation properly. Because there was only one director and a unified shareholder base under his control, there was no risk that counsel would have to choose between competing instructions from different factions, nor any prospect of selectively disclosing confidential information to some directors but not others. The judge also noted that this was not a situation where counsel acted on both sides of the dispute; Mr. Bedrian was self-represented, and there was no suggestion that Pavey Law or Mr. Beney were or had been his lawyers. Nor was it a “lawyer as witness” case in which counsel’s evidence would be required at trial. In short, there was no current duty, obligation, or relationship that created a conflict requiring removal, and no real or actual injury was shown that would result if they remained counsel of record.

Outcome and treatment of costs

In the result, the court dismissed the applicant’s motion to remove counsel. The judge held that there was no justification to interfere with the respondents’ choice of lawyer for S.V.S. or for any of the other respondents, and confirmed that even if new counsel were appointed, that lawyer would still be instructed by Mr. Haneshian in his capacity as sole director, given his statutory authority to manage the corporation and retain counsel. As to costs, the court did not fix any specific monetary amount in this decision. Instead, it encouraged the parties to agree on costs and set a timetable for brief written submissions if agreement could not be reached, with a further stipulation that if no submissions were received by a set date, the parties would be deemed to have resolved costs and no judicial costs determination would be made. Accordingly, in this decision the successful parties are the respondents, and no total monetary award, costs figure, or damages amount can be determined from the reasons, as the question of costs was left to later agreement or written submissions and not quantified in the judgment.