Executive Summary: Key Legal and Evidentiary Issues

• Two petitioning groups of BC companies sought to cancel shareholdings held by David Danyluck and Paul Butler Designs Inc. under the correction provisions of section 230 of the Business Corporations Act.

• Petitioners argued the disputed shares had been issued by mistake because underlying conditions in Option Agreements, Investment Agreements, and Performance Trusts were never satisfied.
   
• Respondents maintained the shares were intended compensation for architectural and design services rendered to the companies, not the product of error.
   
• Evidentiary gaps affected both sides, as the petitioners lacked testimony from representatives involved at the time and Mr. Butler was unable to testify due to Alzheimer's disease.
   
• Corporate records, including central securities registers, share certificates, and instruments of transfer, documented the allocations with apparent care and formality.
   
• Costs were awarded to the respondents at Scale B, with the amount subject to further submissions.
   

Facts of the case

Deleau Holdings Ltd., Cascade Falls Development Ltd., and four related companies (collectively, the "Companies") were incorporated between 2018 and 2019 by Christopher Ross to develop three properties on Stave Lake Road in Mission, BC. David Danyluck, a licensed architect, provided architectural services to the Companies in 2021–2022. Paul Butler, principal of Paul Butler Designs Inc. ("PBD"), provided design services from 2019 to 2024 and served as a senior officer of the Companies.

Investments in the Companies were structured through Governing Agreements, Investment Agreements, Shareholders Agreements, and Options to Purchase and Bare Trust Agreements. In July 2022, the Companies sold the lands to Grewal Development Group Ltd. for $33.9 million with a $20 million vendor take-back mortgage; the purchase was later assigned to 1369779 B.C. Ltd., which defaulted on that mortgage in 2025. After a change in control in 2024 that excluded Mr. Ross, the Companies' new boards reviewed the corporate records and challenged certain shareholdings issued to Mr. Danyluck and PBD, filing petitions in November 2025.

The petitioners valued the disputed shares at approximately $450,000 for Mr. Danyluck and $1.7 million for PBD. Both respondents received their shares on July 8, 2022, through transfers executed by lawyer Alex Sweezey, who had held the shares in trust under various option and performance arrangements.

Policy and legislative provisions at issue

The petitioners relied on section 230 of the Business Corporations Act, which allows a company to apply to correct its "basic records," including the central securities register. Specifically, they invoked section 230(3)(a), permitting an order requiring correction of basic records, and section 230(3)(c), permitting an order determining a party's right to have their name entered, retained, deleted, or omitted from those records.

The underlying agreements governing the disputed shares included Option Agreements requiring specified shareholder loans by fixed deadlines, Performance Trust Agreements requiring achievement of "Third Reading" on rezoning applications, and Investment Agreements requiring specified contributions. Section 2.08(v) of the Companies' Shareholders Agreements required approval by 75% of voting shares for the issuance of additional shares. The petitioners found no evidence that these preconditions were satisfied for the Danyluck Disputed Shares or the PBD Disputed Shares detailed in Schedule A, including unexercised options, unmet loan requirements, and rezoning applications that never proceeded to Third Reading.

Reasoning and analysis

Mr. Justice Coval held that section 230 operates similarly to the equitable remedy of rectification, aiming to ensure a company's records reflect the true agreement of the parties, and that the court may retroactively amend those records under this authority, citing Phaneuf v. 0896459 B.C. Ltd., 2025 BCSC 1509. He noted that share issuances not properly paid for or approved are not automatically invalidated under section 230; the outcome turns on whether the issuance reflects the parties' true agreement, referencing Ascent One Properties Ltd. v. Liao, 2020 BCCA 247, and Dais v. Virvilis, 2018 BCSC 459.

The court found that the corporate records for the disputed shares were carefully and thoroughly documented, including share certificate numbers, allocation and transfer dates, nominal consideration, and formal instruments of transfer signed by Mr. Sweezey and certified by Mr. Ross as director. This documentation, in the court's view, strongly suggested that Mr. Ross and Mr. Sweezey intended the respondents to receive the shares rather than transferring them in error, notwithstanding unmet preconditions in the underlying agreements. The court accepted the respondents' evidence that they received the shares in good faith as compensation for services rendered, and found no evidentiary basis suggesting the respondents knew or should have known they were not entitled to the shares. The petitioners produced no evidence from anyone involved at the time indicating the shares were allocated in error rather than as good-faith compensation.

Ruling and overall outcome

The court dismissed both petitions, finding that the petitioners had not met their onus of establishing, on a balance of probabilities, that the true intention of the parties differed from what was recorded in the Companies' central securities registers. The respondents, David Danyluck and Paul Butler Designs Inc., were successful, retaining their disputed shareholdings. Because the petitions failed on this basis, the court did not need to address the respondents' alternative limitation-period defence. Costs were awarded to the respondents at Scale B; a precise dollar figure was not specified in the decision, and the parties retained the ability to seek a different costs order by scheduling a case conference within 30 days.