LDS Capital v. Smalley 2020 ONSC 7435
December 04, 2020
In a decision issued December 4th, 2020 by the Ontario Superior Court of Justice, Justice Dietrich held in favour of Loopstra Nixon’s client LDS Capital Corporation in its claim against A & B Courier Services Ltd. and its majority shareholder, Smalley Capital Corporation, for shareholder oppression. Loopstra Nixon lawyers, Michael McWilliams and Christophe Shammas, did an outstanding job convincing the Court that the interests of the minority shareholder of A & B Courier, LDS Capital, were disregarded by the majority shareholder, Smalley Capital Holdings. LDS Capital is a holding company owned by Dean Smalley, together the Applicants, and Smalley Capital is a holding company owned by Dewane Smalley, together the Respondents.
The Court rejected the arguments advanced by the Respondents, and found that Dewane had acted in a manner that “oppressed, unfairly prejudiced or unfairly disregarded” his brother Dean’s interests in A & B Courier. Dewane was found to have operated the business with a view to enhance his own interests and with little regard for Dean’s interests, despite his legal obligations. He had operated the company as if there was no shareholder other than himself and no other officer or director. He also overcompensated himself beyond what he was entitled to in order to avoid sharing A & B Courier’s profits with Dean. As such, the Court ordered that the Respondents must buy or redeem the LDS’ shares in A & B Courier at a valuation of $1,592,000.00 and pay $80,902.67 in missed dividends from previous years. Furthermore, in a subsequent endorsement, the Court awarded costs against the Respondents totalling $325,000.00, inclusive of disbursements and HST to be payable to the Applicants within thirty days.
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