An Ontario court has ruled that a founding shareholder of Rideau Elevator Services Inc. was wrongfully dismissed and unfairly excluded from the company, ordering the corporate defendants to purchase his shares and awarding him 12 months’ pay in lieu of notice.
In Cullain v. Wilcox et al, the Superior Court of Justice held that B.C., a co-founder and shareholder of Rideau Elevator and its holding company, 12319896 Canada Ltd., was “pushed out” of the business by his partners, C.W. and J.W., during a failed acquisition of a competitor.
The court found B.C. had a “reasonable expectation” that he would remain employed and involved in the company’s management until retirement or a buyout, and that removing him without cause and attempting to classify it as a retirement constituted oppression under the Canada Business Corporations Act (CBCA).
“Their intent was to negotiate a buyout of [B.C.]’s shares,” the court found. “Negotiations dragged on. It was in this context that he allowed his Class A licence to lapse… I do not consider the lapse… as indicating a refusal to work.”
Background: failed buyout, broken acquisition
B.C., C.W., and J.W. launched Rideau Elevator in 2015, with each holding equal shares and serving as directors. B.C., a licensed elevator mechanic with decades of experience, was Vice President of Operations and played a critical role in the company’s early success.
In 2022, the parties arranged for their holding company to acquire Upper Canada Elevators (UCE). But after the deal was signed, C.W. and J.W. unexpectedly proposed a buyout of B.C.’s shares.
While B.C. did not initially seek a buyout, he engaged in negotiations in good faith. Talks stalled over financial terms, including the interest rate on deferred payments and the removal of B.C. as a guarantor on company loans. The court found that after proposing the buyout, C.W. and J.W. excluded B.C. from management, effectively pushing him out.
This disruption led to the collapse of the UCE deal, as Desjardins Financial refused to finance the acquisition without a signed letter of intent outlining B.C.’s exit.
“[C.W. and J.W.] derailed the acquisition, which would have benefited all the shareholders,” the court stated.
Termination, not retirement
The court rejected arguments that B.C. had voluntarily retired, ruling instead that he was wrongfully dismissed. No shareholder meeting was held to remove him as a director, and the company failed to demonstrate any performance-related cause for termination.
“There is no contemporaneous record… and no record of progressive discipline,” the court wrote. “The reality is that [he] was pushed out.”
Further, allegations that B.C. misappropriated funds and retained company property were found to be unsupported by evidence and not advanced at the time of termination. The court deemed these after-the-fact rationalizations.
B.C. was awarded 12 months’ reasonable notice, amounting to $114,000 in damages, based on his $114,000 annual salary at the time of dismissal. His claim for compensation for lost benefits was dismissed due to insufficient evidence.
Oppression remedy granted
The court also granted B.C.’s request for an oppression remedy under s. 241 of the CBCA, finding that C.W. and J.W.’s conduct violated his reasonable expectations as a shareholder and director. It concluded their actions were “oppressive, unfairly prejudicial, and unfairly disregarded” his interests.
A key factor was the timing of the proposed buyout, which coincided with the final stages of the UCE acquisition. The court found that C.W. and J.W. acted contrary to their duty to act in the best interests of the corporation and shareholders.
“The timing of the proposed buyout of [B.C.]’s interest was entirely within [their] control,” the court stated. “By disrupting the financing… they did not act in Rideau Elevator’s best interests.”
Share valuation and remedy
The defendants agreed that a buyout of B.C.’s shares was appropriate but disputed the valuation date and methodology. They provided a report from a business valuator that valued Rideau Elevator’s shares at nil as of September 30, 2022.
The court rejected this date as unfair, noting it followed the failed UCE acquisition and the exclusion of B.C. from management, which skewed the company’s performance. It set the valuation date at September 30, 2021, when the company’s financials reflected normal operations and consistent growth.
“Setting September 30, 2021 as the valuation date… is specifically aimed at vindicating [his] reasonable expectations,” the court held.
The parties were ordered to file fresh valuation evidence. The court fixed the value of shares in the holding company, ‘896, at $182,000, based on uncontested expert evidence.
The court dismissed the defendants’ counterclaim and summary judgment motion.
For more information, see Cullain v. Wilcox et al, 2025 ONSC 1739 (CanLII).
