CITATION: McInerney v. RJM Holdings Limited, 2019 ONSC 7179  
COURT FILE NO.: 5245/11 (Chatham)  
DATE: 20191211  
ONTARIO  
SUPERIOR COURT OF JUSTICE  
)
)
BETWEEN:  
Cheryl Anne McInerney & Bruce  
McInerney  
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
Raymond G. Colautti and Anita Landry, for  
the Plaintiffs  
Plaintiffs  
– and –  
RJM Holdings Limited, Chilled Cork Inc. &  
Robert Joseph Myers  
Angus T. McKinnon and John B. Brennan,  
for the Defendants  
Defendants  
) HEARD: September 13, 20 and 21, 2018;  
January 7, 8, 9, 10 and 11, 2019; May 13,  
14, 15, 16, 17, 21 and 22, 2019  
REASONS FOR JUDGMENT  
VERBEEM J.:  
(I) THE NATURE OF THE PROCEEDINGS  
(a) Nature of the Action  
[1]  
Cheryl McInerney (“Cheryl”), a former employee and a current 50 percent shareholder of  
the defendant Chilled Cork Inc. (“CCI”), asserts that she was wrongfully dismissed in the  
summer of 2010. She also claims that she is entitled to remedies pursuant to s. 248 of the  
Ontario Business Corporations Act, R.S.O. 1990, c. B.16 (“OBCA”), as a result of the  
defendants’ “oppressive” conduct both before and after her termination. She seeks  
damages and compensation, together with an order that her shares in CCI be purchased at  
an enhanced value.  
Page: 2  
[2]  
Bruce McInerney (“Bruce”) also maintains a wrongful dismissal claim, based on his  
express dismissal, in 2010, from his 13-month period of employment as a part-time,  
minimum wage employee of CCI.  
[3]  
[4]  
Some context is warranted.  
(b) Background  
In 2008, Cheryl and the defendant, Rob Myers (“Rob”), agreed to become “partners” in a  
restaurant business. Rob solicited Cheryl’s participation in the venture – a casual fine  
dinning restaurant, with catering and banquet services, located within the Retro Suites  
Hotel in downtown Chatham, Ontario. Rob indirectly owned the hotel, through the  
defendant RJM Holdings Limited.  
[5]  
[6]  
They agreed that they would be partners and split the profits “50-50”. They also agreed  
that in exchange for her ownership interest in the business, Cheryl, who had experience in  
operating her own restaurant, would be employed to manage the restaurant on a day-to-  
day basis and serve as a chef, for which she would be paid a salary.  
Rob, whose other business interests kept him away from Chatham for most of the year,  
would largely be an absentee owner. In accordance with financial estimates and  
projections made by Cheryl, the parties agreed that Rob would contribute all the capital  
required to build out, equip and furnish the restaurant and cover its initial start-up costs  
and its initial losses. The parties agreed that the monies advanced by Rob would be fully  
repaid before any profits were distributed. They also agreed that since he would make all  
of the financial contributions, Rob would retain ultimate control over its financial aspects.  
[7]  
[8]  
The “partnership” was ultimately structured in a corporate form, with Cheryl and RJM  
Holdings Limited, each being a 50 percent shareholder of CCI. Cheryl was appointed as  
CCI’s president. Rob and Cheryl comprised CCI’s board of directors.  
On behalf of themselves and CCI, Rob and Cheryl executed a number of documents that  
gave effect to the terms of their agreements with respect to CCI, including: a lease  
between CCI and Retro Suites; a general security agreement made by CCI in favour of  
RJM Holdings Limited; an asset purchase agreement between CCI and Cheryl/her sole  
proprietorship restaurant, the Natural Food Emporium (NFE); and a Contract of  
Employment between CCI, Cheryl and Rob, in his capacity as a shareholder of CCI.  
[9]  
In accordance with the asset purchase agreement, CCI assumed NFE’s liabilities, which  
totaled over $102,000, and it acquired its assets for the stated consideration of one dollar.  
[10] The Contract of Employment did not specify a fixed term for Cheryl’s employment,  
which began on January 1, 2009. Pursuant to the contract’s terms, among other things:  
Cheryl was to be employed in “the position of management”, for an annual salary of  
$50,000; Cheryl agreed that in carrying out her employment duties, she would comply  
with all reasonable instructions as may be given to her by Rob, on behalf of CCI; Cheryl  
agreed that she would work with the “representatives” retained by CCI to assist in its  
operations; and Cheryl’s employment could be terminated for specified cause.  
Page: 3  
[11] Through the employment contract, Cheryl also agreed that her “reporting relationships,  
duties and responsibilities” could be changed by Rob, on behalf of CCI, as he deemed  
appropriate, and that any such changes would not affect or change any other part of the  
employment agreement.  
[12] CCI commenced operations in 2009. Things did not go well. The actual costs to build  
out, equip and furnish CCI exceeded Cheryl’s estimates. As a result, by January 1, 2009,  
CCI had incurred related-party debt (owed to one of Rob’s other corporations) in excess  
of $350,000.  
[13] CCI consistently operated at a loss throughout 2009 and, ultimately, incurred an annual  
net operating loss of nearly $200,000, which was far in excess of Cheryl’s projections  
and Rob’s corresponding expectations. Rob was required to make significant monetary  
advances to CCI during 2009, to cover its ongoing losses. As a result, CCI’s related-  
party debt grew to nearly $545,000 by December 31, 2009.  
[14] Despite CCI’s poor financial performance, Cheryl indicates that Rob was kind, and  
treated her fairly throughout 2009.  
[15] Unfortunately, CCI’s financial performance remained sub-optimal in 2010. Despite Rob  
and Cheryl’s common interest in achieving profitability and Cheryl’s efforts in that  
regard, CCI continued to suffer operating losses, month after month. Cheryl became  
increasingly stressed over CCI’s losses, which she and Rob discussed, on a periodic  
basis.  
[16] Cheryl concedes that by mid-2010, CCI’s losses were unsustainable and “something had  
to be done”.  
[17] Similarly, by May 2010, Rob concluded that it was necessary to “bring in” another  
individual to assist Cheryl in managing the financial aspects of the restaurant.  
Ultimately, Greg Kazarian was retained to assume CCI’s bookkeeping duties and aspects  
of its financial controls. Mr. Kazarian did not replace Cheryl as CCI’s general manager  
and Cheryl continued to “run the restaurant”. Cheryl acknowledges that she understood  
the rationale for hiring Mr. Kazarian, but his presence made her feel “useless” and  
“demeaned”.  
[18] After reviewing CCI’s financial aspects, Mr. Kazarian determined, among other things,  
that its “wages and salaries” expenses were too high. He made recommendations with  
respect to salary reductions, and the termination of certain employees that he determined  
were redundant, including Cheryl’s husband Bruce, who worked on a part-time,  
minimum wage basis.  
[19] Rob maintains that until Mr. Kazarian made his recommendations, he was not aware that  
Bruce, whom Cheryl hired in June 2009, was an employee of CCI. He posits that during  
their discussions in 2008, he and Cheryl specifically agreed that Bruce was not to be  
involved in CCI. Cheryl disputes that assertion.  
Page: 4  
[20] Mr. Kazarian also recommended the imposition of tighter financial controls in CCI’s day-  
to-day operations.  
[21] Throughout June 2010, Rob, Cheryl, Mr. Kazarian, and CCI’s head chef, Michel Bonnot,  
met a number of times to discuss CCI’s financial position and Mr. Kazarian’s  
recommendations. During their meetings, Cheryl consistently appeared upset and  
emotional, particularly in response to the suggestion that Bruce be terminated.  
[22] Bruce was terminated on June 28, 2010, with three weeks pay in lieu of notice.  
Subsequently, Cheryl was distressed by his absence from CCI. She continued to attend  
work until July 9, 2010, when she “blew up” at Mr. Kazarian, accused him of “trying to  
take her job”, and left the restaurant. Cheryl has never returned to active employment at  
CCI, or active participation in its business and operations, despite remaining its president  
and a member of its board of directors.  
[23] With Rob’s approval, Mr. Kazarian corresponded with Cheryl on July 14, 2010,  
suggesting that she take two weeks off from work with pay, and that they meet,  
thereafter, to determine if she was ready to return to work. Cheryl did not respond  
directly. Instead, through Chef Bonnot, she provided CCI with a brief note from her  
family doctor indicating that she was “off work for medical reasons for at least one  
month”. Cheryl indicates that at the time, she felt depressed.  
[24] Unfortunately, Cheryl then misapprehended an advertisement placed by CCI in a local  
newspaper in late July for, among other things, a Red Seal chef. The advertisement was  
designed to find a replacement for Chef Bonnot, who, to Cheryl’s knowledge at the time,  
had announced his intent to retire from CCI in September 2010. Cheryl, who did not have  
a Red Seal, believed the advertisement was designed to replace her. Without speaking  
with anyone at CCI, including Rob, she concluded that she had been – or was being –  
forced out of CCI.  
[25] On a few occasions in July 2010, Rob attempted to contact Cheryl to discuss her absence  
from, and anticipated return to, work, without success. He never received a response.  
Eventually, Chef Bonnot advised him that Cheryl had a prior history of depression, she  
was experiencing depressive feelings and she wanted her old restaurant (NFE) back.  
Cheryl previously advised Rob, that she missed her old restaurant.  
[26] As a result, Rob unsuccessfully attempted to contact Cheryl in early August 2010, to  
propose a solution to their circumstances. When he was unable to reach her directly, he  
left her a voicemail message, in which he suggested that CCI would pay her three months  
salary and he would provide her with additional financial assistance to “set up” her old  
restaurant. He invited her to contact him. Cheryl did not respond.  
[27] Cheryl attended a scheduled assessment with a nurse practitioner on August 30, 2010,  
during which she reported that she had been “pushed out of her restaurant business”,  
together with subjective symptoms of anxiety, which were improving. She appeared  
slightly depressed. She was diagnosed with an adjustment disorder. The nurse did not  
opine that she was incapable of engaging in active employment, at any time.  
Page: 5  
[28] Cheryl’s salary continued to be paid by CCI throughout July and August 2010. During  
that time: she did not return to active employment; she did not communicate a desire or  
intent to return to active employment; she did not respond to CCI’s numerous attempts to  
contact her, with respect to her absence from employment and her intentions to return to  
work; and she did not indicate that she needed more time off work. Cheryl concedes that  
she never advised CCI that she intended to return to work, at any time.  
[29] In early September 2010, Rob’s corporate counsel forwarded documents to Cheryl that, if  
executed, would give effect to the terms of Rob’s August 2010 proposal, including a  
document titled “Termination of Employment”. The terms of that document reflect,  
among other things, that: Cheryl resigned her employment; she was to be paid three  
months salary; and she would transfer her shares in CCI to RJM Holdings Limited, for  
one dollar. The defendants posit that Cheryl’s shares had no value at the time, because:  
CCI had, to that date, continuously operated at a substantial loss; and the value of its  
liabilities (including related-party debt) exceeded the value of its assets. In her evidence,  
Cheryl concedes that until CCI became profitable, the value of her 50 percent ownership  
interest was nil.  
[30] Cheryl did not sign the agreement and she did not respond to it, either directly or through  
counsel, even if to: advise that she had not resigned; posit that she had been expressly or  
constructively dismissed, at some point; or to communicate a desire or intention to return  
to work.  
[31] Cheryl attended on a psychiatrist for assessment at the end of September 2010, who  
opined that she had suffered a “narcissistic injury” and offered a formal diagnosis of  
“adult life with mixed emotions”, with no evidence of a major depressive disorder. He  
did not identify any restrictions on her ability to work, at any time. He recommended  
limited counselling, which Cheryl did not pursue.  
[32] In October 2010, Bruce commenced a catering business as a sole proprietorship. Cheryl  
was active in its operations from its inception, cooking and making deliveries. After  
several months of involvement in that business, Cheryl purchased an existing restaurant,  
which she has operated as Zee’s Bistro, to the present.  
[33] CCI continued to operate after Cheryl’s departure in July 2010. It also continued to incur  
operating losses up to and including 2015, which were subsidized by its related parties  
(Rob’s other corporations). In 2012, Pete Tsirimbis became CCI’s general manager. He  
implemented a stage-based strategy to improve CCI’s menu, service model and  
atmosphere. He has also overseen: CCI’s addition of a private dining area and various  
renovations and upgrades to the restaurant’s interior; an improvement in the quality of  
CCI’s menu; and increased promotion and advertising.  
[34] CCI first achieved profitability in 2016, which has continued to date. Nonetheless CCI’s  
related-party debt has not been retired. According to its audited financial statements, CCI  
still owed a net related-party debt in excess of $450,000, as of December 31, 2017. No  
portion of CCI’s annual net income in 2016 and 2017 was distributed to its shareholders.  
Page: 6  
[35] CCI has never held director or shareholder meetings. Although Cheryl remains CCI’s  
president and a member of its board of directors, she has never called or requisitioned  
such meetings. Neither has Rob.  
[36] Apart from 2009, no resolutions have been passed exempting CCI from the audit  
requirements of the OBCA. Nonetheless, CCI did not produce audited financial  
statements to its shareholders. In the context of this proceeding, Cheryl secured an  
interlocutory order in 2014, appointing BDO as CCI’s auditor, dating back to 2009, and  
mandating the preparation of audited financial statements from 2009 to present, and  
ongoing.  
[37] After its appointment, BDO raised a concern over the disorganization and lack of  
completeness that plagued CCI’s storage of historical financial records and source  
documents. It also raised concerns over the general lack of consistency in CCI’s method  
of recording transactions in its books, which resulted from a turnover of six different  
bookkeepers in the five-year period pre-dating BDO’s appointment. As a result, BDO  
was unable to produce any financial statements for 2009-2011. BDO prepared draft  
financial statements for 2012-2015, and final audited statements for 2016 and 2017.  
(c) Cheryl’s Wrongful Dismissal Claim  
[38] In the context of the foregoing, Cheryl asserts that she was expressly or constructively  
dismissed from her employment. She seeks damages for wrongful dismissal based on a  
lack of reasonable notice, and aggravated damages based on the manner in which she  
alleges she was dismissed.  
[39] Cheryl testifies that beginning in 2010, Rob became a “devil”. She says that during their  
infrequent meetings in 2010, which were held in the presence of other staff members of  
both CCI and Retro Suites, Rob would demean and insult her and, generally, act in an  
aggressive manner. He then retained Mr. Kazarian, without notice to her, and  
“wrongfully demoted” her, by stripping her of financial reporting and control duties.  
Despite Rob’s assurance that she would continue to “run the restaurant”, she felt like she  
was “just an employee”.  
[40] Cheryl asserts that her depressive feelings increased in June 2010. When she raised  
certain concerns with Rob, he told her that she would have to personally fire Chef  
Bonnot, his wife Leslie (who was CCI’s bookkeeper at the time) and Bruce, or she  
herself would be fired.  
[41] Cheryl varyingly posits that she was terminated through: the change in her financial  
controls and reporting duties; the implementation of financial controls; the Red Seal  
newspaper ad; Rob’s early August 2010 proposal; and/or the documentation sent to her in  
early September 2010.  
[42] Cheryl was employed for approximately 18 months. She claims she was entitled to 24-  
months notice of termination and seeks damages in lieu thereof, together with aggravated  
damages.  
Page: 7  
[43] Rob asserts that by her conduct, Cheryl clearly and unequivocally resigned from her  
employment in the summer of 2010. He denies that he ever engaged in threatening or  
demeaning behaviour towards her. He never directed her to terminate anyone, including  
Bruce. He consistently interacted with Cheryl in an appropriate manner.  
[44] Rob asserts that in accordance with the Contract of Employment, Cheryl’s duties with  
respect to financial management and controls were changed in June 2010, but Cheryl  
remained in a position of management. The decision to change Cheryl’s duties was made  
only after CCI’s exceptional losses in 2009 and its continuing losses in the first half of  
2010, and after he and Cheryl had discussed the need to address CCI’s losses. Mr.  
Kazarian was retained to assist Cheryl, not to replace her.  
[45] After Cheryl left CCI in July 2010, Rob never heard from her again, despite numerous  
attempts to contact her. He never instructed anyone to terminate Cheryl and he did not  
do so himself. Cheryl never advised CCI that she intended to return to work and she  
refused to respond to its attempts to address the issue with her. Rob made his August 4,  
2010 proposal because he did not know what else to do, in response to Cheryl’s silence.  
Rob posits that he did not attempt to unilaterally impose his proposal. Documents were  
prepared in accordance with the proposal, but Rob appreciated that they would not gain  
effect unless Cheryl signed them. Cheryl never responded to any of the foregoing.  
[46] From a subjective perspective, Cheryl testifies that when she left CCI, she had  
determined that she “did not want to try anymore”, in relation to its operations. By early  
August 2010, she determined that she could not go back to CCI. Finally, by the end of  
August 2010 (before she received the termination agreement), she determined that she  
did not want to be Rob’s partner anymore.  
(d) Cheryl’s Oppression Claim  
[47] In her capacity as a shareholder, Cheryl also asserts an oppression claim pursuant to s.  
248 of the OBCA. She claims her reasonable expectations as a shareholder were violated  
because, among other things: CCI did not employ her on a long-term basis; she did not  
participate in director and shareholder meetings; through the recording of management  
fee transactions, RJM Holdings secured a tax advantage that she did not share in; she has  
not shared in CCI’s profits; CCI began to produce audited financial statements, only after  
it was ordered to do so in the context of this proceeding; she was excluded from the  
management of CCI; and Rob did not deal with her in good faith.  
[48] Cheryl contends that Rob’s oppressive conduct commenced in 2009 and continues to  
date.  
[49] In her pleadings, Cheryl claims, among other things: a variety of orders, effectively,  
ousting Rob as an officer and director of CCI and appointing herself as sole officer,  
director and signing officer; an order extending the term of CCI’s lease with Retro Suites;  
and compensation for loss of profit, disgorgement of profits, and oppressive conduct in  
the amount of $5,000,000.  
Page: 8  
[50] At trial, Cheryl submits that the appropriate remedy for any oppression ought to include  
an ordered purchase of her shares at an enhanced value. She suggests a valuation date of  
December 31, 2017 (essentially, a date of judgment valuation). She has produced expert  
evidence valuing the shares under three different scenarios, premised on varying  
assumptions that, to a large extent, conflict with the content of CCI’s annual financial  
statements.  
[51] Depending on which scenario is used, the plaintiffs’ expert calculates the value of  
Cheryl’s shares to fall within one half of a total amount ranging from a low of $690,000  
to a high of $1.5 million, as of December 31, 2017.  
[52] The defendants assert that: Cheryl has failed to evidence the reasonable expectations that  
she asserts as a shareholder; many of her expectations are not “reasonable”, when  
measured against the parties agreements, past practice, reasonable commercial practice,  
and the availability of preventative steps; the defendants did not engage in conduct that  
falls within the scope of the oppression provisions of the OBCA; and to the extent that the  
failure to provide audited financial statements unfairly prejudiced Cheryl’s interests, that  
prejudice has already been address through the appointment and efforts of the court  
appointed auditor. Further remedial awards are, therefore, unnecessary.  
[53] To the extent that a remedial order is made pursuant to s. 248(3) of the OBCA, the  
defendants agree that it should include an order that Cheryl’s shares be purchased. They  
submit that, in all of the circumstances, the fairest valuation date would either be the date  
of the original alleged oppressive conduct (December 31, 2010) or the date the  
proceeding was commenced (December 31, 2011) (CCI’s year-end dates are used for  
convenience in valuation).  
[54] The defendant’s adduced evidence from an expert business valuator that indicates the  
shares of CCI were worth nil on either December 31, 2010 or December 31, 2011. She  
also opines that en bloc, the shares of CCI have a fair market value between $9,900 and  
$97,900, with a mid-point of $53,900, on December 31, 2017. Therefore, she estimates  
the value of Cheryl’s shares to be $26,950, as of that date. Unlike the plaintiff’s expert,  
she assumes the value of CCI’s related-party debt is consistent with the amount recorded  
in its 2017 audited financial statements, and that the best evidence of its historical  
revenue and wages expenses are its annual financial statements.  
(e) Bruce’s Wrongful Dismissal Claim  
[55] Bruce asserts a claim for damages for wrongful dismissal based on the termination of his  
13-month period of employment, as a part-time minimum wage employee of CCI. He  
claims to have been entitled to a three to six month notice period.  
(f) Other Claims Advanced by the Plaintiffs  
[56] Cheryl pleads a claim in unjust enrichment based on CCI’s acquisition of NFE’s assets,  
as part of her deal to become Rob’s partner. She maintains that CCI not only gained  
NFE’s assets and goodwill, it eliminated a source of major competition.  
Page: 9  
[57] Cheryl also pleads a claim for damages premised on Rob’s alleged fraudulent  
misrepresentations during their 2008 negotiations, that she would be an equal partner in  
the restaurant.  
[58] Bruce alleges that as a result of Rob’s fraudulent misrepresentations in 2008, he was  
induced to provide unpaid labour to CCI.  
(g) The Defendants’ Counterclaim  
[59] In submissions, although not in his pleadings, Rob claims to be entitled to $50,000 as a  
result of defamatory comments made by Cheryl, after she left CCI. The pleaded aspects  
of the defendants’ counterclaim are not pursued at trial.  
(h) Structure of these Reasons  
[60] Below, I will explain my reasons for dismissing the plaintiffs’ wrongful dismissal claims,  
together with the balance of the action, excepting Cheryl’s claim pursuant to s. 248 of the  
OBCA, as well as, my reasons for dismissing Rob’s submitted counterclaim. I will also  
explain why I am persuaded that Rob and CCI engaged in certain conduct that both  
violated Cheryl’s reasonable expectations qua shareholder and fell within the scope of s.  
248(2) of the OBCA and, as a result, a purchase of her shares should be ordered, as the  
parties mutually request. Finally, I will explain why the fairest valuation date for  
Cheryl’s shares is December 31, 2010, CCI’s year-end date in the year the original  
oppressive conduct, as found, occurred and as a result, the value of the shares is nil and  
the transfer should occur at nominal consideration.  
[61] I will begin my reasons by detailing the evidence adduced at trial, followed by a  
summary of the parties’ respective positions.  
[62] Thereafter, I will determine the issues by first resolving the conflicts in the evidence and  
making the necessary factual determinations concerning: the formation of the parties’  
deal; the validity and quantum of CCI’s related-party debt; and the contextual  
circumstances leading to Cheryl’s withdrawal from CCI.  
[63] I will then explain why, in my view, Cheryl was not expressly or constructively  
dismissed, but rather, through her conduct she resigned from her employment. I will also  
provisionally assess Cheryl’s damages for wrongful dismissal, including her claim for  
aggravated damages. Finally, I will assess Bruce’s damages for wrongful dismissal.  
[64] Next, I will dispose of Cheryl’s oppression claim by first determining the reasonableness  
of her asserted expectations as a shareholder, and whether any of them were breached by  
the defendants’ conduct in a manner consistent with s. 248(2) of the OBCA. I will  
explain why certain conduct by Rob, as found, does so. In determining the appropriate  
remedy, I accept the submission, by all affected parties, that a share purchase of Cheryl’s  
shares should be ordered. I will explain my determination that December 31, 2010 is the  
fairest valuation date and why I accept the opinion evidence that the shares have no value  
Page: 10  
as of that date. I will also explain, in a provisional assessment, why I accept the  
defendants’ expert evidence that Cheryl’s shares in CCI have a value of $26,950, if  
December 31, 2017 is selected as the valuation date.  
[65] Finally, I will explain my reasons for dismissing the balance of the plaintiffs’ claims and  
the defendants’ counterclaim.  
II)  
THE EVIDENCE  
The Nature of the Evidence  
[66] The plaintiffs called evidence from four witnesses: Cheryl; Bruce; Ferruccio Da Sacco;  
and James Tracey. Mr. Da Sacco is a member of the court appointed auditor, BDO. Mr.  
Tracey is, among other things, a certified business valuator who was qualified to provide  
expert opinion evidence with respect to the fair market value of CCI’s shares as of  
December 31, 2017.  
[67] The defendants adduced evidence from six witnesses: Rob; Greg Kazarian (CCI’s  
financial controller from 2010 to 2012); Stephanie Temesy (CCI’s bookkeeper from 2015  
to present); Peter Tsirimbis (CCI’s general manager from 2012 to present); Gerry Hockin  
(CCI’s former accountant and current consultant to the RM group of companies); and  
certified business valuator Lindsay Campbell, who was qualified to provide expert  
opinion evidence on the fair market value of CCI’s shares as of December 31, 2010, 2011  
and 2017, respectively.  
[68] Below, I will summarize the evidence of Cheryl, Bruce and Mr. Da Sacco, together with  
aspects of a number of the documentary exhibits to which they referred in their respective  
evidence. Following that, I will summarize the non-expert evidence adduced by the  
defendants. Finally, I will summarize the reports and viva voce evidence of both Mr.  
Tracey and Ms. Campbell.  
The Evidence Adduced on Behalf of the Plaintiffs  
Evidence of Cheryl Anne McInerney  
[69] Cheryl is married to her co-plaintiff, Bruce. Prior to her involvement with CCI, she had  
experience in the restaurant industry, in which she has worked intermittently, in varying  
capacities, since she was a teenager.  
[70] In July 2001, Cheryl purchased a cafeteria-style restaurant in downtown Chatham, known  
as the Natural Food Emporium (“NFE”), which served a lunch and a bistro dinner  
service. She operated NFE as a sole proprietorship. Bruce consistently provided unpaid  
labour services to NFE, performing various tasks on an as needed basis, including  
bookkeeping.  
[71] From a financial perspective, Cheryl indicates that NFE had “good years and bad years”  
in the seven-year period in which it operated. Bruce’s handwritten calculations of NFE’s  
net annual income in the years 2004 to 2008, inclusive, indicate that NFE had: a net loss  
Page: 11  
of $420.42 in 2004; a net income of $48,000 in 2005; a net loss of $2,072 in 2006; a net  
loss of $2,739 in 2007; and a net income of $11,459 in 2008.  
[72] Cheryl enjoyed operating NFE, which she did until December 31, 2008. On January 1,  
2009, she commenced employment as “the manager” and one of the chefs at a Chatham  
restaurant known as the Chilled Cork Inc. (CCI). Cheryl was also a 50 percent  
shareholder of CCI, together with RJM Holdings Inc., a corporation owned by Rob. Rob  
actively solicited Cheryl’s participation in the ownership and operation of CCI.  
[73] Cheryl and Rob first met in April 2008, when he walked into NFE’s kitchen, introduced  
himself and asked Cheryl if she wanted to open a restaurant at the Retro Suites, a hotel  
that he had developed in Chatham’s downtown core. She was intrigued. They met at the  
Retro Suites later that night, where Cheryl, Bruce and three of NFE’s other employees  
toured the empty restaurant shell. At the conclusion of the tour, the NFE employees left  
and Cheryl, Bruce and Rob discussed the nature of Rob’s proposed venture, which  
according to Cheryl’s original evidence, included, among other things, the following:  
1)  
Rob and Cheryl would be 50/50 partners in a restaurant business located in the  
Retro Suites. They would share the profits of the restaurant on an equal basis.  
Cheryl was aware that there would be no profits in the first few years of the  
restaurant’s operation and she advised Rob accordingly.  
2)  
3)  
Cheryl would be employed as the restaurant’s manager and she would be paid an  
annual salary of $50,000.  
Cheryl asked Rob if he required an executive chef for the restaurant because, in  
her words, she was only a cook. He responded in the affirmative and approved  
the hiring of a chef, at an annual salary of $60,000.  
4)  
Cheryl identified all of the kitchen equipment that needed to be purchased for  
CCI. Rob wanted her to personally select the kitchen equipment, as well as, the  
fixtures, furnishings and other capital assets, that the restaurant required.  
5)  
6)  
Rob wanted Cheryl to personally recruit and hire a chef.  
Rob advised Cheryl that he wanted her to oversee the restaurant’s “build out”  
because NFE was a clean restaurant and she was a hard worker.  
7)  
Rob described himself as Cheryl’s “angel investor” and told her that he intended  
to be a silent partner. He would not be involved in the restaurant’s day-to-day  
operation because he had no experience in that regard and he was otherwise too  
busy. He said they would be “rich”.  
8)  
Rob indicated that he would: financially contribute $50,000 for the restaurant’s  
start up; finance the purchase of CCI’s capital equipment; and maintain a  
$100,000 line of credit for the restaurant’s operation.  
Page: 12  
[74] At the conclusion of the meeting, Rob and Cheryl shook hands and Rob said: “It’s a  
done deal”; “My handshake is my bond”; “I never go back on handshakes”; “We will be  
50/50 partners”; and “I don’t want to run the restaurant”.  
[75] After the meeting, Cheryl continued to operate NFE at its original location until the end  
of August 2008. In September 2008, she moved NFE’s equipment to CCI’s planned  
location in the Retro Suites and began to operate NFE there. At that time, there were still  
four years left on a five-year lease of NFE’s original operating premises. Rob did not  
assist her in terminating that lease.  
[76] The restaurant opened at the Retro Suites as “NFE/Chilled Cork”, in September 2008.  
Cheryl continued to run the business as a sole proprietorship until the end of 2008. CCI  
commenced operations on January 1, 2009.  
[77] Cheryl was not required to financially contribute to CCI’s development or its operation.  
She was CCI’s only general manager. She hired all of CCI’s original employees,  
including Bruce, whose job duties were similar to those he held with NFE, and included  
cleaning, stocking the bar, setting up the banquet room, and making purchases. Later in  
her evidence, Cheryl clarified that Bruce was originally not a paid employee of CCI. She  
did not discuss hiring Bruce with Rob because she thought Rob knew that Bruce had  
worked at NFE. Cheryl also hired her friend, Michel Bonnot, a Red Seal chef, as CCI’s  
executive chef. Before he was hired, Chef Bonnot met with both Rob and Cheryl. Cheryl  
also hired Chef Bonnot’s wife, Leslie, as CCI’s original bookkeeper.  
[78] In August 2009, the Retro Suites’ “business manager”, Ron LaRoche, provided Cheryl  
with correspondence dated August 17, 2009, from Rob’s lawyer, Dennis Asher, which  
enclosed several documents for Cheryl’s execution, including: an asset purchase  
agreement between Cheryl (as sole proprietor of NFE) and CCI; a commercial lease  
between CCI and Retro Suites; a resolution of CCI’s board of directors; a stock transfer  
register showing, among other things, that Cheryl received 50 class A shares in CCI and  
that she was elected CCI’s President as of August 17, 2009; a Directors Register that  
listed both Cheryl and Rob as directors; a Contract of Employment between Cheryl, Rob  
and CCI; a general security agreement made by CCI in favour of RJM Holdings Limited;  
and an Unanimous Shareholders Agreement (USA).  
[79] The relevant terms of the foregoing documents include:  
(a) The Commercial Lease  
“2.  
The term of this lease commences on January 1, 2009 and ends of  
December 31, 2014.  
…
4.  
5.  
(a) The Tenant shall pay the Landlord a “base rent” of forty eight  
thousand dollars ($48,000) plus GST per year in equal monthly  
installments of Four Thousand dollars ($4,000) …  
The following services and expenses are at the sole responsibility  
and expense of the Tenant:  
Page: 13  
(a) any and all upgrades to facility to enable and/or increase  
productivity to the business.  
…
7.  
The Tenant shall also be solely responsible for repairs or  
improvements to the structure and to the exterior and interior of the  
building for business purposes.”  
(b) The Contract of Employment  
Between Chilled Cork (Employer), Cheryl McInerney (Employee) and  
Rob Myers (Shareholder)  
“1.  
Employment and Term  
(1) The Employee is employed by the Employer in the position of  
management effective the 1st day of January, 2009 … In carrying  
out her duties the Employee will comply with all reasonable  
instructions as may be given by the Shareholder on behalf of the  
Employer.  
…
(3)  
The Employee agrees that her reporting relationships,  
duties and responsibilities may be changed by the Shareholder on  
behalf of the Employer as he deems appropriate. The Employee  
agrees that any of the changes which may occur pursuant to this  
paragraph will not affect or change any other part of this  
Agreement. The Employee will work with the representatives  
retained by the Employer to assist in the operation of the  
Employer.  
2
Remuneration and Benefits:  
(1) In consideration of your performance of the obligations  
contained in this Agreement, the Employer will:  
(a) pay the Employee a salary of $50,000 per annum  
subject to the normal statutory deductions commencing  
January 1, 2009 based upon full-time employment.  
…
(4)  
Termination:  
The Employee covenants and agrees that the Shareholder on behalf of the  
Employer may terminate this contract of employment without notice or  
pay in lieu of notice for cause. For the purposes of this agreement “cause”  
shall include:  
Page: 14  
…
(b) consistent poor performance on her part, after being advised as  
to the standard required, as determined in the sole discretion of the  
Shareholder on behalf of the Employer;”  
…
[Emphasis added.]  
(c) The General Security Agreement  
“Chilled Cork Inc. (the “Debtor”)  
RJM Holdings Limited (the “Secured Party”)  
1.  
The creation of security interest  
(1) for value received and as a general and continuing collateral  
security for the payment of Indebtedness (as defined below or as set out in  
Schedule “A”) … The Debtor hereby grants to the Secured Party a  
security interest in all of the Debtor’s personal property … and in the  
undertaking of the Debtor.  
Schedule “A”  
This agreement is to secure the liability of the Debtor to the Creditor in the  
amount of One Hundred Fifty Thousand Dollars ($100,000) [sic].”  
(d) The Unanimous Shareholders Agreement  
Article 3 – Operation and Control of the Corporation  
3.1 The parties hereto shall cause such meetings of Directors and  
Shareholders of the Corporation to be held, votes to be cast, resolutions to  
be passed, by-laws to be passed, documents to be executed and all things  
and acts to be done to ensure the following continuing arrangements with  
respect to the operation and control of the Corporation:  
(a) The Board of Directors of the Corporation shall be composed of  
two (2) members namely Cheryl and Rob  
…
(c) without the prior written consent of Shareholders holding, in  
aggregate, not less than 51% of the total number of issued shares;  
Page: 15  
(i) there shall be no change in the number of Directors of  
the corporation;  
…
Article 4 – Restrictions on the Issue and Transfer of Shares  
4.1 Restrictions  
…
(b) no shareholder shall sell, assign, transfer, dispose of, gift,  
donate, grant, mortgage, pledge, hypothecate, charge or otherwise  
encumber or deal with any Shares now or hereafter owned or held  
by such Shareholder or any interest in any such Shares.  
Article 5 – Buy/Sell Arrangements  
5.1 The purchase and sale provisions of section 5.2 hereof shall apply on  
the happening of any one of the following events:  
…
(b) The death of any Shareholder;  
…
(d) The insolvency or bankruptcy of any Shareholder (at the  
option of the Board of Directors of the Corporation exercised by  
giving written notice to such Shareholder);  
(e) In the case of Cheryl, if Cheryl for any reason whatsoever,  
ceases to be an employee of the Corporation (at the option of the  
Board of Directors of the Corporation exercised by the giving of  
written notice to Cheryl)  
…
and the Shareholder, who has given notice, who has died or been  
found incompetent, become insolvent or bankrupt, or Cheryl upon  
ceasing to be an employee of the Corporation and having received  
written notification from Rob, shall hereinafter in this section be  
referred to as the “Retiring Shareholder …”  
…
5.2 The Corporation shall purchase all the Shares of the Corporation held  
by Retiring Shareholder on the following terms and conditions:  
(a) the aggregate purchase price for such Shares (the “Purchase Price”)  
shall be:  
Page: 16  
- an amount equal to the Prescribed Value of the Corporation (as defined  
in annexed Schedule “A”) multiplied by the number of Shares held by the  
Retiring Shareholder and divided by the total number of Shares  
outstanding on the Termination Date.  
…
[Emphasis added.]  
Schedule “A” to the proposed Shareholders Agreement provided that the “Prescribed  
Value of the Corporation” for the purposes of a buyout would be:  
“(b) if there is no written agreement as to the Prescribed Value of the  
Corporation or if such written agreement has elapsed as foresaid, then an  
amount equal to the fair value of One Hundred Percent (100%) of the  
Common Shares as determined by Corporation’s Accountant whose  
determination shall be final and binding upon the surviving  
Shareholders, the Retiring Shareholder, the Corporation and their  
respective heirs, legal personal representatives, successors and assigns.  
[80] Cheryl did not sign the documents immediately upon receipt because she was “always  
too busy to look at them”. Both Mr. Asher and Mr. LaRoche repeatedly followed up with  
her in that regard. She did not read any of the documents, but she eventually signed all of  
them, except the USA. Cheryl explains that she did not receive legal advice before she  
signed the documents because when she originally met with Rob in 2008, he told her that:  
she did not need to retain a lawyer; she could trust him; and a lawyer would just cost her  
money.  
[81] Cheryl originally testified that she eventually signed the documents (except the USA)  
despite not reading them or understanding their content because Rob and Mr. LaRoche  
kept “bugging her to sign”. Anytime that she talked about getting a lawyer, Rob told her  
that she did not need one. Cheryl maintains that she needed someone to “walk her  
through” the documents, but she did not contact Mr. Asher to advise him that she did not  
understand the documents.  
[82] On November 9, 2009, Cheryl read and signed a “waiver and acknowledgment”, that was  
prepared by Mr. Asher and directed to Mr. Asher, RJM Holdings Limited, CCI, and Rob.  
That document confirms that she transferred her restaurant business (NFE) to CCI in  
exchange for 50 percent of CCI’s shares, as well as Cheryl’s understanding that: CCI  
would pay rent to RJM Holdings Limited in the amount of $4,000 per month; she would  
enter into an employment agreement with CCI; she and Rob would enter into a USA with  
respect to CCI; and CCI would grant a security interest over all of its assets in favour of  
RJM Holdings Inc.  
Page: 17  
[83] Finally, through the “waiver and acknowledgement”, Cheryl confirmed that Mr. Asher  
had advised her to obtain independent legal advice with respect to the CCI transaction  
and she declined to do so. In her evidence, Cheryl states that she never spoke with Mr.  
Asher about obtaining independent legal advice. When she read that portion of the  
waiver and acknowledgement, she reasoned that she had already signed the documents  
that were enclosed with Mr. Asher’s August 2009 correspondence, so she signed the  
waiver and acknowledgment and returned it to Mr. LaRoche.  
[84] Cheryl allows that during the course of their ongoing discussions in 2008, she advised  
Rob that she projected that CCI could generate a million dollars in revenue in 2009.  
Ultimately, it did not do so. CCI incurred a substantial loss in its first year of operation.  
Rob was angry that the business was not profitable. Eventually, Rob began to hold staff  
meetings with Cheryl, Nancy Labadie (the general manager of Retro Suites), Ron  
LaRoche and Chef Bonnot. Cheryl’s evidence concerning the commencement of those  
meetings and Rob’s demeanour during the meetings evolved over the course of her  
evidence.  
[85] Originally, Cheryl testified that the meetings, which were held approximately once every  
three months, made her nervous. During the meetings, Rob would rant and rave, throw  
papers around, and “talk down” to the other attendees. He refused to listen to any of  
Cheryl’s “cost cutting” suggestions and he dismissed all of the efforts that Cheryl had  
made to reduce CCI’s expenses. He consistently reiterated that he wanted them to “make  
money”, but he never offered any suggestions of his own, in that regard.  
[86] In order to address Rob’s concerns, Chef Bonnot voluntarily reduced his salary from  
$60,000 to $45,000 and Cheryl reduced the number of CCI’s staff, while increasing the  
number of hours that she worked from 55 hours per week to 70 hours per week. Working  
with Retro Suites marketing director Mr. LaRoche, Cheryl engaged in various efforts to  
increase CCI’s sales. Some of her ideas worked and some did not. Rob remained  
unsatisfied. He never made Cheryl feel that she was improving in her management of  
CCI.  
[87] CCI continued to suffer operating losses throughout the first half of 2010, prompting  
Chef Bonnot to voluntarily reduce his annual salary further, to $35,000. Cheryl believed  
that the restaurant was showing some financial improvements in the period from April to  
June 2010. She presented the numbers to Rob, who laughed at her and told her that she  
was stupid.  
[88] Sometime in mid-2010, an individual named Greg Kazarian began to work as a  
bookkeeper for the Retro Suites Hotel. A few weeks after he started, Mr. LaRoche  
advised Cheryl that Rob wanted her to arrange for Leslie Bonnot to train Mr. Kazarian on  
CCI’s bookkeeping system. Cheryl acknowledges that Mr. LaRoche asked her to do so  
on a number of occasions and she consistently refused. She felt that it was unfair that Rob  
decided to have someone else engaged in CCI’s bookkeeping, without involving her in  
the decision.  
Page: 18  
[89] Cheryl then testified to the content and circumstances of correspondence that she  
authored to Rob in mid-2010. She maintains that when she was originally asked to have  
Ms. Bonnot review CCI’s bookkeeping system with Mr. Kazarian, Rob was out of the  
country and she did not know how to reach him. As a result, she wrote correspondence to  
Rob, which she originally testified she mailed to his residence on July 8, 2010 (the letter  
bears a handwritten date of “July 8”). Later, she conceded that that aspect of her evidence  
was inaccurate. She then suggested that she forwarded the correspondence to Rob at the  
end of June 2010.  
[90] In her correspondence, Cheryl, among other things:  
(a) discloses that Rob has never made her feel like a “partner” and her belief that  
he “probably never will”;  
(b) alleges that at each of their meetings, Rob said that he felt like he had been  
“fucked”;  
(c) discloses that she feels like she has been “fucked”;  
(d) discloses that she “jumped way too fast” at Rob’s proposal; that she trusted  
Rob, despite people telling her not to do so; and reiterating that he said he was  
her “angel”;  
(e) asserts that she received nothing in exchange for moving her restaurant and  
client-base to CCI’s location and she was left with nothing;  
(f) particularizes her debt, related to the lease of NFE’s former operating  
premises;  
(g) discloses her ongoing efforts to make CCI a success;  
(h) alleges that the parties agreed that CCI would make payments with respect to  
a truck that Bruce and Cheryl owned;  
(i) disclosed that when Bruce works for CCI, he “only charges for some of his  
hours and only gets minimum wage”;  
(j) confides that she missed her old bistro restaurant, where she and Bruce were  
happy and “the stress was all ours”;  
(k) attributes CCI’s 2009 financial losses to a recession;  
(l) confirms that she wanted CCI to become profitable;  
(m)discloses that at each of their meetings, Rob destroys “more and more” of her  
self esteem;  
Page: 19  
(n) expresses that she and Rob did not talk like “real partners” about CCI’s issues  
and reasonable solutions to them;  
(o) identifies CCI’s “salary costs” as its biggest issue and that its sales needed to  
increase;  
(p) accepts Rob’s rationale for involving Mr. Kazarian in CCI’s operation, but  
expresses concern that she was not advised, in advance, of his intended role;  
(q) confirms that in 2009, CCI paid her a salary in excess of the $50,000 amount  
set out in her employment contract, and justifies the additional amount as  
being the difference between the salary that she ought to have been paid by  
CCI for the period of September 2008 to December 2009, less NFE’s net  
annual income in 2008;  
(r) acknowledges that some of her personal expenses were paid by CCI in 2009,  
which she attributed to the failure of CCI’s bookkeeper to properly segregate  
personal receipts that Cheryl provided to her;  
(s) acknowledges that CCI’s financial performance in 2009 was “bad” and worse  
than she thought, but expresses her belief that its performance in 2010 was  
improving;  
(t) expresses her hope that Mr. Kazarian would be able to determine other ways  
to improve CCI’s financial performance, without affecting quality and service;  
(u) expresses her desire to work together with Rob, “as partners”.  
[91] In recounting the content of the letter during her evidence, Cheryl testified that in every  
meeting that she had with Rob, he told her that he “felt like he was being fucked” and he  
would not listen to her. He would also tell her that: she was dumb; she did not know  
what she was doing; and he could not believe that she owned a restaurant. In some of the  
meetings, Rob told Cheryl that she was not worth her pay. He threatened that if she did  
not start showing a profit, he would “get rid of her”. She felt like she could never make  
Rob happy. During the meetings, she often cried in front of Rob and other staff members.  
Despite what he told her in their initial meeting in April 2008, Rob was never her angel  
and he did not treat her well. If she had known “how Rob truly was” she would never  
have gone into business with him.  
[92] Shortly after giving the foregoing aspects of her evidence, Cheryl testified to a differing  
narrative concerning Rob’s demeanour. Specifically, during CCI’s initial operations and  
throughout 2009, Rob was always “nice” and “kind” towards her. His demeanour only  
changed in 2010, after CCI did not achieve profitability in its first year of operation.  
[93] Cheryl deposed to a number of other issues that she experienced while operating CCI,  
including the following. When she left NFE’s former location, she ultimately found a  
tenant to sublet that premises for four years but she continued to service a loan associated  
with renovations at the former premises. She also had to pay a lawyer to assist her in  
Page: 20  
“getting out” of her lease. She asked Rob for help with her lease-related issues and he  
told her that she should offer the landlord $10,000.  
[94] Cheryl personally owned a truck that CCI used in its business, for liquor pick-ups and  
deliveries. Initially, she caused CCI to make all of the payments related to the truck.  
Eventually, she resumed personal payment of the truck expenses, in an effort to assist  
CCI achieve profitability.  
[95] Based on the number of hours that she worked and her $50,000 annual salary, Cheryl  
estimates that she was paid approximately $12 per hour while she was employed by CCI.  
In addition, Bruce worked a number of hours that were not recorded and for which he  
was not paid.  
[96] Cheryl authored the “July 8” correspondence, because she wanted Rob to understand that  
she felt like she was losing her self esteem. She expected that after he received it, he  
would talk to her “one on one”. She wrote it to ask Rob for a “chance” and to advise him  
that she was trying to make things better, and that she was striving to achieve  
profitability. Through a patently leading question, Cheryl confirmed that she felt  
“vulnerable”, in relation to Rob.  
[97] Cheryl’s correspondence also refers to Mr. Kazarian’s arrival. Cheryl explains that Mr.  
Kazarian was on site at the Retro Suites for a couple of weeks before she met him. After  
two weeks, Mr. LaRoche introduced him to Cheryl as an “overseer” and indicated that  
Rob wanted him to “take over” CCI’s financial books. Cheryl testifies that Mr.  
Kazarian’s arrival made her feel “useless and demeaned”.  
[98] Cheryl explains that in her correspondence, the statement, “I don’t steal”, refers to “an  
accusation” by Rob that CCI had paid some of her personal expenses.  
[99] Cheryl acknowledges that the total amount of the salary that CCI paid her in 2009,  
exceeded her contracted annual amount of $50,000. She reasons that she was entitled to  
compensation from CCI for the period of September to December 2008, when she  
operated NFE at the Retro Suites location. As a result, in 2009, she caused CCI to pay her  
an additional $4,443.  
[100] As soon as Rob received Cheryl’s correspondence in early July 2010, he summoned her  
to a meeting at the offices of the RM group of companies. When she arrived, Rob advised  
her that as a result of her correspondence, she was personally required “to fire” Chef  
Bonnot, Bruce, and Leslie, and if she did not do so, she would lose her job. Rob also  
advised her that Mr. Kazarian was now going to assume control over all aspects of CCI’s  
management and if she “did not like it, she could leave” and he would “even throw a little  
money” at her. Cheryl cried and told Rob that she needed to keep her job. He told her to  
make a decision by the following day.  
[101] Later that day, Cheryl met with Bruce, Chef Bonnot and Leslie Bonnot and advised them  
about her meeting with Rob. The following day, Chef Bonnot, Leslie and Bruce went to  
work at CCI. Cheryl spoke with Rob and convinced him to retain Chef Bonnot at a wage  
rate of $17 per hour. However, Rob imposed a “new rule” that spouses were no longer  
Page: 21  
permitted to work together at CCI. As a result, he told Cheryl that Leslie Bonnot and  
Bruce had to be terminated within two weeks.  
[102] The following day, Cheryl met with Rob, Mr. Kazarian and Chef Bonnot in CCI’s  
banquet room. Rob announced that effective immediately, Bruce and Leslie were  
terminated and Mr. Kazarian was “taking over the business”. Rob took Cheryl’s CCI  
“credit card” and removed her cheque signing authority. He advised her that Mr.  
Kazarian would provide her with $100 float that could be topped up, if she submitted  
receipts for expenditures. Rob advised Cheryl that he wanted her to continue “cooking  
food” and “running the restaurant”. Cheryl’s office was relocated to a smaller desk in an  
office/storage room. Mr. Kazarian was to assume responsibility for purchasing supplies.  
[103] Leslie and Bruce were fired immediately after the meeting. Cheryl began losing sleep and  
crying all the time. She felt that she had been reduced to “just an employee”.  
[104] In the days that followed, Cheryl eventually “lost it” and confronted Mr. Kazarian in the  
restaurant during its operating hours. She yelled at him and accused him of trying to take  
her job. He advised her that was not the case. She began to cry and ran out of the  
restaurant. She testified that after she confronted Mr. Kazarian, she could not “go back”  
to CCI. She was sad and constantly crying. She felt that “everything had been taken  
away from” her. CCI was “all she had” but Rob made her feel that her efforts to operate  
it were “terrible”. She “just didn’t want to try anymore”. She felt that “they were trying  
to take [her] life away”.  
[105] Eventually, Mr. Kazarian sent Cheryl correspondence, dated July 14, 2010, in which he  
reiterated that she had stated that she was “depressed” and “needed time”. Mr. Kazarian  
suggested that she take two weeks off work with pay. He also proposed meeting with her  
on or about July 28, 2010, to discuss whether she was ready to return to work.  
[106] As Mr. Kazarian suggested, Cheryl remained off work for two weeks, during which she  
“mostly stayed in bed”. She eventually attended on her family physician who prescribed  
medication for “depression” and sleep difficulties. On July 20, 2010, her family  
physician wrote a note endorsing that she was “off work for medical reasons at least a  
month”.  
[107] On July 21, 2010, Cheryl read an advertisement placed by CCI in a local newspaper  
seeking, among other positions, a Red Seal chef, to supervise cooks and kitchen staff.  
Cheryl concluded the purpose of the advertisement was to find someone to replace her at  
CCI. She became more depressed and felt worthless.  
[108] On August 4, 2010, Cheryl received a voicemail message from Rob, which she  
transcribed as follows:  
Hi Cheryl Rob Myers here. I’ve talked [with] Michél [Chef Bonnot] & I  
believe I’ve come up [with] something as a solution so I’ll give you three  
months pay & if you need some help setting up your old Restaurant I’ll  
help you out a little. Obviously this is not going to work between us. So  
I’ve got Dennis Asher drafting up some paper work you’ll have to sign  
Page: 22  
off on. If you have any questions since I can’t get a hold of you give me  
a call at [phone number]. Talk to you later.  
[109] Cheryl did not respond to Rob’s proposal.  
[110] On August 30, 2010, Cheryl attended on registered nurse practitioner Joan Brisley at the  
Chatham-Kent Health Alliance Mental Health and Addictions Program, who  
subsequently authored a report to consulting psychiatrist Dr. Fairburn. In her report, she  
recorded Cheryl’s subjective report that she started feeling depressed six weeks earlier  
after, among other things, a “wrongful demotion” at CCI and a “loss of investment in her  
restaurant business”. She had previously been prescribed paxil by her family doctor,  
which was helping. She had specified anxiety, but no panic. Her past psychiatric history  
was noted to include the loss of a child at a young age, which resulted in feelings of  
loneliness and depression. She also had a family history of depression. The nurse  
practitioner diagnosed Cheryl with an “adjustment disorder”. Cheryl was not diagnosed  
with a depressive disorder. Cheryl did not follow the nurse’s recommendation that she  
engage in a “few sessions” of counselling, reasoning that she had strong support from her  
family. No limitations on Cheryl’s ability to work were expressly endorsed.  
[111] Cheryl maintains that she provided copies of all the medical documentation that she  
received to Chef Bonnot, with the expectation that he would provide it to Mr. Kazarian.  
[112] At the end of August or beginning of September 2010, Cheryl received a package of  
documents through Chef Bonnot, which were prepared by Mr. Asher and included: a  
“Termination of Employment” agreement; a Resolution of CCI’s Shareholders; and a  
Share Transfer Agreement – all dated August 31, 2010. The documents, which required  
Cheryl’s signature to gain effect, essentially record that she resigned as an employee of  
CCI and affected a transfer of all of her shares in CCI to RJM Holdings Limited for  
consideration of one dollar. Cheryl neither requested nor executed the documents.  
[113] On September 24, 2010, Cheryl was assessed by psychiatrist Dr. Fairburn at the request  
of her family physician, who authored a report dated September 24, 2010. The parties  
agree that Dr. Fairburn is qualified to express the opinions set out in the report. Dr.  
Fairburn formally diagnosed Cheryl with “adult life with mixed emotion”. He did not  
diagnose an adjustment disorder and he expressly opined that there was no evidence that  
Cheryl presented with a major depressive disorder. He opined that her prognosis was  
excellent. Cheryl accepted a referral for some counselling, but she ultimately did not  
attend for same.  
[114] After attending on Dr. Fairburn, Cheryl continued to feel depressed. She did not leave  
her home until October 2010. She never returned to CCI and eventually, CCI stopped  
paying her salary.  
[115] In October 2010, Bruce started a business, as a sole proprietor, under the name Healthy  
Choice Catering. From its inception, Cheryl actively participated in the business by  
cooking and engaging in “prep work”. She continued to work in that capacity until she  
Page: 23  
opened a new restaurant in Chatham at the end of July 2011, under the name “Zee’s  
Bistro”, which she has continued to operate, up to the present.  
[116] Since July 2011, Cheryl has acted as the sole proprietor and main cook at Zee’s Bistro.  
She is also responsible for all employee hiring, firing, and scheduling. In order to start  
that business, she purchased an existing restaurant in April 2011, which she fully  
renovated. After sustaining a net loss of $79,515 in 2011, Zee’s Bistro has achieved  
profitability in each year of its operation.  
[117] Zee’s Bistro does not “compete” with CCI. CCI is a fine dining restaurant. Zee’s Bistro,  
which is located approximately eight kilometres from CCI, is a small bistro-style  
restaurant that serves pita sandwiches and soup for lunch and fresh homemade food for  
dinner.  
[118] Cheryl confirms that Bruce was unable to drive, owing to a licence suspension, while the  
Healthy Choice Catering business was active. As a result, she not only performed all of  
the cooking for that business, she also did all of the driving associated with its deliveries  
and catered events. She concedes that that business “made some money” and continued to  
operate until she opened Zee’s Bistro. She confirms that neither she nor Bruce have  
produced or disclosed any financial information for the Healthy Choice catering business  
in the context of this litigation.  
[119] After the commencement of this action, Cheryl received two letters from Rob. The first,  
dated July 19, 2012, and addressed to both Cheryl and Bruce, provides as follows:  
I want to extend a courtesy to the both of you, along with your lawyer, to  
notify you that I, my family, and the RM group of companies, have every  
intention of fully defending your lawsuit, and will also pursue a  
counterclaim against the both of you. Be aware that I will not make any  
settlement offer since I find this lawsuit to be totally unjustified.  
Cheryl, you were a very hard worker but please refer back to our original  
agreement and you will see that Bruce was never to be a part of the  
business. When it came to my attention that The Chilled Cork was losing  
money due to late government payments and penalties, extremely high  
food and labour costs and a multitude of issues, I reviewed our business  
operations with my CFO Gerry Hockin, along with our accountants from  
Deloitte. This is when I discovered the self-imposed increase in your  
personal salary, the unapproved addition of Bruce onto our payroll, along  
with many other operating issues that proved to me that we would not  
have a viable business if you were allowed to continue operating it like  
this.  
The business paid out several months of your salary even though you did  
not come into the restaurant for an extended absence. Further, I  
personally paid out over two-hundred thousand dollars ($200,000) in  
losses at The Chilled Cork while under your management. Until now, I  
Page: 24  
have never asked you to assume your half of the responsibility for your  
share of these losses. At this point, I will now pursue our counterclaim  
against you for a breach of contract, and I insist that you immediately  
stop slandering me and my family’s good name in your restaurant!  
Several friends and clients have been engaged in some of your libelous  
discussions in your new establishment and then reported back to us to  
make us aware of your defamatory comments. This needs to stop now!  
Please take my notice very seriously. If you continue with your lawsuit  
and your slanderous comments about me and my family, I will get very  
active in pursuing compensation from the both of you for losses and the  
damage you are attempting to cause to the Myers family. It would also be  
a shame if the local media were to catch hold of details about this lawsuit  
and counterclaim as I can’t imagine it would be good for your reputation  
and business.  
Cheryl, please understand that I am not in any way wishing to put  
personal pressure or hardship onto you but you will leave me little choice  
but to take actions of my own if you continue moving forward with your  
lawsuit. I will expect your reply within 15 days of this date and I  
recommend that you obtain very sound advice when making your  
decision. I have copied both of RM’s in-house counsel on this memo, as  
well, as they are handling this situation on my behalf.  
[120] In response to the content of that correspondence, Cheryl testifies that: she never agreed  
that Bruce would not be involved in CCI’s operations; she never unilaterally increased  
her salary at CCI; she met with Gerry Hockin once in 2009; she never defamed Rob or  
his family – she was upset with Rob but did not say anything defamatory about him; and  
she has no knowledge concerning the $200,000 losses that Rob described. Cheryl viewed  
Rob’s correspondence as a “threat” which made her feel “horrible”.  
[121] Rob wrote a second undated letter which he delivered to Zee’s Bistro in August 2017.  
That correspondence provides as follows [paragraph breaks inserted for ease of reading]:  
Cheryl,  
I have been monitoring this foolish lawsuit brought by you and Bruce,  
along with your shameless lawyers who have taken this contingency  
case on your behalf in order to try to extort some money from me. Now  
that you all have received the final audited BMO [sic] report, you know  
that due to your management of the Chilled Cork and all of the games  
that you and Bruce played while in charge, it caused a loss to the  
Chilled Cork of $202,485, of which you owe half.  
As has always been the fact, while you were in charge of running the  
Chilled Cork, this restaurant continually lost significant money from  
your operational guidance. I’ve been told of client purchases that were  
Page: 25  
never deposited into the company bank account! Bruce, who by the  
way was never to be an employee or any type of associate with the  
Chilled Cork as you originally agreed to, was purchasing all types of  
wine and other items that you allowed him to purchase even though he  
was never allowed to; as a result, all kinds of money was wasted. I  
believe we will be able to get old staff and even relatives of yours to  
testify that I was abused financially by you, Bruce, and high-paid  
friends that you hired without any type of approval from me.  
I frankly don’t care how you are currently operating your business now,  
but at some point I will most likely need to inform the CRA and an  
accounting firm to investigate your current operation in order to  
confirm for me your ability to pay me back money that will be due  
from you.  
You and the lawyers, who you obviously have had working on a  
contingency fee, have caused me serious damage, both to my reputation  
in town and in legal costs that I will insist to my lawyers that I recover.  
I am sure at that point you will not be able to have your lawyers defend  
you on a contingency basis, and in fact you will have to pay the same  
type of legal fees that I have been paying all along in defending my  
innocence.  
As the latest report will confirm from BDO and as has been stated from  
day one by the nationally recognized accounting firm Deloitte, the  
operations from Chilled Cork until 2015 show a deficit of $202,485,  
which you as a shareholder are responsible for half of, i.e. $101,242.  
This very clearly shows that the shares of the Chilled Cork are not  
worth any money and in fact are a liability that you currently are  
responsible for.  
The gamble that your lawyers have taken in hopes of extorting me has  
backfired on both you and them, and you will be left with the  
consequences to bear. In order for you to end this frivolous lawsuit and  
move on with your lives at Z’s potentially without an investigation, I  
am prepared to make you a final offer to end this foolishness. This offer  
is good for five days only from the date of this letter or I will  
aggressively pursue monies owing to me from both you and Bruce, and  
I will aggressively go out to prove that these Windsor lawyers have  
never been paid any type of fee from you to date, which could make for  
some interesting press. The terms of the offer are as follows:  
#1. You immediately drop this case;  
#2. You pay the Chilled Cork $30,000 to cover a small portion of the  
legal costs that it has incurred;  
Page: 26  
#3. You pay half of the BMO [sic] auditing fee of $23,500; and  
#4. You immediately stop your comments about myself, the Chilled  
Cork, the Retro Suites and any of my family members and sign a gag  
order.  
If you do not accept this offer within the next 5 days, I will instruct my  
internal and outside legal counsel to take the following actions in a  
lawsuit against you and Bruce personally to the fullest outcome  
possible.  
#1. We will seek repayment of $101,242 from you to pay for your  
responsibility of your portion of the deficit [owing] to Chilled Cork.  
#2. We will also seek to recover $101,242 from you to pay for some of  
the damages caused by you for you opening Z’s, as this is in direct  
competition with the Chilled Cork and is in breach of your employment  
contract with the Chilled Cork. You have damaged the Chilled Cork’s  
ability to run a profitable restaurant, both by direct competition and by  
harming both its reputation and my own lawsuit rumors you have  
circulated within our community.  
#3. We will also recover the thousands of dollars you have forced me to  
spend in legal fees to date to defend my innocence.  
As I have seen many times in the past, legal firms find people like you  
and see people who appear to be fairly wealthy and believe that with  
enough hassle, innocent people like myself will pay some money out  
just to settle an issue and make it go away. If I had been unfair to you  
or mistreated you in any way, I would have settled this long ago, but  
this is not the case. In fact with all that happened in the past and the  
large amount of money that you lost of mine, I feel that it has been kind  
of me not to pursue you for some of the losses that you caused me as  
the BDO report shows. This report directly contradicts your lawyers’  
position, and hopefully your lawyers will finally realize that they have  
no chance of winning any money out of this suit and that at this point, if  
this is not settled, we will become very aggressive in seeking the  
amounts outlined above even if you are forced into bankruptcy.  
I am totally disgusted by this situation and refuse to be extorted by you  
or your lawyers ever. My justice will prevail. I recommend you proceed  
cautiously, and I hope that both you and your lawyers will realize that I  
refuse to pay them any money, so get some good advice.  
Rob Myers  
[122] Cheryl viewed the foregoing correspondence as an attempt to scare and intimidate her.  
Page: 27  
[123] As a shareholder of CCI, Cheryl was never provided with annual audited or unaudited  
financial statements, on a contemporaneous basis. She has never agreed to exempt CCI  
from its obligation to produce audited financial statements to its shareholders. She has  
never attended a CCI shareholder meeting. She has never requested a shareholder  
meeting because she feels intimidated by Rob.  
[124] In cross-examination, Cheryl concedes that she is not a chef and she does not have a  
“Red Seal”. She has no formal training in restaurant management. Despite her evidence  
that based on “her experience” in the restaurant industry, start-up restaurants usually lose  
money in their first few years of operation, Cheryl concedes that she had never been  
involved in a start-up restaurant before CCI. She also confirms that NFE lost money in  
three out of four years of operation during the period of 2004 to 2007. She does not  
recall advising Rob about NFE’s historic lack of profitability, during their 2008 meetings.  
[125] Unlike Cheryl, Bruce does not have a long history working in restaurants. When Cheryl  
first met Bruce, he worked as a massage therapist. Following that he worked in a factory  
setting. Eventually, he was laid off and began to help out at NFE.  
[126] Cheryl confirms that in her initial 2008 discussions with Rob, he described the type of  
restaurant he wanted to open and the type of food he wanted to serve. From their  
discussions, she understood that CCI would offer a “finer” dining experience than the one  
offered by NFE and that CCI would be located in a boutique hotel. CCI was a larger  
restaurant than NFE and its service and presentation were intended to be “upscale”.  
Unlike NFE, CCI would serve breakfast, in addition to lunch, and dinner. CCI’s seating  
capacity was greater than NFE and, unlike NFE, it had a separate bar area and separate  
banquet facilities.  
[127] In the context of the foregoing, Cheryl acknowledges that she knew that managing CCI’s  
operations was going to be a challenge, but she viewed it as an opportunity to “up her  
game and to make more money”. Her potential involvement with CCI also afforded her  
an opportunity to become a 50 percent owner of the restaurant, without making any  
financial contribution or guaranteeing any loans. Instead, her “knowledge and services”  
would earn her 50 percent of the business. She acknowledges that until CCI became  
profitable, the value of her 50 percent ownership interest, was nil.  
[128] Cheryl then re-visited her evidence concerning her first meeting with Rob, which  
changed to some extent. Specifically, she testified that she advised Rob that the restaurant  
would not be profitable in its first year of operation and may not be profitable in its  
second year of operation. She did not say anything about expected profitability in its  
third year. During their initial meeting, Cheryl and Rob did not discuss: what would  
happen if the restaurant was unprofitable and Rob was required to advance additional  
funds to cover its losses; or what would happen if Cheryl became sick and was unable to  
work. Cheryl concedes that Rob never guaranteed that she would remain employed with  
CCI for a period of ten or 15 years. However, Cheryl felt that their “partnership  
agreement” would bind her to the restaurant.  
Page: 28  
[129] During her first meeting with Rob, Cheryl had no means to estimate: the revenue or  
losses that CCI would likely generate in its first year; the costs of the build out of the  
restaurant; or the estimated costs for the restaurant’s furnishings and equipment. She  
maintains that during that meeting, Rob advised her that: she did not need a lawyer; he  
trusted her; and she should trust him. She agrees that nothing was finalized between  
them during their initial meeting, but they shook hands.  
[130] Throughout the spring and summer of 2008, Rob and Cheryl had several other meetings  
concerning CCI, during which she never advised him about NFE’s general lack of  
profitability. As CCI’s operating premises were being built out, Cheryl was aware that  
the “costs of the build out” and the kitchen equipment and furnishing necessary for CCI’s  
operation would be financed through Rob, at first instance and repaid by CCI. She  
acknowledges that at some point Rob set up a $100,000 line of credit, but she is uncertain  
if it was through a financial institution or one of his other companies.  
[131] Sometime after their initial meeting, Cheryl advised Rob that CCI could generate a  
million dollars of revenue in its first year of operation. She also provided him with  
projections for the anticipated expenses associated with CCI’s active operation. Despite  
Cheryl’s first year revenue projection, CCI recorded a total revenue of $778,125 in 2009  
and $722,427 in 2010. Further, CCI’s 2010 revenue included “management fees” payable  
by RJM Holdings, recorded in the amount of $150,000. As a result, its actual revenue  
from operations in 2010, was approximately $572,427.  
[132] Cheryl “believes” that in 2008, she provided Rob with a projection that CCI would “lose”  
approximately $50,000 in its first year. She concedes that she understood that to the  
extent that CCI operated at a loss and the loss was “covered” through Rob (or one of his  
companies), CCI would eventually have to repay Rob (or one of his companies). She  
also understood that CCI would have to repay Rob for the costs of its build out,  
equipment, fixtures and furnishings.  
[133] As a 50 percent “partner”, Cheryl testifies that she expected to receive one-half of CCI’s  
profits, but if the restaurant failed she did not expect to pay one-half of its losses. She  
expected that if the business failed she would lose her job.  
[134] Cheryl indicates that she and Rob discussed all of the foregoing issues over the course of  
various meetings held between them in 2008. It was only after those discussions that  
Cheryl accepted Rob’s proposal, which was some time in the mid-summer of 2008. In so  
doing, she agrees that she and Rob proceeded with their deal on the understanding that:  
based on her estimates and projections, the restaurant could be built out, equipped and  
furnished for $100,000; and they anticipated a combined total of $50,000 in start-up costs  
and operating losses, in CCI’s first year of operation.  
[135] Prior to Cheryl accepting Rob’s proposal to be a “50 percent” partner in the restaurant,  
she and Rob did not discuss: the specific repayment terms for capital expenditures that he  
made on behalf of CCI; who would be responsible for “covering” any of CCI’s losses in  
excess of $50,000, during its first year of operation; whether Rob would share in NFE’s  
losses or profits during the period of September 2008 to December 2008; who would be  
Page: 29  
responsible for NFE’s lease obligations related to its former operating premises; who  
would be responsible for payments associated with the truck that Cheryl and Bruce  
owned; or whether CCI would assume NFE’s liabilities. Cheryl denies that in 2008, Rob  
clearly advised her that Bruce was not permitted to work at CCI.  
[136] Cheryl maintains that when she accepted Rob’s proposal, he advised her again, that she  
did not need to consult a lawyer with respect to their business transactions.  
[137] Between September 2008 and December 2008, Cheryl continued to operate NFE (under  
the name “The Chilled Cork”) as a sole proprietorship from CCI’s intended operating  
premises at the Retro Suites Hotel. In that period, on behalf of CCI, she hired Chef  
Bonnot and his wife Leslie, both of whom were over 60 years old at the time. Leslie  
Bonnot and Bruce jointly maintained NFE’s financial books and records during the  
period between September 2008 and December 2008.  
[138] Cheryl endorsed as accurate, documentation prepared by Bruce, indicating that NFE’s net  
annual income for 2008 was $11,459.85 and its gross revenue was $526,345. Cheryl  
attributes NFE’s substantial growth in sales during 2008, to its move to the Retro Suites  
premises, where it enjoyed a greater seating capacity and higher meal prices. NFE’s  
expenses correspondingly increased after the move because it hired more staff, and spent  
more money on groceries and other sundry matters. Cheryl agrees that NFE did not pay  
rent to Retro Suites Hotels or Rob for the use of its operating space from September 2008  
to December 2008. Beginning January 1, 2009, CCI was obligated to pay Retro Suites  
$4,000 per month, for that space.  
[139] Cheryl concedes that Rob did not share in any of NFE’s net income of $11,459 in 2008  
because, in her view, their “50/50 deal” did not apply to NFE.  
[140] Cheryl agrees that Retro Suites advanced $35,000 to NFE in 2008, to be used as start-up  
capital for CCI. She also concedes that the $35,000 loan made by Retro Suites to NFE  
does not appear in NFE’s “financial statements” for that year. Similarly, NFE’s 2008  
financial statements do not record any liability for amounts that NFE owed on account of  
its 2008 unremitted employee source deductions, which totalled in excess of $36,000.  
[141] In November of 2008 Cheryl sublet NFE’s old operating premises, but the subtenant did  
not pay rent. As a result, Cheryl retained a lawyer to assist her with her lease issues.  
[142] Cheryl agrees that as of January 1, 2009, when CCI commenced its operations, she and  
Rob had still not had discussions with respect to: the re-payment of the $35,000 loan  
made by Retro Suites to NFE; who was responsible for payments on Cheryl’s and  
Bruce’s truck; who was responsible for payment of NFE’s liabilities; and who would be  
responsible for covering CCI’s losses in the event that they exceeded $50,000, in its first  
year.  
[143] Beginning on January 1, 2009, both Leslie Bonnot and an “outside bookkeeper” named  
Denise Brouwer were responsible for CCI’s bookkeeping functions. Ms. Brouwer  
periodically attended CCI to make entries and prepare month-end statements, which she  
continuously did during the period from January 1, 2009 to May 2010. Cheryl had full  
Page: 30  
access to CCI’s financial records throughout 2009, she received monthly financial  
reports, and she had access to a computer, through which she could review specific  
journal entries.  
[144] Contrary to an assumption made by the plaintiffs’ business valuation expert, (which I will  
review later in these reasons), Cheryl testifies that it would be wrong to assume that  
CCI’s 2009 annual recorded sales were inaccurate. She denies that CCI made an  
additional $189,000 in unrecorded sales in 2009.  
[145] Cheryl confirms that from the commencement of its active operations, on January 1,  
2009, CCI operated with a point of sale (“POS”) system, whereby information with  
respect to “restaurant sales” of food and beverages were inputted immediately into the  
restaurant’s accounting software, whenever an order was placed. Similarly, credit card  
payments, which accounted for 55 to 65 percent of the payments for CCI’s food and  
beverage sales, were inputted directly into its POS system, in real time. All of CCI’s  
sales and expenses were recorded in its books and records in 2009. During her evidence,  
Cheryl also reviewed CCI’s 2009 financial statements (Notice to Reader) prepared by its  
then accountant, Horne LLP, and confirmed that to the best of her knowledge, those  
financial statements accurately record all of CCI’s sales (revenue) and expenses in 2009,  
which reveal among other things a total gross annual revenue of $778,125.  
[146] Throughout 2009, Cheryl received monthly financial reports and an annual financial  
report prepared by CCI’s accountant, which she contemporaneously reviewed. The  
reports always appeared to be accurate. She confirms that CCI incurred an operating loss  
of $195,001 in 2009, which she acknowledges is “way more” than the $50,000 loss that  
she says she estimated in 2008.  
[147] In this proceeding, Cheryl challenges the validity and quantum of CCI’s recorded debt  
owed to its related parties (Rob, Retro Suites and RJM Holding Inc.). During her cross-  
examination, Cheryl reviewed a copy of CCI’s financial records that record the opening  
balances of its related-party debt as of January 1, 2009, specifically: a $188,439 debt  
associated with related-party funded purchases of CCI’s kitchen equipment in 2008; an  
approximate $56,000 debt associated with related-party funded purchases of CCI’s  
furnishings and fixtures in 2008; and a debt of $97,938 for related-party expenditures to  
build out CCI in 2008. Cheryl verified the accuracy of the kitchen equipment and  
furnishing costs, noting that she was personally involved in those purchases. Cheryl  
initially disputed CCI’s obligation to pay for the build out of the restaurant, reasoning  
that the improvements were made to “Rob’s building”. However, she did not dispute the  
accuracy of the recorded amount spent to affect the build out.  
[148] Cheryl confirms that as of December 31, 2009, she was aware that CCI was indebted to  
its related parties in the amount of $544,000. Although she states that she does not think  
that the value of the build out costs ought to have been included in CCI’s 2009 related-  
party debt (approximately $100,000), she never shared that position with Rob in 2009 or  
2010. Cheryl agrees that even excluding the amount of the debt related to the restaurant’s  
build out, CCI owed at least $444,000 in related-party debt as of December 31, 2009,  
which she concedes had to be repaid to Rob.  
Page: 31  
[149] Further, in addition to the amount of $35,000 that was advanced by Retro Suites to NFE  
in 2008, Cheryl accepts as accurate, financial records that indicate that Retro Suites  
advanced additional amounts of $50,000 to CCI on March 30, 2009, $25,000 to CCI on  
March 31, 2009, and $25,000 to CCI on April 23, 2009, to fund its ongoing operating  
losses. As a result of the foregoing, she agreed that CCI owed Retro Suites a total  
additional amount of $135,000.  
[150] Finally, Cheryl does not dispute the accuracy of CCI’s financial records that indicate that  
Rob advanced, by way of loan, a further $16,000 to CCI on June 30, 2009 to cover its  
“payroll” expenses.  
[151] Turning to the documents prepared by Mr. Asher in 2009, in cross-examination, Cheryl  
originally reiterated that she did not read any of them before she executed them in  
October 2009. Bruce may have read the documents before she signed them. Contrary to  
her original evidence that Rob kept “bugging her” to sign the documents after she  
received them, in cross-examination Cheryl concedes that she did not speak to Rob from  
the time she received the documents in August 2009, until the time she, ultimately,  
signed them, in October 2009. Instead, her communication with respect to the status of  
her execution of the documents was only with Mr. LaRoche. Similarly, contrary to her  
original evidence, Cheryl concedes in cross-examination that she could not recall if Rob  
told her not to get a lawyer after she received the documents that Mr. Asher prepared in  
2009.  
[152] Although she originally testified that she did not read the Asher documents because she  
was “too busy”, she modified her evidence in cross-examination and indicated that she  
tried to read the documents, but they were too complicated, so she set them aside. Despite  
her difficulties with the documents’ complexities, she never considered: contacting Rob  
or Mr. Asher for an explanation; or contacting the lawyer who assisted her with the lease  
issues, or any other lawyer, for legal advice.  
[153] In reviewing the asset purchase agreement during the course of her cross-examination,  
Cheryl concedes that although the initial “purchase price” payable to the vendor (Cheryl)  
of NFE’s “assets” is expressed as $102,238, elsewhere in the agreement, the purchase  
price for NFE’s assets is specified as $1. She agrees that NFE’s balance sheet, as of  
December 31, 2008, reflected its total current liabilities as $102,348.25, which is  
consistent with the stated purchase price payable in the asset purchase agreement. Cheryl  
acknowledged her understanding that the effect of the asset purchase agreement was that  
CCI acquired all of NFE’s (Cheryl’s) liabilities as of December 31, 2008 and purchased  
its actual “assets” for $1.  
[154] Prior to August 2009, Cheryl understood that CCI was required to sign a lease with the  
Retro Suites Hotel, for a five-year term. She also understood that if the lease was not  
renewed, CCI would either have to move its location or close its business at the end of  
the lease term.  
[155] Cheryl understood that she and Rob were required to execute a shareholder agreement  
(i.e. the “partnership agreement”) with respect to CCI. Mr. Asher provided Cheryl with a  
Page: 32  
draft shareholder agreement in August 2009, which contained, among other things, a  
buy/sell provision with respect to the shares held by RJM Holdings and Cheryl, as well  
as, specific restrictions on persons eligible to purchase CCI shares from the shareholders.  
During her cross-examination, Cheryl reviewed those provisions and agreed that “it  
makes sense” that the shares of a CCI shareholder would be purchased in the event that  
the shareholder became a bankrupt, died or was mentally incompetent. She also agreed  
that as the “partner” directly involved in CCI’s operation, it made sense that her shares  
would be purchased in the event that she was permanently incapacitated from operating  
CCI because of injury. However, Cheryl “did not know” if it made sense for her shares to  
be bought out in the event that she ceased to be an employee of CCI. Cheryl has no  
specific recollection as to why she did not sign the USA at the time she signed all of the  
other documentation prepared by Mr. Asher.  
[156] During 2009 and the first half of 2010, Cheryl worked with the Retro Suites’ manager,  
Nancy Labadie, and the Retro Suites marketing director, Mr. LaRoche to develop  
strategies to increase CCI’s revenue and decrease its expenses. Despite their efforts, CCI  
remained unprofitable.  
[157] Cheryl continued to manage CCI’s operations during the first half of 2010. During that  
time, all of its sales were appropriately reported and recorded in its accounting software.  
She disputes any suggestion that CCI had unrecorded sales during the first half of 2010.  
Cheryl continued to receive and review monthly financial statements during the first half  
of 2010. They always appeared accurate and she had no concerns that they understated  
CCI’s sales.  
[158] CCI continued to consistently lose money in the first half of 2010. During that period of  
time, CCI’s sales were low and its wages and costs of goods were “too high”. Cheryl did  
not have the financial resources to cover any of CCI’s losses herself. Instead, all of its  
losses were “covered” by Rob.  
[159] In the foregoing context, Cheryl testifies that Rob went from being her “angel” in 2009 to  
a “devil”, beginning in January 2010. Contrary to her original evidence, in cross-  
examination Cheryl confirms that Rob did not engage in demeaning, insulting or  
aggressive behaviour until 2010. She agrees that by the first half of 2010, CCI’s losses  
were not sustainable. She understands why Mr. Kazarian “had to be brought into” CCI’s  
operation in mid-2010, to address its financial issues and she agrees that “something had  
to be done”, at that time to address CCI’s ongoing losses.  
[160] Cheryl asserts that prior to June 2010, she had good ideas about improving the restaurant  
and she thought the business would have improved, but none of her ideas worked out.  
Cheryl had meetings with Rob in the first quarter of 2010. She perceived that he did not  
support her ideas or efforts. Cheryl asserts that part of the reason that she became  
depressed in 2010 was CCI’s mounting losses and her perception of Rob’s criticism, in  
response.  
[161] Cheryl had no issues with accessing CCI’s financial records up until June 2010. She  
never requested audited financial statements for CCI prior to June 2010. She had no  
Page: 33  
access to CCI’s financial statements or records after June 2010. She had no personal  
knowledge of CCI’s income and expenses from June 2010 to December 2018. She has  
no personal knowledge that CCI engaged in any unreported or unrecorded sales in the  
period between 2010 and 2018.  
[162] Originally in her cross-examination, Cheryl maintained that she mailed her  
correspondence dated “July 8” to Rob sometime in July 2010, before she met with him at  
the RM group offices. Cheryl was then directed to correspondence, dated June 28, 2010,  
addressed to Bruce, advising him of his termination (signed by Mr. Kazarian) and a  
record of employment for Bruce recording his last day of work as June 28, 2010. At that  
point, Cheryl conceded that her own correspondence was likely written prior to June 28,  
2010. However, she does not believe that it was written subsequent to a meeting that she  
had with Rob, Chef Bonnot, and Mr. Kazarian, in which issues including her 2009 salary  
and corporate payment of her personal expenses were discussed, even though she  
acknowledges that her correspondence appears to respond to those issues. She believes  
that the meeting in which those issues were discussed, occurred after she met with Rob  
alone at the RM group offices.  
[163] Cheryl does not specifically recall the last day that she worked at CCI but she believes it  
may have been “around” July 1, 2010. Once she left CCI in July 2010, she did not  
contribute any further ideas or effort to its operation or business. She has no knowledge  
of the various and extensive renovations that have occurred at the restaurant, over the  
course of time, since 2010.  
[164] After Cheryl left CCI in early July 2010, Mr. Kazarian sent her correspondence dated  
July 14, 2010, suggesting that she take two weeks off work. By that time, Cheryl was  
aware that Chef Bonnot planned to retire in September, 2010. She then attended on her  
family physician who recommended that she take a further month off work, which  
extended her absence from CCI to the end of August 2010. Despite knowing that Chef  
Bonnot’s retirement was imminent, Cheryl agrees that she did not mail her doctor’s notes  
for time off to Mr. Kazarian or Rob. Instead, she provided copies to Chef Bonnot and  
assumed that he provided them to either Mr. Kazarian or Rob.  
[165] Cheryl agrees that she never contacted Rob or Mr. Kazarian to advise them that she was  
too depressed to return to work at CCI or that she was taking further time off work.  
Cheryl concedes that between the time that she left CCI in early July 2010 and August  
30, 2010, she never expressed an intention to return to employment at CCI, to anyone on  
behalf of CCI, or at all.  
[166] At the end of July 2010, someone showed Cheryl a copy of CCI’s newspaper  
advertisement, soliciting applicants for various positions including “a chef with a Red  
Seal”, which she did not have. She does not recall if she specifically read the “Red Seal”  
phrase in the advertisement.  
[167] Cheryl acknowledges that in the letter that she forwarded to Rob in June 2010, she stated,  
among other things, that she missed her old bistro. She agrees that through his August 4,  
Page: 34  
2010 message Rob offered to help her set up her old restaurant, however, she never  
responded to him.  
[168] At the time Cheryl saw nurse practitioner Brisley on August 30, 2010, she had already  
consulted with her current litigation counsel. She advised the nurse practitioner that she  
was angry at Rob and that she felt that he had demeaned her and that he had “pushed her  
out” of CCI’s operations. She agrees that by August 30, 2010, from a mental perspective,  
she no longer wanted to be Rob’s partner.  
[169] Cheryl subsequently attended on psychiatrist, Dr. Fairburn, on September 24, 2010. Prior  
to commencing this litigation, Cheryl did not advise either Rob or Mr. Kazarian that she  
had done so. Cheryl agrees that when she attended on Dr. Fairburn, she reported that her  
depressive symptoms had improved with the use of medication and they were less severe.  
Overall, she reported an approximate 50 percent improvement. Dr. Fairburn ruled out a  
diagnosis of major depressive disorder and stated that she had suffered a “narcissistic  
injury”. Cheryl did not know what that term meant, when she reviewed his report. Dr.  
Fairburn also changed her medication and arranged a follow-up two weeks later.  
[170] Cheryl returned to Dr. Fairburn, as scheduled, and reported further improvement (a report  
of that attendance was not adduced as evidence). Although Dr. Fairburn recommended  
that Cheryl participate in counselling, she declined because she had a strong supportive  
network. She acknowledges that according to Dr. Fairburn, her prognosis was excellent.  
Dr. Fairburn then returned her to the care of her family physician. Cheryl cannot recall if  
she attended on Dr. Payne for any further psychological issues.  
[171] Cheryl acknowledges that she was angry over the manner in which she perceives she was  
treated by Rob and she disclosed her feelings to her friends, family members and CCI’s  
employees. Cheryl also agrees that she told CCI’s employees that Rob was a “cheat”.  
[172] By the time Zee’s Bistro was operating in 2011, Cheryl had recovered from her  
depressive feelings, but she remained angry at Rob and she did not want to be part of  
CCI.  
[173] Cheryl has been represented by legal counsel in respect of her dispute with Rob since  
mid-2010. Yet, she never requested audited financial statements for CCI prior to 2014  
and she was not aware of her ability to call shareholder or director’s meetings for CCI,  
nor her ability to have a proxy attend such meetings.  
[174] With respect to Bruce’s status as an employee of CCI, Cheryl confirms that, like any  
other employee, his hours were scheduled by her. Bruce was required to confirm, on a  
time sheet, that he worked the hours for which he was scheduled and for which he was  
subsequently paid.  
[175] In re-examination, Cheryl indicates that Bruce actively worked at CCI and Rob was  
present, at times, while Bruce was working. Rob never expressed an objection to her, in  
that regard.  
Page: 35  
[176] Cheryl believes that NFE’s 2008 unremitted employee source deductions accrued during  
the period of time that it was operating at the Retro Suites. Bruce and Leslie Bonnot  
were responsible for making source deduction remittances at that time.  
[177] CCI’s monthly financial statements from January 1, 2009 to May 2010 were prepared by  
Denise Brouwer. Cheryl did not review them before they were finalized. She believes  
that Rob also had access to CCI’s financial records and that he also received monthly  
statements.  
[178] CCI’s POS system was not used for CCI’s room service sales or its banquet sales. Sales  
of that nature were manually added to CCI’s records. A percentage of all banquet sales  
had to be paid to Retro Suites because banquets were held in the Retro Suites’ operating  
premises, rather than CCI. Generally, one-third of CCI’s revenue was derived through  
banquet sales and two-thirds of its revenue was derived through restaurant sales.  
Evidence of Bruce McInerney  
[179] Bruce’s post-secondary education includes three years of university study. He has  
worked intermittently in the restaurant industry since he was a teenager, including in a  
managerial capacity. Eventually, he secured employment at a Navistar plant. Cheryl  
purchased NFE in August 2001 and took over its operation in September 2001. Bruce  
was laid off from Navistar at the time. Cheryl consistently acted as NFE’s owner,  
manager, and cook throughout its operation. Bruce performed various unpaid tasks for  
NFE, including cleaning, some cooking, bar stocking, deliveries, and bookkeeping  
functions.  
[180] Cheryl financed the purchase of NFE through a loan. Bruce anticipated that NFE would  
become profitable within three to five years of its acquisition, once the loan was repaid.  
NFE first became profitable in 2005 (with a net income of $48,344.98), which Bruce  
attributes, in part, to increased catering sales and a reduction in its expenses. In 2006,  
NFE’s expenses grew and its sales dropped. As a result, the business suffered a net loss in  
2006, as well as in 2007.  
[181] During the period from September 1, 2008 to December 31, 2008, NFE operated from  
CCI’s planned location at the Retro Suites Hotel. NFE’s sales increased significantly at  
the new location and its gross revenue for 2008 totalled over $500,000. NFE earned a  
recorded net income of $11,459 in 2008.  
[182] Cheryl became involved with Rob in April 2008. While attending NFE for lunch, Rob  
walked into its kitchen and, in Bruce’s presence, asked Cheryl if she wanted to move her  
business down the street. Prior to that time, Bruce did not know Rob. That evening,  
Bruce and Cheryl met with Rob in a restaurant shell located in the Retro Suites Hotel.  
Rob explained the general layout of the kitchen and his concept for the restaurant, which  
would seat 50 to 60 people. Rob indicated that he would be a “silent partner” and Cheryl  
would act as its “operating partner”. If required, Rob would help out financially. At the  
end of the meeting, Rob asked if they had a deal and Cheryl and Rob shook hands. Rob  
and Cheryl had several subsequent meetings in 2008, some of which Bruce attended.  
Page: 36  
[183] Bruce continued to work for NFE after it moved to the new location in 2008. Beginning  
on January 1, 2009, he “worked” for CCI. He did not have an official title and simply did  
“whatever was needed”, including washing dishes, tending bar, cleaning the restaurant,  
ordering for the bar, and some cooking.  
[184] Bruce maintained NFE’s financial records for the period from September 1 to December  
31, 2008. He attempted to maintain CCI’s financial records for January and February  
2009, utilizing the same practices that he used at NFE. He was, in his words, “over [his]  
head”, in attempting to do so and “[he] had no idea what [he] was doing”. During the  
course of a meeting held in January 2009, Rob advised him that he needed to engage in  
more detailed bookkeeping, to which Bruce replied, “I don’t know how to do anything  
more.” Rob then arranged for Denise Brouwer to perform CCI’s bookkeeping duties.  
[185] Bruce did not receive any remuneration for the initial work that he performed for CCI.  
He maintains that he worked 60 to 80 hours a week from September 1, 2008 until the  
time he tendered his “resignation” from CCI in April 2009. He testifies that he was not  
“fired” from CCI in April 2009, but he was not willing to remain there because Rob was  
belligerent. Bruce did not condone the manner in which Rob treated the staff members of  
CCI and Retro Suites, respectively, whom he would routinely “yell at” and demean  
during staff meetings. Rob became upset that CCI was not making any money, despite  
assurances from both Cheryl and Chef Bonnot that it took time for a restaurant to do so.  
[186] Shortly before he resigned in April 2009, Bruce attended a meeting with Rob, Rob’s  
wife, the manager of the Retro Suites, Denise Brouwer, Gerry Hockin (Rob’s financial  
advisor), Cheryl, Chef Bonnot and Leslie Bonnot. The night before the meeting, Bruce  
advised Cheryl that he had to leave CCI because he did not have a good feeling about  
Rob.  
[187] During the meeting, Denise Brouwer presented a revised version of CCI’s financial  
statements for February 2009, which Bruce had originally prepared. Bruce thought the  
recorded financial results were good. Rob did not. Rob yelled at the Retro Suites staff.  
He then turned his attention to CCI’s staff and yelled and complained that the restaurant  
was losing money. Cheryl and Bruce advised Rob that it typically took three to five  
years for a restaurant to become profitable. Gerry Hockin agreed and estimated that  
profitability, usually, requires a two to four year time-frame. Eventually, during the  
meeting, Bruce told Rob that effective immediately he would no longer be at CCI and  
because he was never paid, it would not cost Rob anything. Cheryl did not testify to any  
of these events.  
[188] By the end of June 2009, both Cheryl and Chef Bonnot advised Bruce that they needed  
him to return to CCI, on a periodic basis, to perform unspecified tasks. Accordingly,  
Bruce agreed to return to CCI on an “as needed basis”. He was formally hired by Cheryl  
as an employee of CCI and he was paid $15 per hour. He performed various tasks  
including: cooking; waiting tables; bussing tables; cleaning; bartending; washing dishes;  
and doing some deliveries and catering.  
Page: 37  
[189] Initially, Cheryl and Bruce used their own vehicle to make deliveries on behalf of CCI.  
During the first five months of CCI’s operation, Rob and/or CCI made all the payments  
related to the vehicle, including insurance. However, after the April 2009 meeting, Rob  
decided that he did not want Bruce and Cheryl to use their personal vehicle in the  
business. As a result, Cheryl and Bruce resumed making the necessary vehicle-related  
payments, themselves. This aspect of his evidence conflicts with Cheryl’s evidence that  
she decided to take over the payments to increase CCI’s profitability.  
[190] Bruce believes that he continued to be paid $15 per hour into the early part of 2010. At  
that time, he agreed to reduce his wage rate to $10.25 per hour because CCI was losing  
money. He worked a total of 551.25 recorded hours between June 2009 and June 28,  
2010, the date that he was terminated. Rob justified his termination on the basis of a  
policy that family members could not work together. To Bruce’s knowledge, the policy  
did not exist before his termination and Rob’s wife, daughter, and son-in-law all worked  
for the Retro Suites Hotel.  
[191] Cheryl experienced significant difficulty after Bruce’s June 2010 termination. Without  
consulting Cheryl, Rob “took over” CCI’s operation. He hired Mr. Kazarian to manage  
CCI. Together, they stripped Cheryl of her signing authority on CCI’s cheques and  
confiscated her CCI debit card. Cheryl’s emotional distress was compounded by Bruce’s  
absence from CCI because she relied on Bruce “to do everything”. Eventually, Cheryl  
became sad and depressed. She told Bruce that she felt like she was “losing a child”.  
Cheryl eventually attended on her family doctor who referred her to a specialist.  
[192] Chef Bonnot left CCI in September 2010. Thereafter, he engaged in renovation work for  
hire. Bruce assisted Chef Bonnot with his renovation work, for which he was paid. He  
offered no further details in that regard.  
[193] In the fall of 2010, Bruce and Cheryl opened a catering business, which they originally  
operated from their home. The business, Healthy Choice Catering, was put solely in  
Bruce’s name. After two months, Bruce rented an operating premises for Healthy Choice  
Catering. Chef Bonnot and Leslie Bonnot assisted them with that business.  
[194] In April 2011, Cheryl purchased a building housing a restaurant, which she intended to  
renovate. Her restaurant, Zee’s Bistro, opened at that location in July 2011. Since that  
time, Bruce and Cheryl have both worked at Zee’s Bistro in the same capacities that they  
did when they operated NFE.  
[195] In cross-examination, Bruce indicates that “Healthy Choice Catering” was put in his  
name because Cheryl was not sure if she could run the business, based on the way she  
felt. Bruce also agrees that putting the business solely in his name ensured that no  
income from the business was attributed to Cheryl, beginning in October 2010. Bruce is  
not aware that in the context of their wrongful dismissal actions, he and Cheryl were  
required to disclose all of their sources of income during the period of time that they were  
obligated to mitigate their damages. Bruce agrees that neither he nor Cheryl disclosed any  
documentation with respect to the Healthy Choice Catering business in their affidavit of  
Page: 38  
documents. He explains that they only ran that business for a year and it was not  
something that he thought about.  
[196] Bruce agrees that between 2001 and 2008 he did not earn any personal income. Although  
he performed services for NFE, he was not paid. He confirms that NFE lost money in  
2004, 2006 and 2007. He originally denied that NFE actually lost income in 2008, and he  
continued to assert that he accurately recorded its net income to be slightly in excess of  
$11,000. He then conceded that NFE’s financial records, which he prepared, did not  
include its liability arising from the $35,000 loan made to it by Retro Suites Hotel in  
2008.  
[197] Bruce also agrees that in the fall of 2008, he was responsible for ensuring that all source  
deductions for NFE’s employees were remitted to the government. After NFE moved to  
the Retro Suites premises, its employee salaries increased by approximately $120,000.  
Bruce agrees that he failed to make monthly employee remittances totalling over $36,700  
during the months of September to December 2008, inclusive. He deducted those  
amounts from NFE’s employees’ cheques, but he did not render payments to the  
government.  
[198] When he calculated NFE’s net income for 2008, he did not record or take into account its  
liability, in excess of $36,000, on account of unremitted employee deductions. He agrees  
that if that liability was considered, NFE would have a calculated net loss of at least  
$25,000 in 2008. Eventually, Bruce conceded that NFE did not make a profit in 2008.  
Finally, he conceded that contrary to his prior evidence, during the entirety of its  
operation (2001 to 2008), NFE only made a profit in one year, 2005.  
[199] Bruce’s licence to drive was suspended in February 2010. He remained involved in  
delivery services for CCI after that time, but he did not drive. His licence suspension was  
still in effect in October 2010, when he started the Healthy Choice “catering business”.  
He was involved in catering deliveries on behalf of Healthy Choice Catering, but other  
individuals drove.  
[200] After he was hired in June 2009, Cheryl and Chef Bonnot scheduled the hours that he  
worked at CCI. Bruce denies that he was paid for every hour that he was scheduled to  
work at CCI, but on specific inquiry he could not recall the number of hours for which he  
was not paid. Bruce then testified to the accuracy of his record of employment from CCI,  
disclosing that he worked an average of 27 hours per week in his last six months of  
employment in 2010. Bruce agrees that until he commenced this litigation, he never  
complained that he worked hours at CCI for which he was not paid.  
[201] In cross-examination, Bruce reaffirmed that beginning in January 2009, Rob held  
monthly meetings with respect to CCI’s operation, in which he exhibited a poor  
demeanour and demanded CCI become profitable. Bruce was referred to Cheryl’s  
evidence that meetings of that nature first occurred in 2010. Bruce disagrees with  
Cheryl’s evidence and reiterated that Rob’s hostile conduct began in 2009. Bruce also  
disagreed with Cheryl’s evidence that it was only at the beginning of 2010, that Rob went  
from being an angel to being a devil. Bruce maintains that Rob consistently  
Page: 39  
demonstrated a belligerent demeanour towards him, Cheryl and CCI staff, beginning with  
a meeting held on January 31, 2009. After that time, Rob consistently yelled at staff and  
demanded they make money. As a result, Bruce privately told Cheryl that she could not  
trust Rob.  
[202] Bruce is not aware of any evidence that CCI made any unrecorded sales, at any time. He  
does not suggest that the amount of $778,125 recorded as CCI’s annual revenue in its  
2009 financial statements, is inaccurate. He is not aware of any misallocation of wages  
between CCI and Retro Suites, at any point in time.  
[203] Bruce has never met Dennis Asher. Bruce believes that he saw a copy of Mr. Asher’s  
correspondence addressed to Cheryl, contemporaneous with its date of August 17, 2009.  
He confirms that Cheryl received that correspondence after he told her that she could not  
trust Rob. Bruce believes that he may have discussed the correspondence with Cheryl and  
he confirms that both he and Cheryl read the correspondence and the enclosures that Mr.  
Asher sent, but they did not understand the documentation.  
[204] Bruce did not suggest that Cheryl obtain independent legal advice concerning the  
documents, even though he had already told her that she could not trust Rob. Bruce  
explains that in April 2008, Rob told Cheryl that she did not need a lawyer and that she  
could “trust him”, and nothing had changed since that time. Bruce’s evidence then  
shifted on the point and he acknowledged that something had changed since April 2008,  
specifically based on meetings that he had attended, he had cautioned Cheryl that she  
could not trust Rob.  
[205] Bruce agrees that in 2008, Rob and Cheryl made a deal by which she would manage CCI  
and provide cooking services in exchange for an annual salary in the amount of $50,000.  
She would not be required to financially contribute to the business. Instead, Rob would  
pay all of the costs associated with establishing and operating the restaurant, and he  
would eventually be repaid by the business for the amounts he paid. Bruce agrees that  
the employment contract Mr. Asher forwarded to Cheryl provides that Cheryl would be  
paid $50,000 per year, consistent with the terms to which Rob and Cheryl agreed.  
[206] Bruce confirms that during their 2008 discussions, Rob and Cheryl agreed that CCI  
would pay the sum of $48,000 per year to Retro Suites as rent for the operating premises  
it was leasing from Retro Suites. He agrees that the lease forwarded by Mr. Asher in  
August 2009, is consistent with that amount.  
[207] Bruce confirms that Cheryl and Rob agreed that Rob would be repaid for any amount that  
he invested for the start-up of CCI.  
[208] Bruce agrees that he saw the draft USA after it was sent to Cheryl. He understood that it  
dealt with share allocation and buy/sell arrangements for Cheryl and Rob’s (RJM  
Holdings) shares. He does not recall whether that was the only document that Cheryl did  
not sign.  
[209] Bruce does not know why he was listed as a vendor on the original asset purchase  
agreement that Mr. Asher forwarded, but his name was struck out before it was signed.  
Page: 40  
[210] When Bruce worked at CCI, he enjoyed free meals and occasionally free alcoholic  
beverages. He agrees that on a social basis, he regularly attended at CCI more often than  
his scheduled hours.  
[211] Through Cheryl, Bruce may have been aware that CCI was continuously losing money in  
2009. He was not aware that Rob was “covering” CCI’s operating losses. He was aware  
that CCI was continuously losing money in 2010, but he did not consider whether those  
operating losses were “covered” by Rob.  
[212] During the first six months of 2010, Cheryl became more and more stressed by CCI’s  
continuing losses because she was accustomed to success as a restauranteur. Cheryl  
suffered additional stress as a result of Bruce’s termination and the mid-2010 change in  
her duties. Ultimately, her stress led to depression. Cheryl was upset by the loss of  
Bruce’s job, Rob’s assertion that she was overpaid in 2009, and Rob’s assertion that she  
was using CCI money to pay for her personal expenses. He does not know whether  
Cheryl and Rob discussed the latter points during a meeting.  
[213] Cheryl did not return to CCI after her departure in July 2010. Bruce does not know if  
Cheryl ever responded to inquiries from Mr. Kazarian concerning her return to work.  
[214] Cheryl’s condition began to improve in September of 2010 and by October of 2010 she  
was “doing more”. Even so, she remained angry with Rob and felt that she was  
“cheated” by him. Bruce was also angry with Rob, but not to the same extent as Cheryl.  
He denies that he told other people that Rob cheated Cheryl or stole her restaurant.  
Evidence of Ferruccio Da Sacco  
[215] In November 2014, Cheryl moved for the appointment of BDO as CCI’s auditors and an  
order compelling the completion of audited financial statements for CCI dating back to  
2009. By order dated November 25, 2014, Carey J. granted that relief and further  
directed, among other things:  
This Court Orders that any accountants who are employed or contracted  
for by ‘RM Auctions’ or RJM Holdings and related companies, including  
Gerry Hockin and Deloitte LLP be disqualified as the auditor for Chilled  
Cork Inc.  
[216] The order contemplated that audited financial statements for the years 2009 to 2014  
would be provided by January 30, 2015.  
[217] Mr. Da Sacco, who is both an accountant and a designated “assurance specialist” oversaw  
BDO’s audit efforts. He was summonsed as a witness by the plaintiffs. He did not  
discuss his anticipated evidence with counsel for the plaintiffs or the defendants, prior to  
trial.  
[218] BDO Senior Manager, Annette Fletcher, who was not called as a witness by any party,  
was responsible for planning the CCI audit and performing the majority of the work with  
Page: 41  
respect to same. Her work was consistently subject to Mr. Da Sacco’s review and  
approval.  
[219] As CCI’s court appointed auditor, BDO was responsible for expressing an opinion on its  
financial statements. Its audit efforts were designed to provide a reasonable assurance  
that CCI’s financial statements were free of material misstatement, whether caused by  
error or fraud.  
[220] After BDO’s appointment, the plaintiffs rejected BDO’s initial suggestion that it conduct  
its audit efforts through specified audit procedures, directed at any specific areas of  
concern held by the plaintiffs. Instead, the plaintiffs sought a complete historical audit of  
CCI dating back to 2009.  
[221] In preparation for CCI’s audit, BDO developed an audit plan informed by a risk-  
assessment approach, in which CCI’s historical financial statements (including any  
anomalies therein) and its financial “controls” (or lack thereof), among other things, were  
examined to determine respective “levels of risk of material misrepresentation”, across  
various aspects of CCI’s financial reporting.  
[222] In arriving at an audit plan, auditors typically utilize “preliminary” analytical tools to  
identify possible areas of concern, which can include industry “rules of thumb”. In that  
regard, it is generally expected that, as a rule of thumb, one-third of a restaurant’s sales  
will equal its kitchen-related wages and salaries and one-third of its sales will equal its  
food-related costs. The remaining one-third of sales consists of gross profit from which  
management and “front of house” salaries and all other operating expenses are deducted.  
“Rules of thumb” are developed from experience and relevant industry data. The  
available industry data for restaurants is predominantly generated from the United States,  
where both food and labour costs are, typically, lower than they are in Canada.  
[223] Mr. Da Sacco cautions that: “rules of thumb” are only a starting point in identifying  
potential audit-risk areas; when rules of thumb are used, the data should be based on  
industry comparators that are similar to the entity being audited, which in the case of  
restaurant would include a consideration of its location and its type business; and an  
individual restaurant’s financial performance may deviate from a “general rule of  
thumb”, in the absence of fraud or error.  
[224] After its appointment, BDO quickly determined that it was not possible to complete an  
audit for all of the years contemplated by Carey J.’s order because the availability of  
source documentation related to CCI’s several thousands of financial transactions in 2009  
and 2010, was “spotty at best”. Some of that documentation was not available because it  
was damaged in a fire at the Retro Suites Hotel (where the records were stored) in  
September 2010. BDO also determined that it could not perform an audit for CCI’s 2011  
fiscal year because of the absence of adequate source documentation.  
[225] One of the most significant challenges that BDO faced in its attempt to produce audited  
financial statements for the years specified in Carey J.’s order, arose from the high degree  
of turnover in CCI’s bookkeeping personnel from 2011 to 2015, which led to a lack of  
Page: 42  
consistency in the manner in which transactions were recorded in CCI’s financial records  
(even in the same fiscal year).  
[226] BDO’s audit efforts with respect to CCI’s years 2012 to 2014 were also impaired by the  
lack of availability of certain source documentation and the disorganized manner in  
which CCI’s available source documentation was stored (with documentation related to  
several years being mixed and stored together).  
[227] Mr. Da Sacco concluded that audited financial statements for the years 2012 to 2014  
could not be produced until CCI properly organized its records. As a result, he “pulled”  
his staff from the field (“CCI’s operating premises”) and Ms. Fletcher forwarded  
correspondence to CCI and the parties’ respective counsel, in which she advised that  
BDO would not proceed with any further audit-related efforts until CCI provided certain  
records that she specifically identified. Those records included documentation related to  
revenue recorded outside of CCI’s POS system, most notably for revenue generated from  
CCI’s banquet sales, which was traditionally collected, at first instance, by the Retro  
Suites Hotel.  
[228] The production of the organized records sought by BDO, was delayed as a result of  
another change in CCI’s bookkeeper position, in early 2015.  
[229] In February 2015, BDO again proposed to the parties’ counsel that specified auditing  
procedures be undertaken to address the parties’ specific concerns with respect to CCI’s  
financial statements. In response, the plaintiffs indicated that they wanted the audit to  
proceed in the manner ordered by Carey J.  
[230] By January 2017, BDO had not yet completed its audit with respect to the years 2012 to  
2015, despite what Mr. Da Sacco describes as the very helpful and consistent efforts of  
Stephanie Temesy, who has been employed as CCI’s bookkeeper since October 2015. As  
a result, in January 2017, Desotti J. directed BDO to produce draft correspondence setting  
out BDO’s expectations about the type of statements it could produce, based on the  
information that it had received to date. In response, Mr. Da Sacco delivered draft  
correspondence dated April 7, 2017, in which he appended draft financial statements for  
the years 2012 through 2015, inclusive, together with draft qualified audit reports (which  
did not express audit opinions) for those respective years. Neither the financial statements  
nor the audit reports were ever finalized.  
[231] Mr. Da Sacco testifies that through its audit work, BDO did not discover any evidence of  
fraud, related to CCI’s historical financial statements. BDO also did not find any  
evidence of: intentional destruction of documentation related to CCI’s financial  
transactions; evidence that CCI’s computer files had been “wiped clean”; evidence that  
banquet events occurred without revenue being recorded to CCI; or evidence that  
“someone was running a second set of books”. Instead, most of BDO’s concerns as  
expressed in his April 2017 correspondence, arose from irregularities in CCI’s  
bookkeeping procedures.  
Page: 43  
[232] Mr. Da Sacco also confirms that CCI’s accountant Deloitte LLP, did not report any fraud  
or suspected fraud to BDO, in circumstances in which it would have been expected to do  
so, had it been aware of any such activity. In addition, no person involved in the  
operation of CCI, reported any fraud or suspected fraud to BDO. In the result, the only  
individuals who expressed a concern about possible fraud, in this instance, were the  
plaintiffs’ counsel.  
[233] In both his April 2017 correspondence and his evidence, Mr. Da Sacco summarized the  
difficulties that BDO experienced in conducting its audit. First, CCI employed five  
different bookkeepers during the period of 2012 to 2017. BDO was provided with  
explanations for the various changes in CCI’s bookkeeping staff, none of which caused  
Mr. Da Sacco concern. However, the turnover in CCI’s bookkeepers led to a lack of  
consistency in the manner in which transactions were recorded in CCI’s financial records,  
with each bookkeeper using their own method to post entries.  
[234] Second, BDO’s progress was also slowed as a result of difficulty it experienced in  
obtaining a “backup” of CCI’s bookkeeping software, which was mainly a function of the  
amount of time that had elapsed between the original contemporaneous completion of  
CCI’s annual financial statements and BDO’s subsequent audit efforts. Eventually, BDO  
developed a “work around” by exporting the requisite data to spreadsheet software.  
[235] Third, the volume of CCI’s financial transactions in each of the subject years was “vast”  
(i.e. thousands of annual transactions and associated documentation) and required BDO  
to engage in substantial efforts to set up testing for each respective year end. Mr. Da  
Sacco observes that Ms. Temesy was very helpful in responding to BDO’s requests for  
assistance, including locating specific information that BDO required to verify historical  
bookkeeping entries.  
[236] Fourth, based on the historical nature of its engagement (i.e. auditing several past years at  
once), BDO was not physically present to observe CCI’s inventory count at the end of  
each of the years subject to audit. As a result, it was necessary to qualify its statement for  
each year, on that basis.  
[237] Finally, BDO’s audit-related efforts were slowed and influenced by missing and  
disorganized source documents. In his April 2017 correspondence, Mr. Da Sacco  
observes that there were numerous items posted in CCI’s bookkeeping records that BDO  
was unable to verify, as there was no supporting documentation or the documentation  
differed from the posted entries (i.e. during data entry there were transposition errors,  
omissions, etc.).  
[238] However, in his evidence, Mr. Da Sacco agrees that in his experience it is quite unusual  
for a small, privately held restaurant business to request retroactive multi-year audited  
financial statements, or audited statements at all. In his experience, small, privately-  
controlled restaurant businesses, typically, maintain less organized records and have less  
financial controls in place than entities that maintain segregated accounting departments  
and are otherwise “set up” to be audited on an annual basis.  
Page: 44  
[239] Mr. Da Sacco confirms that in circumstances in which a small, privately held restaurant  
business is subject to a retroactive multi-year audit, it is foreseeable that: there may be  
missing source documentation; there may be missing reconciliations; there may have  
been a change in the entity’s accounting system; a former bookkeeper may no longer be  
employed by the entity; and there may be difficulties with management recalling  
explanations for past variations in the entity’s financial records.  
[240] Turning to the results of BDO’s audit work, it identified an issue related to CCI’s  
reported revenue from banquet sales that was common in each of the years that BDO  
originally reviewed (2012-2015). Specifically, CCI’s banquet sales involved inter-  
company transactions between the Retro Suites Hotel and CCI, in which Retro Suites  
collected all revenue, at first instance, and all food and beverage sales related to the  
banquet events were, subsequently, to be paid by Retro Suites to CCI.  
[241] BDO was able to review inter-company invoices related to banquet events, which broke  
down CCI’s portion of the revenue. BDO was also able to reconcile that stated revenue  
with CCI’s recorded receivables due from Retro Suites. However, BDO was not able to  
verify if Retro Suites received more, the same, or less “cash” than the amounts disclosed  
on the “banquet event contracts” related to such sales. In his April 2017 correspondence,  
Mr. Da Sacco indicates that as a result of BDO’s inability to verify if cash was received  
by Retro Suites for banquet transactions, the risk of unreported revenue, as a result of  
subsequent adjustments to the sale was high (because it was not possible to verify the  
amount of the sale to the actual payment made to CCI).  
[242] At trial, Mr. Da Sacco clarified that BDO was able to verify the amounts that CCI  
invoiced to Retro Suites for the food and beverage supplied at banquets and it was able to  
verify that Retro Suites actually paid CCI the invoiced amounts, which were, typically,  
premised on the customer’s contract for the event. However, Retro Suites (as distinct  
from CCI) did not provide BDO with copies of cheques, credit card statements, or other  
documentation evidencing that the amount that the customer actually paid to Retro  
Suites, at first instance, to ensure that it was the same as the original contract amount.  
Therefore, BDO was unable to confirm that CCI was ultimately paid the amount it was  
entitled to receive for the event. Although CCI was correctly paid the invoice price,  
BDO could not rule out that Retro Suites did not charge more or less for the event.  
[243] In his evidence at trial, Mr. Da Sacco states that the significance of the foregoing issue,  
together with each of the other areas of concern expressed by BDO, was the subject of  
judgment, and the result of the issue could range from understated revenue, to accurately  
stated revenue with a poor audit trail, to overstated revenue. BDO was unable to provide  
any further clarification in that regard.  
[244] On a different issue, in his April 2017 correspondence, Mr. Da Sacco correctly observed  
that in the years 2010 to 2013, inclusive, CCI recorded as revenue, management fees  
payable to it, by its related party, RJM Holdings ($150,000 in 2010; $285,000 in 2011;  
$100,000 in 2012; and $50,000 in 2013). From BDO’s perspective, it was unclear  
whether the fees were for services rendered or an adjustment for tax purposes. In order to  
Page: 45  
normalize CCI’s revenue in those years, BDO did not include any management fee  
income in its calculations of CCI’s revenue.  
[245] Mr. Da Sacco confirms that over the course of the period from 2012 to 2015, CCI’s  
annual cost of sales as a percentage of revenue, ranged from a low of 84.95 percent  
(2014) to a high of 88.1 percent (2015). Mr. Da Sacco did not believe that those  
percentages caused any audit concern, even when considering the “1/3 - 1/3 - 1/3 rule of  
thumb”. Mr. Da Sacco states that the “one-third” general benchmark for “wages” is only  
premised on direct wages and salaries related to kitchen staff. In the benchmark analysis,  
front of house wages and salaries, indirect management expenses, and all other operating  
expenses have to be deducted from the remaining one-third of the restaurant’s revenue.  
In the result, he did not view CCI’s historical recorded cost of sales to be an audit  
concern.  
[246] BDO prepared financial statements for CCI for 2012, but it did not express an opinion on  
them. In his April 2017 correspondence, Mr. Da Sacco identified issues concerning  
BDO’s attempt to provide an audit opinion for 2012, which included: missing invoices  
for certain inventory; identified difficulties with CCI’s controls related to inputting POS  
summary data into its bookkeeping system (which could have resulted in understated,  
accurate, or overstated revenue); some missing invoices with respect to CCI’s expenses,  
which were otherwise verified through ledger entries and evidence of payment; BDO’s  
inability to review Retro Suite Hotel’s source documentation with respect to banquet  
sales; lack of documentation and proper segregation in a “Chilled Cork’s sales discounts”  
account (which did not constitute proper audit evidence); and lack of monthly  
reconciliations for related-party balances, which resulted in an inability to verify the  
balances.  
[247] Mr. Da Sacco confirms that as at December 31, 2012, CCI’s financial statements showed  
a receivable owing from RJM Holdings in the amount of $356,916 (for booked  
management fees) and an amount payable by CCI to Retro Suites Hotel in the amount of  
$586,874. The general ledger details obtained by BDO from Retro Suites Hotel, as at  
December 31, 2012, supported most of that final balance, but it did not fully reconcile  
with the amount recorded in CCI’s financial statements. BDO was unable to obtain RJM  
Holdings’ general ledger details prior to its April 2017, correspondence. Mr. Da Sacco  
also observed that the relevant related parties had different year ends, which could have  
resulted in unreconciled balances, as at CCI’s year end.  
[248] In his April 2017 correspondence, Mr. Da Sacco observes that in its preparation of CCI’s  
financial statements for 2013 to 2015, it encountered similar issues to those it  
encountered with respect to 2012, specifically, among other things: BDO was not present  
for CCI’s respective year-end inventory counts; certain source documentation related to  
BDO’s revenue and expense entry testing was not available; and BDO did not have  
access to Retro Suites Hotel’s records to confirm the total amounts that it received for  
banquet sales, and whether it varied from the event contract amounts.  
[249] On the issue of related-party transactions, the financial statements prepared by BDO  
record that CCI maintained a receivable from RJM Holdings in the amount of: $462,704  
Page: 46  
in 2013; $408,464 in 2014; and $354,224 in 2015. Further, CCI owed a payable to Retro  
Suites Hotel in the amount of: $755,899 in 2013; $720,694 in 2014; and $755,524 in  
2015. Mr. Da Sacco indicates that BDO did not find any material errors in testing  
transactions related to those accounts relative to the years 2013 to 2015, inclusive. In  
April 2017, BDO did not have supporting documentation available to verify the opening  
balances of the respective related-party accounts in 2013, which were carried forward to  
subsequent years.  
[250] As a result of the foregoing, BDO was not able to express an opinion with respect to  
CCI’s financial statements for the years 2013 to 2015 inclusive. In addition, the financial  
statements for the years 2012 to 2015, which accompanied Mr. Da Sacco’s April 7, 2017  
correspondence, were prepared in draft form only.  
[251] Mr. Da Sacco testifies that he authored his April 7, 2017 correspondence in an effort to  
solicit additional information and explanations from CCI’s management on the issues  
raised therein. However, he concedes that his letter does not contain a specific request  
that management provide any additional information or explanations. Further, the  
correspondence is only addressed to counsel for the parties in the litigation (not CCI  
management). By its terms, it does not request a response. Instead, the correspondence  
concludes by inviting counsel to contact Mr. Da Sacco, if they have any questions with  
respect to its content.  
[252] BDO did not receive a response to its April 7, 2017, correspondence from CCI  
management. There is no evidence that Mr. Da Sacco or other members of BDO  
engaged in any follow-up communication with CCI management to obtain further  
information or explanations addressing the issues set out in the correspondence. Rather,  
Mr. Da Sacco testifies that he had little to no communication with CCI after May 1, 2017,  
until some time in May 2018. As a result, the 2012 to 2015 financial statements that  
BDO prepared, remain in draft form.  
[253] Notably, in relation to CCI’s years 2012 to 2015, Mr. Da Sacco did not identify: the  
existence of any sales made by CCI that were not recorded in its financial statements; any  
portion of CCI’s labour costs that were improperly allocated between CCI and its related  
parties, including Retro Suites; or any aspects of CCI’s recorded related-party debt that  
were appropriately calculated as being nil.  
[254] In August 2018, BDO delivered draft audited financial statements for CCI’s fiscal years  
2016 and 2017. The final version of each set of financial statements was provided to  
CCI’s management in mid-December 2018 (after the commencement of trial). In both  
instances, BDO opined that the audit evidence that it obtained was sufficient and  
appropriate to provide an audit opinion.  
[255] In his evidence, Mr. Da Sacco confirms that no “audit issues” arose with respect to CCI’s  
sales, cost of sales, or expenses in 2016 or 2017. Further, after April 2017, BDO had  
satisfied itself that the related-party balances recorded in CCI’s 2016 and 2017 financial  
statements were accurate and had originated from transactions occurring in the normal  
course of business. Specifically, in preparing CCI’s 2016 and 2017 audited statements,  
Page: 47  
BDO was able to work with Deloitte LLP to fully reconcile the previously unverified  
amounts set out in CCI’s journal entries concerning its related-party indebtedness. In that  
process, BDO examined the ledgers of both CCI and its related parties (Retro Suites and  
RJM Holdings), and thereafter, it received signed confirmations attesting to the amounts  
owed between CCI and its related parties.  
[256] Subject to a single qualification that BDO was not physically present to verify, CCI’s  
year-end inventory counts in 2016 and 2017 (and the possible effects arising therefrom),  
BDO opined that the 2016 and 2017 financial statements “presented fairly, in all material  
respects, the financial position of CCI as of December 31, 2016 and December 31, 2017,  
respectively, and the results of its operations and the statement of cash flows for the years  
then ended” (in accordance with Canadian accounting standards for private enterprises).  
Mr. Da Sacco agrees that the 2016 and 2017 audited financial statements provide the best  
and most reliable evidence of CCI’s actual sales/revenue in those years.  
[257] The main difference between BDO’s ability to perform auditing functions related to  
CCI’s fiscal years 2016 and 2017, and its ability to do so with respect to former years,  
was the overall improvement in the quality of CCI’s bookkeeping. Ms. Temesy  
maintained accurate and proper accounting systems, which were reconciled on a daily  
basis. BDO observed a year over year improvement in the quality of CCI’s bookkeeping  
even before Ms. Temesy was hired in 2015, however, she was meticulous in daily  
reconciliation. Mr. Da Sacco concedes it is possible that CCI’s bookkeeping improved  
once its management became aware that the company was subject to audit.  
[258] Mr. Da Sacco confirms that CCI’s recorded “wage expenses” rose from $610,000 in 2015  
to $714,000 in 2016, and subsequently to $819,000 in 2017. He confirms that during the  
course of the audit process, members of BDO had discussions with CCI’s management  
that satisfied BDO that all of the “wages expenses” reflected in CCI’s financial  
statements in 2016 and 2017 were related to work performed on behalf of CCI, as  
opposed to related parties, including Retro Suites Hotel.  
[259] Mr. Da Sacco was also referred to an increase in the amounts recorded for CCI’s “repairs  
and maintenance expenses” from $22,560 in 2015 to $28,401 in 2016, and subsequently  
to $44,195 in 2017. Mr. Da Sacco confirms that an analysis was performed during the  
audit process to ensure the appropriateness of amounts being claimed as expenses, as  
opposed to capital expenditures, together with an analysis of the basis for the year-over-  
year increases in the amount of recorded repairs and maintenance expenses. He remained  
satisfied that the 2016 and 2017 financial statements, in that respect, fairly presented the  
financial position of CCI.  
[260] The 2016 and 2017 qualified audited financial statements also provide greater clarity with  
respect to the amounts of the related-party balances owed to and by CCI. Specifically, in  
a note to its 2016 financial statements, BDO indicates that CCI owed RJM Holdings:  
$378,848 at the end of 2015; and $426,848 at the end of 2016. Further, the statements  
indicate that CCI owed Retro Suites Hotel $6,452 at the end of 2015, and Retro Suites  
Hotel owed CCI $124,356 at the end of 2016. BDO also determined that at the end of  
both 2015 and 2016, CCI owed $16,000 to Rob Myers, personally. All of the related-  
Page: 48  
party amounts owed to and by CCI were determined by BDO, to have arisen from  
transactions occurring in the normal course of business.  
[261] Similarly, BDO determined that at the end of 2017, CCI owed RJM Holdings $450,343  
and it owed $16,000 to Rob Myers, personally. Further, the Retro Suites Hotel owed CCI  
$9,271, at the end of 2017. All of the foregoing amounts were verified by BDO, and  
Mr. Da Sacco confirms that they were accurately recorded.  
[262] Mr. Da Sacco was questioned on what appeared to be a “wide swing” from an amount  
that was recorded as a receivable owed by RJM Holdings to CCI in prior year financial  
statements, to a payable owed by CCI to RJM Holdings in 2015 and afterwards, and a  
corresponding swing from a payable owed by CCI to Retro Suites Hotel in earlier years,  
to a receivable owed by Retro Suites Hotel to CCI in 2016 and afterwards. Mr. Da Sacco  
acknowledged the apparent “variance” in related-party account balances, but he observed  
that the net totals with respect to CCI’s related-party obligations remained the same.  
[263] He further explained, with reference to e-mail correspondence that he forwarded to  
counsel for the parties in this litigation, on September 12, 2018, that prior to CCI’s 2016  
audit, BDO engaged in further efforts to confirm the recorded inter-company balances  
between CCI and Retro Suites Hotel and CCI and RJM Holdings. Working with RJM  
Holdings’ financial officer, and RJM Holdings’ external accountant Deloitte LLP, BDO  
was able to reconcile the related-party balances with the appropriate related-party  
companies (i.e. RJM Holdings and Retro Suites Hotel). Through that process, BDO  
determined that as a result of a corporate reorganization, the amount of $749,722.24 that  
was previously recorded as owing to the Retro Suites Hotel and owed by CCI was  
appropriately owed to RJM Holdings.  
[264] It remains that although there was a “swing” in individual related-party balances, once  
BDO worked with Deloitte LLP to reconcile the previously recorded but unverified  
amounts (including the opportunity to examine the ledgers of both RJM Holdings and  
Retro Suites Hotel), BDO was able to group the appropriate related-party accounts  
together for financial statement presentation purposes. Importantly, after that exercise  
was complete, the net totals of CCI’s related-party indebtedness remained the same.  
[265] As a result of its ability to liaise with Deloitte LLP and confirm the appropriate allocation  
of related-party balances, BDO issued revised draft financial statements for CCI’s year-  
ended December 31, 2015, in which the grouping/presentation of related-party balances  
was consistent with the allocation set out above. Specifically, once BDO verified the  
related party balances and attributed them accordingly, it determined that at the end of  
2015, CCI owed: $378,848 to RJM Holdings; $6,452 to Retro Suites Hotel; and $16,000  
to Rob Myers, personally, still yielding a total related-party balance net payable by CCI  
in the amount of $401,300, consistent with the amount recorded in the original 2015 draft  
financial statement prepared by BDO.  
[266] Mr. Da Sacco indicates that “confirmations” of related-party balances were executed on  
behalf of RJM Holdings and Retro Suites Hotel and by Rob Myers, personally.  
Confirmations of that type are common and designed to ensure that the individuals  
Page: 49  
executing them accept and assume responsibility for the accuracy of the amounts set out,  
therein.  
[267] In Mr. Da Sacco’s view, subject only to an inventory scope limitation, BDO’s audited  
financial statements for CCI for 2016 and 2017 provide a reasonable assurance of CCI’s  
financial position, as set out therein, including all related-party balances.  
The Evidence Adduced by the Defendants  
[268] Below, I will summarize the evidence of the non-expert witnesses called by the  
defendants and aspects of the exhibits to which they referred.  
Evidence of Robert Meyers  
[269] Rob, who was born in Chatham-Kent, is 63 years old. He owns the defendant  
corporation, RJM Holdings Limited. In addition, he actively operates an international  
classic car restoration business, through the corporation RM Auto Restoration Ltd. and an  
international classic car auction business, through the corporation RM Sothebys. He also  
owns and operates a Harley Davidson dealership, in the Chatham-Kent area. Rob has  
enjoyed exceptional success in his classic car-related businesses, which are highly  
regarded on an international scale. Indirectly, through RJM Holdings, he is also the  
former owner of the Retro Suites Hotel. In 2013, Rob’s daughter, Jessica Myers, acquired  
ownership of the Retro Suites Hotel from RJM Holdings.  
[270] Rob has consistently maintained his principal residence in the Chatham area, where he is  
heavily involved in local charities. Nonetheless, owing to the nature of his “classic car”  
businesses, Rob is required to travel away from the Chatham area for approximately 35 to  
40 weeks a year, a schedule that he has maintained for the past 30 years.  
[271] Turning to the development of the Retro Suites Hotel, in the early 1990’s, Rob purchased  
a series of 12 buildings, in poor repair, that formed a city block in the downtown  
Chatham core. He substantially renovated those properties and developed them into a  
boutique hotel, named The Retro Suites Hotel. The hotel, which opened with only a few  
rooms, in approximately 1993, served as both an anchor and a catalyst for the  
revitalization of the Chatham downtown core. By 2008, the hotel featured 22 unique  
suites, which grew to approximately 50 suites by the time of trial. By 2008, Rob had  
invested approximately six to eight million dollars to renovate and develop the Retro  
Suites. That amount had grown to approximately 13 to 15 million dollars by the time of  
trial.  
[272] CCI is located in the Retro Suites Hotel. RJM Holdings Inc. and Cheryl each own 50  
percent of CCI’s shares. Rob first met Cheryl in 2008, as a result of periodically  
attending her “sandwich shop” for lunch. He felt that she ran a clean shop, and as a result,  
he approached her in the spring of 2008, and asked her if she was interested in opening a  
restaurant in the Retro Suites’ facilities. She expressed her interest and discussions  
between them followed.  
Page: 50  
[273] During the summer of 2008, Rob and Cheryl had approximately eight to ten meetings  
about the proposed restaurant. Early in their discussions, Rob advised Cheryl that they  
would be partners in the business, he took her on a tour of the hotel and he showed her  
the restaurant’s proposed operating space. Cheryl provided Rob with an estimate of the  
anticipated costs to build out a kitchen and dining area in the existing restaurant shell.  
Cheryl also advised Rob that: she estimated the restaurant would generate one million  
dollars in revenue in its first year of operation; and although she did not expect that the  
restaurant would generate a profit in its first year, she did not expect it to run at a loss.  
[274] Cheryl also provided Rob with a budget of $150,000 to “open the restaurant”, which  
included the costs associated with the purchase of new kitchen and dining room  
equipment, fixtures and furnishings. Rob was prepared to advance that amount, with an  
expectation, of which Cheryl was aware and to which she agreed, that he would be fully  
repaid by the business. Rob also expected that he would fund the costs of the restaurant’s  
build out, at first instance, and that, similarly, he would be repaid. Cheryl agreed to the  
foregoing and it became part of their business plan. Cheryl was not expected to make any  
financial contributions towards the costs associated with building out and opening the  
restaurant. Rob and Cheryl also agreed that the restaurant would pay $4,000 per month  
for rent to the Retro Suites.  
[275] In his evidence, Rob confirmed the accuracy of the aspects of CCI’s financial records that  
record the various amounts that he advanced, through his other corporations, to or on  
behalf of CCI, in order to build out, equip, and furnish the restaurant in 2008, all of which  
total approximately $353,000.  
[276] Pursuant to an agreement he made with Cheryl in 2008: Cheryl was supposed to operate  
the restaurant; be its chef; and receive an annual salary of $50,000; Rob and Cheryl were  
to be partners in the restaurant and split its profits, on an equal basis, after the costs  
associated with building out, equipping and furnishing the restaurant were repaid. They  
did not discuss her anticipated tenure as an employee.  
[277] Since Rob was making all of the financial contributions that the business required, he and  
Cheryl agreed: that in the event of a future disagreement, he would have the “final say”;  
he would have the “final say” over all of the business’s financial aspects and  
expenditures; and he would retain control over the venture. Cheryl would be responsible  
for operating the restaurant. Before they reached their “deal”, Rob advised Cheryl that he  
did not want Bruce involved in the proposed restaurant because he had previously  
observed Bruce “drinking”, instead of working at Cheryl’s restaurant (NFE).  
[278] Cheryl and Rob shook hands on a “deal” consistent with the foregoing, in the late  
summer or early fall of 2008. From Rob’s perspective, their handshake signified that  
they had a “deal”.  
[279] At the time they reached their agreement in 2008, Rob held an expectation that if Cheryl  
left the restaurant within a couple of years of its initial operation and he had not been  
fully repaid for his initial investment, their deal would be “cancelled”. Rob never  
committed to funding CCI’s operating losses on an indefinite basis.  
Page: 51  
[280] In 2008, Rob also expected that NFE would be responsible for its own liabilities. In the  
fall of that year, Cheryl moved NFE’s operation to the Retro Suites Hotel premises where  
she continued to operate it, until CCI obtained its liquor licence in early 2009. RJM  
Holdings Limited advanced a substantial amount of money to NFE in 2008.  
[281] In January 2009, CCI commenced operations in the Retro Suites Hotel. Rob’s lawyer,  
Dennis Archer, prepared documentation to formalize the “deal” that Cheryl and Rob  
agreed to in 2008. Owing to “lawyer delays” the documentation was not ready for  
execution until August 2009. Cheryl never indicated that she wanted to make changes to  
any of the documents prepared by Mr. Asher.  
[282] Rob testifies that he never advised Cheryl that she did not require a lawyer or legal advice  
with respect to the documents that Mr. Asher prepared, nor did he engage in any efforts  
to dissuade her from obtaining a lawyer. Cheryl never advised him that the documents  
that Mr. Asher prepared were inconsistent, or did not reflect, the terms of the deal to  
which they had previously agreed.  
[283] Rob was directed to various aspects of the documentation prepared by Mr. Asher  
including Cheryl’s Contract of Employment, to which he was also a party in his capacity  
as a “shareholder” of CCI. Cheryl never indicated that she disagreed with any of the  
terms of the employment contract, which she ultimately signed. Rob assumed that Cheryl  
also signed the USA that contained “buy/sell provisions” with respect to CCI’s shares.  
He later learned that she had not done so. Cheryl never indicated that she disagreed with  
the terms of the USA and she never expressly sought to change its proposed terms.  
[284] Once it began to operate, CCI continuously incurred monthly operating losses and RJM  
Holdings was required to advance additional monies to CCI, to fund its expenses.  
Although Rob was unable to obtain specific information with respect to CCI’s financial  
performance in 2009, on a contemporaneous basis, he knew that it “lost a lot of money”.  
Based on Cheryl’s representations in 2008, CCI’s operating losses in 2009 were beyond  
Rob’s expectations.  
[285] Owing to his travel schedule, Rob rarely attended CCI in 2009. Cheryl managed the  
restaurant on a day-to-day basis and they had occasional meetings throughout the year.  
Rob denies that during a 2009 meeting, he yelled at a bookkeeper and other staff  
members and slammed things on a table. Rob concedes that he has a “loud voice” and, at  
times, people think that he yells. Nonetheless, Rob has never: yelled at Cheryl; insulted  
her; or called her silly or stupid.  
[286] Early in CCI’s operation, Rob learned that without discussing the issue with him, Cheryl  
hired her friend, Michel Bonnot, as CCI’s chef, at a salary of $75,000 per year. Rob was  
puzzled by her decision because Cheryl was supposed to be the restaurant’s chef.  
[287] During the times that Rob periodically visited CCI, he would often see Bruce drinking at  
the bar. He did not believe that Bruce was employed by CCI because he and Cheryl had  
previously agreed that Bruce would not be an employee.  
Page: 52  
[288] In 2010, Rob continued to occasionally visit CCI and he received monthly financial  
reports evidencing its ongoing losses. In early 2010, he had discussions with Cheryl  
about CCI’s losses and asked her how they were going to “fix the problem”. Cheryl did  
not propose any immediate solutions. In their subsequent meetings, Cheryl always  
appeared “panicky” and “upset”. Rob did not yell at her or demean her during their 2010  
meetings.  
[289] As CCI’s losses continued to grow, Rob eventually concluded that Cheryl did not have  
the requisite knowledge to successfully operate CCI and “something needed to be done”.  
Ultimately, Rob determined that he needed to retain an individual with experience in the  
restaurant business to address CCI’s continuing losses.  
[290] In May 2010, Rob hired Greg Kazarian to assume bookkeeper responsibilities for CCI  
and to provide additional services in the Retro Suite’s accounting department. Rob also  
asked Mr. Kazarian to assess CCI’s financial operation and make recommendations for  
improvement. Mr. Kazarian was not hired to be CCI’s “new manager” or to replace  
Cheryl. Cheryl resisted Mr. Kazarian’s presence at CCI.  
[291] Eventually, Mr. Kazarian made various recommendations designed to reduce CCI’s  
operating expenses. He advised Rob that the costs associated with CCI’s food and wine  
purchases were too high, as were certain employee salaries. Mr. Kazarian characterized  
CCI’s “wages and salaries expenses” as “out of control”. He suggested that Chef  
Bonnot’s salary be reduced. He also suggested terminating some of CCI’s redundant  
employees, including Leslie Bonnot and Bruce. Rob was not aware that Bruce was an  
employee of CCI at the time. Mr. Kazarian also recommended “scaling back” on a policy  
that allowed employees to drink and eat at CCI, solely at the restaurant’s expense.  
[292] Throughout June 2010, Rob attended a series of meetings with Mr. Kazarian, Cheryl, and  
Chef Bonnot. During those meetings, they discussed CCI’s expenses and the potential  
termination of Leslie and Bruce. Chef Bonnot agreed to take a reduction in salary.  
During the course of the meetings, Cheryl appeared to be very upset and unstable. At the  
time, Rob was not aware of Cheryl’s mental health history. During their meetings, Cheryl  
stated that she did not know what to do. Rob denies that he yelled during the meetings,  
or that he threatened to fire Cheryl. The specific meeting in which Bruce’s termination  
was discussed, ended with Cheryl leaving CCI. She never returned to work. Rob was not  
aware that Cheryl was depressed, at the time.  
[293] Rob does not recall meeting with Cheryl at the RM offices, but he concedes that it is  
possible that he did so, before the last meeting he had with Cheryl in June 2010.  
[294] Rob acknowledges that after the meeting in which Bruce’s termination was discussed, he  
received correspondence from Cheryl. Prior to receiving that correspondence, Rob did  
not know that Chef Bonnot planned to retire in September 2010. Through her  
correspondence, Cheryl advised Rob that she missed her old bistro restaurant, which Rob  
understood to mean NFE. Cheryl also asserted that she did not charge personal expenses  
through CCI. However, Rob had been advised by Mr. Kazarian that some of Cheryl’s  
personal expenses had been “put through” CCI. Contrary to the content of Cheryl’s  
Page: 53  
correspondence, Rob never advised Cheryl that he would “get rid of her” if the restaurant  
did not show a profit.  
[295] Rob did not authorize Mr. Kazarian to terminate Cheryl in 2010. Instead he hoped things  
would work out between them and he felt sorry for her.  
[296] After receiving her correspondence, Rob attempted to contact Cheryl in July 2010, but he  
was unable to reach her. He believes that Mr. Kazarian also tried to contact her, without  
success. Later in July 2010, Chef Bonnot advised Rob that Cheryl had a relapse of a  
“breakdown” and was under a doctor’s care. Cheryl’s salary continued to be paid  
throughout July and August, 2010.  
[297] Rob acknowledges that he left a voicemail message for Cheryl on August 4, 2010. He  
does not dispute the accuracy of her transcription of his message, which has been  
previously set out above. By the time he left his voicemail message, Rob had concluded  
that Cheryl no longer wanted to be his partner in their restaurant business. Rob agrees  
that in his message, he advised Cheryl that he would provide her with some money so  
that she could get back into her “sandwich shop”. Rob was prepared to give Cheryl  
whatever amount she needed in order to re-establish her business. Although Rob  
indicated that he would have Mr. Asher prepare appropriate documentation, he never  
advised Mr. Asher that he had terminated Cheryl’s employment and he never instructed  
Mr. Asher to terminate Cheryl’s employment.  
[298] Cheryl did not respond to his August 4, 2010 voicemail message. Rob never heard from  
Cheryl, or a representative on her behalf, again until this action was commenced. Rob  
acknowledges that he was upset when he was served with the Statement of Claim in this  
proceeding. He felt that it was unfair that Cheryl had sued him, without ever talking to  
him, after she walked out of the business in June 2010.  
[299] Rob confirms that director and shareholder meetings with respect to CCI have not been  
held since Cheryl “walked out” in 2010. Similarly, meetings of that nature were not held  
before she “walked out”. Rob reasoned that there was no point in calling director and  
shareholder meetings after she left because Cheryl never attended anything.  
[300] Audited financial statements were not prepared with respect to CCI before Cheryl’s  
departure in June 2010. Instead, the accounting firm Horne and Co. prepared CCI’s  
financial statements on a Notice to Reader basis. Similarly, audited financial statements  
were, initially, not prepared with respect to CCI after Cheryl’s departure because, in  
Rob’s view, “it was not necessary”. Eventually, audited statements were prepared  
pursuant to an order made in this proceeding.  
[301] After the court ordered the preparation of audited financial statements, Rob instructed the  
staff of both Retro Suites and CCI to co-operate fully with the auditors and to provide  
them with as much information as possible. During the audit process, some of CCI’s  
records were not available because they sustained water damage during a major fire in the  
Retro Suites Hotel, in 2012. Rob has never instructed the staff of either the Retro Suites  
or CCI, to destroy or alter CCI’s financial records and source documentation.  
Page: 54  
[302] Rob denies that CCI has ever engaged in sales or earned revenue that was not recorded in  
its financial statements, or that the amount of its sales has been under-reported in its  
annual financial statements. He has never instructed CCI staff to under-record CCI’s  
actual sales/revenue.  
[303] The Retro Suites and CCI operate as two separate business entities and they maintain  
separate accounting records. There is little opportunity to “misallocate” labour costs  
between them.  
[304] Jessica Myers’ husband, Peter Tsirimbis, is currently employed as CCI’s general  
manager. Mr. Tsirimbis has substantial experience in the restaurant industry. Mr.  
Tsirimbis is not the general manager of the Retro Suites hotel.  
[305] Rob confirms that he wrote the two pieces of correspondence that were identified by  
Cheryl, in her evidence (one dated July 19, 2012 and the other undated). Rob confirms  
that he wrote the July 19, 2012 correspondence, because he was upset, in part, after he  
received information from friends, that Cheryl was making defamatory statements about  
him and his family, at her new restaurant. He also wanted Cheryl to “end her lawsuit”  
because he felt that it was an attempt to extort him. He wrote the second correspondence  
in an attempt to stop what he perceived to be a frivolous lawsuit.  
[306] Rob describes CCI as his worst business experience in 40 years. He explains that in mid-  
2010, Cheryl left CCI and did not return in the immediate wake of their discussions about  
the several hundreds of thousands of dollars that he had paid to cover CCI’s expenses and  
losses. He continued to pay her salary for a period of time after she left. Despite his  
efforts to contact her, he heard nothing further from her, until she sued him. He is no  
longer angry with Cheryl.  
[307] When asked why he did not cause RJM Holdings to call CCI’s loan after Cheryl left and  
thereby, bankrupt it, Rob explains that: he did not want to cheat CCI’s suppliers; he felt  
sorry for Cheryl; and if he bankrupted CCI and started a new restaurant, he would have to  
reapply for a liquor licence.  
[308] Rob did not engage in any attempts to buy Cheryl’s shares, after she left CCI, because her  
shares had no value.  
[309] In cross-examination, Rob agrees that through experience, he is a sophisticated business  
man with a relatively large presence in the municipality of Chatham-Kent.  
[310] Rob disagrees with the suggestion that CCI is an “attraction” for the Retro Suites Hotel.  
He agrees that having a restaurant in the hotel makes sense. When customers of RM  
Restoration come to Chatham, they often stay at the Retro Suites Hotel and can elect to  
eat at CCI. Rob denies that CCI is essential to the Retro Suites’ business.  
[311] Rob does not deny that in 2008, when he initially approached Cheryl in NFE’s kitchen,  
Bruce was doing dishes, although he has no specific recollection in that regard. Typically,  
however, when he saw Bruce at NFE, Bruce was sitting at the bar. He does not know  
whether Bruce performed NFE’s catering deliveries.  
Page: 55  
[312] Years before building out CCI, Rob attempted to establish a “bar” in the Retro Suites  
Hotel, called “The Blind Dog Bar and Grill”. Rob disliked the business and  
consequently, he sold it to a tenant. Eventually, the space occupied by The Blind Dog  
was repurposed as the hotel’s lobby.  
[313] Rob agrees that during his interactions with Cheryl, she did not appear to know much  
about financial matters or contracts. He agrees that the employment agreement that she  
signed gave him the right to change the scope of her employment duties and the right to  
terminate her employment for cause. He also agrees that he was the ultimate authority  
for all of CCI’s financial decisions.  
[314] Rob identifies Gerry Hockin as a trusted financial advisor, with whom he has been  
associated for the past 25 years. Mr. Hockin was originally a member of Horne LLP,  
which among other things, was CCI’s original accountant. Shortly thereafter, Horne LLP  
was acquired by Deloitte LLP, which assumed responsibility for the preparation of CCI’s  
financial statements. In 2011, Mr. Hockin became the Chief Operating Officer of RM  
Auctions for a short period of time, and he remains a financial advisor to the RM group  
of companies.  
[315] Rob identified Mr. Kazarian as an individual who responded to an ad placed for a  
bookkeeper. Mr. Kazarian was 25 years old at the time and had prior experience at a  
roadhouse franchise restaurant. Mr. Kazarian reported financial information with respect  
to CCI. He was not involved in the management of the Retro Suites Hotel. Eventually,  
Mr. Kazarian recommended that Bruce and Leslie Bonnot be terminated and, ultimately,  
Rob instructed him to do so.  
[316] Rob denies that he failed to advise Mr. Kazarian that Cheryl was a part owner of CCI. He  
believes that he told Mr. Kazarian about Cheryl’s ownership interests when he hired him.  
To the extent that Mr. Kazarian says that he did not know that Cheryl was an owner of  
CCI, Rob indicates “he should have”.  
[317] Mr. Kazarian worked for CCI for a couple of years and then returned to school. Rob last  
spoke with Mr. Kazarian several years ago. After that, Rob hired a manager on a short-  
term contract, which was not renewed. He then hired his son-in-law, Pete Tsirimbis, as  
CCI’s General Manager. Rob assumes Mr. Tsirimbis’ salary was (and is) paid by CCI.  
[318] Rob agrees that audited financial statements for the years 2009 to 2015, inclusive were  
not produced to CCI’s shareholders. Rob believes that it is rare for small businesses to  
obtain audited financial statements. He is not aware of a corporation’s requirement to  
obtain audited financial statements, as prescribed by the Ontario Business Corporations  
Act. Rob agrees that in the context of this litigation, he opposed Cheryl’s motion for the  
appointment of an auditor and the production of historical and ongoing audited financial  
statements for CCI because he anticipated the costs of such an exercise would exceed  
$100,000.  
[319] Rob agrees that in the context of the motion to produce audited financial statements, he  
swore an affidavit indicating that in July 2010, Cheryl chose to leave her position at CCI  
Page: 56  
and that she chose not to be part of the restaurant. He confirms that is also his evidence  
at trial. He has not seen Cheryl since she left CCI in 2010. He confirms that Cheryl did  
not resign her employment in writing, however, she was not dismissed by him or CCI.  
Instead, Rob feels that by leaving CCI and never coming back, Cheryl abandoned her role  
as an employee and shareholder of CCI. The defendants agree that Cheryl remains an  
officer and director of CCI.  
[320] By order dated November 25, 2014, Carey J. appointed BDO as CCI’s auditors effective  
as of 2009, and he ordered the production of audited financial statements from 2009 to  
2015, and onward. Rob is aware that the costs of the audited financial statements were to  
be paid in full by CCI. Rob is not aware that, ultimately, BDO was only able to produce  
two sets of qualified final audited financial statements, specifically, for the years 2016  
and 2017.  
[321] Rob was then directed to various documents, including Mr. Da Sacco’s April 7, 2017  
correspondence that described BDO’s difficulties in compiling the necessary information  
to produce audited financial statements for CCI’s 2009 to 2015 years. Rob was aware of  
the difficulty in obtaining some documentation because of the records that were  
destroyed or damaged in the fire. Rob was not aware that BDO felt that CCI’s 2011  
records were in disarray. Rob assumes that he tasked someone to look for the  
documentation that BDO required. Rob agrees that BDO wrote several letters in 2015,  
requesting outstanding documentation to complete its audit work. He does not know  
when the documents requested by BDO were assembled.  
[322] During his cross-examination, Rob was confronted with other specific aspects of  
Mr. Da Sacco’s April 7, 2017 correspondence. Consistent with its content, Rob confirms  
that during the period from 2012 to 2016, CCI employed five different bookkeepers. He  
also agrees that over the course of those years there were some problems with CCI’s  
record-keeping, but he denies that it was “on his watch”. He describes himself as an  
absentee owner of CCI, who was not involved in its day-to-day operation. Rob deferred  
to  
Mr. Hockin on a number of questions posed to him, concerning specific  
aspects of BDO’s April 7, 2017 correspondence and various aspects of CCI’s annual  
financial statements.  
[323] Rob confirms that once management fee revenue was removed from CCI’s annual  
financial statements, its net loss in: 2012 was $112,000; 2013 was $90,000; 2014 was  
$36,000; 2015 was $31,000. As a result of the losses, RJM Holdings kept putting money  
into CCI. He agrees that CCI’s losses continued after Cheryl left, but he asserts that a lot  
of recovery time was required after the fire. Nonetheless, he took both Mr. Kazarian and  
Mr. Tsirimbis to task for CCI’s ongoing losses, after Cheryl’s departure. He confirms that  
he did not terminate Mr. Tsirimbis when CCI suffered losses, but he adds that he did not  
terminate Cheryl either.  
[324] Eventually, at the request of BDO, Rob and Jessica Myers confirmed the recorded  
amount of CCI’s indebtedness to RJM Holdings and Retro Suites, respectively. Their  
confirmations were subsequently relied upon by BDO.  
Page: 57  
[325] In cross-examination, Rob denies that Cheryl’s correspondence (“July 8”) followed a  
meeting between the two of them at the RM offices in June 2010, in which he stated,  
among other things, that Bruce, Chef Bonnot and Leslie were to be fired, and that if  
Cheryl did not like it, he would throw a little money at her and she could go too. He  
denies that Cheryl was crying and begging for her job, or that he gave her a day to decide  
what she wanted to do.  
[326] In response to the specific content of Cheryl’s “July 8” correspondence, Rob states that  
Cheryl was his partner, and he does not understand why she stated that she felt like she  
was “fucked”. He agrees that in 2008, he may have told her that he was her angel. He  
does not recall ever telling Cheryl “we’re going to be rich”. When Cheryl expressed,  
through her correspondence, that she felt better off before she became involved with CCI,  
Rob offered to put her back into her old business, in his August 4, 2010 proposal.  
[327] At the commencement of CCI’s operation, the only equipment that Cheryl brought with  
her from NFE were “pots and pans”, which were all returned to her. Rob agrees that as  
part of the asset purchase agreement, CCI obtained NFE’s “goodwill”.  
[328] Rob does not understand why Cheryl claims that her self-esteem was affected as a result  
of her dealings with him. He has over 200 long-term employees with whom he interacts,  
without difficulties. He cared about the way Cheryl felt, and he paid her salary for a  
period of time, after she left and did not return to work.  
[329] Rob believes that before he hired Mr. Kazarian, he advised Cheryl that they needed to  
make a change. He does not believe that he failed to provide Cheryl with notice that Mr.  
Kazarian was being hired.  
[330] Rob never accused Cheryl of stealing money, and he left it to Mr. Kazarian to deal with  
the issue of whether she was paying her personal expenses through CCI.  
[331] Rob made a few attempts to contact Cheryl before his August 4, 2010 voicemail. In his  
voicemail, he offered to pay her three months’ salary and to help her set up a new  
restaurant. He observed that it was not going to work out between the two of them. He  
made the offer because he did not know what else to do, since he had been unable to  
contact Cheryl since the end of June 2010. He instructed Mr. Asher to prepare  
documentation in respect of a share transfer and a release, in exchange for three month’s  
wages. The share transfer contemplated a purchase price of $1.00. At the time, Rob  
would have accepted $1.00 for his shares in CCI because the business was a “loser”. He  
has never taken any money out of CCI and, therefore, he cannot say that CCI is valuable  
to him.  
[332] Rob agrees that after he was served with the plaintiffs’ Statement of Claim he threatened  
to commence a counter-claim against Cheryl. He did so because he was attempting to  
dissuade her from “getting a lawyer on a contingency fee”. His original correspondence  
to Cheryl was designed to put a stop to a frivolous lawsuit. He denies it was an attempt to  
“bully Cheryl into submission”. He explains that he was attempting to stop the lawsuit  
by letting Cheryl’s lawyer know that he was not going to accept her claim. He also wrote  
Page: 58  
the correspondence because he had received information that Cheryl and Bruce were  
saying derogatory things about him and his family, to their customers at Zee’s Bistro.  
[333] Rob recalls that in 2008, he and Cheryl specifically discussed that Bruce was not to be  
part of CCI. He recalls that Chef Bonnot was hired by Cheryl without his knowledge and  
he does not believe that he met with Chef Bonnot before the restaurant was open, to  
discuss equipping the kitchen. Rob confirms that he eventually discovered that in 2009,  
Cheryl had unilaterally increased her salary beyond the $50,000.00 amount set out in her  
employment contract.  
[334] Rob was also cross-examined on the content of his second correspondence to Cheryl.  
Echoing the content of that letter, Rob confirms that he believes that the claim against  
him is frivolous and the plaintiffs’ lawsuit is designed to extort him. In his  
correspondence, Rob raised the prospect of a lawsuit against Cheryl, the possibility of  
involvement of the Canada Revenue Agency and the possibility of “bad press” against  
Cheryl. He denies that he was aggressively threatening to pursue a counter-claim.  
Rather, he maintains that the intent of his correspondence was to create an opportunity to  
negotiate a resolution of the proceeding that was “sensible” rather than the “$500,000 to  
$1,000,000” that plaintiff’s counsel sought. Rob confirms his view that this litigation is a  
contest between himself and plaintiffs’ counsel.  
[335] Rob confirms that according to the audited financial statements for CCI, it generated a  
combined profit of approximately $90,000.00 in the years 2016 and 2017.  
The Evidence of Greg Kazarian  
[336] Mr. Kazarian is currently 38 years old and employed as a controller at a technology-  
based company in Windsor, Ontario, while simultaneously working towards his “CPA”  
designation.  
[337] In 2010, Mr. Kazarian responded to a newspaper advertisement for a job in the  
accounting department of the Retro Suites Hotel. At the time, he had completed an  
accounting program at a local community college. He also had experience as a cook, a  
manager and a kitchen manager at a roadhouse restaurant franchise. He participated in  
multiple interviews including “one with Rob” and was ultimately, offered a position. Mr.  
Kazarian was not hired as a manager of CCI. Through his employment at Retro Suites he  
came to work indirectly for CCI.  
[338] Eventually, Mr. Kazarian was asked by Rob to analyze CCI’s financial performance and  
make suggestions for improvement. When he was initially hired by Retro Suites, he did  
not know Cheryl’s role at CCI, but he eventually learned that she was a partner and its  
manager.  
[339] Shortly after he was hired, Mr. Kazarian was introduced to Cheryl, who was advised that  
he would be taking over CCI’s bookkeeping functions and assessing the financial aspects  
of the restaurant. At the time, CCI operated with an “outside” bookkeeper. From an  
emotional prospective, Cheryl seemed fine when he met her. He does not recall her  
reacting negatively to him, at that time.  
Page: 59  
[340] In examining CCI’s books, it was obvious that it was not profitable and its record keeping  
was not optimal. After assessing the financial aspects of CCI’s operations, his biggest  
concern was its labour costs, particularly for kitchen staff. At the time, CCI employed  
two chefs – Chef Bonnot and Cheryl. Mr. Kazarian also determined that Chef Bonnot’s  
wife was engaged in some bookkeeping functions on behalf of CCI, which he felt was  
unnecessary because CCI also used an outside bookkeeper. In addition, he felt that  
Bruce’s role was unnecessary and that he was performing a lot of “errand”-type functions  
that could be done by other existing employees. He was not aware that Bruce’s driver’s  
license was suspended. Finally, he felt that Chef Bonnot’s salary ought to be reduced  
because many of his duties were capable of being discharged by a “line cook”.  
[341] Mr. Kazarian shared his conclusions and recommendations with Rob. He is clear in his  
evidence, that as a result of his recommendations, Rob authorized him to terminate Bruce  
and Leslie, not Cheryl. From Mr. Kazarian’s perspective, it appeared that Rob wanted  
Cheryl to remain involved in CCI’s operations.  
[342] Mr. Kazarian recalls attending at least one meeting and maybe more, together with Rob,  
Cheryl and Chef Bonnot, in which CCI’s sales and expenses were discussed. During that  
meeting, Mr. Kazarian shared his views that: CCI did not require two full-time chefs; and  
all of the functions that Chef Bonnot performed could be performed by a line cook. Chef  
Bonnot was offended by his suggestion. Cheryl did not like anything that Mr. Kazarian  
proposed. During that meeting, the actual amount of Cheryl’s 2009 salary (which was  
greater than $50,000.00) and CCI’s ostensible payment of certain of her personal  
expenses were also discussed. Throughout the meeting, Rob’s demeanour remained  
appropriate. He did not yell or insult anyone. He does not recall Rob saying that anyone  
was “stupid”. He recalls that Cheryl appeared upset about what was being discussed.  
[343] Cheryl continued to attend work after their final meeting in 2010, but she did not remain  
at CCI for much longer. He does not specifically know the last day that she worked.  
[344] Mr. Kazarian believes that he signed a letter dated June 28, 2010 terminating Bruce’s  
employment. His signature appears at the bottom of Bruce’s record of employment,  
which reveals that Bruce worked a total of 551.25 hours in the first six months of 2010, at  
a wage rate of $10.25 per hour (earning approximately $205.00 per week). On  
termination, Bruce was paid $680.82 (which included 4% vacation pay) in lieu of notice  
of termination, which equates to approximately three weeks of pay in lieu of notice.  
[345] After their June 2010 meetings, Cheryl’s behaviour “progressed downward” and she  
ended up taking time off of work. Mr. Kazarian recalls that she received medical care, at  
some point, but he can not recall whether it was before or after her last day at CCI. He  
was not aware that Cheryl had a prior history of depression.  
[346] Mr. Kazarian authored correspondence dated July 14, 2010, in which he advised Cheryl  
that in the circumstances, he felt that it was best for her to take two weeks off work with  
pay. He suggested that they get together during the week of July 28, 2010 “to discuss  
your progress and to see if you feel you are ready to return to work”. He never took steps  
to terminate Cheryl’s employment and Rob did not instruct him to do so.  
Page: 60  
[347] Cheryl did not respond to Mr. Kazarian’s correspondence and she did not arrange to meet  
with him. Instead, she communicated with him indirectly through Chef Bonnot, who  
picked up Cheryl’s pay cheques, on her behalf, and provided Mr. Kazarian with a copy of  
Dr. Payne’s note dated July 20, 2010. He does not recall receiving any other medical  
notes or reports concerning Cheryl’s health.  
[348] Mr. Kazarian agrees that in July 2010, he placed an advertisement in a local newspaper  
for three positions at CCI including a: “Chef with a Red Seal Certificate” – which Cheryl  
did not possess. That advertisement was designed to find a replacement for Chef Bonnot,  
who had advised Mr. Kazarian of his imminent retirement. The advertisement was  
placed with Chef Bonnot’s knowledge. Cheryl never contacted Mr. Kazarian about the  
advertisement, nor with respect to her plans to return to work, to the extent that she had  
any. Mr. Kazarian ultimately hired a replacement for Chef Bonnot, before he retired as  
planned, in September 2010.  
[349] Mr. Kazarian was responsible for both the Retro Suites and CCI’s bookkeeping functions,  
from the spring of 2010 until the spring of 2012. During that time, his salary was paid  
entirely by Retro Suites. In carrying out his CCI-related bookkeeping duties, he had all  
of CCI’s source documentation available to him, and he posted corresponding journal  
entries in CCI’s records, in the ordinary course of business. CCI used external  
accountants to prepare its year end financial statements.  
[350] CCI utilized a POS system to track its sales. To the best of his knowledge, all of CCI’s  
sales were accurately recorded. Monthly and annual statements were routinely prepared.  
In some instances, Mr. Kazarian was required to determine whether specific expenses  
should be recorded as current expenses or capital expenditures, and he believes he did so  
accurately. The monthly statements that he prepared from 2010 to 2012 inclusive,  
accurately reflected CCI’s income and expenses.  
[351] Mr. Kazarian was also responsible for filing and storing CCI’s financial source  
documentation. He does not recall any existing source documentation being destroyed in  
a fire. He does not recall management fees being paid to CCI while he was there. He  
believes that CCI achieved profitability while he was there.  
[352] He left his employment at Retro Suites Hotel to complete his university degree. Pete  
Tsirimbis became CCI’s General Manager a few months after he left. Mr. Kazarian last  
communicated with Rob in the spring of 2012, when he provided him with his notice of  
resignation.  
[353] In cross-examination, Mr. Kazarian provided details of his tenure and the duties of his  
employment in the restaurant industry before he was hired by the Retro Suites Hotel,  
none of which involved a “fine dining experience”.  
[354] He confirmed that during his tenure at Retro Suites/CCI he acted as the controller  
(referring to control over financial matters) of both Retro Suites and CCI. His salary was  
paid entirely by Retro Suites, at first instance, and CCI made monthly reconciliation  
payments to Retro Suites for the work he performed on its behalf. Mr. Kazarian never  
Page: 61  
assumed the title of “general manager” of the Retro Suites or CCI. Retro Suites had its  
own manager and in addition to his services, CCI employed a banquet manager.  
[355] Mr. Kazarian’s initial annual salary at Retro Suites was in the range of $30 – 40,000, and  
it had increased to $60,000, by the time he resigned in 2012.  
[356] Mr. Kazarian took all of his “orders” from Rob. He does not recall Rob telling him that  
Cheryl was a 50 percent shareholder and president of CCI, at any time. He was surprised  
to learn that information at trial. He now feels that he was somewhat misled about  
Cheryl’s status with the corporation.  
[357] Mr. Kazarian confirms that on Rob’s instructions, he replaced Cheryl’s corporate debit  
card with a corporate credit card. Cheryl worked in an office space in a storeroom, as did  
he. Mr. Kazarian does not recall seizing Cheryl’s office computer. Cheryl did have  
access to a petty cash float, which he topped up, after approving of her expenses.  
[358] Mr. Kazarian knows that Rob tried to contact Cheryl in the summer of 2010 after she left  
CCI. He confirms that if Rob instructed him to terminate Cheryl’s employment with  
three months pay in lieu of notice, he would have done so. Rob never instructed him to  
terminate Cheryl.  
[359] Finally, Mr. Kazarian agrees that at the time that he placed the newspaper advertisement  
for a Chef with a Red Seal, he had determined that the duties that Chef Bonnot performed  
could not be performed by a line cook.  
Evidence of Stephanie Temesy  
[360] Ms. Temesy has been a salaried employee of both the Retro Suites Hotel and CCI since  
October 2015. Her time and duties are split evenly between the two entities, and her  
salary is allocated between them on an equal basis. She performs bookkeeping and  
payroll functions for both entities. She is aware of the functions and duties of the other  
employees of the respective corporations. At the time that she was hired, Ms. Temesy  
had six to seven years of bookkeeping experience, in addition to related college level  
courses.  
[361] When Ms. Temesy became CCI’s bookkeeper in October 2015, its records were “all over  
the place”, primarily because it had employed a significant number of bookkeepers in the  
past, all of whom used different systems to file documentation. Eventually, Ms. Temesy  
became involved in assisting BDO with its attempts to complete an audit of a number of  
CCI’s prior fiscal years. She was tasked with providing all of the documentation  
requested by BDO and she did so to the best of her ability, to the extent that such  
documentation was available. During her audit-assisting efforts, Ms. Temesy did not  
discern that either CCI or Retro Suites employees were resisting the auditors’ ongoing  
efforts.  
[362] Ms. Temesy describes the manner in which CCI sales from three distinct sources are  
recorded in its financial records: restaurant service; room service at Retro Suites Hotel;  
and banquets and catering. With respect to restaurant sales, CCI utilizes a POS system  
Page: 62  
that tracks, in real time, all food and beverage orders, as well as, payment for those orders  
(including cash and credit/debit cards – the latter of which constitute 85-95 percent of the  
restaurant’s payments).  
[363] On a daily basis, Ms. Temesy ensures that the credit card and cash payments match the  
amounts recorded on the restaurant’s servers’ “daily reads”, and she verifies those  
amounts against the data recorded through the POS. Once verified, she enters the sale  
data into the CCI’s accounting software, and e-mails daily reports to its general manager  
(Mr. Pete Tsirimbis) and its manager (Connor Allen). To the best of her knowledge, she  
has consistently and accurately recorded CCI’s sales, and generated reports in that regard,  
in the ordinary course of business.  
[364] Ms. Temesy also details the system that CCI uses to record sales through “complimentary  
breakfast vouchers” that are provided to Retro Suites Hotel guests, as well as, the daily  
reports that she prepares in that regard, all of which are made in the ordinary course of  
business.  
[365] Ms. Temesy also prepares monthly financial reports in respect of CCI, in the ordinary  
course of its business, that include all of its monthly revenue and expenses. She  
describes the manner in which she enters CCI’s payable invoices into its accounting  
software, which she has consistently and accurately done.  
[366] Ms. Temesy describes the manner by which financial information related to CCI banquet  
and catering sales, is recorded in the ordinary course of business, generally as follows.  
Banquets are, typically, held in the Retro Suites Hotel’s facilities. When the event ends,  
a banquet manager, employed by CCI, enters the information related to sales of “banquet  
food”, “banquet beverage”, “banquet bar” and “gratuity and taxes” into the Retro Suites  
Hotel’s POS system. If the number of meals that were actually served, differs from the  
number of meals set out in the original contract for the banquet/event, the change is  
recorded on the banquet event order. Subsequently, Ms. Temesy ensures that the content  
of the banquet event order, is consistent with the number of meals actually served (as  
recorded on the banquet servers’ “reads”) and she enters that information into CCI’s  
financial bookkeeping software, in the ordinary course of business. Retro Suites Hotel  
then pays CCI 100 percent of the amounts collected for banquet food, beverage, and bar,  
together with gratuities and taxes. Ms. Temesy has consistently followed the foregoing  
system in CCI’s ordinary course of business. To the best of her knowledge, Retro Suites  
Hotel has always paid CCI all of the revenue that it was owed on account of banquet  
sales.  
[367] The banquet sales “system” applies equally to CCI’s catering sales and room service  
orders. Ms. Temesy has consistently followed the system, she has accurately recorded  
the amounts owed by Retro Suites Hotel to CCI in that regard, and she has prepared  
monthly reports that include those amounts, in the ordinary course of business.  
[368] Ms. Temesy also prepares annual year-end financial reports and draft annual financial  
statements for CCI. She provides those statements to Gerry Hockin for review. Either  
Gerry Hockin or CCI’s external accountant, Deloitte LLP, makes determinations with  
Page: 63  
respect to the appropriate characterization of expenditures as “capital” or an “annual  
expense” and ultimately, Deloitte LLP provides her with adjusting entries in that regard.  
The annual reports that Ms. Temesy prepares, accurately record all of CCI’s income and  
expenses in the particular year.  
[369] Mr. Tsirimbis’ assistant, Ms. Lucier, and Ms. Temesy are the only two CCI employees  
that consistently divide their time between CCI and Retro Suites Hotel. They do so on an  
equal basis and each corporation pays one-half of their respective salaries. There are  
other employees, who are paid on an hourly basis, that work for both Retro Suites Hotel  
and CCI. The specific time that those employees work for each corporation is tracked,  
and they are accurately paid by each corporation, accordingly.  
[370] In cross-examination, Ms. Temesy agrees that BDO was able to produce nearly  
unqualified audited financial statements for the first two full years that she served as  
CCI’s bookkeeper (2016 and 2017). She also confirms that:  
1.  
CCI’s general manager, Mr. Tsirimbis, works 50 hours per week for CCI and an  
additional ten hours per week for Retro Suites Hotel. His annual salary and car  
allowance ($1,000 per month) are paid, entirely, by CCI. He receives an annual  
bonus from both CCI and Retro Suites Hotel.  
2.  
3.  
CCI’s staff includes a general manager, a dining room manager, a head chef, a  
sous chef, an executive chef and two banquet managers, all of whom are paid by  
CCI.  
Banquets are traditionally held at the Retro Suites Hotel, which receives a portion  
of the banquet revenue for “room rental”. CCI receives all banquet revenue  
derived from food, beverage and bar sales. CCI pays the banquet managers’  
salaries, even though the Retro Suites Hotel receives some revenue from banquet  
events. However, the banquet managers’ offices are located in the Retro Suites  
Hotel premises, for which CCI does not pay rent.  
The Evidence of Pete Tsirimbis  
[371] Mr. Tsirimbis is a university graduate, who has worked in the restaurant industry since he  
was 16 years old. He has been employed as CCI’s general manager since 2012. He is  
married to Rob’s daughter, Jessica Myers.  
[372] Mr. Tsirimbis describes CCI as a “casual fine dining restaurant” offering breakfast,  
lunch, and dinner service. Most of its meals are made from scratch, with fresh  
ingredients, as opposed to “pre-made” food, resulting in relatively higher labour costs.  
CCI operates in the Retro Suites Hotel. The development of the Retro Suites Hotel is  
widely recognized as a significant factor in the revitalization of Chatham’s downtown  
area.  
[373] Prior to accepting the position, Mr. Tsirimbis turned down a number of offers made by  
Rob to become CCI’s general manager because the restaurant had a bad reputation, at  
Page: 64  
that time. Specifically, the quality of its food was inconsistent and the kitchen was not  
“set up to succeed”.  
[374] Even after Mr. Tsirimbis was hired as its general manager, Mr. Kazarian continued to act  
as CCI’s controller for a period of time, and was responsible for its finances and  
bookkeeping. When he first started at CCI, Mr. Tsirimbis assumed responsibility for  
hiring and firing employees, cleaning the restaurant and “changing its operations”. He  
only received “signing authority” for CCI’s purchases, approximately, one to one and a  
half years after his employment commenced, even though Mr. Kazarian left CCI  
approximately six to eight months after Mr. Tsirimbis was hired.  
[375] When Mr. Tsirimbis started at CCI, Jessica Myers was the Retro Suites’ general manager.  
Eventually, Jessica took time off from the hotel. During that time, Mr. Tsirimbis  
temporarily assumed the title of General Manager of Retro Suites Hotel, however his  
hotel-related duties were generally limited to signing cheques, “assisting” in hotel hiring  
and assisting in employee discipline issues. During that time, he continued to work 50  
hours per week at CCI and another ten hours per week at the hotel. After Jessica’s  
departure, the Retro Suites Hotel hired a new manager (now its general manager), who  
assumed Jessica’s operational duties at the hotel.  
[376] At the time that Mr. Tsirimbis was hired by CCI, it was losing money and its food was, in  
his view, “terrible”. He consistently worked to improve CCI’s menu, cleanliness and  
atmosphere, and he strived to establish a standard of “excellence” in its service. He  
systematically made incremental changes in the restaurant and its operation because he  
did not have a budget to make wholesale changes, all at once. Over the course of time,  
he built a management team consisting of a restaurant manager, an executive chef, a  
dining room manager (front of house), and two banquet managers.  
[377] Mr. Tsirimbis also implemented and oversaw an expansion of the restaurant in 2012,  
which added a private dining room and increased its seating capacity. Later, the Retro  
Suites Hotel banquet facility was renovated, increasing its banquet capacity by 60 seats.  
CCI’s dining room, bar area, and private dining room underwent significant renovations  
in 2018, which cost approximately $400,000, paid by CCI. Over the course of time, the  
hotel has also added a number of additional suites, increasing its guest capacity. All of  
these changes have led to increased revenue to CCI.  
[378] Mr. Tsirimbis’ incremental improvement strategy was successful. Both the restaurant’s  
reputation and its sales continuously improved, on an annual basis, and CCI achieved  
profitability, for the first time, in 2016. Mr. Tsirimbis credits the gradual improvement  
and ultimate success of CCI’s operation to the following factors: hiring key employees  
(including CCI’s current manager and executive chef); changing the restaurant’s menu;  
increased guest traffic from the Retro Suites Hotel; the expansion of the hotel’s banquet  
room; the addition of CCI’s private dining room; CCI’s improved level of service; and  
CCI’s increased media advertising and promotion.  
Page: 65  
[379] Mr. Tsirimbis describes the restaurant’s POS system and the manner by which daily sales  
are verified and recorded in CCI’s accounting software in a manner that is entirely  
consistent with Ms. Temesy’s evidence.  
[380] Mr. Tsirimbis confirms that CCI employed a number of different bookkeepers after Mr.  
Kazarian’s departure and before Ms. Temesy’s arrival. All of CCI’s bookkeepers  
followed its established system of verifying daily POS revenue data and entering the  
amount into CCI’s bookkeeping software, and all of them were instructed to do so  
accurately. Prior to Ms. Temesy’s arrival in 2015, Mr. Tsirimbis received monthly  
bookkeeper-generated sales reports, all of which appeared to be accurate. To the best of  
his knowledge, throughout his tenure at CCI, all of its sales had been accurately verified  
and recorded in its financial records, in the ordinary course of business.  
[381] On the issue of banquet sales, Mr. Tsirimbis indicated that CCI’s banquet managers are  
responsible for facilitating sales of off-site and “in-house” events, catered by CCI.  
Banquet revenue is typically split 90 percent to CCI for food, beverage, and bar, and ten  
percent to the Retro Suites Hotel for room rental. CCI’s banquet managers and CCI’s  
manager work in offices that are located in the Retro Suites Hotel premises. CCI does not  
pay the Retro Suites Hotel for the use of its office space. Similarly, CCI does not pay  
Retro Suites for the work that the hotel’s desk staff and general manager perform, in  
relation to catered banquet events (including labour and supervisory services).  
[382] Banquet costs are invoiced to customers by CCI’s banquet managers, but the revenue is  
collected by Retro Suites Hotel, immediately after the event is completed because the  
Retro Suites’ payment system operates on a “24 hour per day” basis. The hotel then pays  
CCI 100 percent of the meal, beverage, and bar revenue generated from the event. The  
hotel retains revenue for the banquet room rental, unless the event is held in CCI’s private  
dining room, in which case, CCI receives 100 percent of the revenue related to the event.  
[383] Mr. Tsirimbis deposes that based on his own personal observations of: CCI’s level of  
patronage; its service staff (both in the restaurant and at banquets); its sales and related  
entries; and his review of the ongoing reports of CCI’s financial performance, it does not  
seem possible that CCI made unrecorded sales in an amount of: over $200,000 in 2012;  
$225,000 in 2013; $193,000 in 2014; and $252,000 in 2015.  
[384] Mr. Tsirimbis justifies the legitimacy and accuracy of CCI’s recorded annual labour costs  
and he attributes its asserted “higher than average labour costs” to:  
a)  
b)  
preparing meals from scratch (which is labour intensive);  
serving three meals a day (which results in the restaurant being open  
longer hours, thereby requiring more staff throughout the day);  
c)  
CCI’s commitment to its “excellence” in service standard, which involves  
more service providers at various levels of service (i.e. hosts/wait staff),  
and a higher staff to customer ratio than an average restaurant; and  
Page: 66  
d)  
paying employees a higher wage rate than they could earn elsewhere  
(together with benefits), to facilitate employee retention.  
[385] Mr. Tsirimbis confirms that in this litigation, the plaintiffs’ expert, Mr. Tracey, provided  
a detailed list of questions concerning the operations of CCI and, to a lesser extent, the  
Retro Suites Hotel. In response, Mr. Tsirimbis and Ms. Temesy provided accurate  
information concerning, among other things: a precise list of all the people involved in  
CCI’s management, together with their respective roles and duties; the amount of time  
that Mr. Tsirimbis works for CCI and Retro Suites Hotel, respectively; and the amount of  
time that other management team members work for CCI, on a weekly basis.  
[386] Mr. Tsirimbis confirms that once he learned that the court had ordered that multi-year  
audited financial statements be prepared for CCI, he instructed CCI staff to fully  
cooperate in BDO’s audit efforts and to be as helpful as possible. To the best of his  
knowledge, all of his staff did so, even to the point of working overtime to facilitate  
BDO’s efforts. Mr. Tsirimbis confirms that he has never knowingly participated in  
covering up a fraud of unreported sales by CCI, and he would never do so on behalf of  
the defendants, or otherwise.  
[387] Mr. Tsirimbis approved increases in CCI’s advertising and promotional expenses in both  
2016 and 2017, which led to increased revenue. He deposes that CCI’s motor vehicle-  
related expenses increased in 2016 and 2017 because it purchased a new truck, used for  
catering and running errands. He also believes that the restaurant’s “repair and  
maintenance” expenses increased in 2016 and 2017 because of the life-cycle of its  
equipment and possibly some changes in the kitchen.  
[388] In cross-examination, Mr. Tsirimbis confirms that CCI currently employs both an  
executive chef and a head chef. The duties of the executive and head chef overlap, to  
some extent, but between them they cover three meal services a day over seven days a  
week, during the 90 hours a week that the restaurant is open. Similarly, there is some  
overlap between the duties of certain management positions at CCI because those duties  
are performed, at any given time, by the particular manager that is actively working, at  
that time.  
[389] Mr. Tsirimbis receives a $1,000 per month car allowance related to his personal pick-up  
truck, which is used by CCI to make deliveries, pick up supplies and in its catering  
operations.  
[390] Mr. Tsirimbis confirms that according to BDO, CCI’s annual net income/losses since he  
became its general manager are as follows: ($112,338) in 2012; ($ 90,230) in 2013;  
($36,945) in 2014; ($31,104) in 2015; $83,727 in 2016; and $8,933 in 2017.  
[391] CCI’s draft internal financial statements for 2018, as prepared by management, record an  
unadjusted net income of $131,160.08. Mr. Tsirimbis is not in a position to determine  
what adjusting entries will, ultimately, be made, or what CCI’s actual anticipated net  
income will be, after those entries are made.  
Evidence of Gerry Hockin  
Page: 67  
[392] Mr. Hockin is a Chartered Public Accountant (“C.P.A.”) and formerly the senior partner  
of Horne LLP, which provided accounting services for various corporations that Rob held  
an ownership interest in, which included CCI, 2009. In 2010, Horne LLP was sold to  
Deloitte LLP, which continued to act as CCI’s accountant. Shortly after retiring from  
Deloitte LLP in 2010, Mr. Hockin became an independent consultant to the RM group of  
companies, owned by Rob. Among his current duties, Mr. Hockin oversees the  
preparation of CCI’s year-end financial statements.  
[393] Mr. Hockin describes Rob as a great friend, but cautions that he would never assist a  
great friend in covering up a fraud.  
[394] Turning to the formation of CCI, Mr. Hockin recalls that some time in 2008, Rob  
contacted him and advised him that he had been speaking with the “McInerneys” about  
starting a restaurant in the hotel. Rob instructed him to set up a new corporation for the  
restaurant. Mr. Hockin believed that RJM Holdings would be a 50 percent shareholder  
and the McInerneys would be 50 percent shareholders. When he was originally contacted  
by Rob, with respect to the corporate structure of CCI, Mr. Hockin understood that Bruce  
would be involved in the business. Mr. Hockin sent a memorandum to Rob’s counsel,  
Dennis Asher, concerning the new corporation. He also instructed Mr. Asher to prepare a  
USA and a lease. Mr. Hockin believes that he initially advised Mr. Asher that the  
shareholdings would be broken down as: 50 percent by RJM Holdings, 25 percent by  
Cheryl and 25 percent by Bruce. He does not know why Cheryl became a 50 percent  
shareholder.  
[395] From his discussions with Rob, Mr. Hockin understood that RJM Holdings Limited was  
intended to have financial control over CCI and that it would have a right of first refusal  
to purchase Cheryl’s shares, in the event of her death or disability. He described the  
latter term as being “fairly standard” in a corporate structure similar to the one anticipated  
for CCI.  
[396] Mr. Hockin confirms that the asset purchase agreement between Cheryl/NFE and CCI  
was designed to transfer NFE’s assets and liabilities to CCI effective January 1, 2009.  
NFE’s liabilities, which totalled over $102,000 as of December 31, 2008, were assumed  
by CCI, which is the reason that the consideration in the asset purchase agreement is  
stated as $102,238. The actual “assets” that NFE owned were valued at $1. NFE’s stated  
liabilities included $36,702 of unremitted employee source deductions. However, the  
actual amount of the liability owed by CCI to the Receiver General, as a result of its  
assumption of NFE’s liabilities, was $40,711.33, once interest and penalties were  
calculated. That amount was ultimately paid by RJM Holdings, on behalf of CCI.  
[397] Mr. Hockin assumed that Cheryl signed all the documentation forwarded to her by Mr.  
Asher in August 2009, including the USA. Cheryl never advised him that she disagreed  
with the terms of the USA, or that she wanted them changed.  
[398] Mr. Hockin testifies that while it is unusual for a small business to obtain audited  
financial statements, they are required pursuant to the provisions of the Ontario Business  
Corporations Act, unless all shareholders agree to an exemption. CCI was incorporated  
Page: 68  
on December 22, 2008. On January 6, 2009, Rob executed a resolution exempting CCI  
from the statutory requirement for audited statements for the year 2009. Cheryl became a  
shareholder of CCI in August 2009. Mr. Hockin does not know if she ever agreed to  
exempt CCI from the OBCA’s audit requirements.  
[399] Beginning in early 2009, Mr. Hockin periodically attended meetings concerning CCI’s  
operation and fiscal performance. During those meetings, Rob’s demeanour was always  
“fine”. Mr. Hockin did not attend a meeting in April 2009, in which Rob yelled,  
slammed papers, and demanded to know why CCI was not making a profit. Similarly,  
Mr. Hockin never attended a meeting where Rob yelled at, insulted, or demeaned Cheryl.  
Rob never advised Mr. Hockin that he intended to fire Cheryl.  
[400] On the contentious issue of CCI’s related-party debt, Mr. Hockin confirms that through  
other corporations that he owned, Rob paid all of the amounts related to CCI’s build out,  
the acquisition of its kitchen equipment and its furnishing and fixtures, and all of the  
expenses required to set up the restaurant, all of which totalled $353,429. To the best of  
Mr. Hockin’s knowledge, that amount accurately reflects the total amount spent by Retro  
Suites Hotel, which was owned by RJM Holdings at the time, to build out, equip and  
furnish CCI.  
[401] CCI’s financial records also indicate that Retro Suites Hotel advanced a further $35,000  
to NFE in 2008 and a total of $125,000 to CCI in 2009, and that Rob personally advanced  
$16,000 to CCI in 2009. To the best of Mr. Hockin’s knowledge, the records relating to  
the foregoing cash advances are accurate.  
[402] Mr. Hockin does not recall reviewing any source documentation related to the foregoing  
entries and he did not make the entries himself.  
[403] Horne LLP prepared CCI’s financial statements for the year ended 2009 on a Notice to  
Reader basis, relying on the general ledger and internal trial balance prepared by CCI’s  
then bookkeeper, Ms. Brouwer. Deloitte LLP prepared Notice to Reader annual financial  
statements for CCI for the period of 2010 to 2014, inclusive. Unlike audited financial  
statements, no specific testing of the financial information supplied by management is  
conducted when statements are prepared on that basis. Rather, the financial statements  
are prepared in accordance with an overall test of reasonableness. Pursuant to that  
standard, if an aspect of the information provided by management is questionable or a  
variance in a “year-over-year comparison” appears to be “off”, the accountant preparing  
the statements has a duty to make inquiries of management for an explanation in that  
regard. If an accountant preparing a Notice to Reader statement discovers fraud, he is  
obliged to report it to the client.  
[404] Mr. Hockin confirms that in all of the years that it prepared Notice to Reader statements  
for CCI, Deloitte LLP never reported any fraud-related concerns with respect to CCI’s  
financial statements or its financial records. Deloitte LLP stopped preparing CCI’s  
financial statements after BDO was appointed as its auditor in 2014, but it continued to  
prepare CCI’s annual tax returns, based on management’s internal statements. CCI has  
never been audited by the Canada Revenue Agency.  
Page: 69  
[405] To the best of Mr. Hockin’s knowledge, all of the amounts set out in CCI’s 2009  
financial statements are accurate. Those statements indicate that as of December 31,  
2009: CCI owed $544,116 to the Retro Suites Hotel as long-term debt; the value of CCI’s  
long-term assets was $292,174, representing the depreciated value of the furnishings and  
equipment that were purchased through related parties on behalf of CCI; and CCI  
incurred a net operating loss of $195,001 in 2009.  
[406] In 2010, CCI’s recorded related-party debt grew by approximately $35,000, which Mr.  
Hockin attributes to related-party funding of CCI’s calculated annual net loss of $35,000,  
as recorded in the Notice to Reader statements prepared by Deloitte LLP for that year.  
However, the amount of its net loss was calculated after considering a management fee of  
$150,000 that was booked as owing by RJM Holdings to CCI. Without the management  
fee, CCI’s calculated operating loss would have been $150,000 higher, i.e. approximately  
$185,000.  
[407] Consistent with the foregoing, Mr. Hockin confirms that management fees were booked  
as owed by RJM Holdings to CCI in each of 2010, 2011, 2012 and 2013, in an aggregate  
total of $585,000. He observes that in order to book such management fees, there had to  
be a factual basis for the fees themselves and the amounts charged. He explains that  
during the period of time that management fees were being booked, CCI was undergoing  
a renovation to its operating premises that required continuous construction oversight,  
which could have provided the basis for the management fees. He describes the  
management fees as essentially a “tax play”. The management fees were never paid in  
cash, but they had the effect of increasing CCI’s annual revenue and decreasing RJM  
Holdings’ annual taxable income in the subject years. He estimates that the accrued  
management fees resulted in a total tax savings to RJM Holdings of approximately  
$100,000, over the four-year period in which they were booked.  
[408] Mr. Hockin did not personally verify the basis for the management fees but he observes  
that they were included in CCI’s Notice to Reader financial statements prepared by  
Deloitte LLP, who would have to have been satisfied that a reasonable basis for the  
management fees, as charged, existed. He agrees that when BDO subsequently  
calculated CCI’s net annual losses for the years 2010 to 2014, inclusive, it did not include  
the management fees as part of CCI’s annual revenue.  
[409] Since the management fees, as booked, were not directly paid by RJM Holdings, they  
remained a receivable on CCI’s financial statements, which in turn, affected the net  
amount of the related-party debt that CCI owed. Mr. Hockin testifies that had the subject  
management fees not been recorded as revenue to CCI, the calculated related-party debt  
that CCI owed as of the end of 2013 would have been $585,000 higher than the amount  
that is reflected in CCI’s 2013 Notice to Reader statement prepared by Deloitte LLP,  
which would have resulted in a total related-party debt owed by CCI of approximately  
$1,130,000 as of the end of December 31, 2013.  
[410] Conversely, had management fees not been accrued in the period of 2010 to 2013, CCI  
would have had an additional available “loss-carry forward” of $585,000 at the end of  
2013, to offset against future taxable income. CCI did not have any taxable income in  
Page: 70  
2014 or 2015 and despite the booking of management fees in 2010 to 2013, it still had a  
sufficient loss carry forward to reduce both its taxable income of $83,000 in 2016 and  
$8,933 in 2017, to zero.  
[411] In order to determine CCI’s financial performance from its active operations in 2010-  
2013, respectively, the management fees booked during those years must be subtracted  
from the total revenue recorded in the subject years. Once that adjustment is made, it is  
clear that CCI continued to operate at a loss in each of those years.  
[412] To the best of Mr. Hockin’s knowledge, as of December 31, 2017, CCI owed RJM  
Holdings the total amount of $450,343 and it owed Rob $16,000, in his personal capacity.  
[413] Mr. Hockin confirms that once BDO was appointed, CCI’s employees were instructed to  
fully cooperate with its audit efforts. Mr. Hockin was not aware that BDO required  
additional information to complete its audit work. BDO never contacted him for  
information. He does not know why BDO did not prepare audited statements for 2015  
and prior years.  
[414] On the issue of related-party debt reconciliation, Mr. Hockin confirms that eventually, he  
became aware that BDO was attempting to confirm the amounts owing by and to CCI by  
its related parties, as they were recorded in CCI’s general ledger and financial statements.  
He understands that BDO was able to work with Deloitte LLP and verify the accuracy of  
the amounts recorded as owing by CCI to related parties (which reconciled with the  
amounts recorded by the related parties, as being owed to them, by CCI), and the correct  
identities of CCI’s related-party creditors. Thereafter, Rob (on behalf of himself and  
RJM Holdings) and Jessica Myers on behalf of Retro Suites, signed debt confirmation  
letters prepared by BDO, which are commonly used for audited financial statement  
purposes.  
[415] Mr. Hockin believes that CCI has paid BDO approximately $115,000 for its audit-related  
work, to date.  
The Share Valuation Evidence  
[416] Although not expressly pleaded, the parties agree that if a remedy is granted pursuant to  
s. 248(3) of the OBCA, the award ought to include an order that Cheryl’s shares be  
purchased, but they dispute the appropriate valuation date for the shares. The defendants  
advocate a valuation, as at CCI’s year-end in the year in which the proceeding was  
commenced (December 31, 2011), or as at CCI’s year-end in the year of the alleged  
oppressive conduct (December 31, 2010). The plaintiffs advocate a valuation date as of  
the date of judgment. In the event that the latter date is selected as the valuation date, the  
parties dispute the fair market value (FMV) of CCI’s shares.  
[417] The plaintiffs and defendants both called opinion evidence concerning the FMV of CCI’s  
share capital as at December 31, 2017, from properly qualified experts: James Tracey of  
Tracey Business Advisors Inc. for the plaintiffs; and Lindsay Campbell of Marcus &  
Associates/Hoare Dalton for the defendants. Ms. Campbell also provided opinion  
evidence with respect to the FMV of CCI’s shares as of December 31, 2010 and  
Page: 71  
December 31, 2011. Finally, the respective experts also critiqued aspects of the other’s  
assumptions and methodology, as it relates to their respective valuations of CCI’s shares  
as of December 31, 2017.  
[418] Below, I will generally review the experts’ respective evidence about their valuation  
methodologies, including their assumptions, together with their evidence on share value. I  
will not expressly review their evidence concerning the details of the individual aspects  
of their methodologies, although I have considered that evidence, together with the  
balance of the evidence, in determining this proceeding.  
[419] Mr. Tracey provides calculations of value for CCI’s shares as of December 31, 2017,  
under three differing sets of assumptions. Conversely, Ms. Campbell provides estimates  
of value for CCI’s shares as of: December 31, 2010; December 31, 2011; and December  
31, 2017. In each instance, her opinions are premised on CCI’s actual financial  
performance, as recorded in its annual financial statements, rather than “assumptions”  
about its financial performance.  
[420] Both experts offer evidence with respect to the FMV of CCI’s shares. They generally  
agree that FMV is regarded as the highest price at which property would change hands  
between a hypothetical willing and able buyer and a hypothetical willing and able seller,  
acting at arms length in an open and unrestricted market, where neither is under a  
compulsion to buy or sell and they both have reasonable knowledge of the relevant facts.  
[421] In their evidence, the experts agree that the first step in valuing CCI’s shares is the  
selection of the appropriate valuation “approach”. In that regard, Ms. Campbell indicates  
that the FMV of a business is normally determined by the greater of: the value that can be  
substantiated based on the capitalization of its anticipated future earnings or cash flow;  
and the value that the owner would receive if the business was liquidated. The FMV of a  
business that is generating a level of profitability consistent with the assets it utilizes to  
do so, ought to be determined in accordance with a “going concern approach”.  
Conversely, in circumstances in which a business’s earnings or cash flow are inadequate,  
in relation to its tangible assets, and the investor would benefit more by liquidating the  
business than by operating it, the FMV of the business ought to be based on its  
liquidation value through “an asset-based approach”.  
Ms. Campbell’s Evidence Concerning the FMV of CCI’s Shares as of December 31,  
2010 and December 31, 2011  
[422] In arriving at her estimates of value, Ms. Campbell accepted CCI’s historical annual  
financial statements as accurate, including its recorded: sales (revenue); expenses and  
related-party debt. All of those financial statements were filed by the defendants, as  
evidence of the proof of their content, in accordance with a notice of intention pursuant to  
s. 35 of the Evidence Act, R.S.O. 1990, c. E.23.  
[423] Ms. Campbell indicates that an asset-based approach is appropriate to determine an  
estimate of value for CCI’s shares on December 31, 2010 and 2011, respectively,  
because, CCI had a negative cash flow in 2010 and 2011, once its revenue was  
Page: 72  
normalized (by deducting its booked management fees as an unusual or non-recurring  
revenue source).  
[424] Ms. Campbell values CCI’s shares under the asset-based approach, by using the net book  
value of its assets and liabilities, restated to their respective fair market values at the  
assumed valuation dates in 2010 and 2011, other than CCI’s loss carry forward amounts  
and the amounts due to CCI’s related parties as long-term debt. Next, she determines the  
FMV of CCI’s loss carry forwards, based on an estimated tax savings from their future  
usage. Those amounts are then added to the total of CCI’s assets. Next, she considers  
CCI’s long-term debt (owed to related parties) to be impaired, to the extent that the FMV  
of CCI’s liabilities exceeds the FMV of its assets. She then deducts the calculated  
impairment from the debt amounts in order to restate the “recoverable amount” due to  
related parties as at the respective 2010 and 2011 valuation dates, which forms part of  
CCI’s liabilities.  
[425] After performing the foregoing calculations, she determines that the value of CCI’s  
liabilities still exceeds the value of its assets in each of 2010 and 2011. Therefore, Ms.  
Campbell determines and opines that the FMV of CCI’s share capital as of both  
December 31, 2010 and December 31, 2011, respectively, is nil.  
Mr. Tracey’s Evidence Concerning the FMV of CCI’s Shares as of December 31,  
2017  
[426] Mr. Tracey and Ms. Campbell both employed a “capitalized cash flow approach” in order  
to value CCI’s shares as of December 31, 2017. That approach involves capitalizing an  
enterprise’s maintainable after-tax cash flow from operations. The cash flow is calculated  
before depreciation, but after a notional assumed income tax on net income, before  
depreciation, and after sustaining capital reinvestment, net of the related tax shield.  
Sustaining capital reinvestment is defined as the capital outlay required each year to  
maintain and sustain operations at the existing level. The present fair market value of the  
tax advantage accruing as a result of capital cost allowance available (the “tax shield”), at  
the valuation date, is added to the capitalized cash flow.  
[427] In certain circumstances it may be appropriate to apply a “capitalized earnings before  
interest, income taxes, depreciation and amortization” (“EBITDA”) approach. Sustaining  
capital reinvestment reduces EBITDA. The resulting maintainable discretionary cash  
flow is capitalized by a rate based on the weighted average cost of capital. The  
capitalized discretionary cash flow is added to the present value of the existing income  
tax pools and other adjustments, if necessary, to arrive at enterprise value. Outstanding  
debt is then deducted to arrive at en bloc FMV.  
[428] In order to determine CCI’s “maintainable after-tax cash flow from operations”, Ms.  
Campbell and Mr. Tracey both estimated the maintainable EBITDA that CCI could  
reasonably be expected to generate in future years (i.e. post December 31, 2017). In  
calculating maintainable EBITDA, adjustments to such things as management salaries, or  
other specific non-occurring items or events are necessary, in order to “normalize”  
EBITDA.  
Page: 73  
[429] Under their approaches, once maintainable EBITDA was determined, it was subject to a  
capitalization rate in the form of a multiplier. The applicable capitalization rate, to some  
extent, is a function of the individual valuator’s exercise of professional judgment based  
on considerations including: general economic factors; industry prospects; the prospects  
facing the specific company; and the inherent risks in establishing maintainable EBITDA.  
[430] Once the multiplier was applied to maintainable EBITDA, the resulting value was then:  
reduced by any short-term and long-term debt owed by the entity; and adjusted for any  
redundant assets or liabilities that existed as at the valuation date.  
[431] Mr. Tracey authored a report dated March 1, 2018, setting out his original “calculation of  
value” of CCI’s shares as of December 31, 2017 (the lowest quality of value calculation  
that can be performed in accordance with the professional standards governing Canadian  
business valuators). In doing so, Mr. Tracey estimated CCI’s normalized maintainable  
EBITDA with reference to both a simple average and a weighted average of CCI’s  
recorded expenses over the five-year period from 2013 to 2017, reasoning that a five-year  
average was warranted because it allowed for fluctuations in expenses over the years. He  
considered the weighted five-year average to afford more relevance to the expenses  
incurred in CCI’s most recent years of operation, relative to the valuation date. He  
derived those values from CCI’s draft audited financial statements (2012 through 2015)  
and his assumption that CCI’s financial performance in 2016 and 2017 was identical to  
its performance in 2015.  
[432] In his work, Mr. Tracey used CCI’s Notice to Reader financial statements for the period  
of 2009-2015 as a starting point. He normalized CCI’s historical earnings by first  
deducting the “booked” management fees payable to CCI, as recorded in its 2010 to 2013  
financial statements. Ms. Campbell made a similar normalization adjustment.  
[433] Next, for the purposes of completing his original “calculation of value”, Mr. Tracey  
assumed, as he was instructed to do, that:  
a) Any amounts recorded as being debt owed by CCI to related parties on the  
valuation date had a nil value; and  
b) The annual revenue recorded in each of CCI’s financial statements for the  
period of 2009 to 2015, was inaccurate and CCI’s actual annual revenue  
included assumed unrecorded sales. Mr. Tracey assumed that CCI’s total  
“costs of sales” and CCI’s “wages and benefits as a percentage of sales” were  
lower than the “industry benchmarks” because CCI had unrecorded sales  
revenue.  
[434] Further to his assumption of unrecorded sales (understated revenue) in each year of CCI’s  
operation, Mr. Tracey then “recalculated” CCI’s recorded sales for each year from 2009  
to 2018 by applying what he described as an industry “rule of thumb”. The “rule of  
thumb” suggested that CCI’s “cost of sales” and its “cost of wages and benefits” should  
each represent one-third of CCI’s total sales (revenue), in each of its years of operation.  
He derived the “rule of thumb” from data reported in the “IBIS World Industry Report of  
Page: 74  
Full-Service Restaurants in Canada”, which was compiled from a sample of all  
restaurants offering “food service to patrons who order and are served while seated and  
pay after eating”. Mr. Tracey agrees that the data he relied on was not differentiated  
based on, among other things, the location of the restaurant or its nature (fine dining,  
pizzeria, roadhouse or otherwise).  
[435] Using the “benchmark” he identified, Mr. Tracey increased CCI’s revenue on account of  
“unrecorded sales” by the following amounts, for the purposes of performing a  
calculation of CCI’s share value as of December 31, 2017: 2013 $225,854; 2014  
$195,193; 2015 $252,198; 2016 $252,198; 2017 $252,198. He also added additional  
revenue in the amount of $252,198 to the revenue that he assumed CCI earned in 2018.  
According to his “assumption-based” recalculations, Mr. Tracey estimates that CCI  
earned total additional revenue in excess of $1,850,000 on account of unrecorded sales  
from 2009 to 2017, including $192,000 of unrecorded sales in 2009, when Cheryl  
engaged in the day-to-day management of CCI’s operations.  
[436] At trial, Mr. Tracey acknowledges that he is not aware of any evidence establishing that  
CCI, in fact, engaged in any unrecorded sales in any of its years of operation, as he had  
assumed. Although he posited in his testimony that “unrecorded sales” could also include  
sales that were recorded at less than fair market value, Mr. Tracey agrees that there is no  
evidence that any of CCI’s sales were, in fact, made at less than fair market value. He did  
not conduct any analysis in that regard.  
[437] In addition, prior to basing his calculation of value on an “assumption” that the value of  
CCI’s related-party debt on the valuation date was nil, Mr. Tracey acknowledges that he  
did not ask Cheryl about the nature of CCI’s recorded related-party debt or its origins.  
[438] After recalculating CCI’s historical revenue and recasting its long-term debt as nil, Mr.  
Tracey then calculated and normalized CCI’s maintainable EBITDA, by adjusting for  
certain non-recurring or unusual expenses using a five-year average of various categories  
of CCI’s “expenses as a percentage of its sales”. He also determined an EBITDA  
multiplier in the range of 3.63 to 4.83 and ultimately, arrived at a calculation of value of  
the FMV of all of CCI’s shares as being between $633,770 and $770,164 with a mid-  
point valuation of $701,000, as of December 31, 2017 (with Cheryl’s shares valued at  
half that amount).  
[439] At trial, Mr. Tracey acknowledges that if the evidence at trial does not support his  
assumptions of unrecorded sales and related-party debt being nil on December 31, 2017,  
his calculation of the value of CCI’s shares as of that date, will not be of assistance to the  
court.  
[440] Finally, as it relates to his March 1, 2018 approach, Mr. Tracey concedes that although  
his report indicates that he prepared an “estimate value”, he actually prepared a  
“calculation of value”. He attributes the misnomer to an error during the preparation of  
his report.  
Page: 75  
[441] Subsequent to BDO’s release of CCI’s draft audited financial statements for its fiscal  
years 2016 and 2017, Mr. Tracey provided an updated report dated September 10, 2018,  
in which he set out various “calculations of the value” of CCI’s shares as of December  
31, 2017, under three different “scenarios”:  
a) Scenario 1 – premised on the assumption that the CCI engaged in unrecorded  
sales (and had unreported revenue) in each of its years of operations from  
2009 to 2017;  
b) Scenario 2 – premised on an assumption that CCI’s historical “normalized  
costs of sales” was equal to an “industry benchmark”. This approach was  
founded in Mr. Tracey’s observation that CCI’s annual financial statements  
supported that its “wages and benefits” expenses were significantly greater  
than the “industry benchmark” (as derived from the IBIS World Industry  
Report for full-service restaurants in Canada). In order to better understand the  
reasons for CCI’s wage expenses, Mr. Tracey forwarded a series of detailed  
questions to CCI’s management. He was provided with a response from CCI’s  
management, totalling approximately 13 pages. Mr. Tracey indicates that the  
information provided by CCI’s management is not fully responsive to his  
inquiries. Accordingly, for the purpose of “scenario 2”, he assumes that CCI  
historically ought to have maintained “overall cost of sales” that were  
consistent with the average of the IBIS data, which he opined would still  
allow for greater than industry benchmark “wages and benefits” expenses,  
because CCI’s “costs of purchases” was traditionally less than industry  
benchmarks; and  
c) Scenario 3 – premised on adjusting CCI’s 2016 and 2017 “costs of supplies as  
a percentage of sales”, to their 2015 levels, instead of a five-year average.  
[442] In all three scenarios, Mr. Tracey assumed that the value of CCI’s related-party debt was  
nil, as of December 31, 2017.  
[443] In arriving at his “calculation of value” under “scenario 1”, Mr. Tracey generally used the  
same methodology to calculate maintainable EBITDA that he used in his March 1, 2018  
report, with one notable exception. Specifically, to adjust for CCI’s “non-reoccurring or  
unusual expense items”, Mr. Tracey adjusted the amount of CCI’s 2016 and 2017  
“expenses as a percentage of sales” to its 2015 level of “expenses as a percentage of  
sales”, instead of using a five-year average, as he had previously done. CCI’s “expenses  
as a percentage of sales” were at their lowest in 2015.  
[444] In addition, in his September 10, 2018 report, Mr. Tracey applied an EBITDA multiplier  
range of 4.17 to 5.55, instead of the multiplier range of 3.63 to 4.83 that he originally  
used in his March 1, 2018 report, despite relying on the exact same risk premium factors  
in both reports.  
Page: 76  
[445] Mr. Tracey acknowledges that the changes he made in his September 2018 report, with  
respect to both the multiplier range and the normalization of CCI’s expenses, resulted in a  
higher calculated value of CCI’s shares as of December 31, 2017.  
[446] Similar to his March 1, 2018 approach, Mr. Tracey acknowledges that the share valuation  
he calculated under “scenario 1”, is of no assistance to the court, if his assumption about  
CCI engaging in annual unrecorded sales is not borne out by the evidence at trial.  
[447] Turning to “scenario 2”, Mr. Tracey indicates that this scenario is premised on an  
assumption that the annual “wages and benefits expenses” recorded in CCI’s financial  
statements were higher than they ought to have been because those expenses were not  
properly allocated between CCI and the Retro Suites Hotel. Although Mr. Tracey  
concedes that he was not aware of specific evidence to support his assumption in that  
regard, he also observed that he had not been afforded direct access to CCI and Retro  
Suites’ management, for the purpose of interviewing them on wage allocation and related  
issues. He did not find the information provided by CCI’s management to be sufficient in  
that regard. He did not review the transcripts from the examination for discovery of  
CCI’s representative.  
[448] Although he used “benchmarks” to recalculate CCI’s annual “wages and benefits”  
expenses, he concedes that the IBIS report he relied on, states, in part: “unlike large  
chains, single location full-service restaurants struggle to increase automation and lower  
labour costs due to lack of economics of scale”. He also agrees that he did not “back out”  
wage expenses attributable to CCI’s “front of house” staff, when he completed his  
analysis.  
[449] Under “scenario 3”, Mr. Tracey accepted that both CCI’s sales and its wages expenses  
were accurately recorded in its annual financial statements. He assumed that its related-  
party debt was nil. In calculating maintainable EBITDA, he “normalized” CCI’s 2016  
and 2017 “supplies expenses as a percentage of sales” to its 2015 level of “expenses as  
percentage of sales”, as opposed to the five-year average that he had originally used in his  
March 1, 2018 calculation of value.  
[450] Mr. Tracey also identified two items from CCI’s 2016 general ledger (“Uline banquet  
tables - $5,225 and Great Lakes Neon - $3,541”) which, in his view, appeared to be  
capital in nature and, therefore, ought to have been capitalized over time, rather than  
expensed. He then made corresponding adjustments to CCI’s recorded expenses, which  
increased its net income. In arriving at that conclusion, Mr. Tracey concedes that he did  
not have any information with respect to the nature of the asserted expenses, other than  
their respective descriptions in CCI’s general ledger. He also concedes that he did not  
know whether BDO had already identified those particular expenses as capital in nature,  
and adjusted CCI’s financial statements accordingly (by removing them from the expense  
category), during the course of its audit work.  
Page: 77  
[451] In his September 2018 report, Mr. Tracey arrived at the following calculations of the  
value of all of CCI’s shares, as of December 31, 2017:  
a) Under “scenario 1”, the FMV of all of CCI’s shares is $1,200,000 to  
$1,500,000, with a mid-point of $1,350,000 assuming related-party debt is nil  
and including “assumed unrecorded sales”. If the actual recorded amount of  
CCI’s related-party debt as of December 31, 2017 is deducted, the FMV of all  
of CCI’s shares is $745,000 to $1,045,000 with a mid-point of $895,000.  
b) Under “scenario 2”, assuming that CCI ought to have operated at industry  
benchmark cost of sales (and it did not because its wages and benefits  
expenses were not properly allocated between various related parties) the  
FMV of all of CCI’s shares is $1,045,000 to $1,325,000 with a mid-point of  
$1,180,000, assuming its related-party debt is nil. If the recorded amount of  
CCI’s related-party debt as of December 31, 2017 is deducted, the FMV of all  
of CCI’s shares is $590,000 to $870,000, with a mid-point of $730,000; and  
c) Under “scenario 3”, the FMV of all of CCI’s shares at December 31, 2017, is  
$690,000 to $860,000 with a mid-point of $775,000, assuming its related-  
party debt is nil. If the recorded amount of CCI related-party debt as of  
December 31, 2017, is deducted, the FMV of all of CCI’s shares is $230,000  
to $400,000 with a mid-point of $315,000.  
[452] In all cases, the value of Cheryl’s shares is one half of the total share value, as found.  
Ms. Campbell’s Evidence Concerning the FMV of CCI’s Shares as of December 31,  
2017  
[453] Ms. Campbell originally prepared an estimate of value of CCI’s shares as of December  
31, 2017, through her report dated April 17, 2018. An estimate of value yields a higher  
quality of valuation than a calculation of value.  
[454] Similar to Mr. Tracey, Ms. Campbell employed a “capitalized cash flow approach” to  
value CCI’s shares as of December 31, 2017. Like Mr. Tracey’s original approach, when  
she determined CCI’s maintainable EBITDA, Ms. Campbell adjusted CCI’s 2016 and  
2017 expenses using a five-year average of its “expenses as a percentage of sales”. She  
applied an EBITDA multiplier of 4.5 to 5.4, which was higher than the multiplier Mr.  
Tracey originally used in his March 1, 2018 report.  
[455] Unlike Mr. Tracey, Ms. Campbell did not assume that CCI’s financial performance in  
2016 and 2017 mirrored its 2015 performance. Instead, she relied on CCI’s internally  
generated financial statements, in respect of its financial performance in those years.  
Similarly, Ms. Campbell did not assume: that CCI’s related-party debt was nil; that CCI  
consistently made unreported sales; nor that its wage expenses should, necessarily, have  
been lower than the amounts recorded in its annual financial statements.  
Page: 78  
[456] In her April 2018 report, Ms. Campbell provided an estimate of the value of all of CCI’s  
shares as of December 31, 2017, ranging from nil to $36,200 with a mid-point of $18,100  
(with the value of Cheryl’s shares being half that amount).  
[457] Ms. Campbell delivered a supplemental report revising her estimate of value, after the  
release of BDO’s draft audited financial statements for CCI for the years 2016 and 2017.  
Those statements revealed that CCI’s financial performance in 2016 and 2017, was better  
than the performance reflected in its internally generated statements. In her supplemental  
report, Ms. Campbell employed the exact same methodology that she did in her original  
April 2018 report, specifically relying on the sales, expenses and debt amounts recorded  
in the 2016 and 2017 draft audited financial statements prepared by BDO. None of those  
amounts were subject to a scope limitation by BDO.  
[458] Ms. Campbell did not alter the EBITDA multiplier that she originally used, nor did she  
deviate from her use of a five-year average when normalizing expenses, for the purpose  
of calculating CCI’s maintainable EBITDA.  
[459] In her supplemental report, Ms. Campbell provided an estimate of value of all of CCI’s  
shares as of December 31, 2017, in the range of $9,900 to $97,900 with a mid-point of  
$53,900. The value of Cheryl’s shares is one half of the value of all of the shares.  
[460] Ms. Campbell testifies that Mr. Tracey’s use of an increased multiplier range had the  
effect of increasing his calculation of value by $157,000 in “scenario 1”. She further  
testifies that the change in his approach to normalizing expenses to 2015 levels rather  
than a five-year average, increased his calculation of value by a range of $108,948 to  
$121,160.  
[461] In the context of the foregoing evidence, I will now summarize the parties’ position at  
trial.  
III) THE POSITION OF THE PARTIES  
(a) The Position of the Plaintiffs  
[462] The plaintiffs claim for wrongful dismissal and Cheryl claims a remedy for the  
consequences of the defendants’ asserted oppressive conduct, in accordance with s. 248  
of the OBCA. The latter aspect of Cheryl’s claim is embedded with allegations that Rob,  
qua director: breached his fiduciary obligations both to CCI and Cheryl, in her capacity  
as a shareholder; breached his obligation of loyalty and good faith; and breached his  
obligation to fully account, including through his failure to ensure that proper financial  
records were maintained on behalf of CCI.  
[463] Cheryl asserts that Rob has engaged in a pattern of ongoing oppressive conduct that dates  
back to 2009, and continues to the present. Her wrongful termination from CCI was part  
of the pattern that also includes: Rob’s abusive and bullying conduct towards her; Rob’s  
ongoing exploitation of the disproportionate “control and power” he held over CCI and  
Cheryl’s corresponding “vulnerability”; Rob’s consistent bad faith conduct; and Rob’s  
repudiation, through his conduct, of every “promise” he made to Cheryl.  
Page: 79  
[464] In the foregoing context, the plaintiffs identify the issues in the proceeding, as follows:  
1.  
2.  
Was Cheryl directly or constructively dismissed from CCI?  
Did Rob commit acts or omissions that were oppressive or that unfairly  
disregarded or were unfairly prejudicial to Cheryl’s interests as a shareholder of  
CCI?  
3.  
4.  
Has Rob appropriated all of the assets of CCI for his own use and benefit?  
Have the defendants been unjustly enriched through the appropriation of Cheryl’s  
business, assets and goodwill, and the elimination of a major competitor (i.e. her  
former “NFE” business)?  
5.  
6.  
To what extent should Rob be held personally liable for any damages and/or  
compensation, to which the plaintiffs are entitled?  
Are the plaintiffs entitled to compensation and/or damages?  
[465] In affirmatively answering the last question, the plaintiffs request judgment on the  
following terms:  
a)  
Cheryl’s shares in CCI be purchased using a valuation date of December 31,  
2017, and a purchase price of either $590,000 or $387,500 (in accordance with the  
midpoint of Mr. Tracey’s calculation of value pursuant to scenarios 2 and 3,  
respectively);  
b)  
c)  
d)  
The defendants pay compensation to Cheryl in the amount of $50,000, as  
disgorgement of one-half of the $100,000 tax benefit enjoyed by RJM Holdings  
Inc. as a result of the recording of management fees in 2010 to 2013, inclusive;  
The defendants pay compensation to Cheryl in the amount of $80,500  
representing one-half of CCI’s internally recorded $161,000 [sic] net income  
earned in 2018;  
The defendants pay damages in the amount of $100,000 to Cheryl for wrongful  
dismissal, based on a 24-month notice period;  
e)  
f)  
The defendants pay aggravated damages to Cheryl in the amount of $50,000;  
The defendants pay damages to Bruce for wrongful dismissal based on a notice  
period of three to six months (less the three weeks for which he has previously  
been paid).  
[466] The plaintiffs submit that the evidence which the court ought to accept establishes that in  
2008, Rob enticed Cheryl to leave her successful NFE business, by assuring her that: they  
would be partners; she would participate in share ownership; and they would become  
“rich” together. Cheryl accepted Rob’s proposal, and was subsequently, terminated from  
Page: 80  
her employment at CCI, less than two years after it commenced operations and just as the  
business was “turning around”.  
[467] Cheryl contributed her goodwill, experience, reputation and NFE’s equipment to CCI’s  
business operations.  
[468] With Rob’s knowledge, Cheryl recruited a “top chef” (Chef Bonnot) and his wife to work  
in the restaurant. Contrary to Rob’s evidence, Cheryl, Bruce, and Rob understood and  
agreed that Bruce would also be employed by CCI. Their evidence is corroborated by  
Mr. Hockin’s evidence, who testifies that after Rob advised him about the “deal” to form  
CCI, he (Mr. Hockin) was aware that Bruce would be involved in the restaurant, and he  
instructed Mr. Asher to allocate 25 percent of CCI’s anticipated share capital to Bruce.  
In the context of the foregoing, Rob is clearly not being truthful when he testifies that he  
and Cheryl agreed that Bruce would not be part of CCI.  
[469] Bruce worked at CCI from September 2008 to June 2010, performing a variety of tasks.  
He worked “a lot more” than “the 20 hours per week”, for which he was paid. He was  
terminated without cause. He is entitled to damages in lieu of notice, consistent with a  
three to six month notice period.  
[470] Turning to Cheryl’s wrongful dismissal claim, she acknowledges that CCI suffered a loss  
in 2009, as she previously advised Rob that it would. Following that loss, Rob engaged in  
a series of “rants” and abusive behaviour, primarily, directed at Cheryl, in which he  
asserted, among other things, that CCI’s labour expenses were too high. Rob’s  
complaints about staffing costs were a pretext, in order to “lower the boom”.  
[471] Rob engaged in a pattern of conduct that culminated in Cheryl’s express dismissal from  
CCI on August 4, 2010, through Rob’s voicemail message. Alternatively, she was  
expressly terminated by the delivery of the termination agreement in early September  
2010.  
[472] If Cheryl was not expressly dismissed, she was constructively dismissed by Rob’s  
unilateral changes to her duties and the circumstances surrounding those changes.  
Specifically, Rob hired Mr. Kazarian without consulting Cheryl and without advising Mr.  
Kazarian that Cheryl was CCI’s president and a 50 percent shareholder. Rob unilaterally  
reassigned Cheryl’s financial reporting and controls duties to Mr. Kazarian. Mr. Kazarian  
then gave several orders to Cheryl, and made recommendations about the business  
without consulting her, at a time when he was unaware that she was an officer and  
shareholder.  
[473] Eventually, a meeting was held in June 2010, in which Rob was angry and accusatory  
towards Cheryl. He directed her to fire her husband Bruce, as well as, Leslie Bonnot, or  
she herself would be fired. Ultimately, Mr. Kazarian fired Bruce and Leslie at the end of  
June, 2010. Shortly thereafter, Cheryl wrote a letter (“July 8”), the content of which, if  
true, evidences “classic oppression”.  
[474] Cheryl’s correspondence is not consistent with the proposition that she abandoned her  
position at CCI. Instead, she clearly indicated that she intended to remain at the  
Page: 81  
restaurant and that she wanted to develop a successful “go forward plan” with Rob, to  
achieve profitability.  
[475] Shortly after Cheryl delivered the foregoing correspondence, she received  
correspondence from Mr. Kazarian, at Rob’s direction, directing her to take “two weeks  
off with pay”. The plaintiffs submit that this was part of Rob’s efforts to push Cheryl out  
of CCI. During the time that Cheryl was “off”, Mr. Kazarian advertised for a new chef,  
which further evidenced that Cheryl was being replaced.  
[476] Cheryl suffered emotional distress as a result of: Rob’s ongoing mistreatment of her; his  
unilateral decision to “strip her of all of her management functions”, and to vest them in  
Mr. Kazarian; his unilateral termination of Bruce; and his subsequent acts that appeared  
designed to oust Cheryl from CCI (“two weeks off” and “advertising for a chef”). Cheryl  
became depressed and, for medical reasons, she was unable to return to work at the end  
of July. She provided CCI with a doctor’s note, in that regard.  
[477] Cheryl submits that if she was not constructively dismissed by that point in time, she was  
directly dismissed on August 4, 2010. Notwithstanding her medical condition, Rob left  
Cheryl a message advising her that he had “worked out a solution”, whereby she would  
receive three months pay in lieu of notice of termination of her employment, together  
with “a little” assistance in re-establishing her former restaurant.  
[478] Cheryl’s position that she was directly dismissed, as a result of Rob’s August 4, 2010  
voicemail message, is corroborated by the documents that were subsequently sent to her  
by Mr. Asher, at Rob’s direction, including a “termination of employment contract”.  
Cheryl did not accept the terms of her dismissal, which Rob unilaterally purported to  
dictate. Instead, she concluded that, as a result of Rob’s conduct, she had been “forced  
out” of CCI.  
[479] The plaintiffs submit that the events that unfolded over the course of mid-2010, are not  
consistent with an employee “abandoning” her employment. Rather, they illustrate Rob’s  
high-handed and arrogant actions in terminating Cheryl’s employment with CCI.  
[480] Cheryl submits that before she was wrongfully dismissed, Rob subjected her to  
humiliating changes in both her employment duties and her work environment including:  
stripping her of all her authority; moving her to an office/storage room (shared by Mr.  
Kazarian), removing her access to the corporation’s financial books and records; and  
taking away her corporate credit card and banking authority.  
[481] The plaintiffs posit that if this was not a case of direct dismissal, it would clearly be a  
case of constructive dismissal, in the most humiliating manner.  
[482] Rob’s actions had a profound effect on Cheryl. The medical records demonstrate that she  
reported feeling depressed following her “demotion”, the “loss of her investment in her  
restaurant business” and after “being pushed out of the business”. Cheryl also reported a  
lack of self esteem and increased anxiety. She was prescribed medication. By the end of  
September 2010, she endorsed a 50 percent improvement in her symptoms and her  
prognosis was deemed excellent.  
Page: 82  
[483] Eventually, Cheryl started a new business some distance away from CCI and commenced  
litigation against Rob. Rob’s correspondence to Cheryl during the litigation evidences his  
bullying and abusive behaviour and corroborates Cheryl’s evidence about his 2010  
demeanour.  
[484] Cheryl submits that a 24-month notice period is applicable to the termination of her  
employment, and she is entitled to aggravated damages in the amount of $50,000, as a  
result of Rob’s unfair and bad faith conduct, in the course of her dismissal.  
[485] Turning to the issue of “oppression”, Cheryl correctly submits that the application of the  
OBCA’s oppression provisions are fact-specific and driven by the reasonable expectations  
of the corporation’s stakeholders. A claim for a remedy for oppression compels an  
analysis of two fundamental issues:  
1. Does the evidence support the reasonable expectation asserted by the claimant?  
and;  
2. Does the evidence establish that the reasonable expectation was violated by  
conduct falling within the terms “oppression”, “unfair prejudice” or “unfair  
disregard” of a relevant interest?  
[486] In identifying her reasonable expectations qua shareholder, Cheryl submits that most  
fundamentally stakeholders are entitled to “reasonably expect” fair treatment. She also  
asserts that she held the following reasonable expectations as a CCI shareholder:  
1. She would be a fully equal 50 percent partner;  
2. She would have a “meaningful say” in decisions involving CCI’s business;  
3. She would be actively involved in the management of the business;  
4. She would be treated in good faith and respectfully, by her partner, Rob;  
5. She would be able to continue to maintain a livelihood by working at the  
business, on a long-term basis (15 years);  
6. She would participate as a shareholder in profit distribution;  
7. She would be able to participate in director’s meetings;  
8. She would be able to participate in shareholder meetings;  
9. She would have timely access to financial information, with respect to CCI;  
10. She would not have her interest in CCI impaired by conflicts of interest and  
self-dealing by Rob.  
[487] Cheryl contends that all of her reasonable expectations were violated by conduct by the  
defendants, that was oppressive and/or unfairly disregarded or was unfairly prejudicial to  
Page: 83  
her interests as a shareholder. For example, until she brought a motion in 2014, the  
defendants made no efforts to produce annual audited financial statements for CCI.  
[488] Cheryl also submits that her reasonable expectation to participate in CCI’s management  
was violated because she was excluded from CCI, through her dismissal. Her dismissal  
also violated her reasonable expectations as a shareholder because her continued  
employment was an integral part of the parties’ compact.  
[489] Cheryl contends that the management fees that were recorded as payable by RJM  
Holdings Inc. to CCI, evidence that Rob placed himself in a position in which his duty to  
CCI conflicted with his personal interest or his duty to another, and as a result, he failed  
to act in CCI’s best interests.  
[490] Further, Rob, as a CCI director, owed a fiduciary duty to Cheryl as a shareholder, arising  
from the power that Rob held and Cheryl’s corresponding dependency. In the context of  
their power imbalance, Rob abused his control over CCI, to obtain a personal tax benefit  
for RJM Holdings Inc., through the recording of management fees. Cheryl submits there  
were “no real transactions” grounding the fees, which were an artificial construct that  
resulted in a tax benefit enjoyed exclusively by Rob, to the exclusion of Cheryl. She is  
entitled to compensation in the amount of $50,000, which is one half of the benefit.  
[491] Cheryl also requests an order compelling the purchase of her shares, with a valuation date  
of December 31, 2017, plus an additional $80,000 representing one half of CCI’s 2018  
net income, as internally calculated by its management (prior to any adjusting entries by  
its accountants) [the actual recorded unadjusted 2018 net income is $131,160, with one  
half being $65,580].  
[492] Cheryl rejects a valuation of her shares that is consistent with either the date that the  
proceeding was commenced, or the date of her termination. Cheryl submits that she has  
consistently remained a shareholder of CCI throughout the conduct of this litigation,  
during which the defendants’ oppressive conduct has continued.  
[493] Further, despite her failure to request a remedial share purchase in her statement of claim,  
Cheryl submits that it was open to the defendants to admit wrongdoing, at an early stage,  
and thereafter proceed to a remedial hearing (in which a share sale could have been  
requested), on a timely basis. They did not. Therefore, it is not open to the defendants to  
complain that the “value” of Cheryl’s shares has increased over the years that they have  
defended the proceeding.  
[494] Cheryl submits that for the purpose of valuing CCI’s shares, its related-party debt should  
be treated as nil. She reasons that in his April 7, 2017 correspondence, Mr. Da Sacco  
indicates that BDO was not able to verify the opening balances of the related-party debt,  
which were carried through CCI’s financial statements, in subsequent years. No source  
documentation was produced to support the alleged opening balance of the debt  
($353,429.70), nor the subsequent advances said to have been made by various related  
parties to “cover” CCI’s losses.  
Page: 84  
[495] Cheryl contends that: as a fiduciary of CCI, Rob has a duty to account for all amounts  
received by CCI; and Rob, as a trustee wrongfully withholding property which he is  
bound to deliver to the beneficiary, is liable to make reparation for loss suffered by the  
trust, by reason of its breach, with every presumption being made against him as a  
wrongdoer.  
[496] Since CCI’s related-party debt opening balances cannot be verified with reference to  
source documentation, every presumption must be made against Rob, who has failed to  
discharge his duty to account. Therefore, CCI’s recorded, but unverified, related-party  
debt should be valued as nil.  
[497] In addition, CCI’s historical financial recording and record-keeping practices were  
flawed. BDO cannot state whether CCI’s financial statements up to 2015, reasonably  
reflect the financial position of the company. BDO cautioned that the risk of unreported  
revenue from CCI’s banquet sales was high, as was the risk of input errors in the  
recording of revenue. As a result, there may have been understated revenue, accurate  
revenue with a poor audit trail or overstated revenue in CCI’s financial statement for  
2015, and all prior years. BDO raised similar concerns with respect to the recording of  
CCI’s expenses for 2015 and prior years.  
[498] Cheryl states that although BDO identifies various potential affects of CCI’s past record-  
keeping, every presumption must be made against the defendants, who have a duty to  
account. Consequently, the use of CCI’s financial statements for 2015 and prior years  
will yield unreliable results. Instead, the approaches embedded in Mr. Tracey’s scenario 2  
or 3, ought to be preferred, as they will produce more reliable results than Ms.  
Campbell’s approach.  
[499] The mid-point calculation of value of all of CCI’s shares derived from scenario 2 is  
$1,180,000. Therefore, Cheryl’s shares ought to be valued at $590,000. Alternatively, the  
mid-point of the value of CCI’s shares derived from scenario 3, is $775,000. Therefore,  
Cheryl’s shares ought to be valued at $387,500.  
[500] The plaintiffs request judgment in accordance with the foregoing.  
(b) The Position of the Defendants  
[501] The defendants seek judgment dismissing the plaintiffs’ action in its entirety. They also  
seek judgment on the counterclaim in the amount of $50,000 against Cheryl, in favour of  
Rob, as damages for defamation.  
[502] In support of their position, the defendants submit that the following issues must be  
determined:  
a) Whether Cheryl abandoned her employment at CCI in the summer of 2010,  
when she stopped attending at work and thereafter, failed to communicate any  
desire or intention to return to work;  
Page: 85  
b) If Cheryl is found not have abandoned her employment, whether in the  
circumstances, the salary continuation that she received constitutes adequate  
pay in lieu of notice;  
c) Whether the pay in lieu of notice that Bruce received on the termination of his  
employment constitutes adequate pay in lieu of notice;  
d) Whether Cheryl’s “reasonable expectations” as a shareholder were oppressed,  
unfairly prejudiced or unfairly disregarded, and whether it caused it her  
compensable injury;  
e) In the event that the answer to (d) above is in the affirmative, what valuation  
date should be chosen for the purchase of Cheryl’s shares;  
f) What is the value of Cheryl’s shares in CCI on the valuation date; and  
g) Whether Cheryl defamed Rob when she publicly called him a cheat and if so,  
what damages should be awarded.  
[503] The defendants submit that the foregoing issues must be determined in the context of the  
case-specific circumstances including the following “immutable facts”: Cheryl and Rob  
agreed to become 50/50 partners in CCI; Cheryl was to be the operating partner and Rob  
was to contribute the money; Rob invested $350,000 to launch the restaurant; CCI  
opened January 1, 2009; Cheryl served as CCI’s manager and one of its two chefs from  
January 2009 until early July 2010; CCI lost more than $200,000 during the time Cheryl  
operated it, which she confirmed in cross-examination; in early July 2010, Cheryl  
stopped coming to work; at no time following her departure from CCI did Cheryl advise  
of a desire or intention to return to CCI; and at the time Cheryl left CCI, and at the time  
her action was commenced, her shares were worth nil.  
[504] In addressing the relevant contextual background, the defendants submit that at the time  
they met, Rob was highly successful. Cheryl and Bruce were operating a money losing  
restaurant (NFE), which is relevant to the plaintiffs’ claim of unjust enrichment.  
[505] After Rob made his initial proposal, the parties met several times in 2008, and,  
ultimately, arrived at an agreement consisting of the following terms: they would be  
50/50 partners in a restaurant business, with Cheryl contributing solely through her  
labour; Cheryl would be paid a $50,000 annual salary; Cheryl prepared a budget and a  
revenue projection of $1 million for CCI’s first year; Rob would advance a total of  
$150,000 towards the start-up costs that had been discussed at their meetings; the  
restaurant would pay $48,000 per year as rent; the monies advanced by Rob would be  
repaid before any profits were distributed to the partners; Rob would have financial say  
over financial matters; and a partnership agreement would be drawn up.  
[506] Based on their agreement, the defendants submit that the parties’ reasonable expectations,  
at the time their deal was formed, included: Cheryl would be paid a salary and Retro  
Suites would be paid rent; the restaurant’s profits would be used to repay Rob’s  
investment and then split 50/50; if Rob was unable to fund the restaurant, he would be  
Page: 86  
required to sell his shares; if either shareholder died, their shares would be sold; if one of  
them decided that they did not want to continue in the venture, they would sell their  
shares; and similarly, if Cheryl ceased to be an employee of CCI, it was reasonable to  
expect that she would sell her shares.  
[507] The terms of the documentation prepared by Mr. Asher in 2009 supported the foregoing  
expectations. Further, the parties reasonably expected that Rob would exercise some  
control over Cheryl’s employment. The contract of employment that Cheryl signed  
specified that: she would comply with all reasonable instructions as may be given to her  
by Rob; her reporting relationships, duties and responsibilities may be changed by Rob  
on behalf of CCI, as he deemed appropriate without affecting the balance of the contract;  
and she would work with representatives retained by CCI to assist in its operation.  
[508] The proposed terms of the USA also reflected the parties’ reasonable expectations, at the  
time, concerning what would transpire in the event of a breakdown of their “partnership”.  
In her evidence, Cheryl agreed that excepting the sale of her shares on cessation of her  
employment, all of the share transfer and share purchase provisions of the USA made  
sense. Cheryl “did not know” if she held an expectation, in 2009, that her shares would  
be purchased if she ceased to be employed as CCI’s operating partner. The defendants,  
therefore, submit that Cheryl has failed to discharge her onus, as plaintiff, to identify her  
“expectation” in that regard. They also submit that it would have been unreasonable for  
Cheryl to have expected that if her employment ceased when her shares had no value, she  
would be able to retain them until they did have a value.  
[509] All of the agreements that were signed in 2009, which gave control to Rob as employer,  
landlord and secured creditor, all inform the determination of Cheryl’s reasonable  
expectations. Rob did not dissuade her from obtaining legal advice with respect to the  
agreements. Cheryl concedes that she did not speak with Rob between the time she  
received the documents and the time she executed them, months later.  
[510] The defendants submit that the written documents, both signed and unsigned, reflect the  
parties’ reasonable expectations as of the autumn of 2009. The terms of the agreement,  
including the unexecuted shareholders’ agreement “made perfect sense”, given the nature  
of the “partnership” relationship that Rob and Cheryl entered into, and they are consistent  
with what the parties reasonably expected, at that time.  
[511] The defendants posit they have not failed to account, in respect of CCI’s historical  
financial performance, including in relation to the validity and quantum of its recorded  
related-party debt. They correctly observe that this trial is not a forensic audit of CCI’s  
past fiscal performance. Further, the evidence, including Cheryl’s admissions, confirms  
that CCI’s related parties did, in fact: spend $353,429.70 to build out, equip and furnish  
CCI in 2008, which had to be repaid by CCI; advanced $35,000 to NFE in 2008 for  
CCI’s start-up costs, which had to be repaid; advanced in excess of $100,000 to CCI  
directly in 2009, which had to be repaid; and directly paid certain of CCI’s expenses in  
2009, which had to be repaid. Cheryl and Mr. Hockin confirm the accuracy of the  
opening balance of CCI’s long-term debt, as well as the long-term debt that it owed to its  
Page: 87  
related parties, in the amount of $544,166, as of December 31, 2009, together with  
$16,000 owed to Rob personally.  
[512] There is no evidence that CCI fully repaid its long-term debt. After Mr. Da Sacco’s April  
2017 correspondence, BDO worked with Deloitte and was able to reconcile the long-term  
debt accounts on a historical basis. BDO was ultimately satisfied and issued an audit  
opinion that as of December 31, 2017, CCI owed in excess of $450,000 in long-term  
debt. In the foregoing context, there is no basis to conclude that CCI’s related-party debt  
should be treated as nil.  
[513] Similarly, on the issue of recorded management fees, the defendants submit that the  
evidence of Mr. Hockin was clear. For every management fee booked by CCI, there was  
a corresponding debit to the RJM Holdings related-party debt account. Effectively, RJM  
Holdings was covering CCI’s ongoing operating losses during the years that the  
management fees were recorded (2010-2013), by paying expenses on CCI’s behalf and  
offsetting them in its own books against the “management fee” account payable that it  
maintained. There was no tax “freebie” that needs to be disgorged. The evidence  
discloses that through RJM Holdings, Rob continued to support CCI in the approximate  
amount of $450,000, from 2010-2013, consistent with the management fees that were  
booked.  
[514] The evidence does not disclose that Cheryl was expressly or constructively dismissed.  
The evidence supports that, through her conduct, Cheryl resigned. It is also open for the  
court to conclude that Cheryl concluded that she could no longer work at CCI, and,  
therefore, the contract of employment was frustrated.  
[515] Consistent with Rob and Cheryl’s duty as directors to act in CCI’s best interests, there  
was a valid commercial reason to involve Mr. Kazarian in the financial aspects of CCI.  
After a year and a half of Cheryl’s operation and management, the restaurant had lost  
over $200,000, its sales were declining, and it owed in excess of $500,000. Reasonably,  
the parties could not have expected that Rob would continue to fund CCI’s ongoing  
losses, indefinitely. Rob and Cheryl agree that something had to be done. Mr. Kazarian  
was brought in to assist Cheryl in CCI’s operation.  
[516] The evidence does not support a finding that prior to, or subsequent to, Mr. Kazarian’s  
retention, Rob engaged in bullying or demeaning behaviour toward Cheryl, during their  
2010 meetings, or otherwise. Rob and Cheryl gave opposing evidence on the issue. Mr.  
Kazarian’s evidence corroborates Rob’s testimony. Cheryl did not call any evidence from  
the individuals that she says were in a position to witness the manner in which Rob  
treated her. Cheryl began to experience depressive feelings, in part, because of CCI’s  
ongoing losses and her perception of unfair criticism.  
[517] Mr. Kazarian assumed a role of financial comptroller, and concordant changes were made  
to Cheryl’s duties. The changes were permitted pursuant to the Contract of Employment  
to which Cheryl agreed. Based on CCI’s historical financial performance, Rob had a  
responsibility to CCI to change some of Cheryl’s duties, related to its financial aspects.  
Page: 88  
[518] Bruce was terminated in late June 2010. Cheryl became more distraught. A short time  
later, she blew up at Mr. Kazarian and left the restaurant. Contrary to Cheryl’s  
characterization of him as a “bully”, Rob agreed that Cheryl should take two weeks off  
work with pay, given her then emotional state.  
[519] After she left CCI in early July 2010, Cheryl never expressed an intention or desire to  
return to work. She did not respond to CCI’s attempts to contact her. She mistook an  
attempt to find a replacement for Chef Bonnot, as an attempt to replace her. She did not  
contact CCI, in that regard, for clarification, or otherwise.  
[520] Rob made a proposal to Cheryl in early August 2010 designed to address their  
outstanding issues, which he also believed was consistent with Cheryl’s desire to return  
to her old restaurant. He did not expressly terminate Cheryl’s employment, nor did he  
intend to do so. He invited Cheryl to contact him regarding the proposal. Instead, it was  
met with Cheryl’s silence. Subjectively, by early August 2010, Cheryl determined that  
she could not go back to CCI.  
[521] In response to Cheryl’s continued silence, Rob requested that Mr. Asher prepare  
documents for Cheryl’s signature, in accordance with the terms of his proposal. The  
“termination of employment” agreement that Mr. Asher prepared did not expressly or  
constructively terminate Cheryl’s employment. It was predicated on Cheryl’s resignation,  
as the manner in which her employment would be “terminated”, and it required her  
consent to be operative. Cheryl did not sign the agreement and, therefore, it did not  
“terminate” her employment. Neither Cheryl nor her counsel responded to the  
documentation.  
[522] By the autumn of 2010, neither Rob nor Mr. Kazarian had advised Cheryl that her  
employment was terminated through dismissal. Rob and Mr. Kazarian agree that Rob  
never intended, or expressed an intent, to do so. Conversely, there is no evidence that  
Cheryl intended to return to CCI after she left in July 2010. To the contrary, she  
subjectively determined that she was not going to return to CCI. In those circumstances,  
the defendants posit that Cheryl, through her conduct and prolonged silence, resigned her  
employment from CCI. In all the circumstances, a reasonable person, viewing matters  
objectively, would conclude that Cheryl had resigned.  
[523] In the event that the court concludes that Cheryl was dismissed, then in accordance with  
the Bardal factors and the decided cases, the high end of the range of reasonable notice is  
36 months. However, in all the circumstances, a notice period at the low end of the range,  
in the order of two months, is warranted. Cheryl was employed as a restaurant manager  
and chef for approximately 18 months. At the time of dismissal, she was relatively young  
and she had experience and training, albeit a lack of formal qualifications, in the  
restaurant industry. There is no basis for an award of aggravated or moral damages.  
[524] The notice period ought to commence running in early July 2010, when Cheryl left CCI.  
Although Cheryl testified to depressive feelings after that time, the evidence does not  
support that she was unfit for employment in the period of June through September 2010.  
Page: 89  
Therefore, the salary that Cheryl received in July and August 2010, ought to be deducted  
from any damage award.  
[525] Further, it is clear that after she left CCI, Cheryl eventually earned income through the  
Healthy Choice Catering business. The plaintiffs have failed to produce any documents  
associated with the income that was earned through that business, thereby rendering it  
impossible for the court to determine whether Cheryl, partially or fully, mitigated her  
damages by October 2010. The court should liken that circumstance to one of spoliation,  
and draw an adverse inference that Cheryl fully mitigated her damages through the  
catering business.  
[526] With respect to Bruce’s wrongful dismissal claim, he was employed for a 13-month  
period in a part-time, minimum wage capacity. In those circumstances, the $680.42 that  
he has already received (representing three weeks wages that Bruce received in lieu of  
notice of termination) satisfies his common law entitlement to payment in lieu of notice.  
[527] Rob held a reasonable expectation that upon Cheryl’s resignation from CCI in 2010, her  
shares would be purchased. Any expectation that Cheryl had that she would continue to  
hold shares in CCI, in perpetuity, and eventually, share in its profitability, in the  
foregoing circumstances was not reasonable.  
[528] With respect to Cheryl’s oppression claim, the defendants submit that: Cheryl has failed  
to identify, in her evidence, the reasonable expectations that she asserts as a shareholder;  
many of her “submitted” expectations are not reasonable, when measured against the  
parties’ agreement, past practice, reasonable commercial practice and the availability of  
preventative steps; the defendants did not engage in conduct that falls within the scope of  
the oppression provisions of the OBCA; and, to the extent that the defendants engaged in  
any “technical breaches”, they did not result in compensable injury to Cheryl. No remedy  
is warranted.  
[529] If Cheryl is entitled to a remedy under s. 248 of the OBCA, it ought to include a purchase  
of her shares. Consistent with the parties’ reasonable expectations and the case-specific  
facts, the defendants submit that the appropriate valuation date is either December 31,  
2010 or December 31, 2011. After Cheryl left CCI, she did not contribute to its business,  
in any way. CCI’s eventual profitability is attributable to the ongoing investments made  
by Rob and the management and labour of individuals, other than Cheryl. Reasonably,  
Cheryl could not have held an expectation that she could leave the business, contribute  
nothing further and, eventually, gain the benefit of a share valuation, seven years later,  
after CCI achieved profitability. As a result, the least-fair potential valuation date is  
December 31, 2017 (date of judgment).  
[530] The value of Cheryl’s shares on either December 31, 2010, or 2011, is nil. With respect  
to the December 31, 2017 valuation evidence, Ms. Campbell’s evidence, which is  
consistent and founded in CCI’s actual financial performance, ought to be preferred over  
that of Mr. Tracey, whose evidence is based on unproven assumptions that ignore: the  
content of CCI’s 2016 and 2017 audited financial statements; the evidence at trial,  
including Cheryl’s evidence; and CCI’s actual financial performance.  
Page: 90  
[531] There is no evidence to support the balance of the claims advanced by the plaintiffs.  
[532] With respect to the counterclaim, Cheryl acknowledges that she told other individuals  
that Rob was a “cheat”. The evidence establishes that the assertion was untrue. Damages  
in the amount of $50,000 are appropriate.  
IV)  
DISPOSITION  
[533] In the context of the foregoing evidence and submissions, I will now dispose of the  
parties’ respective claims and counterclaim. I will begin by determining the wrongful  
dismissal claims asserted by Cheryl and Bruce. Next, I will determine Cheryl’s claim  
pursuant to s. 248 of the OBCA. Then, I will determine the other claims that the plaintiffs  
have pleaded in their statement of claim (broadly, unjust enrichment and fraudulent  
misrepresentation). Finally, I will dispose of the counterclaim.  
[534] In determining Cheryl’s wrongful dismissal claim, I will resolve the conflicting evidence  
concerning the events and contextual circumstances surrounding Cheryl’s cessation of  
employment with CCI. Next, with reference to the applicable legal principles, I will  
explain my reasons for concluding that Cheryl was not expressly or constructively  
dismissed by CCI, but instead that through her conduct, she resigned from her  
employment. Then, I will provisionally assess Cheryl’s damages for wrongful dismissal,  
in the event that I have erred in determining that she was not dismissed. Finally, I will  
determine the reasonable notice period applicable to the termination of Bruce’s  
employment and the corresponding assessment of his damages.  
[535] In determining Cheryl’s claim pursuant to s. 248(2) of the OBCA, I will begin by  
identifying the applicable legal principles. I will then assess the reasonableness of  
Cheryl’s asserted expectations qua shareholder, in the context of the case-specific facts,  
and determine whether any of her reasonable expectations were violated by conduct on  
the part of the defendants that falls within the scope of s. 248(2) of the OBCA. In so  
doing, I will explain why Cheryl’s reasonable expectation as a shareholder were violated  
by CCI’s failure to contemporaneously provide her with annual audited financial  
statements and by Rob’s 2012 and 2017 correspondence to her.  
[536] Next, I will turn to the appropriate remedy for the “oppressive” conduct as found. In that  
regard, all parties submit that a remedial purchase of Cheryl’s shares ought to be ordered.  
I will explain my reasons for concluding that for the purpose of the proposed remedial  
transaction, the fairest valuation date for Cheryl’s shares is December 31, 2010, which  
corresponds to CCI’s fiscal year-end date in the year of the original “oppressive” conduct  
(i.e. the first year in which CCI failed to produce audited financial statements, in the  
absence of an exempting resolution).  
[537] Then, I will explain why I accept Ms. Campbell’s evidence that the value of CCI’s  
shares, measured on the valuation date, is nil. Finally, in the event that I have erred in  
determining the fairest valuation date, I will explain why I accept Ms. Campbell’s  
evidence and reject Mr. Tracey’s evidence concerning the fair market value of CCI’s  
shares as of December 31, 2017, and my corresponding provisional findings that the  
Page: 91  
value of CCI’s shares, en bloc, on December 31, 2017, is $53,900 and therefore, Cheryl’s  
shares are valued at $26,950, as of that date.  
[538] I will then explain why the evidence does not support the causes of action in unjust  
enrichment and fraudulent misrepresentation advanced by the plaintiffs.  
[539] Finally, I will explain my reasons for concluding that the defamation claim advanced by  
Rob, in submissions at trial, fails because it has not been properly pleaded.  
(a) The Case-Specific Circumstances  
[540] The dispository findings set out above are made in the case-specific circumstances,  
including: the broad terms of the accord reached between Cheryl and Rob in 2008; NFE’s  
operation from the Retro Suites’ premises in September – December 2008; CCI’s  
subsequent assumption of NFE’s liabilities; the documentation executed (and not  
executed) by the parties in 2009; CCI’s financial performance in 2009 and the first half of  
2010; the nature of the interactions between Rob and Cheryl in 2009 and the first half of  
2010; and the basis for, and validity of, the quantum of the related-party debt recorded in  
CCI’s annual financial statements. As a result, prior to examining the specific  
circumstances surrounding the cessation of Cheryl’s employment in mid-2010, I will  
resolve the conflicting evidence and make the necessary factual finding with respect to  
the foregoing matters, beginning with the formation of “the deal” between Rob and  
Cheryl.  
(i)  
The Formation of the Deal Related to CCI  
[541] In 2008, Cheryl owned and operated NFE, a small lunch and “bistro style” dinner  
restaurant in downtown Chatham. In the same year, Rob sought to develop a casual fine  
dining restaurant in the Retro Suites Hotel, which he owned through RJM Holdings  
Limited. Since he had little experience in the restaurant business, and his other business  
ventures kept him away from the Chatham area for the majority of the year, he sought out  
assistance with planning and eventually, operating the restaurant. In April, Rob  
approached Cheryl, explained his concept, and invited her to tour the proposed restaurant  
space, which she did later that day.  
[542] During Cheryl’s tour, Rob suggested that they become “partners” in the proposed  
restaurant, with Cheryl acting as its operating partner. During their initial meeting, Rob  
explained that the restaurant would be open daily, for three meal services (including  
breakfast), and it would also offer catering and banquet services. The restaurant, as  
described, was larger and more sophisticated than any of the restaurants with which  
Cheryl had experience. Although they shook hands at the end of the meeting, I accept  
Cheryl’s evidence that she did not accept Rob’s proposal at that time.  
[543] Rob and Cheryl continued to discuss the venture over the spring and summer of 2008,  
including the structure and parameters of their proposed “partnership”; related financial  
matters; and the restaurant’s anticipated financial performance. Neither of them made  
contemporaneous notes or records concerning their discussions, and neither, currently,  
Page: 92  
recalls the events with exacting detail. Nonetheless, through their respective evidence,  
Rob and Cheryl agree, and I find, that:  
1.  
2.  
3.  
Cheryl did not advise Rob that NFE incurred net annual losses in three out of its  
four years of operation in the period of 2004 – 2007;  
Cheryl projected that the restaurant could earn $1,000,000 in revenue in its first  
year of operation;  
Cheryl advised Rob that she estimated that a total of $100,000 would be required  
to equip the kitchen and furnish the restaurant and a total of $50,000 would be  
required to cover both the restaurant’s initial start-up costs and its initial losses.  
Rob and Cheryl understood that Rob would advance all of those amounts at first  
instance, and that his advances were required to be repaid by the restaurant  
business;  
4.  
5.  
The restaurant would pay rent to the Retro Suites Hotel;  
Rob and Cheryl would be 50/50 “partners” in the business and a “partnership  
agreement” would eventually be prepared; and  
6.  
Cheryl would be employed by the restaurant for an annual salary of $50,000.  
[544] In 2008, Rob and Cheryl also discussed the expected extent of CCI’s losses, if any, in the  
initial phase of its operation. Their expectations in that regard inform the context in  
which they reacted to CCI’s significant 2009 and ongoing 2010 losses, and the steps that  
Rob eventually took to address them. They give conflicting evidence in that regard.  
Although Cheryl testifies that she cautioned Rob to expect losses during the restaurant’s  
initial years of operation (i.e. beyond its first year of operation), her evidence in that  
regard is inconsistent and ultimately, it is unpersuasive. I will explain.  
[545] Cheryl acknowledges that prior to her involvement with CCI, she had no experience with  
a restaurant “start up”. In direct examination, she testifies that prior to the  
commencement of CCI’s operations, she knew that it would not be profitable in its first  
few years of operation and she advised Rob accordingly. She deposes that Rob did not  
react to that suggestion and he seemed “fine with it”. In cross-examination, Cheryl was  
more equivocal about the expected duration of CCI’s anticipated operating losses, stating  
that in 2008, she advised Rob that the restaurant would not be profitable in its first and  
maybe second year of operation. She says that the parties did not discuss what would  
happen, in the event that the restaurant continued to suffer operating losses beyond its  
first year and Rob continued to “cover” them. She “believes” that she advised Rob that  
CCI could lose as much as $50,000 in its first year of operation.  
[546] Conversely, Rob testifies that based on his discussions with Cheryl, he expected that the  
restaurant would “break even” in its first year of operation.  
[547] After considering the parties’ evidence and the documentation that was ultimately  
executed by them (including the GSA securing a total indebtedness of $150,000), I accept  
Page: 93  
that Cheryl advised Rob that she projected that CCI’s anticipated start-up costs and initial  
losses would combine to total $50,000 and that she estimated that it would cost $100,000  
to equip and furnish the restaurant. I do not accept that Cheryl told Rob that she expected  
multi-year operating losses, or that she estimated that the restaurant’s losses alone  
(without a consideration of its start-up costs) could total up to $50,000 in its first year, as  
she now believes. In addition, the lack of any discussions between the parties in 2008,  
with respect to the manner in which sizeable first year losses, would be “covered” or  
“financed” by CCI, together with the absence of any terms addressing substantial  
anticipated first year losses in the documentation that the parties executed in 2009,  
militate against a finding that Cheryl advised Rob that she anticipated a first year  
operating loss of “up to” $50,000 or that she advised him to expect additional operating  
losses in years subsequent to 2009.  
[548] On any version of the evidence, it is clear that Cheryl did not advise Rob that the  
restaurant could potentially lose as much as $200,000 in its first year of operation.  
[549] In the summer of 2008, Cheryl accepted Rob’s proposal to become a partner in the  
restaurant venture. I find that the broad terms of their agreement at that time, were as  
follows:  
1.  
Rob and Cheryl would be 50/50 “partners” in a restaurant business, (CCI). The  
restaurant would offer a casual fine dining menu for distinct three meal services  
per day, as well as, catered and banquet events;  
2.  
3.  
4.  
CCI would operate on the ground floor of the Retro Suites Hotel. It would pay  
$48,000 per year as rent ($4,000 per month) to the Retro Suites Hotel;  
Rob would contribute a total of $150,000 to equip, fixture and furnish the  
restaurant, and cover its start-up costs and initial losses;  
Cheryl would not be required to make any financial contribution in order to  
receive a one-half interest in the business. She would contribute to the business  
by working at the restaurant, for which she would be paid an annual salary of  
$50,000;  
5.  
The monies advanced by Rob to CCI would be repaid in full, before any profits  
were distributed to the parties on a 50/50 basis. Cheryl understood and agreed that  
any amounts Rob (or his other companies) paid to cover CCI’s operating losses  
would also be required to be repaid by CCI;  
6.  
7.  
Rob would retain ultimate control over the financial aspects of the business; and  
The parties would execute a formal partnership agreement.  
[550] I find that when Cheryl accepted Rob’s proposal, the parties had not made any agreement  
with respect to the following issues:  
1.  
A guaranteed number of years, if any, that Cheryl would be employed by CCI;  
Page: 94  
2.  
3.  
4.  
5.  
Whether CCI would assume all payments related to a truck owned by Bruce and  
Cheryl;  
Which party or parties were responsible for payment of the balance owing on  
NFE’s lease of its former operating premises;  
Whether NFE’s profit or loss for the period of September 2008 to December 2008  
would be shared or apportioned between Cheryl and Rob; and  
Whether NFE would pay rent to the Retro Suites Hotel for the period of  
September 2008 to December 2008.  
[551] From September to December 2008, NFE operated at the Retro Suites, under the name  
“The Chilled Cork”. Despite its name change, the restaurant remained a sole  
proprietorship operated by Cheryl. Certain aspects of NFE’s operation during that time  
are relevant to the determination of the issues in this proceeding. My factual  
determinations in that regard, follow.  
(ii)  
NFE’s Operation in September – December 2008 and the Assumption of its  
Liabilities  
[552] On the totality of the evidence, I find as follows.  
[553] NFE’s 2008 revenue was substantially higher than in prior years, primarily, as a result of  
its operation at the Retro Suites location. Despite its recorded net income of  
approximately $11,000, NFE actually operated at a loss in 2008, after accounting for: its  
receipt of $35,000 from the Retro Suites Hotel, as start-up capital for CCI; and its failure  
to remit employee withholdings made in last quarter of 2008.  
[554] NFE did not pay rent to the Retro Suites, despite operating in its premises from  
September to December 2008. Cheryl retained 100 per cent of NFE’s 2008 recorded net  
income.  
[555] CCI was incorporated in December 2008 and it commenced its operations on January 1,  
2009. Consistent with the terms of the Contract of Employment that the parties executed,  
Cheryl did not become an employee of CCI until January 1, 2009. Consequently, she was  
not entitled to be paid a salary by CCI during the period of September to December 2008.  
[556] When NFE ceased its operation on December 31, 2008, its current liabilities, which  
totalled $102,348.25, were comprised of, among other things: $35,000 advanced by Retro  
Suites; $36,702 owed to the Receiver General for unremitted source deductions; and  
GST/PST obligations, totalling nearly $20,000. CCI assumed all of those liabilities, as a  
result of the asset purchase agreement executed between Cheryl and CCI in 2009. In  
addition, CCI eventually assumed an additional NFE liability of $4,000, as interest and  
penalties arising from NFE’s unremitted source deductions.  
Page: 95  
[557] As NFE’s sole proprietor, Cheryl was personally relieved of responsibility for payment  
for the foregoing liabilities, as a result of her “partnership” with Rob and CCI’s  
corresponding assumption of NFE’s debt.  
[558] Although Cheryl asserts that as a result of her “partnership” with Rob, CCI obtained all  
of NFE’s assets, no evidence was adduced with respect to the value of the “NFE” assets  
allegedly obtained, other than the terms of the executed asset purchase agreement, in  
which the stated consideration for NFE’s assets is $1.00. In the absence of any other  
evidence on the point, I accept that amount as the value of NFE’s assets, on acquisition.  
The plaintiffs have failed to prove, on a balance of probabilities, that the CCI acquired  
tangible assets of any substance or value from NFE that were subsequently used in CCI’s  
business, or at all.  
[559] CCI did acquire NFE’s goodwill and a portion of NFE’s clientele patronized the new  
restaurant for a period of time. However, no evidence was adduced on the value of  
NFE’s goodwill.  
[560] Even with the retention of some of NFE’s prior customers, the revenue generated by CCI  
in 2009, was wholly inadequate to meet its ongoing expenses. Before addressing CCI’s  
operation and financial performance in 2009, this is a convenient place to address the  
parties’ dispute concerning the validity and quantum of CCI’s related-party debt, since  
the plaintiffs’ concerns in that regard date back to the opening balances recorded at the  
commencement of CCI’s operation on January 1, 2009.  
(iii) The Validity of the Recorded Amounts of CCI’s Initial and Subsequent  
Related-Party Debt  
[561] The plaintiffs submit that the balances of the related-party debt recorded in CCI’s 2009  
financial statements are not supported by the evidence and, as a result, the quantum of  
related-party debt that is carried forward through CCI’s subsequent annual financial  
statements is both unproven and invalid. As a result, the plaintiffs have adduced evidence  
with respect to the value of CCI’s share capital (as of December 31, 2017) that is  
premised on the value of its related-party debt being nil. For reasons set out below, I do  
not give effect to the plaintiffs’ submissions in that regard.  
[562] Despite the evidence of Mr. Da Sacco confirming BDO’s unqualified opinion that CCI’s  
2016 and 2017 audited financial statements fairly and accurately present the respective  
amounts of CCI’s debt to RJM Holdings Limited and Rob Meyers, personally, Cheryl  
continues to posit that the value of CCI’s related-party debt should be treated as nil  
because the defendants have failed to produce source documentation evidencing the  
amounts that were allegedly spent on behalf of CCI, by its related parties, to build out,  
equip and furnish the restaurant. I do not agree.  
[563] Despite the absence of the source documentation identified by the plaintiffs, the evidence  
overwhelmingly supports and I find that the opening balances for CCI’s related-party  
debt, which total $353,429.70, as recorded in CCI’s financial records, are accurate and  
reliable. I will explain.  
Page: 96  
[564] Cheryl was involved in CCI’s active “management” when the amounts forming CCI’s  
opening balances for its related-party debt were recorded. In cross-examination, she  
confirmed the accuracy of the opening balances, as recorded in CCI’s financial records,  
including: the costs and value of its kitchen equipment as $188,439.46, which she  
personally purchased using Rob’s funds in 2008; and the costs and value of its furniture  
and fixtures as $56,255.63, which she personally purchased using Rob’s funds in 2008.  
[565] The remaining components of CCI’s initial related-party debt include the costs associated  
with the restaurant’s build out, which is recorded as $97,938.02, together with the costs  
of its incorporation totalling $1,379.88, utilities totalling $9,069.71 and advertising and  
promotion expenses totalling $320 that were incurred in 2008, prior to CCI’s  
incorporation.  
[566] Cheryl did not contemporaneously object to any aspect of the quantum of CCI’s recorded  
related-party debt opening balances, despite unfettered access to all of CCI’s books and  
records throughout 2009 and the first half of 2010.  
[567] Mr. Hockin confirms that he was responsible for CCI’s general ledger opening balances  
for its related-party debt accounts, which he believes are accurate. His evidence in that  
regard was not contradicted or meaningfully challenged, either through cross-  
examination or otherwise.  
[568] As a result of the foregoing, I accept the recorded amounts of CCI’s initial related-party  
debt as accurate. I am mindful that in her evidence, Cheryl took some issue with respect  
to CCI’s build out costs, but her concern did not relate to quantum, which she did not  
challenge. She confirmed that the “empty shell” that she had originally seen was, in fact,  
built into a functional operating restaurant in 2008, as well as her understanding that the  
costs associated with the build out would, initially, be paid by one of Rob’s other  
companies.  
[569] During cross-examination, Cheryl questioned whether CCI ought to have been  
responsible for repaying the build-out costs, reasoning that the improvements were made  
to “Rob’s building” and CCI paid rent for the use of the premises. However, Cheryl’s  
stated concern is tempered by her evidence in cross-examination, in which she  
acknowledged her belief that part of the “deal” that she made with Rob in 2008, was that  
the amounts that he, or one of his companies, spent (or would spend) on building out,  
equipping and furnishing the restaurant would have to be repaid by CCI, at some point in  
time. Similarly, Rob testifies that the costs of the build out were required to be repaid by  
CCI.  
[570] I am satisfied the amount related to the build out of the restaurant, as recorded in CCI’s  
financial records, properly forms part of CCI’s related-party debt.  
[571] CCI’s historical related-party debt also includes amounts that were advanced to it (or on  
its behalf) or not collected from it, in order to cover its ongoing operating losses, over the  
course of several years, which I am satisfied are accurately recorded in CCI’s financial  
statements. I will explain.  
Page: 97  
[572] Cheryl described the manner in which CCI’s sales were tracked and recorded in its  
ordinary course of business throughout 2009. She confirms that: to the best of her  
knowledge all of the CCI’s sales and expenses were accurately recorded in that year  
(including its total sales of $778,120); while under her management, CCI incurred an  
operating loss in 2009, totalling $195,000; the Retro Suites Hotel advanced NFE $35,000  
in 2008 (as start up capital for CCI), which was a liability that CCI assumed pursuant to  
the asset purchase agreement; Retro Suites advanced further amounts directly to CCI in  
2009 to cover part of its operating losses; and in June 2009, Rob personally advanced  
$16,000 to CCI to cover a payroll deficit. All of those advances are recorded in CCI’s  
general ledger.  
[573] CCI’s general ledger also records liabilities that it owed additional related-party debt, on  
account of the following: an $18,000 payment made by Retro Suites to the Ministry of  
Finance on behalf of CCI in 2009; $17,645.59 owed by CCI to Retro Suites for utility  
expenses related to CCI’s premises and operation in 2009; and $755 owed by CCI to  
Retro Suites for maintenance related labour costs in 2009.  
[574] There is no evidence that Cheryl, as CCI’s active management at the time,  
contemporaneously disputed the accuracy of any of the foregoing entries in CCI’s general  
ledger. Further, in his evidence, which I accept, Mr. Hockin testifies to the accuracy of  
the foregoing transactions and recorded amounts in CCI’s general ledger and the fact that  
cash advances were, in fact, made by Retro Suites Hotel to CCI in 2009. I further accept  
Mr. Hockin’s evidence that, as a result of the foregoing, CCI’s related-party debt  
increased to a total amount of $544,155.51, as of December 31, 2009, with an additional  
$16,000 owed to Rob, personally.  
[575] Finally, all of the Notice to Reader financial statements for CCI that were prepared by  
Horne LLP and Deloitte LLP, including its 2009 statements, were the subject of a notice  
of intention, served by the defendants in accordance with s. 35 of the Evidence Act. CCI’s  
2009 financial statements record its current liabilities as of December 31, 2009 as  
$30,000 and its long-term debt as $544,156. The accuracy of that amount was confirmed  
by Cheryl in her evidence. Subject to her current concern about whether CCI ought to be  
responsible to repay the costs associated with the restaurant’s build out, Cheryl  
acknowledges, that as of December 31, 2009, CCI had borrowed $544,156 from related  
parties and it was required to repay that amount, at some point in time.  
[576] In the context of the foregoing, I do not find that the defendants have failed to “account”  
because they have not produced “source documents” evidencing the basis of the recorded  
related-party debt. As a result of Cheryl’s own evidence confirming the accuracy of the  
amounts owed by CCI to the Retro Suites Hotel and Rob personally, as of December 31,  
2009, coupled with Mr. Hockin’s evidence on the point, I accept as accurate, the amounts  
recorded in the excerpts of CCI’s 2009 general ledger that have been set out above.  
Therefore, I find that CCI owed the Retro Suites Hotel $544,156 as of December 31,  
2009 and it owed $16,000 to Rob, personally, as of December 31, 2009.  
[577] In their submissions, the plaintiffs also express a concern over the accuracy of the  
recorded amount of CCI’s related-party debt in each of its annual financial statements,  
Page: 98  
which arises out of Mr. Da Sacco’s April 7, 2017 correspondence. Specifically, Mr. Da  
Sacco writes that BDO was unable to verify the opening balances of CCI’s related-party  
long-term debt accounts as of January 1, 2012 and, that it was unable to verify certain  
entries in CCI’s 2012 general ledger that were made with respect to those balances.  
BDO’s difficulty in that regard was stated in part, to arise from its inability to access  
RJM Holding Limited’s general ledger.  
[578] In my view, the plaintiffs’ stated concern is answered by Mr. Da Sacco’s evidence at  
trial. He testifies, and I accept that subsequent to April 7, 2017: BDO secured greater  
access to the financial records of CCI’s related parties, during the course of its  
preparation of CCI’s audited financial statements for 2016 and 2017; and it received  
confirmations from CCI’s relevant related parties, acknowledging the accuracy of the  
specific debt amounts that BDO calculated. As a result of those things, in its audit-related  
review, BDO was able to fully reconcile CCI’s historical recorded related-party debt  
transactions and accurately determine the balances of the related-party accounts between  
CCI and: Retro Suites Hotel Inc.; RJM Holdings Limited; and Rob in his personal  
capacity, respectively. I also accept Mr. Da Sacco’s unchallenged and uncontradicted  
explanation of the “swing” in individual aspects of CCI’s related-party balances in 2015  
and his accurate observation that the overall amount of the related-party debt owed by  
CCI did not change, as a result.  
[579] Importantly, BDO did not simply accept the accuracy of the related-party balances based  
only on the strength of the confirmations it received from those parties. Instead, it  
actively worked with Deloitte LLP to reconcile the balances recorded in CCI’s records  
with the records of the related parties, which BDO, itself, examined. The amounts that are  
set out in the confirmations that were subsequently executed by the related parties, are the  
product of BDO’s work in that regard. The purpose of the confirmations was to assure the  
auditors that the related parties were satisfied with, and assumed responsibility for, the  
amounts of the respective debt that the auditors had independently arrived at, through  
their review.  
[580] Finally, I accept Mr. Da Sacco’s evidence that once its work was complete, BDO was  
able to offer its unqualified opinion that the related-party debt balances set out in CCI’s  
2016 and 2017 audited financial statements, present fairly, in all material respects, the  
financial position of CCI in that regard, in each of those years.  
[581] In the context of the foregoing, there is no sound basis to conclude that the defendants  
have “failed to account”, in respect of the related-party debt owed by CCI. To the  
contrary, BDO was able to offer unqualified audit opinions on CCI’s related-party debt  
based on the documentation and information that was available to it. In my view, its  
ability to do so conclusively answers the plaintiffs’ assertion that the defendants have  
“failed to account”, in relation to CCI’s related-party debt.  
[582] I find that CCI’s 2016 and 2017 audited financial statements constitute the best evidence  
of its financial position for those years and I accept their content as accurate. As a result,  
I find that as of December 31, 2017:  
Page: 99  
1.  
2.  
3.  
CCI owed $450,343 to RJM Holdings;  
CCI owed $16,000 to Rob, personally; and  
The Retro Suites Hotel Inc. owed $9,271 to CCI.  
[583] With the issue of the validity and quantum of CCI’s related-party debt resolved, I will  
now turn to my findings with respect to the relevant aspects of the nature of CCI’s  
operation in 2009, which, in turn, contextually inform the circumstances surrounding  
Cheryl’s departure from CCI in July, 2010.  
(iv)  
The Nature of CCI’s Operations in 2009  
[584] At the time of its incorporation on December 22, 2008, Rob was CCI’s sole shareholder  
and he served as its original president, secretary-treasurer and sole director (see Exhibit  
No. 2, Tab 1). By resolution dated January 6, 2009, CCI’s year-end was fixed as  
December 31, 2009 and it was exempted from obtaining audited financial statements for  
its 2009 fiscal year. Shareholder resolutions exempting CCI from the requirement for  
audited financial statements were not passed with respect to any year subsequent to 2009.  
[585] The restaurant operated throughout 2009, with Rob and Cheryl assuming the respective  
roles that they envisioned during their 2008 discussions. Broadly stated, Rob was an  
“absentee” owner. His other business interests kept him away from the Chatham area for  
the majority of the year and commanded the majority of his time and attention, even  
when he was in the area. Conversely, Cheryl actively managed the restaurant on a day-  
to-day basis and served as one of its two chefs.  
[586] Although the specific timing is unclear, at some point prior to January 1, 2009, Cheryl  
hired her friend, Michel Bonnot, as CCI’s executive chef, at an annual salary of $70,000.  
Rob testifies that she did so without notice to, or approval by, him. Cheryl testifies that  
Rob not only instructed her to hire a chef, he met with Chef Bonnot prior to January 1,  
2009 and endorsed that he be hired. In any event of that discrepancy, Rob undoubtedly  
became aware of Chef Bonnot’s employment at some point in 2009, and there is no  
evidence that he expressly objected to his employment, in 2009, or that he took active  
steps to dismiss him in 2009. That narrative wholly negates the strength of Rob’s post-  
litigation complaint that Chef Bonnot was hired without his knowledge. Cheryl also hired  
Chef Bonnot’s wife, Leslie, to assist with CCI’s administrative tasks, including  
bookkeeping.  
[587] Bruce testifies that from January to April of 2009, he provided labour services to CCI on  
an unpaid basis (similar to his arrangement with NFE). No records were kept of the  
alleged number of hours that he provided services, but Bruce asserts that he worked 60-  
80 hours/week during that time, which exceeds Cheryl’s estimate of the amount of time  
that she, herself, worked at CCI over the same period (55 hours/week). Bruce did not  
complain that he was not paid for his services, until he commenced this proceeding, over  
two years later.  
Page: 100  
[588] Bruce also testifies that he performed CCI’s initial bookkeeping functions, and he  
continued to do so for two months after it commenced its operations. He states that  
eventually those tasks were assumed by an external bookkeeper, Denise Brouwer, who  
was “brought it” by Rob. His evidence in that regard conflicts with the balance of the  
evidence on the point.  
[589] Contrary to Bruce, Cheryl testifies that Denise Brouwer was “brought in” in January  
2009, and that Ms. Brouwer (not Bruce) was responsible for making the necessary entries  
in CCI’s financial books and producing its monthly financial statements, from the  
inception of its operation in January 2009.  
[590] Cheryl’s evidence is consistent with Mr. Hockin’s evidence, which I accept, indicating  
that Ms. Brouwer (not Bruce) was retained by him (not Rob), as CCI’s original  
bookkeeper and that she worked with Mr. Hockin to transition NFE’s accounts into CCI’s  
financial records. Mr. Hockin’s evidence inferentially supports that Ms. Brouwer was  
involved in CCI’s bookkeeping functions consistently from the beginning of its  
operation. Mr. Hockin does not testify that Bruce had any involvement in CCI’s initial  
bookkeeping activities, as Bruce otherwise asserts.  
[591] I accept Cheryl’s evidence over Bruce’s evidence on that point. Further, as I will explain  
later in these reasons, I find aspects of Bruce’s evidence to be incredible and unreliable.  
As a result, unless otherwise expressly indicated in these reasons, I generally reject  
Bruce’s evidence.  
[592] One of the troubling aspects of Bruce’s evidence is his unsupported testimony that  
beginning in January 2009, Rob participated in monthly meetings related to CCI, in  
which he was belligerent and demeaning towards staff members of both the Retro Suites  
and CCI. Bruce further testifies that during those meetings, Rob specifically criticized  
Bruce’s CCI-related bookkeeping efforts. Bruce testifies that Rob’s demeaning conduct  
was so offensive that it led to him withdraw from his unpaid involvement in CCI’s  
operation, in April 2009. Bruce asserts that at that time, he advised Cheryl that Rob  
could not be trusted. For reasons that are set out later below, I completely reject the  
foregoing aspects of Bruce’s evidence. His testimony in that regard is not supported by  
any other witness, including Cheryl. Instead, it is persuasively contradicted.  
[593] Contrary to Bruce’s evidence, I accept Cheryl’s evidence that she and Rob met  
infrequently in 2009, and throughout the entirety of that year, Rob remained supportive  
of her, he was kind to her, and he treated her fairly. Similarly, both Rob and Mr. Hockin  
confirm that Rob’s demeanour during his 2009 interactions and meetings with Cheryl  
was appropriate, and devoid of the aggressive and hostile conduct that Bruce describes.  
[594] Despite the foregoing, I do not discount the possibility that at some point during 2009,  
Rob may have criticized aspects of the manner in which Bruce performed bookkeeping  
duties for NFE as opposed to CCI, specifically as it relates to his failure to remit  
employee source deductions (which NFE collected) in the period of September to  
December 2008. Bruce acknowledges that his failure, in that regard, led to a statement of  
account in the amount of $40,711.33 being issued by the Canada Revenue Agency on  
Page: 101  
April 1, 2009. That liability was assumed by CCI and paid, at first instance, by Retro  
Suites. The date of the statement of account coincides with the timing of Bruce’s stated  
withdrawal from his unpaid involvement in CCI-related activities.  
[595] In June 2009, at Cheryl’s request, Bruce became a part-time paid employee of CCI,  
performing various tasks on an “as needed basis”. I accept Bruce’s evidence that he  
consistently spent time at CCI, even during the times that he was not actively working.  
His evidence in that regard finds some confirmatory support in Rob’s evidence that he  
observed Bruce hanging around at CCI.  
[596] Nonetheless, there remains a discrepancy in the evidence concerning whether Rob was  
aware that Cheryl hired Bruce to work at CCI. Rob testifies that during the course of their  
2008 negotiations, at his insistence, he and Cheryl agreed that Bruce would not work at  
CCI, and as a result, he was not aware that Cheryl had hired Bruce in June 2009. Cheryl  
testifies that: there was no such agreement; Bruce was involved in their 2008 meetings;  
and she assumed that Rob understood that Bruce would be employed by CCI, once it  
commenced operations. The plaintiffs submit that: Cheryl’s evidence should be accepted;  
the foregoing aspect of Rob’s evidence is incredible; and it substantially informs the  
overall determination of Rob’s credibility.  
[597] In that regard, the plaintiffs also rely on Mr. Hockin’s evidence, indicating that he  
originally instructed Rob’s corporate solicitor to transfer CCI share capital to both Bruce  
and Cheryl in 2009, and his evidence that he (Mr. Hockin) knew that Bruce was going to  
be involved in the restaurant business. The plaintiffs posit that Mr. Hockin’s evidence  
confirms Cheryl’s evidence on the point and impeaches Rob, in a manner that justifies an  
adverse finding with respect to Rob’s credibility, at large. For the following reasons, I do  
not agree.  
[598] First, Mr. Hockin explained that the original instructions to transfer CCI share capital to  
Bruce resulted from his belief that NFE was owned by Bruce and Cheryl. His belief was  
not accurate and the share recipient was ultimately changed solely to Cheryl. Bruce did  
not receive shares.  
[599] Second, when describing the terms of the agreement that they reached in 2008, neither  
Cheryl nor Rob testified that its express terms contemplated that CCI would employ  
Bruce.  
[600] Third, the surrounding circumstances do not support that the parties expressly  
contemplated that Bruce would be employed by CCI. Specifically, for the first six months  
of CCI’s operation (January to June 2009), Bruce was not, in fact, employed by CCI,  
notwithstanding his evidence that he volunteered his unpaid services during that time.  
The fact that Bruce was not actually hired as a paid employee of CCI in January of 2009,  
is generally consistent with Rob’s evidence that in 2008, he and Cheryl agreed that Bruce  
would not be employed by CCI. There is no compelling reason for CCI not to have  
formally hired Bruce in January 2009, if Rob and Cheryl had otherwise agreed that Bruce  
would be an employee.  
Page: 102  
[601] In the absence of any evidence that Cheryl advised Rob that she had hired Bruce in June  
2009, I find that Rob was not aware of the fact that Bruce had been hired at that time.  
Rob rarely attended CCI in 2009, and when he did, he consistently observed Bruce  
“hanging” around at the bar area, an activity in which Bruce acknowledges that he  
engaged. I accept Rob’s evidence that he did not know that Bruce had been hired as an  
employee until Mr. Kazarian made recommendations concerning CCI’s expenses in mid-  
2010.  
[602] As a result of the foregoing, I decline to make an adverse credibility finding against Rob  
on the basis of his evidence about his 2008 discussions with Cheryl concerning Bruce’s  
potential employment with CCI.  
[603] I will now address the documentation executed by Rob, Cheryl and CCI that records the  
terms of the various agreements and relationships between the parties. The terms of that  
documentation inform both: the issue of whether Cheryl was constructively dismissed in  
2010; and the reasonableness of the parties’ respective expectations, in the context of  
Cheryl’s oppression claim.  
(v)  
The CCI-Related Documentation Executed by the Parties in 2009  
[604] In August 2009, Cheryl received a number of documents from Rob’s counsel, Mr. Asher,  
that, when executed, would give effect to the terms of the “partnership” (albeit through a  
corporate structure) between Rob and Cheryl including: a contract with respect to  
Cheryl’s employment; an asset purchase agreement, pursuant to which CCI assumed  
NFE’s liabilities; a GSA in favour of RJM Holdings Limited in the amount of $150,000  
(representing certain aspects of Rob’s financial contribution to CCI, as originally  
planned); a five-year lease between CCI and Retro Suites Hotel; and a unanimous  
shareholders agreement that included, among other things, a buy/sell provision with  
respect to the parties’ shares in CCI. In addition, CCI’s common shares were issued and  
transferred in a manner that resulted in Cheryl and RJM Holdings Limited being equal  
equity owners of CCI, consistent with Rob and Cheryl’s agreement. Cheryl was also  
appointed as a director and president of CCI.  
[605] Cheryl delayed executing the documents, despite multiple attempts by both Mr. LaRoche  
(a management employee of Retro Suites) and Mr. Asher (through correspondence) to  
follow up with her in that regard. Cheryl explains that she did not execute the documents  
because she was preoccupied with her restaurant-related duties until late October or early  
November, at which time she executed all of the documents, except the USA.  
[606] On November 9, 2009, Cheryl executed a “waiver and acknowledgment” in favour of Mr.  
Asher, CCI, Rob and RJM Holdings Limited in which she acknowledged that:  
1.  
She was transferring the restaurant business known as “The Chilled Cork” [NFE]  
to CCI;  
2.  
The parties agreed that the transfer of the restaurant business would be satisfied  
by the issuance of 50 CCI Class A common shares to her;  
Page: 103  
3.  
4.  
5.  
RJM Holdings Inc. would also own 50 CCI Class A common shares;  
CCI would assume all of NFE’s liabilities;  
CCI would execute a lease as tenant, for its operating premises at the Retro Suites  
Hotel;  
6.  
She would enter into an employment contract with CCI; CCI would deliver a  
GSA to RJM Holdings Inc. and Rob; and she and RJM Holdings Inc. would enter  
into a unanimous shareholders agreement;  
7.  
8.  
She was advised by Mr. Asher that it would be appropriate for her to obtain  
independent legal advice, with respect to the foregoing documentation; and  
She wished to execute the foregoing documentation without the benefit of  
independent legal advice, and she exempted Mr. Asher from any liability arising  
from its preparation and execution.  
[607] Notwithstanding the terms of the “acknowledgement and waiver” that she executed,  
Cheryl asserts that she did not read any of the documents provided by Mr. Asher before  
she signed them, or alternatively, that she read the documents but she did not understand  
them and she needed someone to “walk her through” them.  
[608] Cheryl does not explain why she did not execute the USA in 2009. Both Rob and Mr.  
Hockin testify, and I accept that in 2009, they believed that she had done so. For her part,  
Cheryl acknowledges that in 2009, she understood that she and Rob were obligated to  
execute  
a
“partnership agreement”/shareholder agreement. She did not  
contemporaneously express any objection to the terms of the proposed USA. She did not  
request an explanation of the USA’s terms (or the terms of any of the other documents  
that she executed in 2009) from Mr. Asher, Rob, or through independent legal counsel,  
nor did she seek to negotiate different terms, at any time.  
[609] Although I am mindful that Cheryl maintains that Rob discouraged her from seeking  
independent legal advice with respect to the foregoing documents and the legal structure  
of their agreement, I do not accept that aspect of her evidence, for the following reasons.  
[610] First, Rob testifies that he did not do so and his evidence, in that regard, was unshaken in  
cross-examination. Second, the totality of the evidence confirms that throughout 2009,  
Rob’s involvement in CCI’s business and affairs was minimal. Mr. Asher prepared the  
subject documents. Mr. Asher and Mr. LaRoche were directly involved in following up  
with Cheryl to determine the status of her execution of the documents. Rob was not.  
Third, Cheryl acknowledges in her evidence that she never discussed the documents with  
Rob, which is consistent with Rob’s evidence. Fourth, Cheryl ultimately executed the  
“acknowledgement and waiver”, confirming that she was cautioned that it was  
appropriate for her to receive independent legal advice with respect to the documents that  
Mr. Asher prepared and that she wished to proceed, without doing so. In the context of  
the foregoing circumstances, I do not accept Cheryl’s evidence that Rob told her that she  
Page: 104  
could “trust him” and that, as a result, she did not need a lawyer, in relation to the  
documents prepared by Mr. Asher, or any other issue.  
[611] In addition, I find that had she wished to do so, Cheryl had the means to obtain legal  
advice and/or to obtain an “explanation” of the documents, before she signed them. She  
had the opportunity: to contact Mr. Asher in that regard; to contact Rob directly in that  
regard (at a time, on her evidence, when Rob was treating her fairly); to consult with the  
counsel that she had recently retained in relation to her lease dispute with NFE’s former  
landlord; and/or to seek out other independent legal advice concerning the Asher  
documents, from other counsel. She did not do so.  
[612] In all of the circumstances, I find that Cheryl’s signature evidences her assent to the terms  
of the documents that she executed (the Contract of Employment, the asset purchase  
agreement, the Lease and the GSA). At trial, Cheryl did not submit that there was a legal  
basis to set any of the agreements aside.  
[613] The terms of the Contract of Employment inform the analysis of the circumstances that  
Cheryl asserts give rise, in part, to her wrongful dismissal claim. Among other things,  
pursuant to its terms:  
1.  
CCI is defined as the employer; Cheryl as the employee; and Rob as the  
“shareholder”;  
2.  
Cheryl’s employment “in the position of management” with CCI commenced  
January 1, 2009 (para. 1(1));  
3.  
4.  
The duration of Cheryl’s employment is not fixed by the contract;  
Cheryl agreed to be bound by the terms and conditions of the agreement during  
the period of her employment (para. 1(1));  
5.  
6.  
Cheryl agreed that in carrying out her employment duties she would comply with  
all reasonable instructions as may be given to her by Rob (the shareholder), on  
behalf of CCI (the employer) (para. 1(2));  
Cheryl agreed that her reporting relationships, duties and responsibilities may be  
changed by the shareholder [Rob] on behalf of the employer [CCI] as he deemed  
appropriate. She also agreed that any changes made in accordance with the  
foregoing term would not affect or change any other part of the employment  
agreement (para. 1(3)).  
7.  
8.  
Cheryl agreed that she would work with “the representatives” retained by CCI to  
assist in its operations (para. 1(3));  
In consideration of the performance of her obligations under the Contract of  
Employment, CCI would pay Cheryl a salary of $50,000 per annum commencing  
January 1, 2009 based on full time employment;  
Page: 105  
9.  
Cheryl agreed that CCI could terminate her employment without notice or  
payment in lieu of notice, for cause, which included, among other things:  
“conduct on [Cheryl’s] part that is materially detrimental to the business or the  
financial position of CCI” (para. 4(e)); and  
10.  
The agreement represented the parties’ “full and entire understanding” with  
respect to the terms and conditions of Cheryl’s employment. Any modifications  
to the agreement were required to be made in writing and signed by Rob, Cheryl,  
and on behalf of CCI (paras. 8 and 9).  
[614] For reasons that I will explain later in this judgment, I conclude that through the ordinary  
and grammatical meaning of the words used by the parties to express their mutual intent,  
the terms of the contract clearly and unambiguously reflect the parties’ agreement that:  
Rob had the authority to change Cheryl’s employment-related reporting requirements,  
duties, and responsibilities on behalf of CCI, in his sole discretion, without affecting the  
balance of the employment agreement, provided she continued to be employed in “the  
position of management”. Even so, Rob was subject to an overall duty of good faith in  
the exercise of his contractual right in that regard. However, the evidence that I accept  
persuades me that Rob acted in good faith, when so doing, particularly in the context of  
CCI’s poor financial-performance history, which I will now address.  
(vi)  
CCI’s Financial Position at the end of 2009  
[615] Despite Cheryl’s best efforts, CCI’s financial performance remained dismal throughout  
2009. I accept Cheryl’s evidence confirming the accuracy of CCI’s 2009 Notice to  
Reader financial statements as it relates to CCI’s 2009: revenue; expenses; and related-  
party debt. The statements record that CCI’s 2009 revenue was approximately $750,000.  
CCI incurred an annual operating loss of $195,000 in 2009, which was nearly 400 per  
cent higher than Cheryl’s estimate of the $50,000 required for both CCI’s anticipated  
start-up costs and its projected initial losses. Similarly, the actual cost to equip, fixture  
and furnish the restaurant’s kitchen and seating area was greater than Cheryl’s $100,000  
projection.  
[616] In the result, by the end of 2009, the initial contribution of $150,000 that the parties  
contemplated that Rob would be required to make, in order to start up the restaurant and  
initiate its operations, had grown to a total contribution of $544,000 from Retro Suites  
Hotel, and an additional contribution of $16,000 from Rob personally.  
[617] I accept that once he became aware of CCI’s actual 2009 financial performance, Rob was  
concerned about the restaurant’s losses and Cheryl’s ability to manage the financial  
aspects of CCI’s business. In the foregoing context, Rob’s concern was reasonably held  
and, in part, it informs the contextual circumstances surrounding the cessation of Cheryl’s  
employment, which I will now address.  
[618] In so doing, I will begin by reviewing the legal principles applicable to: the plaintiffs’  
wrongful dismissal claim; and the defendants’ assertion that Cheryl resigned. Then, I will  
resolve the conflicting evidence concerning the circumstances surrounding Cheryl’s  
Page: 106  
withdrawal from CCI. Next, I will explain why I do not find that Cheryl was expressly or  
constructively dismissed by CCI, as well as my reasons for concluding that the facts as  
found, establish that objectively, Cheryl’s conduct in mid-2010 evidenced her intention  
to resign from her employment, which corresponded with her contemporaneous  
subjective intention not to return to her employment at CCI, after she left in early July  
2010.  
(b) The Determination of Whether Cheryl Was Wrongfully Dismissed and Related  
Damages Issues  
(i)  
Principles Applicable to the Determination of the Plaintiffs’ Wrongful  
Dismissal Claims  
[619] An action for wrongful dismissal is generally founded in an implied obligation in a  
contract of employment requiring the employer to give reasonable notice of its intention  
to terminate the relationship, in the absence of just cause. If an employer fails to provide  
reasonable notice of termination, the employee may bring an action for breach of the  
implied term: see Keays v. Honda Canada Inc., 2008 SCC 39, [2008] 2 S.C.R. 362, at  
para. 50.  
[620] An employee alleging that he or she was wrongfully dismissed, bears the onus of  
proving, on a balance of probabilities, that he or she was, in fact, dismissed: see Gill v. A  
& D Precision Ltd., 2010 ONSC 4646, [2010] O.J. No. 3583, at para. 69.  
[621] For the purpose of a wrongful dismissal action, the manner of dismissal may be express  
or constructive. The concept of constructive dismissal is founded in the principle that a  
party to a contract commits a fundamental breach when it demonstrates that it no longer  
intends to be bound by the contract’s terms. As a result, in circumstances in which an  
employer unilaterally makes a fundamental or substantial change to the terms of an  
employee’s contract of employment that otherwise violates the contract’s terms, the  
employer commits a fundamental breach, and the employee is entitled to consider himself  
or herself constructively dismissed. The employee may then assert a claim for damages  
against the employer, for failure to provide reasonable notice of termination: see Farber  
v. Royal Trust Co. (1996), [1997] 1 S.C.R. 846, at para. 33.  
[622] The determination of whether an employee has been constructively dismissed is a fact-  
driven exercise, in which the specific terms of the case-specific employment contract  
must be considered, in order to determine whether an essential term of the contract was  
unilaterally and substantially changed by the employer: see Farber, at para. 35.  
[623] Not every employment contract is terminated through an employer-initiated dismissal.  
An employee may terminate an employment contract through resignation. The principles  
applicable to the determination of whether an employee “resigned or intended to resign”  
his or her employment, are succinctly stated in Gill v. A & D Precision Ltd., at paras. 65-  
66 as follows:  
Page: 107  
Employers and employees have a mutual right to unilaterally terminate an  
indeterminate employment contract at any time, as long as there are no  
express terms to the contrary. The termination is considered a resignation if  
it originates with the employee, and a dismissal if it originates with the  
employer: Wallace v. United Grain Growers Ltd., [1997] S.C.J. No. 94 at  
para. 75.  
A resignation must be clear and unequivocal. It must objectively reflect an  
intention to resign, or conduct evidencing such an intention. Whether  
words or actions equate to resignation must be determined  
contextually: Kieran v. Ingram Micro Inc., [2004] O.J. No. 3118 (C.A.) at  
paras. 27 and 30.  
[624] The determination of whether an employee’s words or action equate to resignation, is  
made in the context of the case-specific surrounding circumstances. Ultimately, the court  
must determine whether a “reasonable person, viewing the matter objectively, would  
have understood [the employee] to have unequivocally resigned”: see Kieran v. Ingram  
Micro Inc., [2004] O.J. No. 3118 (C.A.), at para. 30.  
(ii)  
The Principles Applied  
[625] In applying the foregoing principles, I conclude that the defendants did not expressly or  
constructively dismiss Cheryl.  
[626] I am mindful that Cheryl posits that she was either expressly or constructively dismissed  
as a result of a number of isolated events, or their cumulative effect, which she asserts  
was, ultimately, a successful effort by Rob to force her out of CCI. I do not agree. As I  
will explain, Rob did not intend to force Cheryl out of CCI, nor did he do so. He did  
exercise his contractual authority to change her duties, as it related to the financial  
aspects of CCI, but even with those changes, Cheryl remained employed in the position  
of management (i.e. she continued to “run the restaurant”). He exercised his contractual  
authority in good faith.  
[627] Undoubtedly, owing to its 2009 financial performance and its continued poor financial  
performance in 2010, the circumstances surrounding CCI’s operation were difficult for  
Cheryl. She prided herself on being a successful restaurateur and she was not accustomed  
to the magnitude of CCI’s losses. Her strategies to increase CCI’s revenue largely failed.  
CCI’s revenue was declining in 2010, compared to 2009. She became increasingly  
stressed by CCI’s losses, which she acknowledge were unsustainable.  
[628] Rob was also concerned about CCI’s 2009 losses and its 2010 performance. He  
continually afforded Cheryl time to address CCI’s financial performance, until May  
2010, when he involved Mr. Kazarian in the financial aspects of its operations. At the  
time, Cheryl understood the rationale for Rob’s decision in that regard, but Mr.  
Kazarian’s actual assumption of those duties made Cheryl feel “useless”, despite  
remaining in a position of management. Bruce’s contemporaneous termination added to  
her stress and her depressive feelings. Subjectively, by early July 2010, Cheryl did not  
Page: 108  
want to try anymore as it related to CCI’s operations. After aggressively confronting Mr.  
Kazarian in the work place, she left CCI at the beginning of July 2010 and never  
returned.  
[629] After she departed CCI, Cheryl did not directly communicate with Rob or Mr. Kazarian,  
nor respond to their inquiries or attempts to contact her concerning the status of her  
employment. After approximately two months of paying Cheryl’s salary while she was  
absent from work and silent in the face of attempts to communicate with her, the  
employer concluded Cheryl had abandoned her employment and thereby, resigned.  
Subjectively, Cheryl concedes that by the beginning of August 2010, she had determined  
that she could not return to CCI. By the end of that month, she determined that she did  
not want to be Rob’s partner. In all of the circumstances, I conclude that Cheryl resigned  
from her employment.  
[630] I will explain all of the findings above, by first examining the nature of the employment  
contract and the potential determinative effect of its terms, in respect of Cheryl’s claim  
that she was constructively dismissed, as a result of the mid-2010 change in her duties  
associated with the financial aspects of CCI’s operations. Next, I will explain the factual  
context and good faith manner in which Rob exercised his contractual authority in that  
regard. Then, I will explain the reasons for concluding that Cheryl was not expressly or  
constructively dismissed by the change in her duties or any other events in the period of  
June to September 2010.  
(iii) The Nature of the Contract of Employment  
[631] Cheryl, in part, submits that the mid-2010 changes to her employment duties and  
responsibilities, particularly in relation to the financial aspects of CCI, constituted a  
constructive dismissal. Those changes were implemented in the context of an  
employment relationship that was subject to a written contract of employment. Cheryl  
did not make extensive submissions concerning the manner in which the written terms of  
the parties’ contractual bargain impact her constructive dismissal claim, nor the proper  
interpretation of the contract. Nonetheless, in my view, the issue of whether Cheryl was  
constructively dismissed through the implemented changes to her duties, primarily turns  
on the interpretation of the Contract of Employment and the corresponding determination  
of the rights accorded to both CCI and Rob, by its terms.  
[632] I have previously excerpted and detailed the relevant portions of the Contract of  
Employment. The legal principles applicable to its interpretation have been summarized  
in the jurisprudence as follows.  
[633] In Salah v. Timothy’s Coffees of the World Inc., 2010 ONCA 673 (), 268 O.A.C.  
279, at para. 16, Winkler C.J.O. states:  
When interpreting a contract, the court aims to determine the intentions  
of the parties in accordance with the language used in the written  
document and presumes that the parties have intended what they have  
said. The court construes the contract as a whole, in a manner that gives  
Page: 109  
meaning to all of its terms, and avoids an interpretation that would render  
one or more of its terms ineffective. In interpreting the contract, the  
court must have regard to the objective evidence of the “factual matrix”  
or context underlying the negotiation of the contract, but not the  
subjective evidence of the intention of the parties.  
[634] The interpretation of a contract invokes a common-sense approach, which is not  
dominated by technical rules of construction, with an overriding purpose to determine the  
intent of the parties and the scope of their understanding. The court is required to read the  
contract as a whole, giving its words their ordinary and grammatical meaning, consistent  
with the surrounding circumstances known to the parties at the time of its formation to  
deepen the court’s understanding of the mutual and objective intentions of the parties, as  
expressed in the words of the contract: see Sattva Capital Corp. v. Creston Moly Corp.,  
2014 SCC 53, [2014] 2 S.C.R. 633, at paras. 47 and 57.  
[635] In my view, when the foregoing principles are applied, the ordinary and grammatical  
meaning of the words used by the parties to express their mutual objective intention,  
yields a clear and unambiguous interpretation.  
[636] The parties agreed that their bargain with respect to the terms of Cheryl’s employment  
was exclusively and exhaustively recorded in the terms of the Contract of Employment.  
Cheryl does not identify any asserted ambiguity in the contract’s terms. Pursuant to those  
terms, Cheryl was to be employed in “the position of management”, but her reporting  
relationships, duties and responsibilities in that regard, could be unilaterally changed by  
Rob, on behalf of CCI, as he deemed appropriate and any changes of that nature “would  
not affect or change any other part of the parties’ agreement.  
[637] As a result, the parties specifically turned their mind to the consequences that would flow  
from a unilateral change, initiated by Rob, to Cheryl’s employment duties and  
responsibilities. Through clear and unambiguous language, the parties’ expressed their  
agreement that provided Cheryl remained employed “in the position of management”, the  
implementation of such changes would not, in and of itself: operate to terminate the  
employment relationship between Cheryl and CCI, which was otherwise created by the  
provisions of the Contract of Employment; nor constitute grounds to terminate the  
employment relationship at the behest of either the employee or the employer. In other  
words, the parties agreed that a unilateral change to Cheryl’s employment-related duties  
and responsibilities, implemented at Rob’s direction (on behalf of CCI), would not  
violate the terms of the contract nor constitute a fundamental breach of same. Cheryl does  
not assert any alternative interpretation.  
[638] In arriving at the foregoing interpretation, I have had regard to the terms of the contract,  
as a whole. I am satisfied that the foregoing interpretation does not render any of the  
terms of the contract ineffective and Cheryl does not submit otherwise. I am satisfied that  
the foregoing interpretation is consistent with the objective intention of the parties at the  
time the contract was signed and specifically, with what a reasonable person would have  
understood from the words of the document, read as a whole, and the objective evidence  
Page: 110  
of the factual matrix, including Rob’s retention of ultimate control over the financial  
aspects of CCI.  
[639] The exercise of Rob’s authority pursuant to paragraph 1(3) of the contract was not  
absolute. Paragraph 1(3) must be read in conjunction with paragraph 1(1), that is that  
Cheryl was to be employed by CCI in the position of management. Therefore, the result  
of any changes that were made pursuant to paragraph 1(3), could not disturb Cheryl’s  
continued employment “in the position of management”. To find otherwise, would render  
paragraph 1(1) ineffective.  
[640] In addition, Rob’s exercise of his contractual authority was subject to a general principle  
of good faith that required him to have “appropriate regard” for the legitimate  
contractual interests of his contracting partners, namely Cheryl and CCI, when so doing:  
see Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494, at para. 65.  
[641] “Appropriate regard” is a concept that varies depending on the context of the contractual  
relationship at issue. Fundamentally, however, as the Court in Bhasin makes clear, a  
contracting party is not required to act in a manner that serves the other party’s interests,  
in all cases. Rather, a contracting party is required to refrain from seeking to undermine  
those interests in bad faith. Unlike fiduciary duties, good faith performance does not  
engage duties of loyalty to the other contracting party nor a duty to put the interests of the  
other contracting party first: see Bhasin, at para. 65. Instead, the principle of good faith  
must be applied in a manner that places significant weight on the freedom of contracting  
parties to pursue their individual self-interest: see Bhasin, at para. 70. A party to a  
contract does not have a general duty to subordinate his or her interests to those of the  
other contracting party. Nonetheless, contracting parties must be able to rely on a  
minimum standard of honesty from their contracting partner, in the performance of the  
contract: see Bhasin, at para. 86.  
[642] Ultimately, Cromwell J. explains the duty of good faith in the performance of contracts,  
at para. 73 of Bhasin, as follows:  
I would hold that there is a general duty of honesty in contractual  
performance. This means simply that parties must not lie or otherwise  
knowingly mislead each other about matters directly linked to the  
performance of the contract. This does not impose a duty of loyalty or of  
disclosure or require a party to forego advantages flowing from the  
contract; it is a simple requirement not to lie or mislead the other party  
about one’s contractual performance.  
[643] In accordance with the foregoing principles, the evidence that I accept does not establish  
that Rob purported to exercise his power to change Cheryl’s “reporting relationships,  
duties or responsibilities” on behalf of CCI, in a manner that undermined her contractual  
interests, in “bad faith”. I will explain my findings in that regard, by first addressing the  
specific contextual circumstances in which Rob exercised that authority.  
Page: 111  
(iv)  
CCI’s Financial Performance Prior to Any Change to Cheryl’s Financial  
Reporting and Controls Responsibilities  
[644] Above, I have outlined CCI’s precarious financial position at the end of its first year of  
operation: its sales were well below Cheryl’s projections; its losses were exceptionally  
high; and it had incurred a significant amount of related-party debt that was well beyond  
the parties’ expectations, as informed by Cheryl’s projections.  
Despite those  
circumstances, Rob did not “call” the related-party loans made to CCI, which, on the  
available evidence, would likely have resulted in the corporation’s bankruptcy. Instead,  
he continued to make the necessary financial contributions to cover CCI’s unexpected  
and continuing operating losses. In addition, Rob did change or attempt to change  
Cheryl’s duties or responsibilities, once the total extent of CCI’s 2009 losses was known  
in early 2010. Instead, with Rob’s approval, Cheryl continued to maintain responsibility  
for, among other things, CCI’s day-to-day financial controls and reporting.  
[645] Despite Cheryl’s best efforts, CCI’s operating losses continued to accumulate month after  
month, during the first half of 2010, and it consistently remained on track to earn less  
gross annual revenue in 2010 (excluding management fees) than it earned in 2009. Yet,  
Rob made no effort to affect any change to Cheryl’s duties or responsibilities until May  
2009. Instead, he afforded Cheryl a reasonable period of time to adequately address  
CCI’s losses before affecting any changes to her financial reporting and controls  
responsibilities. Cheryl was unable to do so. It is in that context that Cheryl submits that  
Rob transformed into a demeaning “bully” and eventually orchestrated a campaign to  
“push her out” of CCI. In explaining why I do not accept that submission, I will first  
address the conflicting evidence concerning the nature of the 2010 meetings between Rob  
and Cheryl.  
(v)  
The Nature of the 2010 Meetings Between Rob and Cheryl  
[646] During the first half of 2010, Rob continued to have “occasional meetings” with Cheryl,  
Chef Bonnot and management staff from the Retro Suites Hotel (Ms. Labadie and Mr.  
LaRoche) in which, among other things, the issue of CCI’s ongoing monthly operating  
losses was discussed. In that regard, Rob and Cheryl’s evidence is generally consistent.  
Rob testifies that he and Cheryl met occasionally in the first half of 2010 and Cheryl  
testifies that before June 2010, they had a total of two meetings that year.  
[647] With respect to the specific content of their 2010 meetings, I accept Rob’s evidence that  
Cheryl was unable to offer specific proposals or plans to address CCI’s continuing sub-  
optimal financial performance. Further, and for the following reasons, I do not accept  
Cheryl’s evidence that during their 2010 meetings, or at any other time, Rob demeaned,  
insulted and/or bullied her or that he acted in an aggressive manner toward her, through  
his words or conduct.  
[648] Although, she was originally unclear in her evidence on the point, Cheryl ultimately  
settled on the proposition that Rob first started to exhibit a bombastic demeanour toward  
her in 2010, when, in her words, he became a “devil”. She testifies that throughout their  
meetings in 2010, including those which Mr. Kazarian attended, Rob, among other  
Page: 112  
things: ranted and threw papers; talked down to the staff (except for Mr. Kazarian);  
refused to listen to her “cost cutting ideas”; called her “dumb”; and threatened to  
terminate her if the restaurant did not show a profit.  
[649] Conversely, in his evidence, Rob allows that during his infrequent meetings with Cheryl  
in 2010, he expressed concern over CCI’s financial performance, and he sought solutions  
from her in that regard. In my view, the type of discourse described by Rob is consistent  
with a reasonable reliance on the “restaurant ownership” experience that the parties  
contemplated Cheryl would contribute to CCI’s operation. Further, such inquiries were  
entirely consistent with Rob’s duty as a director to act in the best interests of CCI, which  
had an obvious interest in addressing its ongoing and unsustainable losses.  
[650] Rob expressly denies all aspects of the aggressive and demeaning conduct that Cheryl  
describes in her evidence. According to him, Cheryl did not offer any solutions to CCI’s  
financial distress. She also consistently appeared to be emotional and upset.  
[651] During cross-examination, neither Rob nor Cheryl were shaken in their respective  
evidence concerning the nature of their interactions during their 2010 meetings.  
However, Rob’s evidence is corroborated by Mr. Kazarian’s evidence. Mr. Kazarian  
testified that he attended meetings in June 2010, together with Rob, Cheryl, and Chef  
Bonnot, during which Rob was consistently civil and his behaviour both toward Cheryl  
and in general, was appropriate. He confirms that Rob was not rude and he did not yell at  
Cheryl. He also observed that during their 2010 meetings, Cheryl consistently appeared  
upset and emotional.  
[652] I find Mr. Kazarian to be a credible and reliable witness. He presented as a forthright and  
unbiased individual, without a connection to, or communication with, Rob for well over  
half a decade prior to his testimony at trial. He has no stake in the outcome of this  
proceeding. I accept his evidence concerning Rob’s demeanour and interactions with  
Cheryl during the 2010 meetings.  
[653] Conversely, Cheryl did not call evidence from any of the other people that she testifies  
were present to witness the nature of Rob’s asserted treatment of her during the 2010  
meetings, and whom Cheryl testifies were treated by Rob, in the same or similar manner.  
On Cheryl’s narrative, those individuals (Chef Bonnot, Ms. Labadie, and Mr. LaRoche)  
are in a position to offer testimony concerning Rob’s alleged offensive demeanour and  
conduct, which the plaintiffs submit, ultimately lends support to a finding that Rob  
engaged in a sustained effort to drive Cheryl out of CCI. There is no information that  
indicates that those individuals were not available to testify at trial and Cheryl has not  
explained her failure to call them as witnesses. However, I am not prepared to draw an  
adverse inference from her failure to do so. It was equally open to the defendants to call  
those individuals as witnesses, and similar to Cheryl, they elected not to do so.  
[654] Nonetheless, Cheryl’s decision not to call evidence from the foregoing individuals is not  
without practical consequence. As plaintiff, Cheryl bears the onus to prove the essential  
facts upon which her asserted wrongful dismissal and oppression claims rest. The  
demeaning manner with which she alleges she was treated by Rob, is a significant  
Page: 113  
component of the contextual circumstances that she relies on, in respect of each of those  
claims. Factual determinations concerning the events that transpired during the parties’  
2010 meetings must be based on the evidence that was actually adduced at trial. That  
evidence does not include testimony from Chef Bonnot, Ms. Labadie or Mr. LaRoche. In  
the result, Cheryl’s evidence about the nature of the meetings is not corroborated by the  
evidence of other witnesses.  
[655] Conversely, Mr. Kazarian’s evidence corroborates Rob’s own evidence that he  
comported himself appropriately, during all of the June 2010 meetings that Mr. Kazarian  
attended. While I remain mindful that Mr. Kazarian did not attend any meetings between  
Rob and Cheryl prior to June 2010, based on the corroborative strength of his evidence,  
as it relates to Rob’s evidence concerning his conduct during the June 2010 meetings, I  
accept the overall credit and reliability of Rob’s evidence concerning his demeanor  
during the pre-June 2010 meetings and all of his other dealings with Cheryl.  
[656] In the result, I find that Rob comported himself civilly and appropriately in all of his  
meetings and interactions with Cheryl in 2010. He did not demean, threaten, or otherwise  
act aggressively or inappropriately towards Cheryl at any of their meetings, or at all in  
2010.  
[657] In arriving at the foregoing findings, I remain mindful of the plaintiffs’ submissions that  
the two letters that Rob wrote to Cheryl, after this action was commenced evidence his  
“bullying” behaviour towards her and, therefore, confirm Cheryl’s evidence that Rob  
acted in a similar “bullying” and threatening manner during their 2010 meetings. I do not  
agree.  
[658] In addressing the issue, I begin by observing that both letters that Rob sent to Cheryl,  
after the commencement of this litigation, were entirely inappropriate and unacceptable.  
However, I am not persuaded that the content of Rob’s correspondence corroborates or  
confirms Cheryl’s evidence concerning Rob’s conduct during their 2010 meetings, which  
occurred, respectively, two years and seven years before the subject correspondence was  
written. The circumstances that surrounded the 2010 meetings are distinguishingly  
different from those that prevailed at the times that Rob authored the subject  
correspondence.  
[659] In 2010, Rob and Cheryl’s interests were aligned. As directors, they were both charged  
with acting in the best interest of CCI. During their 2010 meetings, their discussions were  
exclusively related to CCI’s ongoing business, including its “unsustainable” fiscal  
performance, which they both sought to improve. Cheryl continued to maintain  
responsibility for CCI’s day-to-day financial affairs. While remaining concerned, Rob  
had not yet sought to implement changes to her duties in that regard.  
[660] Conversely, at the times that Rob authored the impugned correspondence, the parties  
were adverse in interest, as it relates to the allegations pleaded in the statement of claim.  
In addition, the scope of the issues between the parties had been infected with a personal  
element that emotionally resonated with Rob. Specifically, as Cheryl, eventually,  
conceded in her evidence, she told certain individuals that Rob was a “cheat”.  
Page: 114  
Contemporaneous to his 2012 correspondence, Rob states that he had received  
information that Cheryl made what he believed to be defamatory statements about him  
and his family, which angered him and, in part, motivated his post-litigation  
correspondence to her.  
[661] Rob also sent the subject correspondence because he was upset that he had been sued  
following Cheryl’s failure to respond to his repeated efforts to contact her, after she left  
CCI in July 2010. He viewed Cheryl’s action as frivolous. From his perspective, his view  
in that regard, was confirmed by the result of aspects of BDO’s work, which prompted  
his second piece of correspondence to Cheryl.  
[662] None of the foregoing justifies Rob’s conduct in corresponding directly to Cheryl after  
she commenced this action. However, it illustrates the differing circumstances that  
surrounded Rob’s post-litigation correspondence and those that were operable at the time  
of Rob and Cheryl’s 2010 meetings.  
[663] In my view, the circumstances that prevailed at the time of the 2010 meeting are actually  
more analogous to those that surrounded Rob and Cheryl’s interactions in 2009, than they  
were to the circumstances surrounding Rob’s post-litigation correspondence. As Cheryl  
testifies, despite CCI’s consistently poor financial performance throughout 2009, Rob  
treated her kindly and he continued to be her “angel” in that year. According to Cheryl,  
Rob’s demeanour did not change in 2009, even after he and his related corporations  
injected in excess of $100,000 into CCI, mid-year, in order to subsidize its losses. Mr.  
Hockin confirms that he attended CCI meetings in 2009 with Rob and Cheryl, in which  
Rob consistently acted appropriately.  
[664] Similarly, Mr. Kazarian’s evidence confirms that Rob continued to act appropriately  
during their June 2010 meetings with Cheryl, despite the continued losses that CCI had  
endured, to that point.  
[665] In the context of the foregoing, I am not persuaded that the correspondence that Rob  
wrote to Cheryl after this litigation was commenced, confirms Cheryl’s evidence that  
Rob demeaned or threatened her during their meetings in 2010.  
[666] With the issue of Rob’s general demeanour and behaviour towards Cheryl in 2010,  
resolved, I will turn to the specific circumstances surrounding Mr. Kazarian’s initial  
involvement with CCI.  
(vi)  
The Circumstances Surrounding Mr. Kazarian’s Initial Involvement With  
CCI  
[667] Although I reject Cheryl’s evidence concerning Rob’s general demeanour and his  
treatment of her during their 2010 meetings, I accept her evidence that she consistently  
felt anxious about their meetings and that she experienced depressive feelings and a loss  
of self esteem in 2010. Nonetheless, I do not find that those feelings were attributable to  
offensive or inappropriate conduct on the part of either Rob, or Mr. Kazarian.  
Page: 115  
[668] Throughout 2009 and early 2010, Cheryl engaged in various efforts to achieve  
profitability that were largely unsuccessful. She knew that Rob was concerned with  
CCI’s ongoing losses, as was she. She became increasingly stressed because of CCI’s  
financial performance in the first half of 2010. Objectively, in that context, it is  
understandable that she felt anxious about her meetings with Rob. Losses were  
accumulating and she was unable to identify solutions to adequately address the issue.  
She felt like she had good ideas, but they never worked out.  
[669] In her evidence, Cheryl acknowledged that by mid-2010, CCI’s continued losses were not  
sustainable, “something had to be done”, and in that context, she understood “why” Mr.  
Kazarian had to be “brought in”.  
[670] I accept Rob’s evidence that based on CCI’s consistently poor financial performance and  
despite Cheryl’s best, albeit unsuccessful, efforts to achieve profitability, he, eventually,  
concluded that it was necessary to bring in another individual with restaurant experience  
to address CCI’s financial issues, but not to act as its manager. In my view, Rob’s  
decision in that regard was: a reasonable exercise of business judgment, consistent with  
the parties’ agreement that he would retain ultimate control over CCI’s financial aspects;  
consistent with his duty, as a director, to act in the best interests of CCI; motivated by  
good faith; and founded in the actual financial performance of the restaurant from  
January 1, 2009 to May 2010, rather than as part of an overall plan to force Cheryl out of  
the business, or to demean and humiliate her.  
[671] The implementation of Mr. Kazarian’s planned role in CCI’s operation necessarily  
involved a change to Cheryl’s duties and responsibilities, which was reasonably limited  
to the financial “reporting and controls” aspects of CCI’s operation. I accept the  
evidence of Rob and Mr. Kazarian that Rob did not intend, nor did he express an  
intention: to replace Cheryl with Mr. Kazarian; to terminate Cheryl’s employment with  
CCI; or to remove Cheryl from CCI’s management. Instead, Rob intended and expressed  
his intent (including to Cheryl) that Cheryl would continue to “run the restaurant”,  
despite the change in her financial reporting and controls duties.  
[672] In the foregoing context, Rob’s decision to involve Mr. Kazarian in CCI’s operation was  
made with “appropriate regard” for the contractual interests of the other parties to the  
Contract of Employment, including CCI’s interests. By the time Mr. Kazarian was  
retained, Rob had expressed concerns to Cheryl regarding CCI’s losses on several  
occasions and she had been afforded time to address the issue. Eventually, CCI’s  
financial circumstances reached a point where even Cheryl acknowledges “something  
had to be done”. Mr. Kazarian’s intended role was limited to oversight of CCI’s  
financial reporting and its financial controls, with Cheryl continuing to manage the  
restaurant’s operation.  
[673] The evidence does not persuasively establish that Rob’s exercise of his contractual power  
to affect changes to Cheryl’s financial reporting and financial controls duties that were  
necessary to give effect to Mr. Kazarian’s intended role, was undertaken in bad faith or in  
the absence of good faith.  
Page: 116  
[674] Despite understanding Rob’s rationale for retaining Mr. Kazarian, on her own evidence,  
Cheryl did not react positively to his presence. Cheryl testifies that she was advised by  
Mr. LaRoche, on more than one occasion, that Mr. Kazarian was brought in to “help” her  
operate the restaurant, which is consistent with Rob’s evidence. I accept that Mr.  
Kazarian was retained in order to assist Cheryl in the management of CCI’s operations,  
not to replace her in that role. Despite being repeatedly advised that Rob wanted her to  
assist Mr. Kazarian in familiarizing himself with CCI’s bookkeeping system, Cheryl  
refused to do so.  
[675] Cheryl testifies that Mr. Kazarian’s presence made her feel “useless and demeaned”. I  
accept that Cheryl ultimately had an emotional reaction to both Mr. Kazarian’s  
involvement in CCI’s operation and the unsustainable losses that it continued to endure,  
which, in turn, contributed to her depressive feelings in mid-2010. However, I do not find  
that her reaction was the result of any malfeasance or misconduct on the part of Rob.  
(vii) Cheryl Was Not Constructively Dismissed Through Mr. Kazarian’s  
Assumption of Duties Related to CCI’s Financial Reporting and Controls  
[676] I am not persuaded that Mr. Kazarian’s employment in general, or his assumption of  
CCI’s bookkeeping duties and the financial controls that he enacted with Rob’s approval,  
when considered individually and cumulatively, operated to constructively dismiss  
Cheryl from her employment with CCI.  
[677] The changes made to Cheryl’s duties and responsibilities did not alter the essential terms  
of the Contract of Employment. To the contrary, the changes were implemented in  
accordance with the contract’s express terms. By assigning financial reporting and  
controls responsibilities to Mr. Kazarian, Rob, on behalf of CCI, exercised a fully  
disclosed right available to him pursuant to paragraph 1(3) of the Contract of  
Employment. Rob’s exercise of that contractual right, which was previously known, and  
agreed to, by Cheryl, did not constitute a breach of the employment contract. It did not  
evince CCI’s (or Rob’s) intention to no longer be bound by the terms of the employment  
contract, and it would not lead a reasonable person to conclude otherwise, when  
considered in all of the circumstances. The changes were not the result of bad faith  
conduct by either Rob or CCI, and Cheryl was not ousted from her involvement in CCI’s  
management. Rob intended, and Cheryl was advised, that despite the changes in  
responsibility for CCI’s financial reporting and controls, Cheryl would still maintain  
responsibility for the restaurant’s overall management. In Cheryl’s words, she would  
continue to “run” the restaurant.  
[678] Similarly, there is no evidence that Cheryl was advised, or that Rob intended or  
expressed, that any changes in Cheryl’s reporting requirements, duties or responsibilities  
would be accompanied by: a change in her salary; a forced surrender or cancellation of  
her shares; or her forced disentitlement to a share of CCI’s profits, if any, as a 50 per cent  
shareholder, after its related-party debt was retired.  
[679] For the foregoing reasons, I conclude that the assignment of financial reporting and  
controls duties to Mr. Kazarian and the corresponding changes in Cheryl’s duties, did not  
Page: 117  
operate to constructively dismiss Cheryl. That finding alone does not dispose of Cheryl’s  
wrongful dismissal claim, since she alternatively submits that she was either expressly or  
constructively dismissed by subsequent conduct by Rob and CCI. For the reasons that  
follow, I conclude that she was not. I will begin my explanation of that conclusion by  
reviewing the contextual circumstances that arose after Mr. Kazarian commenced active  
participation in CCI’s operations.  
(viii) Cheryl Was Not Expressly or Constructively Dismissed As A Result of  
Events That Occurred During June and July 2010  
[680] As he was tasked to do, Mr. Kazarian completed an assessment of CCI’s financial records  
and the restaurant’s operations, in order to develop suggestions to improve its financial  
performance. Among other things, he concluded that the restaurant’s staffing level was  
excessive in relation to its sales. In his view, the restaurant could not sustain the salaries  
of two highly paid chefs (Cheryl and Chef Bonnot), nor the overall staffing levels it  
maintained. He also concluded that Bruce and Leslie Bonnot were, in effect, redundant  
employees and he recommended that they be terminated.  
[681] Cheryl was unclear and inconsistent in her evidence concerning the events that occurred  
after Mr. Kazarian became involved in CCI, and the sequence of those events. She  
originally testified that on July 8, 2010, which was after Mr. Kazarian had commenced  
his duties with CCI, she authored correspondence addressed to Rob (ostensibly dated  
“July 8”), and within days she was summoned to a private meeting held at RM’s head  
office. She testifies that during that meeting, Rob told her that effective the following  
day, she was required to personally terminate Chef Bonnot, Leslie Bonnot and Bruce, or  
she herself would be terminated. She further testifies that Rob advised her that Mr.  
Kazarian was going to take over all aspects of the restaurant’s management and if she did  
not like it, she could leave and he would “throw a little money” at her. Cheryl testifies  
that she left the meeting in tears.  
[682] Cheryl also testifies that the following day (which on her original narrative was in mid-  
July 2010) she, Rob, Mr. Kazarian, and Chef Bonnot attended a meeting in which: Rob  
determined that Leslie and Bruce would be fired immediately; and tighter financial  
controls were announced. Cheryl testifies that she became more depressed as a result of  
that meeting. She lost her will to work. She eventually confronted Mr. Kazarian in the  
workplace, yelled at him, and aggressively accused him of “trying to take her job”. She  
ran out of the restaurant and never returned. Subjectively, she felt that she could not  
return to CCI and she did not want to “try anymore”, in relation to its operations.  
[683] The timeline implicit in the foregoing aspects of Cheryl’s evidence was “undone” in  
cross-examination. When confronted with the date of Bruce’s termination at the end of  
June 2010, Cheryl asserted that her “July 8” correspondence was actually written in June,  
before Leslie and Bruce were terminated, and before she met with Rob alone. She  
concedes that her “July 8” correspondence addresses, in part, concerns that were raised  
about the amount of remuneration she caused CCI to pay her in 2009, and her alleged use  
of corporate funds for personal expenses. She believes that those issues “might” have  
been raised at a different meeting.  
Page: 118  
[684] Cheryl’s evidence on the issue of the content and sequence of the parties’ mid-2010  
meetings is also directly contradicted by the evidence of both Rob and Mr. Kazarian.  
[685] As a result of the inconsistencies between Cheryl’s evidence concerning the sequence of  
events that occurred in June and July 2010 and my favourable impression of Mr.  
Kazarian’s evidence overall (which is generally consistent with Rob’s evidence on the  
foregoing issues), where Cheryl’s evidence concerning the sequence and content of her  
meetings with Rob and Mr. Kazarian in June and July 2010, conflicts with the evidence  
of either Rob or Mr. Kazarian, I prefer the evidence of the latter two witnesses.  
[686] Rob and Mr. Kazarian both testify that they, together with Cheryl and Chef Bonnot,  
attended meetings in June 2010. During those meetings, Chef Bonnot agreed to a  
reduction in his salary. Rob does not recall meeting with Cheryl at the RM offices,  
although he allows that it is possible that such a meeting occurred. Nonetheless, he  
steadfastly denies ever: advising Cheryl that she had to personally “fire” Bruce and  
Leslie; advising Cheryl that Mr. Kazarian was taking over all of her duties; or engaging  
in any other aggressive or threatening conduct towards her. I accept those aspects of his  
evidence.  
[687] More specifically, Rob testifies that the issue of Bruce’s termination was first raised  
during the last meeting in June 2010, between himself, Cheryl, Mr. Kazarian and Chef  
Bonnot, which was held in the Retro Suites Hotel banquet room. He recalls that Cheryl  
became extremely upset when the issue of Bruce’s termination was raised. Shortly  
thereafter, she left the meeting and Rob never saw her again.  
[688] Rob also testifies that it was not until June 2010, that he learned from Mr. Kazarian that  
CCI’s records indicated that certain of Cheryl’s personal expenses had been paid by CCI  
and that she was paid in excess of her agreed upon salary of $50,000 in 2009. However,  
he denies that he alleged, at any time, that Cheryl “stole money” from CCI.  
[689] Mr. Kazarian testifies, and I accept that during the meetings held in June 2010, Rob acted  
appropriately and was always civil towards Cheryl. Mr. Kazarian confirms and I accept  
that at one of the June 2010 meetings, which Cheryl attended, the amount of Cheryl’s  
actual 2009 salary and issues related to her personal expenses were discussed.  
[690] Both Rob and Mr. Kazarian testified that during their meetings with Cheryl, she  
consistently appeared upset and emotional.  
[691] After considering the totality of the evidence, I accept that Bruce’s termination was first  
discussed during the last June 2010 meeting held between Rob, Cheryl, Mr. Kazarian and  
Chef Bonnot. I do not accept that Cheryl was ever presented with an ultimatum, requiring  
her to personally terminate Bruce and Leslie’s employment or to be terminated herself.  
Further, I do not accept that Cheryl was advised that Mr. Kazarian was “taking over all  
aspects of the restaurant’s management”. I also find that Rob did not intend to terminate  
Cheryl’s employment in June 2010, or at any other time.  
[692] As a result of the combined evidence of Rob and Mr. Kazarian, in the context of the  
evidence as a whole, I find that Bruce’s termination, which Rob approved, was initiated  
Page: 119  
by Mr. Kazarian’s “financial improvement” recommendations, in the context of CCI’s  
prevailing financial circumstances, rather than as part of a plan to force Cheryl out of  
CCI’s operation. I also find, as Cheryl testifies, that the depressive feelings that she  
experienced in mid-2010 were attributable, in part, to Bruce’s termination and his  
absence from the workplace.  
[693] Similarly, I conclude that to the extent that Mr. Kazarian, with Rob’s approval,  
implemented financial controls in CCI’s operation, those controls were founded in the  
reasonable exercise of business judgment, exercised in the context of CCI’s prevailing  
financial circumstances, with a view to ensuring CCI’s best interests. Those controls did  
not completely remove Cheryl’s ability to incur expenses on behalf of CCI. Instead,  
Cheryl’s corporate debit card was replaced with a corporate credit card. CCI’s general  
expenditures, including the purchase of supplies, were run through one person, the  
financial controller Mr. Kazarian, which was not unreasonable in the context of CCI’s  
ongoing losses. In addition, Cheryl was provided with a cash “float” to fund certain  
expenses that she may have been required to make on behalf of CCI. These were all  
financial matters over which the parties agreed Rob would have control.  
[694] Finally, Cheryl’s evidence at trial confirms Mr. Kazarian’s stated view that in 2009,  
Cheryl caused herself to be paid a salary in excess of the amount that she was  
contractually entitled to receive for that year. She justified the additional amount on the  
basis that she was not fully paid a “pro-rated” share of her $50,000 salary during the  
period of September to December 2008, while NFE operated out of CCI’s intended  
premises. But, she was not employed by CCI in 2008. Rather, her employment  
commenced on January 1, 2009. As a result, there was no contractual basis for Cheryl to  
cause CCI to pay her a salary in excess of $50,000 in 2009.  
[695] I do not foreclose the possibility that her excessive salary in 2009, may have resulted  
from her misunderstanding of the date that her employment with CCI actually began.  
However, it remains that CCI, either through Rob or Mr. Kazarian, did not breach the  
terms of the Contract of Employment or engage in threatening or demeaning behaviour  
by raising the issue of her 2009 remuneration during the parties’ June 2010 meetings. The  
assertion that she did so, was accurate.  
[696] Similarly, in her evidence, Cheryl confirms that CCI did, in fact, pay for some of her  
personal expenses in 2009. She explains that actuality as an error by CCI’s bookkeeper in  
handling her receipts. Nonetheless, it remains Rob and Mr. Kazarian did not engage in  
threatening or demeaning conduct by raising the issue. The assertion that she did so, was  
accurate.  
[697] In the context of the foregoing and for reasons previously expressed, I conclude that the  
implementation of financial controls within CCI’s operation in June 2010 and the  
concordant changes in Cheryl’s reporting relationships, duties, and responsibilities: were  
not undertaken in the absence of appropriate regard for Cheryl’s contractual interests;  
were permitted by the provisions of the Contract of Employment, of which Cheryl had  
prior notice and to which she agreed; did not, in isolation or in combination, constitute a  
Page: 120  
constructive dismissal of Cheryl’s employment; and did not evince an intention on the  
part of the employer not to be bound by the provisions of the Contract of Employment.  
(ix)  
Cheryl Was Not Expressly or Constructively Dismissed As A Result of  
Events That Occurred During August and September 2010  
[698] I now turn to the events in and after July 2010 that Cheryl relies on in support of her  
position that she was wrongfully dismissed.  
[699] I find that Cheryl ultimately stopped actively participating in CCI’s operations and the  
duties of her employment, in early July 2010. The evidence concerning her last day of  
work at CCI is unclear. Cheryl believes that it may have been July 1, 2010. She also  
recalls that her last day at work was a Friday. Mr. Kazarian testifies that Cheryl left the  
restaurant’s operation in early July 2010.  
[700] I accept that Cheryl’s departure from CCI’s operation was immediately preceded by an  
incident in which she confronted Mr. Kazarian and accused him of trying to “take her  
job”. I also accept Cheryl’s evidence that when she left CCI on her last day of active  
work, she felt that she could not go back and she “didn’t want to try anymore”, in relation  
to its operation. When she left, she did not contemporaneously advise Rob or Mr.  
Kazarian that she intended to return to work at CCI, or a date by which she intended to  
return to work.  
[701] With Rob’s approval, Mr. Kazarian wrote to Cheryl on July 14, 2010, suggesting that she  
take two weeks off work with pay and further suggesting that the parties meet on  
approximately July 28, 2010 to discuss her progress and to determine if she was ready to  
return to work. In all of the circumstances, the content of Mr. Kazarian’s correspondence  
is reasonable. I do not find that his correspondence is consistent with an effort or intent  
by CCI or Rob to: terminate Cheryl’s employment; force her out of CCI; or harass,  
embarrass or demean her. Further, based on the date and content of Mr. Kazarian’s  
correspondence and Cheryl’s recollection that her last day at work was a Friday, I  
conclude that her last day of active employment with CCI was Friday, July 9, 2010.  
[702] I am satisfied that Cheryl did not directly respond to Mr. Kazarian’s correspondence, at  
any time. Further, I find that subsequent to withdrawing from active participation in  
CCI’s operations in July 2010, Cheryl never returned to CCI, nor did she advise Rob or  
Mr. Kazarian that she intended, or even wanted, to do so. I accept Rob and Mr.  
Kazarian’s respective evidence that despite being advised that Cheryl had stopped  
attending at CCI, Rob never determined that her employment should be terminated, and  
he never directed Mr. Kazarian to do so.  
[703] On July 20, 2010, Cheryl’s family doctor provided her with a note to be “off work for at  
least one month”, for unspecified “medical reasons”. She provided the note to Mr.  
Kazarian, indirectly, through Chef Bonnot. In my view, her actions in that regard  
confirm that as of July 20, 2010, Cheryl did not subjectively believe that she had been  
terminated from her employment.  
Page: 121  
[704] Despite the content of Mr. Kazarian’s correspondence, Cheryl did not engage in return to  
work discussions with him on or about July 28, 2010, or at any other time. Similarly,  
although Rob attempted to contact Cheryl during the month of July 2010, to discuss her  
absence from and potential return to work, he did not receive a response or reply.  
Cheryl’s salary continued to be paid by CCI throughout July 2010.  
[705] In late July 2010, Cheryl saw CCI’s advertisement for the position of a “Red Seal chef”,  
which she misinterpreted as an attempt to replace her. I accept Mr. Kazarian’s evidence,  
which is not contradicted, that through the ad, he sought to hire a new chef to replace  
Chef Bonnot who, to Cheryl’s knowledge, had announced his intent to retire from his  
employment with CCI in September 2010. Consistent with Mr. Kazarian’s evidence,  
Chef Bonnot was a Red Seal chef. Cheryl was not. In her evidence, Cheryl concedes that  
she may have “missed” “the Red Seal” aspect of the advertisement, when she read it in  
2010. I find that her misapprehension of the advertisement’s content resulted in her  
mistaken view that she was being forced out of her employment with CCI. She was not.  
Cheryl did not contact CCI to seek clarification about the purpose of the advertisement.  
Her assumption that she was being forced out does not evidence the truth of same.  
[706] I accept Cheryl’s evidence that by early August 2010, she subjectively determined that  
she could not return to CCI.  
[707] I accept that after Chef Bonnot advised Rob about Cheryl’s emotional distress, her past  
history of depression, and her desire to return to her previous “bistro business” (NFE),  
Rob attempted to contact Cheryl by telephone on August 4, 2010. When he was unable  
to reach her directly, he left her a voicemail message in which he proposed a “solution”  
to their circumstances that involved paying Cheryl three months salary and providing her  
with financial assistance to set up her “old restaurant”. He invited Cheryl to contact him  
in respect of his proposal. Cheryl did not respond.  
[708] Notwithstanding Cheryl’s continued absence from CCI and her continued silence with  
respect to her intention to return to active employment, neither Rob nor CCI took steps to  
terminate Cheryl’s employment in August 2010, or at all. Instead, CCI continued to pay  
Cheryl’s salary throughout August 2010.  
[709] Cheryl was assessed by nurse practitioner Joan Brisley on August 30, 2010, through the  
Chatham-Kent Health Alliance Mental Health Program. At the time of her assessment,  
Cheryl reported subjective symptoms of anxiety and appeared “slightly depressed”. She  
was diagnosed with an adjustment disorder. Subjectively, Cheryl reported that her  
symptoms were improving. In her report, nurse practitioner Brisley did not opine that  
Cheryl was medically incapable of engaging in active employment at CCI, or elsewhere,  
at any time. The report was not shared, on a contemporaneous basis, with a representative  
of CCI.  
[710] Nurse practitioner Brisley’s report also records that on the date of her assessment Cheryl  
reported that: she had been “pushed out of her business six weeks earlier”; she suffered a  
“loss of investment in her restaurant business”; and she had “lost her restaurant  
business”. The fact that those assertions were recorded, does not make them true. In my  
Page: 122  
view, those assertions were not factually accurate. Although aspects of her duties were  
changed in accordance with the provisions of the Contract of Employment: Cheryl’s  
employment was not terminated; her salary remained unchanged; her employment duties  
continued to involve management of the restaurant’s day-to-day operations; she  
voluntarily left her active employment at CCI in early July 2010; she did not return to  
active employment or communicate an intention to do so at any time thereafter; she did  
not respond to the employer’s efforts to contact her; and she remained a 50 per cent  
shareholder of the corporation. In that context, I find that she was not “pushed out” of  
her business (CCI) and she did not “lose it”.  
[711] Further, on the totality of the evidence before me, I find that the stress and depressive  
feelings that Cheryl suffered in 2010 were attributable to: CCI’s consistent poor financial  
performance, despite her efforts to improve it; her subjective perception of what she  
believed to be unfair criticism from Rob over CCI’s losses; Bruce’s termination; her  
inaccurate subjective perception that she had been “wrongfully demoted”, despite  
acknowledging the rationale for Mr. Kazarian’s involvement in CCI’s operation (“losses  
unsustainable” – “something had to be done”); and her misapprehension that the  
advertisement for a “Red Seal chef” was an effort to replace her.  
[712] Cheryl confirms that by the time she attended on the nurse practitioner, she had retained  
counsel. There is no evidence that her counsel communicated Cheryl’s desire or intent to  
return to active employment at CCI, either to Rob or anyone else on behalf of CCI, at any  
time.  
[713] Fortunately, Cheryl’s symptoms abated over time. When she attended on psychiatrist Dr.  
Fairburn, for assessment at the end of September 2010, her symptoms had subjectively  
improved by a reported 50 per cent. In his report, Dr. Fairburn opined that Cheryl had  
suffered a “narcissistic injury” and offered a formal diagnosis of “adult life with mixed  
emotions”, with no evidence of major depressive disorder. He did not identify any  
restrictions on her ability to work, at any time. Similar to nurse practitioner Brisley, Dr.  
Fairburn recommended counselling, which Cheryl did not pursue.  
[714] By October 2010, Cheryl was actively working in the Healthy Choice Catering business  
that was operated in Bruce’s name. After several months of involvement in that business,  
she established Zee’s Bistro, which has been operating continuously from 2011 to date.  
[715] Relatively contemporaneous to Cheryl’s August 30, 2010, assessment by nurse  
practitioner Brisley, of which Rob was unaware, Rob instructed Mr. Asher to prepare  
documentation that when executed, would give effect to the proposal that he made during  
his August 4, 2010 voicemail message to Cheryl. Those documents included a  
“Termination of Employment” agreement pursuant to which: Cheryl would acknowledge  
her resignation from CCI; be paid three months salary; and agree to transfer her shares of  
CCI to RJM Holdings for consideration of one dollar. The documents were forwarded to  
Cheryl under cover of correspondence from Mr. Asher, dated in early September 2010, to  
which Cheryl never responded.  
Page: 123  
[716] In all of the foregoing circumstances, I do not accept Cheryl’s submission that she was  
expressly or constructively dismissed as a result of the proposal that Rob made in his  
August 4, 2010 voicemail message or the subsequent documentation that followed under  
cover of Mr. Asher’s correspondence. I will explain.  
[717] Rob’s voicemail message and Mr. Asher’s subsequent correspondence were designed to  
address the difficult situation of Cheryl’s prolonged absence from the workplace, in  
circumstances where she was unwilling to communicate directly or through counsel, with  
Rob or Mr. Kazarian about the issue, or her anticipated return to work date, if any,  
coupled with information Rob received from Chef Bonnot that Cheryl wanted to return to  
her former bistro business.  
[718] Cheryl’s trial evidence establishes that subjectively, both at the date of Rob’s voicemail  
message and the date of Mr. Asher’s subsequent correspondence, she did not intend to  
return to active employment at CCI. Yet, she did not contemporaneously share that  
information with Rob, either directly or indirectly, despite his efforts to communicate  
with her.  
[719] In his voicemail message, Rob does not purport to expressly terminate Cheryl’s  
employment. Further, Rob did not seek to unilaterally impose the terms of his proposed  
solution. Instead, he recognized that his proposal required Cheryl’s agreement to become  
effective, as evidenced by both his request that she contact him and the subsequent  
preparation of documentation that required Cheryl’s signature in order to gain effect (the  
“Termination of Employment” agreement and related documentation). It consistently  
remained open to Cheryl to contact Rob to discuss the terms of the proposal and/or to  
communicate her acceptance or rejection of same and/or to confirm that she remained  
employed with CCI and she intended to return to work, at some point. It also remained  
open to her to contact Rob, at any time, to discuss any other aspect of her employment  
with, or the operation of, CCI. She did not do so.  
[720] Similarly, the documents forwarded to Cheryl by Mr. Asher, did not purport to  
unilaterally terminate her employment with CCI. None of the terms of the Termination  
Agreement were unilaterally imposed on Cheryl. Although the structure of the agreement  
was premised on Cheryl’s resignation from CCI, absent her execution of same, that stated  
premise did not bind her. Although the transfer of Cheryl’s shares to RJM Holdings was  
proposed in exchange for consideration of one dollar, I find, in accordance with Ms.  
Campbell’s evidence, that was the fair market value of Cheryl’s shares at the time, owing  
to CCI’s negative cash flow and its substantial debt, which was in excess of the total  
value of its liabilities. The plaintiffs did not submit, or call evidence, to the contrary.  
[721] In response to Mr. Asher’s correspondence, it remained open to Cheryl, either directly or  
through her counsel, to communicate with CCI, either directly or through Mr. Asher, to  
advise that: Cheryl had not resigned; Cheryl intended to return to work; Cheryl currently  
remained unfit to return to work; and/or Cheryl posited that she had already been  
terminated, as a result of the change in her duties, or otherwise. She did not do so.  
Nevertheless, it remains that without her assent, neither Rob’s proposal nor the terms of  
Page: 124  
the agreement forwarded by Mr. Asher were given effect, and neither had the effect of  
dismissing Cheryl from her employment.  
[722] In the result, I conclude that Cheryl was not dismissed from her employment from CCI.  
Instead, I am satisfied that the defendants have established that through her conduct in  
mid-2010, Cheryl resigned. I will explain below.  
(x)  
Cheryl Resigned From Her Employment with CCI  
[723] When all of the circumstances above are viewed objectively, I am satisfied that Cheryl’s  
conduct in mid-2010, evidenced her intention to resign from her employment with CCI.  
In addition, Cheryl’s evidence establishes that she held a contemporaneous subjective  
intention not to return to her employment at CCI, after she left the restaurant in July 2010  
and continuously thereafter.  
[724] In arriving at that conclusion, I remain mindful of the relatively high onus applicable to  
the determination of whether an employee has resigned from his or her employment. The  
employee’s resignation, or her intent to resign, must be “clear and unequivocal”. Based  
on the facts as I have found them, that standard is met in this instance.  
[725] I have previously set out my reasons for concluding that the changes to Cheryl’s  
reporting obligations, responsibilities, and duties did not constitute an express or  
constructive dismissal of her employment. As a result of those changes, among other  
things, Cheryl concedes that she “blew up” at Mr. Kazarian in early July 2010, left the  
restaurant and never returned.  
[726] Objectively, Cheryl did not advise Mr. Kazarian or Rob of the reasons for her departure,  
nor the date by which she anticipated returning to work, if at all. Subjectively, Cheryl  
testifies that by the time she left CCI, she determined that she did not want to “try  
anymore”, in relation to its operations.  
[727] Objectively, in the aftermath of her “blow up”, Cheryl’s employer, acting reasonably,  
provided her with two weeks “off work” with pay and invited her to contact Mr. Kazarian  
at the end of that period to discuss her return to work. She did not do so. Instead, in the  
approximate two-month period following her departure from CCI, Cheryl: did not  
respond to Mr. Kazarian’s efforts to contact her; did not respond to Rob’s efforts to  
contact her; did not respond to the proposal that Rob made to her on August 4, 2010; and  
did not respond to Mr. Asher’s correspondence in early September 2010, if only to  
confirm that she had not resigned her employment or conversely, to posit that she had  
been terminated. Further, Cheryl never communicated an intention of, or an interest in,  
returning to work at CCI, after she left in July 2010.  
[728] In concluding that Cheryl resigned, I remain mindful of the plaintiffs’ submission that  
Cheryl’s misdated “July 8” correspondence, reflects an ongoing intention to “work with  
Rob”, in order to find a mutual solution to CCI’s financial performance issues. Cheryl  
submits that the content of her correspondence, in that regard, is inconsistent with the  
defendants’ position that she resigned from her employment. For the reasons that follow,  
I do not give effect to that submission.  
Page: 125  
[729] In her evidence, Cheryl settled on the proposition that her “July 8” correspondence  
actually preceded Bruce’s termination on June 28, 2010. Accepting the accuracy of  
Cheryl’s evidence in that regard, the subject correspondence would necessarily have been  
prepared before: Bruce’s termination; the implementation of changes to Cheryl’s duties  
and responsibilities; her subsequent confrontation with Mr. Kazarian in early July; and  
her departure from CCI. In my view, those happenings constitute material changes in the  
circumstances that existed on the actual date Cheryl prepared her misdated “July 8”  
correspondence and those that existed on the date that she left active employment at CCI.  
After those events occurred, Cheryl determined that she did not want to “try” anymore, as  
it related to the CCI’s operation, a view that she held when she departed CCI in July  
2010. Conversely, there is no evidence that she had arrived at that view when she wrote  
the subject correspondence in June 2010. Accordingly, I do not find that correspondence  
evidences that Cheryl did not intend to resign when she left CCI in July 2010. To the  
contrary, the totality of her conduct after she left CCI, evidences that she did.  
[730] In my view, a reasonable person viewing all of the relevant circumstances disclosed by  
the facts as I have found them, would conclude that Cheryl’s departure from the  
workplace, following her heated albeit inaccurate allegation that Mr. Kazarian was  
attempting to “take her job”; and her continued silence in the face of her employer’s  
subsequent repeated attempts to communicate with her concerning her return to work or  
other “go forward” plans, evidenced her clear and unequivocal intention to abandon her  
employment with CCI in the summer of 2010. In other words, a reasonable person would  
conclude that she had resigned from her employment.  
[731] As the objective factual matrix developed over the summer of 2010, Cheryl held a  
corresponding subjective intention not to return to employment at CCI: she did not want  
to try anymore; she could not return to her employment at CCI; and she no longer wanted  
to be Rob’s partner.  
[732] In all the circumstances, I am persuaded that by the end of August 2010, the employer  
correctly concluded that Cheryl had abandoned her employment. Objectively, that  
conclusion was reasonable and justified by the totality of the circumstances. CCI’s  
acceptance of Cheryl’s resignation was manifest when it stopped paying Cheryl’s salary.  
[733] In the result, Cheryl was not wrongfully dismissed from her employment by CCI. She  
resigned. Therefore, she is not entitled to damages for wrongful dismissal.  
(xi)  
Provisional Assessment of Cheryl’s Damages for Wrongful Dismissal  
[734] In the event that I have erred in determining that Cheryl was not dismissed from her  
employment, I will provisionally determine the appropriate notice period and other issues  
related to the quantification of her damages. Those issues must be determined in  
accordance with the following principles.  
[735] Where an employee’s dismissal from employment is without cause, the employer must  
provide the employee with either reasonable notice that the contract is to be terminated,  
or compensation in lieu of reasonable notice: see Wallace v. United Grain Growers Ltd.,  
Page: 126  
[1997] 3 S.C.R. 701, at para. 75. If the employer fails to do either, the employee may  
bring an action for wrongful dismissal and seek an award of damages based on the period  
of notice that ought to have been provided: see Wallace, at para. 115. Generally, in such  
instances, damages are confined to the loss suffered as a result of the employer’s failure  
to provide proper notice of termination, as distinct from damages for the actual loss of the  
employee’s job and/or the pain and distress that the employee may have suffered as a  
consequence of being terminated: see Keays v. Honda Canada Inc., at para. 50.  
[736] For the purpose of this provisional assessment, I will assume that I have erred in the  
interpretation of the Contract of Employment or the nature and extent of the implemented  
changes to Cheryl’s duties, such that the changes as implemented in early July 2010,  
were not authorized by the contract’s terms. In those circumstances, the employer’s  
unilateral changes to Cheryl’s duties, which were not accepted or ratified by Cheryl (as  
evidenced by her departure from the restaurant in early July 2010), constituted a  
constructive dismissal.  
[737] The first issue in assessing Cheryl’s damages is determining the appropriate notice  
period. The requisite period of reasonable notice is decided in each case on its own facts,  
having regard to: the character of employment; the length of service; the age of the  
employee; and the availability of similar employment having regard to the experience,  
training and qualifications of the employee (the “Bardal” factors): see Bardal v. Globe  
and Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.), [1960] O.J. No. 149, at p. 145 and  
Keays, at para. 28. In determining the appropriate notice period, no particular “Bardal”  
factor should be given disproportionate weight: see Keays, at para. 32.  
[738] Determining the period of reasonable notice is an art not a science. No two cases are  
identical. In each case, the court must weigh and balance a catalogue of relevant factors.  
Typically, there is not a single “correct” period of reasonable notice, in any particular  
case. Rather, most cases yield a range of reasonableness, as it relates to the applicable  
notice period: see Minott v. O’Shanter Development Co. (1999), 42 O.R. (3d) 321, 168  
D.L.R. (4th) 270 (Ont. C.A.) at pp. 343-44.  
[739] There is no upper temporal limit on notice periods in wrongful dismissal cases. However,  
only exceptional circumstances will support a base notice period in excess of 24 months:  
see Lowndes v. Summit Ford Sales Ltd. (2006), 206 O.A.C. 55 (Ont. C.A.), [2006] O.J.  
No. 13, at para. 11; Keenan v. Canac Kitchens Ltd., 2016 ONCA 79, 29 C.C.E.L. (4th)  
33, at paras. 30-32; Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2016  
ONCA 520, 349 O.A.C. 360, at para. 42. Courts should strive to ensure that notice  
periods are consistent with those determined in previously decided cases: see Strudwick,  
at para. 41.  
[740] In applying the foregoing principles and the Bardal factors, I find that Cheryl, who was  
approximately 48 years old at the time of dismissal, was employed in a position of  
management at CCI and as one of its chefs. She exercised a wide latitude of day-to-day  
managerial control and she was actively involved in developing promotional ideas and  
events designed to increase the restaurant’s revenue. Her period of employment was  
approximately 18 months.  
Page: 127  
[741] Based on her length of service, Cheryl would have been entitled to a minimum of two  
weeks notice of termination pursuant to the Employment Standards Act, 2000, S.O. 2000  
c. 41, s. 57. The Contract of Employment does not specify a fixed or minimum term of  
employment, nor does it fix a period of notice of termination that would supersede a  
period of reasonable notice, as determined in accordance with the common law.  
[742] No specific evidence was adduced with respect to the availability (or lack thereof) of  
employment similar to Cheryl’s employment, in the Chatham area in 2010 and 2011, for  
a person with Cheryl’s history of practical experience in restaurant operations,  
management and meal preparation (including catering services). The evidence does  
establish that there were relatively few casual fine dining restaurants comparable to CCI,  
in the Chatham area, at the time of dismissal.  
[743] In fixing the notice period, I also remain mindful that Cheryl was induced by Rob to  
leave her previous sole proprietorship, NFE.  
[744] In the context of the foregoing circumstances, Cheryl asserts that she was entitled to 24  
months notice or payment in lieu thereof. Unfortunately, she did not provide the court  
with any decided cases in which a notice period of that length was fixed in circumstances  
similar to those in this instance.  
[745] Conversely, the defendants submit that the appropriate reasonable notice period, at its  
highest, is three months. In that regard, they rely on the result in Mussleman v. Pasta &  
Grill Works Inc., 1999 CarswellOnt 3413 (Gen. Div.), in which a restaurant manager with  
36 months service was found to be entitled to three months pay in lieu of notice.  
[746] Having regard to all of the circumstances set out above, including the level of managerial  
responsibility that Cheryl assumed in her first 18 months of employment at CCI, I am  
satisfied that reasonably, the appropriate notice period is six months. As a result, if  
Cheryl was wrongfully dismissed, she was entitled to six months pay in lieu of notice,  
from the time that she effectively received notice of her dismissal. However, that finding  
does not end the inquiry.  
[747] In quantifying the damages that flow from the notice period, as found, there are two  
further issues that must be determined:  
1.  
When did the notice period begin to run in the context of Cheryl’s asserted  
inability to work due to medical reasons; and  
2.  
Did Cheryl partially or completely mitigate her damages?  
I will address each in turn.  
[748] On the first issue, I conclude that in the event that Cheryl was wrongfully dismissed, the  
notice period began to run on the date of her departure from CCI in July 2010. Despite  
her evidence concerning her subjective symptoms of anxiety and her depressive affect,  
both before and after that date, I am unable to conclude that she was incapable of  
Page: 128  
engaging in her own (or any other) employment, at any time before or after her departure  
from CCI. I will explain.  
[749] Although I remain mindful of the note from Cheryl’s family physician, Dr. Payne,  
indicating that she was “off work for medical reasons for at least one month” as of July  
20, 2010, I am not satisfied that Cheryl has established, through cogent evidence, that she  
was, in fact, medically unfit to work during the period of July to October 2010, before  
she began to actively participate in Healthy Choice Catering’s business activities.  
[750] In my view, Dr. Payne’s note is of little probative value in that regard. Dr. Payne’s  
qualifications were not provided to the court. His note is a one-line conclusory statement  
that does not offer any information concerning his findings or the basis for the stated  
conclusion that he records. The note does not state the nature of the “medical reasons”  
that are said to have rendered Cheryl unfit for work. In the absence of any evidence from  
Dr. Payne concerning the basis for the conclusion set out in his note, I am not prepared to  
place any weight on the “unfitness for work” conclusion implied by the note, for the  
purpose of this proceeding.  
[751] Further, in their respective reports, neither nurse practitioner Brisley nor Dr. Fairburn  
opine that Cheryl was incapable of working at the time of, or at any time prior to, their  
assessments (August 30, 2010 and September 24, 2010, respectively). Each of them  
recorded a history that contains subjective reports of anxiety and some depressive-like  
symptoms. Nurse practitioner Brisley offered a diagnosis of “adjustment disorder” and  
suggested that Cheryl may benefit from a “few” counselling sessions. Dr. Fairburn ruled  
out major depressive disorder and made a formal diagnosis of “adult life with mixed  
emotions”. Neither of them endorsed that Cheryl was medically incapable of working, at  
any time. The subjective history ostensibly provided to nurse practitioner Brisley does not  
expressly indicate that Cheryl stopped working in July 2010, because of medical reasons.  
[752] On the totality of the available evidence, I am not satisfied that Cheryl was medically  
incapable of engaging in employment in July 2010, or at any time thereafter. As a result,  
I conclude that the applicable notice period began to run on July 9, 2010, which was the  
last day that Cheryl actively worked at CCI.  
[753] Turning to the issue of mitigation, a dismissed employee is obligated to take reasonable  
steps to secure comparable alternative employment to mitigate the loss consequent on her  
dismissal. Where a lack of mitigation is alleged, the burden of proof is on the employer to  
establish, on a balance of probabilities, that the employee failed to take such reasonable  
steps and that had she done so, she could have minimized her loss: see Gill, at para. 70;  
Red Deer College v. Michaels (1975), [1976] 2 S.C.R. 324, at p. 331.  
[754] There is no evidence that Cheryl attempted to find alternative employment before Bruce  
ostensibly commenced a catering business out of their home in October 2010. I am  
satisfied that Cheryl contributed significant labour services to that business by  
performing its essential tasks (cooking and deliveries) beginning with the commencement  
of its operations. Consistent with Bruce’s evidence, the effect of placing ownership of the  
Page: 129  
catering business solely in his name, ensured that its income was, initially, attributed  
entirely to him, despite Cheryl’s active participation in the business.  
[755] In my view, the evidence establishes that Cheryl was capable of earning an income in  
October 2010, and continuously thereafter. In actuality, her efforts in the catering  
business did, in fact, earn income, although it was attributed, at first instance, solely to  
Bruce. Regrettably, the details of that income or its ultimate attribution were not  
disclosed to the court by either plaintiff, despite each of them maintaining a wrongful  
dismissal claim. As a result, the court cannot assess the extent to which Cheryl mitigated  
her damages in the period beginning mid-October 2010 and ending mid-January 2011  
(the last three months of the notice period, as found).  
[756] Owing to the plaintiffs’ failure to disclose the income derived from the catering business,  
the defendants’ request that I draw an adverse inference that Cheryl fully mitigated her  
damages from October 2010, onward. I am prepared to draw such an inference, but only  
for the period beginning in mid-November 2010, for the following reasons.  
[757] Cheryl had an obligation to mitigate her damages. The onus is on the defendants to prove  
that she has failed to do so. The defendants’ ability to attempt to adduce evidence in that  
regard was completely frustrated by the plaintiffs’ failure to provide evidence of the  
income generated from the catering business and its ultimate attribution, either at or  
before the time of trial. Information and documentation related to the catering business’  
income was solely in the plaintiffs’ control. Any documentation related to the income  
earned through the catering business ought to have been disclosed long before trial.  
Regrettably, the defendants first received disclosure about the existence of the catering  
business during the course of this trial. In that context, the defendants can hardly be  
faulted for not pursuing documentation and information related to the financial  
performance of that business and the extent to which Cheryl may have derived income  
from it, prior to the trial.  
[758] In all the circumstances, I am prepared to draw an inference that had the documentation  
(or any specific information) with respect to the income generated by the catering  
business and the distribution of that income, been adduced as evidence, it would have  
been completely unfavourable to the plaintiffs’ position on the issue of mitigation. In  
other words, it would have shown that Cheryl fully mitigated her damages during the last  
two months of the notice period as I have found it to be, namely, the period from mid-  
November 2010 to mid-January 2011.  
[759] I have not drawn an inference with respect to the period between mid-October 2010 and  
mid-November 2010 because, in my view, it is reasonable to infer that the catering  
business would have required a “start-up period” before it became profitable. On the  
admittedly scarce evidentiary record on the point, I have concluded that a one month  
start-up period is reasonable.  
[760] Had I determined that a longer notice period was applicable to Cheryl’s employment, I  
would have drawn the inference of full mitigation from mid-November 2010 until the  
date that Cheryl took possession of Zee’s current operating premises which appears to be  
Page: 130  
June 1, 2011 (the disclosed completion date in the relevant agreement of purchase and  
sale).  
[761] In calculating Cheryl’s damages for wrongful dismissal, the two-month period of  
complete mitigation and the approximate two-month period that Cheryl continued to be  
paid by CCI after her departure from the restaurant (most of July and all of August 2010),  
must be deducted from the six-month period of “payment in lieu of notice” that Cheryl  
was entitled to at common law. The result is a net period of slightly in excess of two  
months, for which Cheryl was not paid by CCI and in which she did not completely  
mitigate her damages.  
[762] Cheryl earned $4,166.67 per month ($50,000/year) while employed at CCI. Therefore, in  
the event that she was wrongfully dismissed, she would be entitled to damages in the net  
amount of $9,566.34 (2 months x $4,166.67/month with an additional $1,233 to  
recognize that the employer ought not to be credited for the salary paid to Cheryl from  
July 1 to July 9, 2010, while she was still employed), as payment in lieu of reasonable  
notice of her dismissal (after the deductions identified above are made).  
(xii) Provisional Assessment of Cheryl’s Claim for Aggravated Damages for  
Wrongful Dismissal  
[763] In addition, had I concluded that Cheryl was wrongfully dismissed, I would not give  
effect to her claim for “aggravated” or “moral” damages. I will explain.  
[764] Moral or aggravated damages are available to compensate damage or loss arising from  
the manner of dismissal, only in circumstances where the aggrieved loss arises naturally  
from the breach of the employment contract itself or where compensation for such losses  
was reasonably within the contemplation of both parties at the time the contract was  
formed: Keays, para. 54-56.  
[765] In this instance, the Contract of Employment did not have a fixed term. Rather, it was  
subject to cancellation on reasonable notice or payment in lieu of notice, without regard  
to the normal psychological impact of termination of employment. In accordance with the  
contract’s terms, dismissal remained a clear and consistent legal possibility. Therefore,  
compensation for psychological distress consequent on dismissal was not something that  
the parties may be supposed to have reasonably contemplated at the time the contract was  
formed: see Keays, at para. 56.  
[766] In the foregoing circumstances, damages resulting from the “manner of dismissal” are  
only available in circumstances where they result from an employer’s conduct, in the  
course of dismissal, that is “unfair or is in bad faith by being, for example untruthful,  
misleading, or unduly insensitive”: see Keays, at para. 57. For reasons that I have  
previously set out, I do not find that CCI engaged in such conduct, whether at Rob’s  
direction or otherwise. Mr. Kazarian’s involvement in CCI’s operation and the  
concordant changes in Cheryl’s duties were solely designed to address CCI’s continued  
poor financial performance that Cheryl, herself, acknowledged was unsustainable.  
Page: 131  
[767] I find Mr. Kazarian’s involvement and the financial controls that he proposed were not  
designed to punish, humiliate, or demean Cheryl, but rather to address CCI’s ongoing  
losses, in circumstances in which Cheryl acknowledges “something had to be done”. The  
changes were ostensibly made pursuant to the terms of Cheryl’s Contract of Employment  
and consistent with the bargain and understanding that the parties arrived at in 2008,  
pursuant to which Rob retained ultimate control over the financial aspects of CCI.  
[768] I specifically find that the changes to Cheryl’s duties and responsibilities were not made  
in a surreptitious effort to force Cheryl out of the business or to terminate her  
employment, in a manner that lacked honesty or candor, or at all. Despite the changes,  
Cheryl was to remain employed by CCI in a management capacity. When Cheryl  
emotionally “blew up” in July 2010, CCI suggested she take two weeks off work with  
pay. Mr. Kazarian’s correspondence extending that offer did not lack sensitivity. Further,  
CCI’s reaction to Cheryl’s subsequent cessation of active employment was, in my view,  
sensitive to Cheryl’s circumstances, notwithstanding that it was consistently met with her  
silence. CCI continued to pay Cheryl’s salary for nearly two months despite her ongoing  
silence and absence from work.  
[769] In the context of the foregoing, had I determined that the implemented changes to  
Cheryl’s duties were not authorized by the Contract of Employment and as a result,  
Cheryl was constructively dismissed, I still would not have found that Cheryl was entitled  
to an award of aggravated or moral damages.  
[770] I will now determine Bruce’s claim for wrongful dismissal.  
(c) The Determination of Damages Issues Related to Bruce’s Termination  
[771] On his evidence, Bruce provided unpaid services to CCI from January 2009 to April  
2009. He says that he ceased his voluntary unpaid work at CCI, in part, because of  
aggressive and hostile conduct that he asserts Rob engaged in during the course of  
monthly meetings that were held with staff from both CCI and the Retro Suites Hotel,  
commencing at the end of January 2009. I reject that aspect of his evidence because in  
the context of the evidence as a whole, I find that it is not true.  
[772] Contrary to Bruce’s evidence concerning regular monthly meetings beginning in January  
2009, both Rob and Cheryl testify that Rob did not regularly attend meetings with respect  
to CCI in 2009. Mr. Hockin’s evidence supports that there were some CCI-related  
meetings in 2009, but he does not confirm that they were held on a monthly basis. Bruce  
identifies other people who allegedly attended the monthly meetings beginning in early  
2009, to which he testifies, but he elected not to call any of them as witnesses to give  
evidence in support of his position. I do not draw an adverse inference from his failure to  
do so, but it remains that Bruce is the only witness to testify to Rob acting in an  
aggressive and demeaning manner in 2009.  
[773] In all of the circumstances, I prefer the combined evidence of Rob and Cheryl over that  
of Bruce. I find that Rob did not attend regular monthly meetings with CCI and Retro  
Suites staff beginning in January 2009. More fundamentally, on the evidence as a whole,  
Page: 132  
I find Rob did not engage in hostile and bullying conduct in any meetings in 2009 (or at  
all), as Bruce otherwise testifies. Bruce’s evidence in that regard is troubling and, in my  
view, ultimately undermines his credibility.  
[774] Bruce offers colourful evidence of Rob’s asserted belligerent and demeaning behaviour,  
in which he is said to have, among other things, systematically engaged in hostile  
criticism of members of both the Retro Suites Hotel and CCI staff on a monthly basis,  
beginning at the end of January 2009. That evidence is not only not corroborated by any  
other evidence, it is expressly contradicted by the evidence of Cheryl, Rob and Mr.  
Hockin.  
[775] Notwithstanding Cheryl’s evidence that throughout 2009, Rob consistently treated her  
kindly and fairly, Bruce still insists that Rob was consistently belligerent and hostile,  
beginning in January of 2009. He further maintains that Rob’s demeanor from January  
2009 to April 2009 prompted him, in April 2009, to advise Cheryl that Rob could not be  
trusted, which is something to which Cheryl did not testify.  
[776] Similar to Cheryl’s evidence, Rob denies engaging in any belligerent conduct in 2009  
meetings. Mr. Hockin supports that Rob’s conduct in 2009 meetings was appropriate.  
[777] In the context of the evidence as a whole, I not only reject as incredible, Bruce’s evidence  
with respect to Rob’s ongoing demeanour in 2009 and the manner with which Rob  
treated Cheryl, among others, I am left to conclude that his evidence was designed to  
embellish and corroborate Cheryl’s evidence concerning Rob’s asserted bullying and  
insulting demeanour during the course of their 2010 meetings (which Bruce did not  
attend). It does not do so, because I find his evidence on the point to be untrue.  
[778] Bruce gave evidence that Rob engaged in conduct in 2009, that did not, in fact, occur. He  
was given the opportunity to consider his evidence in the context of Chery’s conflicting  
evidence about Rob’s demeanour in 2009, and he maintained his original untrue  
assertions. In such circumstances, I do not accept Bruce as a credible witness.  
[779] Turning to the evidence of Bruce’s actual employment with CCI, accepting Cheryl’s  
evidence, I find that she formally hired Bruce to work at CCI beginning on June 1, 2009,  
on an “as needed basis”. His intended duties included: cooking; cleaning; bartending;  
and delivery functions. I accept that his hours were scheduled by Cheryl and that he was  
paid by CCI for all of the hours for which he was scheduled. His rate of pay was $10.25  
per hour. In February 2010, he lost his driver’s licence and stopped driving on deliveries.  
On average, he worked 21 hours per week. He was terminated on June 28, 2010. His  
total period of employment service was 13 months.  
[780] Bruce was not lured away from previous employment to accept a position at CCI. From  
2004-2008, he provided unpaid services at NFE, that were similar in character to the  
employment duties he eventually performed at CCI. He was never an employee of NFE  
and it ceased operating on December 31, 2008.  
[781] No specific evidence was led with respect to the availability of similar employment at the  
time of Bruce’s dismissal. However, Bruce, with Cheryl’s significant contributions,  
Page: 133  
commenced a catering business in October 2010, in which Bruce performed tasks similar  
to some of those that he performed at CCI.  
[782] For the purpose of fixing the notice period and otherwise, I do not give effect to Bruce’s  
claim that after he was hired in June 2009, he worked unrecorded hours at CCI, for which  
he has not been paid. Apart from my concerns over his credibility, Bruce has no record  
of the alleged amount of additional unpaid time that he asserts that he spent “working”  
for CCI in and after June 2009, and he gave no specific evidence in that regard at trial.  
Bruce also concedes that he spent additional time at CCI during which he was not  
actively working. On the evidence, there is no reliable manner in which to quantify the  
alleged “unrecorded” and “unpaid” hours claim that he asserts, even if I were to accept it,  
which I do not.  
[783] On dismissal, Bruce was paid, in lieu of notice, three weeks worth of wages and  
applicable vacation pay. In my view, that payment accords with the common law notice  
period to which he was entitled as a part-time employee, in the context of his  
employment tenure and the nature of the duties that he performed. Although plaintiffs’  
counsel submits that Bruce’s claim was minor, he advocates a notice period in the range  
of three to six months. No decided authorities were provided to the court that support a  
reasonable notice period in that range, in the applicable circumstances.  
[784] As a result, I conclude that Bruce has already received adequate payment in lieu of notice  
of his termination from CCI. His claim for damages on account of wrongful dismissal is,  
therefore, dismissed.  
[785] I would add that even if Bruce were entitled to a notice period in the three to six month  
range, as his counsel submits, his failure to provide evidence concerning the  
income/remuneration that he earned through his work in September 2010 (with Chef  
Bonnot) and from the Healthy Choice Catering business, beginning in October 2010,  
would have significantly impaired this court’s ability to determine the appropriate  
quantum of damages owing to Bruce, once mitigation was considered. Similar to  
Cheryl’s claim, I would have drawn an adverse inference against Bruce on the issue of  
mitigation beginning in September 2010, as a result of his failure to produce evidence  
concerning the income that he earned, thereafter.  
[786] I will now turn to the determination of the issues related to Cheryl’s “oppression” claim  
pursuant to s. 248 of the OBCA.  
(d) The Determination of Whether Cheryl is Entitled to a Remedy Pursuant to Section  
248 of the Ontario Business Corporations Act (OBCA) on Account of “Oppressive”  
Conduct by the Defendants  
(i)  
The Applicable Principles  
[787] Cheryl’s oppression claim is founded in s. 248 of the OBCA which, in part, provides:  
248 (1) A complainant and, in the case of an offering corporation, the  
Commission may apply to the court for an order under this section.  
Page: 134  
(2) Where, upon an application under subsection (1), the court is  
satisfied that in respect of a corporation or any of its affiliates,  
(a) any act or omission of the corporation or any of its  
affiliates effects or threatens to effect a result;  
(b) the business or affairs of the corporation or any of its  
affiliates are, have been or are threatened to be carried on  
or conducted in a manner; or  
(c) the powers of the directors of the corporation or any of its  
affiliates are, have been or are threatened to be exercised in  
a manner,  
that is oppressive or unfairly prejudicial to or that unfairly disregards the  
interests of any security holder, creditor, director or officer of the  
corporation, the court may make an order to rectify the matters  
complained of.  
[788] For the purpose of these reasons, I will generally refer to conduct that falls within the  
scope of s. 248(2) of the OBCA as “oppressive conduct”. Once a finding of oppressive  
conduct is made, the court is vested with broad remedial discretion to rectify the effects  
of the case-specific oppressive acts and omissions. In that regard, s. 248( 3) of the OBCA  
provides:  
In connection with an application under this section, the court may make  
any interim or final order it thinks fit including, without limiting the  
generality of the foregoing,  
(a) an order restraining the conduct complained of;  
(b) an order appointing a receiver or receiver-manager;  
(c) an order to regulate a corporation’s affairs by amending the articles or  
by-laws or creating or amending a unanimous shareholder agreement;  
(d) an order directing an issue or exchange of securities;  
(e) an order appointing directors in place of or in addition to all or any of  
the directors then in office;  
(f) an order directing a corporation, subject to subsection (6), or any  
other person, to purchase securities of a security holder;  
(g) an order directing a corporation, subject to subsection (6), or any  
other person, to pay to a security holder any part of the money paid by  
the security holder for securities;  
Page: 135  
(h) an order varying or setting aside a transaction or contract to which a  
corporation is a party and compensating the corporation or any other  
party to the transaction or contract;  
(i) an order requiring a corporation, within a time specified by the court,  
to produce to the court or an interested person financial statements in the  
form required by section 154 or an accounting in such other form as the  
court may determine;  
(j) an order compensating an aggrieved person;  
(k) an order directing rectification of the registers or other records of a  
corporation under section 250;  
(l) an order winding up the corporation under section 207;  
(m) an order directing an investigation under Part XIII be made; and  
(n) an order requiring the trial of any issue.  
[789] There is no dispute that pursuant to s. 245 of the OBCA, Cheryl, as a shareholder of CCI,  
is a “complainant” for the purpose of s. 248 of the OBCA.  
[790] As the party claiming oppression, the onus is on Cheryl to establish that the court’s  
intervention is warranted under s. 248 of the OBCA: see Duwyn v. Albert Duwyn & Sons  
Ltd., [2003] O.J. No. 293 (S.C.J.), [2003] O.T.C. 77, at para. 19.  
[791] The legal principles that govern the application of s. 248 of the OBCA are, generally, set  
out in BCE Inc., Re, 2008 SCC 69, [2008] 3 S.C.R. 560, which may be broadly  
summarized as follows:  
a) A corporation’s directors are responsible for its governance. Directors are  
subject to two duties: a fiduciary duty to the corporation and a duty to exercise  
the care, diligence and skill of a reasonably prudent person in comparable  
circumstances (see s. 134 of the OBCA). Fiduciary duties owed by directors  
compel them to act honestly and in good faith, with a view to the best interests  
of the corporation. If the best interests of the corporation conflict with the best  
interests of its shareholders and/or stakeholders, the director’s duty remains to  
act in the corporation’s best interests. The fiduciary duty owed by a director to  
the corporation is a broad contextual concept that, at a minimum, requires the  
director to ensure that the corporation meets its statutory obligations.  
Although directors must consider the best interests of the corporation, it may  
be appropriate, although not mandatory, for directors to consider the impact of  
their corporate decisions on shareholders or other particular stakeholder  
groups (see BCE at paras. 35 to 39);  
b) Courts should give appropriate deference to the business judgment of directors  
who take into account all of the ancillary interests of the corporation’s various  
Page: 136  
stakeholders, in accordance with “the business judgment rule”. The “business  
judgment rule” accords deference to a director’s decision, as long as it lies  
within a range of reasonable alternatives (see BCE, para. 40).  
c) Although, three types of conduct are identified in [s. 248(2) of the OBCA]:  
“oppression”; “unfair prejudice”; and “unfair disregard”, those terms cannot  
be put into watertight compartments or conclusively defined. Rather, the three  
statutory components of [s. 248(2) of the OBCA] are adjectives that attempt to  
describe “inappropriate conduct” (BCE, para. 54);  
d) “Oppression” is an equitable remedy that seeks to ensure fairness – defined by  
what is “just and equitable”, in the circumstances of a particular case. Section  
248 of the OBCA provides the court with broad equitable jurisdiction to  
enforce not just what is legal, but what is fair. In considering claims for  
oppression, the court should examine “business realities, not merely narrow  
legalities” (BCE, para. 58);  
e) Oppression claims are fact specific. What is deemed to be “just and equitable”  
in any given case, must be judged by the reasonable expectations of the  
stakeholders, determined in the case-specific context, and in regard to the  
specific relationships at play (BCE, para. 59);  
f) The determination of a claim for oppression compels two related inquiries: 1)  
Does the evidence support the reasonable expectation asserted by the  
claimaint? and 2) Does the evidence establish that the reasonable expectation  
was violated by conduct falling within the terms “oppression”, “unfair  
prejudice”, or “unfair disregard” of a relevant interest? (BCE, para. 68);  
g) The “reasonable” expectations of a corporation’s stakeholders are the  
“cornerstone” of an oppression claim. The actual expectations of an allegedly  
aggrieved stakeholder are not conclusive. Instead, when determining whether  
it would be “just and equitable” to grant a remedy, the issue remains whether  
the asserted expectation is “reasonable” having regard to the facts of the  
specific case, the relationships at issue and the entire context in which the  
expectation is asserted, including the existence of any conflicting claims and  
expectations (BCE, paras. 61-62).  
h) The corporation and its shareholders are entitled to maximize profit and share  
value, but not at the expense of treating individual stakeholders unfairly. Most  
fundamentally, a corporation’s stakeholders are entitled to reasonably expect  
fair treatment (BCE para. 64);  
i) Generally, directors do not owe a direct duty to individual stakeholders of the  
corporation who may be affected by a corporate decision. To the contrary, the  
directors only owe a fiduciary duty to the corporation. Although directors may  
be obliged, in certain circumstances, to consider the manner in which their  
decision(s) may impact corporate stakeholders, where there is conflict  
Page: 137  
between the corporation’s interest and those of a particular stakeholder, the  
reasonable expectation of the stakeholder must be that the directors will act in  
the best interests of the corporation (see BCE para. 66);  
j) At the outset, a claimant under s. 248 of the OBCA must identify the  
expectations that he or she claims have been violated by the conduct at issue  
and thereafter, establish that those expectations were reasonably held.  
Evidence of an expectation may take different forms, depending on the facts  
of the case. It can be inferred that a stakeholder has a reasonable expectation  
of “fair treatment” in all of the circumstances. Actual unlawfulness is not  
required to invoke [s. 248 of the OBCA]. Not all conduct that is harmful to a  
stakeholder will give rise to a remedy for oppression (BCE, para. 71);  
k) The decided cases have identified several factors that may inform the  
determination of whether a reasonable expectation exists, including: general  
commercial practice; the nature of the corporation; the relationship between  
the parties; past practice; steps the claimant could have taken to protect itself;  
representations and agreements; and the fair resolution of conflicting interests  
between corporate stakeholders (BCE, para. 72).  
l) The foregoing factors can serve to inform the determination of the  
“reasonableness” of an asserted expectation in a number of ways, depending  
on the circumstances of the case, including:  
i)  
Commercial practice – a departure from normal business practices  
that has the effect of undermining or frustrating the complainant’s  
exercise of his or her legal rights will generally (although not  
inevitably) give rise to a remedy;  
ii)  
The nature of the corporation – the size, nature and structure of the  
corporation are relevant in assessing reasonable expectations. More  
latitude may be accorded to the directors of a small closely held  
corporation to deviate from strict formalities than the directors of a  
large public company;  
iii)  
iv)  
Relationships – reasonable expectations may emerge from personal  
relationships between the claimant and other corporate actors (for  
example, shareholder relationships based on family ties or  
friendship);  
Past practice – past practice may create reasonable expectations,  
especially among shareholders of a closely held corporation on  
matters relating to participation of shareholders in the  
corporation’s profits and governance. Notably, practices and  
expectations can change over time. Where a valid commercial  
reason exists for the change and the change does not undermine the  
Page: 138  
claimant’s rights, there can be no reasonable expectation that  
directors will resist a departure from past practice;  
v)  
Preventive steps – in determining whether a stakeholder’s  
expectation is reasonable, the courts may consider whether the  
claimant could have taken steps to protect itself against the  
prejudice it claims to have suffered. For example, it may be  
relevant to inquire whether the claimant could have negotiated  
protection against the prejudice allegedly suffered;  
vi)  
Representations and agreements – shareholder agreements may be  
viewed as reflecting the reasonable expectations of the parties;  
vii)  
Fair resolution of conflicting interests – conflicts may arise  
between the interests of stakeholders with differing interests in the  
corporation. Where the conflict involves the interests of the  
corporation, it falls to the directors to resolve them in accordance  
with their fiduciary duty to act in the best interests of the  
corporation (BCE, paras. 73-83). No one set of interests, including  
shareholders’ interests, should necessarily prevail over another set  
of interests. Instead, the inquiry is directed at whether the directors  
in the case-specific context, exercised business judgment in a  
responsible manner (BCE para. 84);  
m) After a complainant establishes a reasonable expectation, the requisite inquiry  
shifts to whether the failure to meet that expectation resulted from conduct  
falling within the scope of [s. 248(2) of the OBCA]. Wrongful conduct,  
causation and compensatory injury must all be established in a claim for  
oppression (BCE para. 89-90);  
n) Not every unmet expectation, even if reasonable, gives rise to a claim under  
[s. 248 of the OBCA]. The section requires that the conduct complained of,  
must be demonstrated to constitute “oppression”, “unfair prejudice” or “unfair  
disregard” of relevant interests. “Oppression” envisions conduct that is  
“coercive and abusive” and suggests “bad faith”. “Unfair prejudice”  
envisions a less culpable state of mind that nevertheless, results in unfair  
consequences. Finally, “unfair disregard” of interests extends the remedy to  
“ignoring an interest” or deeming it to be of no importance, contrary to the  
stakeholder’s reasonable expectation. These phrases all describe ways in  
which a corporate actor may fail to meet the reasonable expectation of a  
stakeholder (BCE, para. 67).  
(ii)  
The Principles Applied  
[792] In accordance with the foregoing principles, a “reasonable expectations” analysis applies  
to the determination of Cheryl’s oppression claim. As a result, it is incumbent on Cheryl  
to identify her expectations that she asserts were violated as a result of the defendants’  
Page: 139  
alleged “oppressive conduct”. This court must then determine whether the expectations,  
as identified, were contextually reasonable, having regard to, among other things: the  
case specific facts; the case specific relationships; and the existence and nature of any  
competing claims and expectations. In so doing, the determination of Cheryl’s  
“reasonable expectations” as a shareholder ought not to be conflated with her “individual  
wish list”, in that regard. Instead, to be reasonable, the expectations must be those that  
could be seen as (or ought to have been considered) part of the compact between the  
shareholders: see Naneff v. Con-Crete Holding Inc., (1995), 23 O.R. (3d) 481 (C.A.), 85  
O.A.C. 29, at para. 28. The onus remains on Cheryl to establish that her asserted  
expectations were reasonable.  
[793] Once Cheryl’s reasonable expectations are determined, the court must then determine  
whether they were breached by conduct on the part of the defendants that was  
“oppressive” or “unfairly disregarded” or was “unfairly prejudicial” to Cheryl’s interests,  
as a shareholder.  
[794] Previously, I summarized Cheryl’s overall position in this action. In so doing, I  
enumerated the expectations that Cheryl asserts that she reasonably held in her capacity  
as a shareholder, that were subsequently breached by the defendants’ alleged oppressive  
conduct. Below, I will address each of those asserted expectations, in turn, together with  
the reasonable expectations that the defendants assert that: RJM Holdings held as a  
shareholder; and Rob held as a creditor of CCI (i.e. the asserted conflicting claims and  
expectations). Before doing so, I will address the case-specific factual setting in which  
the parties’ respective asserted reasonable expectations are said to arise.  
(iii) The Case-Specific Factual Setting In Which the Parties’ Asserted Reasonable  
Expectations Are Said to Arise.  
[795] Earlier in these reasons, I made factual findings with respect to the broad terms that  
Cheryl and Rob agreed would govern their “partnership” in respect of CCI’s operations  
and I identified certain aspects of their proposed venture that they did not expressly  
discuss in 2008, and upon which no expressed agreement was ultimately reached. Those  
findings apply equally to this aspect of Cheryl’s claim.  
[796] In summary, the broad terms of the parties’ initial “compact” were that: Rob and Cheryl  
would be 50/50 “partners”; Rob would contribute a total of $150,000; Cheryl was not  
required to make any financial contribution, rather, she would contribute to the  
partnership by working at the restaurant; Cheryl would be paid an annual salary of  
$50,000; CCI would pay rent in the monthly annual amount of $4,000 to Retro Suites; the  
monies advanced by Rob as creditor would be repaid before profits were distributed to  
the “partners”/shareholders; Rob would have ultimate control over the financial aspects  
of the business; and a “partnership” agreement would eventually be executed between  
them.  
[797] Documentation was eventually executed between Rob and Cheryl (and on behalf of  
related parties) that gave effect to much of the foregoing. The Contract of Employment  
reflects Cheryl’s $50,000 annual salary and Rob’s ability, in his sole discretion and on  
Page: 140  
behalf of CCI, to alter Cheryl’s reporting structure, duties, and responsibilities, without  
impacting the balance of the employment agreement. The Contract of Employment also  
prescribes that Cheryl would comply with all reasonable instructions, as may be given to  
her by Rob. The lease provided for rent in the amount of $4,000 per month, with a five-  
year term. The GSA made by CCI in favour of RJM Holdings secures a debt of  
$150,000.  
[798] Cheryl executed all the foregoing documents on behalf of herself and/or CCI and as a  
result, expressly assented to their respective terms. In turn, those agreements must be  
considered in the determination of the “reasonableness” of each of the parties’ respective  
asserted expectations.  
[799] Conversely, Cheryl did not execute the draft USA that was provided to her in 2009.  
Nonetheless, the defendants posit that its terms ought to be considered in determining the  
parties’ reasonable expectations. They correctly submit that: in her evidence, Cheryl  
conceded that a “partnership agreement” had to be executed (based on CCI’s structure as  
a corporation, the defendants assert that the USA was the agreement they contemplated);  
after receiving the USA, Cheryl never expressed any concerns over its terms, nor did she  
attempt to negotiate different terms; in her evidence, Cheryl agreed that the terms of the  
USA made sense, save for one specific aspect related to the sale of her shares on the  
cessation of her employment, to which she expressed equivocation; the terms of the USA  
reflected Rob’s expectations at the time that it was prepared; and there is no evidence that  
Cheryl advised anyone that she was not prepared to sign the USA, or some variation of it.  
[800] Cheryl also signed a “waiver and acknowledgment” in November 2009, through which  
she agreed that she would enter into a USA with Rob. In her evidence at trial, she did not  
comprehensively or even summarily identify the terms that she anticipated would be  
included in the USA that was contemplated by the terms of the “waiver and  
acknowledgment”. However, she did acknowledge that: she expected that if she were to  
die suddenly, her shares should be purchased; it made “good sense” to include provisions  
that restricted the transfer of CCI’s shares; and it made good sense to mandate the  
purchase of a shareholder’s shares, in the event of their death or bankruptcy. She also  
testified that she “did not know” if, in 2009, she expected that her shares in CCI would be  
bought out if she ceased to be its “operating” partner.  
[801] The defendants observe that the foregoing provisions were contained in the draft USA  
provided to Cheryl and they submit that they are “standard terms” commonly found in  
such agreements, particularly one that is, in essence, a partnership agreement.  
[802] The defendants submit that the uncertainty that Cheryl testified to with respect to whether  
her expectations in 2009, included a forced sale of her shares if she ceased to be  
employed by CCI, constitutes an insurmountable challenge to her claim that a share  
valuation date be fixed in 2017, in the event that the court determines that her shares  
ought to be sold. They contend that as plaintiff, Cheryl is obligated to specifically  
identify and evidence the reasonableness of her expectations qua shareholder, and the  
equivocal aspect of her evidence set out above, fails to meet that standard.  
Page: 141  
[803] The defendants also submit that it would be wholly unreasonable for Cheryl to have  
expected that on the cessation of her employment, she would be able to retain her shares  
in CCI until they finally had “some value”. The defendants say that their own  
expectations, in that regard, were consistent with the proposed USA’s terms (i.e. sale of  
Cheryl’s shares on cessation of her employment).  
[804] Conversely, Cheryl posits that the terms of the USA cannot be relied upon as evidence of,  
or in the determination of, her reasonable expectations as a shareholder because she did  
not agree to them. Cheryl submits that as a shareholder, she has a fundamental right to  
maintain ownership of her shares and to exercise her rights as a shareholder while doing  
so.  
[805] In determining the reasonableness of Cheryl’s asserted expectation at trial, that in the  
absence of her execution of the USA, the cessation of her employment would not trigger  
a “buy/sell” of her shares, I will first consider the nature of the aspects of Cheryl’s  
evidence set out above, in the context of the case-specific circumstances.  
[806] Unlike the defendants, I do not view Cheryl’s evidence that she “does not know” whether  
she expected that her shares would be purchased if her employment with CCI ceased, to  
be a failure to identify her expectation in that regard. Context matters. From a  
prospective basis in 2009, there were a variety of circumstances by which Cheryl may, at  
some point, have ceased to be employed by CCI “in the position of management”, which  
in turn may, reasonably, have attracted different expectations.  
[807] Remaining mindful that Cheryl’s active employment in CCI’s operation was her  
contribution to the business, as well as, the basis of her share ownership, in my view,  
Cheryl’s expectations concerning whether her shares would be purchased if she ceased to  
be employed by CCI would, at a minimum, be influenced by: the length of her service, at  
the time her employment ceased; the circumstances surrounding the cessation of her  
employment, namely, resignation or termination; in the case of termination, whether there  
was cause; and if there was cause, the nature of the cause.  
[808] For example, broadly stated, the expectations that might reasonably arise from  
circumstances in which Cheryl determined after six months of employment, that she did  
not enjoy operating CCI and she summarily resigned, would likely differ from those that  
might reasonably arise from circumstances in which Cheryl worked at CCI for 15 years,  
during which she built it into a profitable operation, and she wanted to retire.  
[809] Consistent with the foregoing, Cheryl’s uncertainty as to whether she held an expectation  
that she ought to have necessarily been required to sell her shares when her employment  
ceased, in any event of its surrounding circumstances, does not equate to a failure on  
Cheryl’s part, to identify her asserted reasonable expectations as a shareholder.  
[810] Further, the relevant “buy/sell” provisions of the proposed USA, are drafted in a manner  
that reflects the necessity of applying contextual consideration to all of the relevant  
circumstances surrounding a cessation of Cheryl’s employment before determining  
whether her shares would be purchased. Specifically, s. 5.1(e) of the USA prescribes that  
Page: 142  
its purchase and sale provisions shall apply “in the case of Cheryl, if Cheryl, for any  
reason whatsoever, ceases to be an employee of the corporation at the option of the Board  
of Directors of the corporation by the giving of written notice to Cheryl.” [Emphasis  
added.]  
[811] Therefore, the terms of the proposed USA contemplate that the cessation of Cheryl’s  
employment would not necessarily trigger the purchase of Cheryl’s shares. Rather, a  
share purchase would only be triggered “at the option of the Board of Directors”, of  
which Cheryl and Rob were the only members. The terms of the proposed USA also  
contemplate that: Rob and Cheryl would both remain directors in perpetuity, as long as  
they both remained shareholders; and a “directors’ deadlock” would remain in perpetuity,  
because the USA fixed the number of directors at two, subject to change only by a  
shareholder with 51 percent or more of the shares, which neither RJM Holdings nor  
Cheryl held.  
[812] Had the terms of the USA been in effect in this instance, the end of Cheryl’s employment  
would have vested CCI’s board of directors with an exercisable option to trigger the  
purchase of Cheryl’s shares. As a member of CCI’s board of directors, it is reasonable to  
expect that Cheryl would necessarily have been involved in the determination of whether  
the option would be exercised.  
[813] The inclusion of an exercisable option provision with respect to “share purchase on  
cessation of employment”, recognizes the commercial efficacy of prescribing flexibility,  
in order to address the various circumstances that may potentially have surrounded the  
termination of Cheryl’s employment. It also recognizes that, in certain instances, it would  
be appropriate and accord with reasonable and usual commercial practice, for Cheryl’s  
shares to be purchased when her employment with CCI ended. In my view, Cheryl’s  
evidence that she “did not know” if she expected that her shares should be purchased if  
she ceased to be CCI’s “operating partner”, is consistent with the foregoing dynamic.  
(iv)  
In the Case-Specific Circumstances, Cheryl’s Expectation That She Would  
Remain a Shareholder After She Resigned From CCI in 2010 Was Not  
Reasonable  
[814] Turning to the case-specific circumstances, on the facts that I have found, the parties  
contemplated that all of Cheryl’s contributions to the business and the basis of her share  
ownership would come through her active employment with CCI. Her employment  
ceased when she abandoned it, following 18 months of active employment, in which the  
restaurant sustained operating losses in excess of $200,000, followed by a two month  
period in which she: did not attend the workplace; did not directly communicate with, or  
respond to, inquiries by the employer’s representatives with respect to her employment  
and her intentions in that regard; and did not communicate an intention or a desire to  
return to active employment.  
[815] Through her conduct, Cheryl clearly and unequivocally resigned at a time when the  
corporation’s liabilities were in excess of both half a million dollars and the recorded  
value of CCI’s assets. At the time of Cheryl’s resignation, CCI had historically remained  
Page: 143  
unprofitable and her shares correspondingly held no value, in accordance with the  
evidence of Ms. Campbell, which I accept, for reasons I will explain later, below.  
[816] Distilled to its essence, in her submissions but notably not in her evidence, Cheryl  
maintains that in the foregoing circumstances, she expected that she would remain a  
shareholder of CCI in perpetuity. Rob testifies that in such circumstances, he expected  
that Cheryl’s shares would be purchased when she left CCI.  
[817] After taking into account: the employment-based manner in which Cheryl was to  
contribute to the parties’ venture and the basis of her share ownership; Cheryl’s  
contribution to the corporation ended through her resignation; Cheryl’s relatively short  
period of employment/contribution to CCI; the corporation’s precarious financial position  
from the inception of its operations to the date of Cheryl’s resignation; and the conflicting  
expectations and interests of the shareholders and the need to fairly resolve them – I find  
that Rob held a reasonable expectation that Cheryl’s shares would be purchased in the  
foregoing circumstances, as of the date of her resignation. Moreover, this is an area  
where Cheryl could have engaged in preventative steps by signing the USA in 2009, in  
order to gain the benefit of the “exercisable option” dynamic created by its terms. She  
did not do so.  
[818] In the circumstances, any expectation that Cheryl had that she would remain a  
shareholder of CCI, despite her voluntary resignation from employment and her  
voluntary withdrawal from participation in any aspect of its operations, at such an early  
stage in CCI’s business, was not reasonable.  
[819] Similarly, it was not reasonable for Cheryl to expect, upon resignation, that she would be  
entitled to contribute nothing further to CCI while, simultaneously, retaining the right to  
share in its future profitability, if ever achieved. Nor was it reasonable for her to expect  
that she would eventually enjoy the benefit of a share valuation determined at some  
future point in time, well after she resigned, when CCI’s shares finally attained a positive  
value. That is particularly so where, as is the case here, CCI’s eventual profitability is  
exclusively attributable to the ongoing financial contributions made by Rob, and the  
innovation, planning, strategy and labour of individuals other than Cheryl, including Mr.  
Tsirimbis, that were all affected after Cheryl’s resignation.  
(v)  
To the Extent Cheryl Held an Unequivocal Expectation That She Would  
Remain Employed by CCI On A Long-Term Basis, It Was Not a Reasonable  
Expectation  
[820] In addressing the reasonableness of Cheryl’s other asserted expectations and their alleged  
violation by the defendants, I will begin with those related to her asserted entitlement to  
remain continuously employed by CCI. Cheryl submits that she expected to be employed  
by CCI on a long-term basis (15 years) and that she expected that she would continue to  
earn a “decent livelihood” during that period of time, by receiving a $50,000 annual  
salary. To the extent that those expectations were held in unequivocal terms, they were  
not reasonable, in the case-specific circumstances. I will explain.  
Page: 144  
[821] In determining the reasonableness of a shareholder’s expectations, consideration must be  
lent, among other things, to the representations and agreements between the relevant  
parties and the availability of preventative steps.  
[822] In this instance, Cheryl testifies that in 2008, she advised Rob that she was prepared to  
make a 15-year commitment to the restaurant. She concedes that they did not agree to the  
tenure of her employment. Further, she subsequently executed an employment contract  
that did not prescribe a fixed term of employment, but specifically defined several  
circumstances that constituted cause for her dismissal. Cheryl’s execution of a contract  
with terms authorizing the termination of her employment does not support a  
“reasonable” expectation of unequivocal employment for 15 years. Further, by its terms,  
the Contract of Employment constitutes the entire agreement between the parties, and it  
does not include an enforceable promise of unequivocal employment for 15 years.  
[823] From a preventative steps perspective, Cheryl did not attempt to negotiate contractual  
terms that were consistent with her now stated expectation concerning the tenure of her  
employment.  
[824] Cheryl’s asserted expectation also carries with it, an implicit expectation that CCI, itself,  
would continue to operate for at least 15 years and, in turn, that Rob would continue to  
unequivocally fund any of its operating losses during that time. Those expectations do not  
accord with Rob’s (and related corporations) competing interests as a creditor, nor with  
reasonable commercial practice.  
[825] In all the circumstances, I find that to the extent that Cheryl held an expectation that she  
would be employed unequivocally by CCI for a 15-year period, it was not a reasonable  
one.  
[826] More fundamentally, even if the foregoing expectation, or any other expectation related  
to the tenure of her employment, was reasonably held, it was not breached by the  
defendants’ conduct because Cheryl resigned from her employment.  
(vi)  
Cheryl’s Expectation That She Would “Remain Involved in CCI’s  
Management” Was Not Violated by the Defendants’ Conduct  
[827] Apart from the duration of her employment, Cheryl submits that she held a reasonable  
expectation, as a shareholder, that she would be involved in CCI’s management. I accept  
that she held such an expectation and that it was reasonable, albeit qualified, in  
accordance with the context of the case-specific facts.  
[828] Pursuant to the Contract of Employment, Cheryl was employed in the position of  
management. Through her execution of that contract she also agreed: to comply with all  
of Rob’s reasonable instructions; to work with representatives retained by CCI to assist in  
its operations; and that Rob, on behalf of CCI, could change her reporting requirements,  
duties and responsibilities, without affecting the balance of the contract. All of those  
terms had the potential to impact and inform the extent of Cheryl’s day-to-day  
managerial functions and they reasonably ought to have tempered her expectations,  
accordingly.  
Page: 145  
[829] Further, I do not find that Cheryl’s reasonable expectations with respect to her  
involvement in the management of CCI were breached by the defendants. For reasons set  
out earlier, motivated by a reasonable commercial concern, the validity of which Cheryl  
acknowledges, Rob involved Mr. Kazarian in CCI’s operation, in order to address its  
consistent losses through assessment and eventual assumption of duties related to its  
financial reporting and controls. When he did so, as Cheryl acknowledges in her  
evidence, Rob advised her that he still wanted her to “run the restaurant”. Cheryl was not  
ousted from CCI’s management. Nonetheless, Cheryl withdrew from CCI’s operations in  
July 2010. In so doing, she abandoned the balance of her day-to-day involvement in its  
management.  
[830] However, unlike the circumstances in Naneff, (where a shareholder-employee was  
terminated, removed as an officer of the corporation, and ordered to stay off the  
premises), to date Cheryl has remained CCI’s president and a member of its board of  
directors. She was not “stripped” of either position, nor was she “ordered off CCI’s  
premises” by the defendants, or anyone on their behalf. To the contrary, Cheryl left  
CCI’s premises in July 2010, on her own accord, and subjectively, she decided not to  
return.  
[831] The defendants have never attempted to remove Cheryl as either an officer or director of  
CCI. Similarly, there is no evidence that Cheryl has ever made an attempt to exercise the  
powers associated with her office as CCI’s president, or as a member of its board of  
directors, that was resisted by the defendants. Instead, after Cheryl left CCI, she never  
expressed an interest or an intention to participate in the management of CCI nor did she  
respond, on a contemporaneous basis, to efforts made by and on behalf of CCI to contact  
her. At the end of August 2010, she decided that she no longer wanted to be Rob’s  
partner. She evidenced her decision in that regard through her continued silence in the  
face of efforts to contact her and her continued lack of involvement in the corporation’s  
business and affairs.  
(vii) In the Case-Specific Circumstances, Cheryl’s Expectation That She Would  
Be An Equal 50 Percent Partner of CCI Was Not Breached by the  
Defendants’ Conduct  
[832] Cheryl submits that she expected to be a “fully equal” 50 percent partner in CCI. The  
reasonableness of that asserted expectation must be viewed in the context of the  
shareholders’ compact and their agreements. During their 2008 discussions, Cheryl and  
Rob agreed that Rob would retain ultimate control over CCI’s financial aspects because  
he was providing all of the financial contributions to the venture. The Contract of  
Employment supports the parties’ mutual expectation that Rob was to retain an element  
of control over Cheryl’s employment-related duties and activities.  
[833] I accept that from the perspective of their respective equity holdings, Cheryl’s  
expectation of “fully equal 50 per cent” partner, was reasonable and it accords with the  
shareholders’ compact. That expectation has not been breached. To date, RJM Holdings  
and Cheryl continue to own 50 percent of CCI’s issued common shares, respectively.  
Page: 146  
[834] However, any expectation that Cheryl held that she and Rob would share “fully equal”  
control over the corporation does not accord with the shareholders compact, by which  
they agreed that Rob would retain ultimate control over CCI’s financial aspects, nor the  
control afforded to Rob by the Contract of Employment to which Cheryl agreed. There is  
no evidence that Cheryl sought to negotiate different contractual terms to give effect to  
her asserted expectation of “fully equal control”. In that context, and based on the  
agreements that she made, I am unable to conclude that such an expectation was  
reasonable.  
(viii) Cheryl’s Expectation That In Her Capacity as a CCI Shareholder, She  
Would Be Treated in Good Faith Was Violated Through Rob’s Post-  
Litigation Correspondence  
[835] Cheryl submits that she held an expectation, as a shareholder, that Rob would treat her in  
“good faith” and “respectfully”. I accept that shareholders enjoy a reasonable  
expectation that their interests will be considered and addressed by the corporation’s  
officers and directors, in the absence of bad faith. I also remain mindful that the presence  
of bad faith is not necessary in order for aggrieved conduct to fall within the scope of s.  
248(2) of the OBCA.  
[836] In this instance, I am not persuaded that Rob’s actions or omissions prior to Cheryl’s  
resignation and departure from CCI in July of 2010, evince “bad faith” in respect of the  
manner in which he regarded or treated Cheryl qua shareholder, or at all. In that regard, I  
have previously determined that Rob consistently interacted with Cheryl in an  
appropriate and civil manner and his contractual authority to change her employment  
duties was exercised in good faith.  
[837] Nonetheless, in the absence of a transfer of her shares, Cheryl remained a shareholder of  
CCI, even after she resigned. Eventually, she brought this action to resolve certain  
disputes that she advances in her capacity as both a former employee of CCI and as one  
of its current shareholders. In the context of this proceeding, the defendants have  
disputed the factual and legal validity of her claims in that regard. They are entitled to do  
so. However, Rob’s actions have perilously strayed beyond simply responding to, and  
defending, Cheryl’s alleged claims qua shareholder.  
[838] On two occasions, Rob has corresponded directly with Cheryl in an effort to “put an end”  
to what he perceives to be her meritless action. Notwithstanding the strength of his  
conviction in that regard, his conduct in forwarding correspondence of such a nature,  
directly to a shareholder advancing a litigated claim that is premised on an assertion that  
her interests as a shareholder have been oppressed (or were unfairly prejudiced or  
disregarded) and while all parties were represented by counsel, was and remains  
completely inappropriate.  
[839] Rob’s correspondence was designed to pressure Cheryl to abandon her action. His 2017  
correspondence invokes the spectre of media publicity, the involvement of the Canada  
Revenue Agency, and, potentially, Cheryl’s bankruptcy. His correspondence was well  
beyond the bounds of any sense of reasonableness or fairness. Rob, a director and officer  
Page: 147  
of CCI, unjustifiably sought to directly interfere with a shareholder’s decision concerning  
whether to proceed with a litigated dispute involving his alleged misconduct, in relation  
to the business and affairs of CCI. Cheryl viewed the correspondence as an effort to  
intimidate her. Rob’s actions, at a minimum, were unfairly prejudicial to, and unfairly  
disregarded, Cheryl’s interests as a shareholder. His conduct in that regard and its effect,  
fall within the provisions of s. 248(2) of the OBCA.  
(ix)  
Cheryl’s Expectation That She Would “Share in CCI’s Profits” Was Not  
Violated by the Defendant’s Conduct  
[840] Cheryl submits that as a shareholder she held an expectation that she would participate,  
on an equal basis, in the distribution of CCI’s profits. In my view, that expectation, albeit  
qualified to some extent, was reasonable. The reasonableness of that expectation must be  
qualified to the extent that the shareholders expected and agreed that CCI’s related-party  
debt would be repaid, prior to any distribution of profits to its shareholders. I have  
previously made factual determinations with respect to the validity and quantum of CCI’s  
historical related-party debt, a relatively sizable portion of which still remained  
outstanding as of December 31, 2017.  
[841] As a result, CCI has not yet distributed profits to its shareholders. Clearly, RJM Holdings  
has not received any distribution of profits qua shareholder, to the exclusion of Cheryl, or  
otherwise. The defendants have not engaged in any conduct that falls within s. 248(2) of  
the OBCA, with respect to the distribution of profits to CCI’s shareholders.  
(x)  
Cheryl’s Expectation That “Her Interests in CCI Would Not Be Impaired by  
Conflicts of Interest and Self-Dealing” Was Not Violated by the Defendants’  
Conduct  
[842] Cheryl submits that she had a reasonable expectation that her interests in CCI qua  
shareholder, would not be impaired by conflicts of interest and self-dealing, on Rob’s  
part. She says that her reasonable expectation in that regard was violated by the  
“booking” of management fees payable to CCI by RJM Holdings Limited during the  
period from 2010 to 2013, which resulted in an approximate total $100,000 tax benefit to  
RJM Holdings, during that time. To remedy the asserted breach, Cheryl seeks an award  
of $50,000 in the form of compensation pursuant to s. 248(3) of the OBCA.  
[843] Cheryl also submits that Rob, as a director, owed her a fiduciary duty in her capacity as a  
shareholder, based on the “power imbalance” between them, which he breached by,  
among other things, reaping a tax advantage for himself. I will deal with the latter aspect  
of her submissions first.  
[844] As I set out previously, in BCE, the Court confirms that generally directors owe fiduciary  
duties to the corporation and not to individual shareholders. The Court also expressly  
recognized that there are some instances in which a fiduciary duty may be owed directly  
by a director to a shareholder, independent of the director/corporation relationship, as a  
result of the particular circumstances surrounding the dealings between them. Typically,  
those circumstances arise from situations involving a family or other “close/special  
Page: 148  
relationships” of trust and vulnerability between the claimant shareholder and the  
defendant director, where the director attempts to take advantage of the relationship for  
personal gain or profit: Harris v. Leiken Group, 2013 ONSC 1525, [2013] O.J. No. 1097,  
at para. 402.  
[845] In my view, there is no basis to conclude that Rob qua director, owed Cheryl qua  
shareholder, a fiduciary duty, during the time that the management fees were booked, or  
at all. To the contrary, the evidence militates against a finding that during that period, a  
relationship existed between them in which Cheryl reposed trust and confidence in Rob,  
in circumstances where Rob, either implicitly or expressly, undertook to act in her best  
interests as a shareholder, as distinct from the best interests of CCI overall.  
[846] Recall that Cheryl testifies that beginning in 2010 (before any management fees were  
booked), she subjectively believed that: Rob was a “devil”; Rob had cheated her; and she  
was angry with him. In those circumstances (and specifically without accepting that  
Cheryl’s stated beliefs in that regard were true, in fact), I infer that subjectively, Cheryl  
did not repose any trust, confidence, or reliance in Rob at any time after her departure  
from CCI in July 2010. Consequently, a special relationship of “trust and dependency”  
did not exist at the time that the management fees were recorded.  
[847] Further, even after Cheryl left CCI’s operation, she remained one of its officers and  
directors. As a result, she did not need to rely on Rob qua director, to act in a fiduciary  
capacity in respect of her interests as a shareholder. As an officer and director of CCI,  
she was adequately positioned to do so herself.  
[848] Finally, as I will explain further below, I find no basis to conclude on the evidence, that  
Rob sought to take advantage of any relationship between himself and Cheryl, in order to  
secure personal gain or profit. The management fees, as recorded, were not an  
opportunistic artifice, designed to fleece CCI in order to reduce RJM Holdings’ tax  
liability. Instead, the recording of management fees yielded real value to CCI.  
[849] Recall that the amounts comprising the booked management fees reduced CCI’s overall  
related-party debt arising from funds that were either advanced to, or on behalf of, CCI,  
by its related parties, or not collected from CCI by the related parties to whom they were  
owed, in part, to subsidize CCI’s actual operating losses in the period of 2010 to 2013,  
inclusive. When considering only its revenue from sales, CCI consistently operated at a  
net annual loss in each of the years 2010 to 2013, inclusive, generally as follows:  
CCI’s  
Revenue  
including  
booked  
management  
fee  
Net  
CCI’s  
revenue  
without  
booked  
Net  
Income/Loss  
without  
Booked  
management  
fee amount  
payable to  
CCI  
Income/Loss  
including  
booked  
Year  
booked  
management management management  
fee  
fee  
fee  
2010  
2011  
$ 722,427  
$ 891,171  
$150,000  
$285,000  
($34,091)  
$572,427  
($184,091)  
$160,099  
$606,171  
($124,901)  
Page: 149  
2012  
2013  
$1,016,390  
$1,052,817  
$100,000  
$ 50,000  
$ 56,429  
$ 11,504  
$916,390  
$952,817  
($ 43,571)  
($ 38,496)  
[850] I accept Mr. Hockin’s evidence that although part of the effect of the recorded  
management fees was to lower the tax liability of RJM Holdings, it remains that a  
legitimate basis to claim the fees and a legitimate basis for the quantum charged, must  
have existed. I also accept his evidence that in the preparation of CCI’s annual financial  
statements, even on a Notice to Reader basis, CCI’s accountant, Deloitte LLP, would  
have been obligated to make inquiries concerning the basis for the management fees that  
were recorded, if they appeared inappropriate. There is no evidence that such inquiries  
were made.  
[851] In addition, I accept Mr. Hockin’s evidence concerning the benefits to CCI that were  
derived from the “booked management fee transactions”. CCI’s annual operating losses  
in each of the years 2010 to 2013, required funding from a source external to CCI,  
whether a related party or an arm’s length creditor. Ultimately, its losses were funded by  
its related parties. Through the booked management fee transactions, CCI avoided a  
cumulative increase in its related-party debt totalling several hundreds of thousands of  
dollars over the course of 2010 to 2013, which it would otherwise have been required to  
repay at some point in the future. In turn, based on the shareholders’ compact, CCI  
would have been required to repay that additional amount of related-party debt before  
any profits were distributed to its shareholders.  
[852] Correspondingly, the management fee amounts were recorded as expenses by RJM  
Holdings, rather than related-party receivables owed by CCI. Therefore, although RJM  
Holdings received an immediate tax benefit from the recorded expenses, it did so at the  
cost of foregoing repayment of the total amounts of the recorded fees (i.e. $585,000) at  
some point in the future.  
[853] To the extent that the recorded management fees were greater than CCI’s annual  
operating loss in any given year, the excess formed part of a recorded related-party  
receivable owed to CCI, that was available to offset a portion of CCI’s existing related-  
party debt, thereby reducing CCI’s net related-party indebtedness.  
[854] In the foregoing context, I am not persuaded that the structure of the related-party  
recorded management fee transactions in 2010-2013, violated a reasonable expectation  
held by Cheryl qua shareholder, nor was it oppressive, or unfairly prejudicial to, or done  
with unfair disregard for Cheryl’s interests as a shareholder. The transactions  
contemporaneously allowed CCI to meet its then current liabilities in a manner that  
avoided CCI incurring significant additional long-term debt.  
[855] I am not persuaded that an order compelling a “cash payment” of $50,000 to Cheryl to  
“disgorge” the tax benefits received by RJM Holdings Limited, resulting from the  
recording of management fees is warranted. All of CCI’s shareholders have already  
benefited from the management fee transactions, through the corresponding reduction of  
CCI’s related-party debt.  
Page: 150  
(xi)  
Cheryl’s Reasonable Expectation That She Would Receive Annual Audited  
Financial Statements for CCI Was Violated by the Defendants’ Conduct –  
Her Expectation That She Would Participate in CCI Director and  
Shareholder Meetings Was Not  
[856] Cheryl submits that: she held a reasonable expectation that she would consistently  
participate in shareholder and director meetings related to CCI and that she would receive  
annual audited financial statements for CCI; and that both expectations were violated by  
the defendants. I will address the latter asserted expectation first.  
[857] Absent a shareholder resolution exempting the corporation from the audit provisions set  
out in Part XII of the OBCA, a shareholder’s right to financial information or material  
concerning the corporation (including audited financial statements) is a clear and  
mandatory one that is: prescribed by the OBCA; and vested personally in the shareholder.  
A shareholder does not need to negotiate with the corporation, in order to obtain audited  
financial statements: see Labatt Brewing Company Ltd. v. Trilon Holdings Inc. (1998),  
41 O.R. (3d) 384, (Gen. Div.), 72 O.T.C. 223, at para. 6.  
[858] A corporation’s failure to produce annual audited financial statements deprives the  
shareholder of financial information about the corporation that he or she is otherwise  
lawfully entitled to receive. I find that Cheryl’s expectation of audited financial  
statements was reasonable. Objectively, she was entitled to expect that the corporation  
would comply with Part XII of the OBCA.  
[859] In this instance, Rob made no effort to arrange for the preparation of annual audited  
financial statements for CCI, until CCI was compelled to do so as a result of an order  
made in the context of this proceeding.  
[860] I do not accept the defendants’ submission that “past practice” in this instance militated  
against the reasonableness of Cheryl’s expectation to receive annual audited financial  
statements. I am mindful that the defendants correctly submit that audited financial  
statements were not prepared with respect to CCI for its 2009 year, without objection  
from Cheryl. Recall, however, that when Rob was CCI’s original and sole shareholder, he  
passed a resolution exempting the corporation from an audit in 2009. Those  
circumstances do not impair the reasonableness of Cheryl’s expectation that audited  
financial statements would be prepared in accordance with the OBCA, in each of the  
years subsequent to 2009, for which no exempting resolutions had been passed.  
[861] Similarly, I do not find that Cheryl’s failure to object to the lack of audited financial  
statements until some time in late 2013 or early 2014, evidences a “past practice” that  
negates the reasonableness of her expectation. Unless the shareholders passed a  
resolution in a particular year, exempting CCI from the OBCA’s audit requirements,  
audited statements were required. The corporation is obligated to comply with the  
OBCA’s audit requirements, in any event of whether a shareholder actively demands such  
statements.  
Page: 151  
[862] I appreciate that the defendants also adduced evidence through various witnesses,  
indicating that based on the cost, small closely held corporations, typically, do not obtain  
audited financial statements. However, the evidence adduced in that regard does not  
establish that such corporations refrain from obtaining audited financial statements in the  
absence of an exempting shareholder resolution. As a result, the anecdotal evidence on  
the foregoing point does not undermine the reasonableness of Cheryl’s expectation. The  
expense associated with the production of annual audited financial statements, alone,  
does not justify a corporation’s failure to provide such statements to its shareholders.  
Shareholders have a right to audited financial statements and a failure to provide them is,  
at the very least, conduct that unfairly disregards, or is unfairly prejudicial to, their  
interests: see Krandel v. 1714176 Ontario Ltd., 2014 ONSC 4615, 32 B.L.R. (5th) 171,  
at paras. 5 and 7.  
[863] As a result of the foregoing, I find that by failing to provide Cheryl with annual audited  
financial statements, Rob and CCI engaged in conduct that was oppressive or unfairly  
disregarded her interests as a shareholder. In reaching that conclusion, I remain mindful  
that the provisions of the OBCA mandating audited financial statements do not create a  
statutory cause of action or shift the evidentiary onus, in the context of a claim pursuant  
to s. 248 of the OBCA. Cheryl does not submit otherwise. In this case, the import of the  
statutory requirement to produce audited financial statements, lies in its ability to  
conclusively establish Cheryl’s expectations, in that regard, as reasonable, which it does.  
Those expectations were breached by Rob and CCI in a manner consistent with s. 248(2)  
of the OBCA.  
[864] The analysis with respect to Cheryl’s asserted expectations concerning her ability to  
attend director and shareholder meetings, is more nuanced. Although CCI’s articles of  
incorporation and by-laws contemplate shareholder and director meetings, none were  
ever held.  
[865] There is no evidence that Cheryl ever complained about the lack of such meetings, or that  
she took any action to call such meetings herself, at any time. Shortly after she resigned  
and withdrew from active involvement in CCI, Cheryl retained counsel, while  
simultaneously remaining a director and officer of CCI. As a result, if she wanted to  
attend annual or special shareholder meetings and director meetings, respectively, she  
could have engaged in preventative steps by calling or requisitioning such meetings  
herself, both in accordance with the powers afforded to her as CCI’s president, pursuant  
to Article 4.01 of CCI’s By-Law No. 1 (the president may determine the date, time and  
location of Director’s meeting)), and Article 7.02 of CCI’s By-Law No. 1 (the president  
shall have the power at any time to call a special meeting of the shareholders).  
[866] Similarly, as the holder of not less than five percent of CCI’s issued shares that carried a  
right to vote, Cheryl had the right to requisition a shareholders’ meeting pursuant to s.  
105(1) of the OBCA. There is no evidence that Cheryl ever sought to do so, nor is there  
any evidence that Cheryl ever either directly, or through counsel, requested that Rob call  
or requisition such meetings, or contemporaneously complained that such meetings had  
not been called.  
Page: 152  
[867] In the foregoing context, while I do not conclude that Cheryl’s “submitted” expectation  
that she would attend director and shareholder meetings is necessarily unreasonable, I  
find that to the extent that she expected that after she withdrew from active involvement  
in CCI’s day-to-day operations, that such meetings were necessarily required to be (or  
would be) called or requisitioned exclusively by Rob, was unreasonable, particularly as  
she remained CCI’s president and one of its two directors. She had the means to call and  
requisition such meetings herself. She did not do so. Had she done so, any concerns held  
by either party about attending a shareholder meeting in the presence of the other, could  
have been attenuated by resort to a proxy, in accordance with s. 110(1) of the OBCA.  
[868] In the result, I find that Cheryl, herself, consistently had the ability to fulfill her asserted  
expectation of attending director and shareholder meetings. She did not do so. As a result,  
I do not conclude that her asserted expectation in that regard was violated by the  
defendants’ conduct, in a manner consistent with s. 248(2) of the OBCA, or at all.  
(xii) Summary of “Oppressive” Conduct Findings  
[869] Consistent with the foregoing, I conclude that the defendants did engage in some conduct  
that falls within the scope of s. 248(2) of the OBCA that violated Cheryl’s reasonable  
expectations as a shareholder. Specifically, at Rob’s direction, CCI failed to provide  
annual audited financial statements to Cheryl (in the absence of annual exempting  
resolutions) and Rob sent correspondence directly to Cheryl, during the conduct of this  
litigation, that was designed to interfere with her decision to continue this action by  
pressuring her to abandon claims that she advances in her capacity as a shareholder of  
CCI. I do not give effect to the balance of Cheryl’s submissions concerning the alleged  
violations of her asserted expectations as a shareholder.  
[870] The fact that qualified audited statements were eventually produced for some years does  
not completely remedy the prejudice to Cheryl’s interests arising from CCI’s failure to  
produce annual audited statements on a contemporaneous basis. CCI’s failure to do so  
contributed to the auditor’s difficulties in producing even qualified audited financial  
statements for the period of 2009 to 2015. From Mr. Da Sacco’s evidence, I infer that  
had annual audited financial statements been produced on a contemporaneous basis  
throughout CCI’s operating history, the impact of the disorganization of its financial  
records, that eventually confronted BDO and impeded its historical audit efforts, would  
have been minimized.  
[871] Further, had Cheryl been provided with annual audited financial statements, as was her  
right, she could have made a more informed decision about whether to call or requisition  
director and shareholder meetings, herself.  
[872] Rob’s correspondence to Cheryl after she commenced this litigation, at a minimum,  
unfairly disregarded her interests as a shareholder, for the reasons I have set out  
previously.  
Page: 153  
[873] With the extent of the defendants’ violations of Cheryl’s reasonable expectations  
determined, I will now determine the appropriate remedial order resulting from the  
defendants’ “oppressive conduct”.  
(xiii) The Appropriate Remedy for the Defendants’ Oppressive Conduct, As  
Found  
[874] In determining the appropriate remedy for the defendants’ oppressive conduct, I remain  
mindful that the available remedies are, in effect, equitable in nature and designed to  
ensure fairness in the case-specific circumstances: see BCE, at para. 58. The  
determination of what is “just and equitable” in the circumstances of a particular case  
must be guided by the reasonable expectations of the shareholders and the relationships at  
play: see BCE, at para. 59.  
[875] In crafting a remedy, the court ought not to interfere with the corporation’s affairs lightly.  
Where relief is required to correct “oppressive” circumstances, it should be fashioned  
with precision, rather than through the imposition of an overly broad order. The remedy  
imposed ought to “even up the balance, not tip it in favour of the hurt party”: see Naneff,  
at para. 32.  
[876] In this instance, the plaintiffs and defendants submit that in the event that a remedy is  
ordered pursuant to s. 248(3) of the OBCA, it ought to include a court ordered purchase of  
Cheryl’s shares. The parties dispute the appropriate terms of the proposed transaction,  
primarily, on issues concerning the appropriate share valuation date, and the fair market  
value of Cheryl’s shares, as of that date.  
[877] Cheryl submits that her shares ought to be valued as of the date of judgment.  
Accordingly, she has adduced expert evidence valuing the shares as of December 31,  
2017, using three different valuation scenarios, which I will address further, below.  
[878] The defendants submit that Cheryl’s shares ought to be valued at the original date of the  
oppressive conduct, as found, or alternatively, the date the proceeding was commenced.  
Accordingly, they propose valuation dates of December 31, 2010 or December 31, 2011,  
respectively. The defendants contend that a valuation date of December 31, 2017 would  
unfairly frustrate the shareholders’ reasonable expectations. Finally, they submit that the  
assumptions that underwrite each of the plaintiffs’ expert’s December 31, 2017  
“valuation scenarios” are unsupported by the evidence, with the result that the actual  
FMV of Cheryl’s shares as of December 31, 2017, is far less than he calculates. I will  
address each of those issues below.  
(xiv) The Determination of the Fairest Valuation Date for CCI’s Shares  
[879] The selection of the appropriate valuation date is guided by the determination of the  
“fairest” date, in all of the case-specific circumstances. The decided cases generally  
identify three potential dates in that regard: the date of the oppressive conduct (for  
example: Naneff (ONCA), at para. 41); the date that the proceeding was commenced (for  
example: Smith v. Ritchie, 2009 ABCA 373, [2009] A.J. No. 1218, at para. 24 and Proulx  
v. 2006550 Ontario Inc., [2005] O.J. No. 5150 (S.C.), 15 B.L.R. (4th) 72, at para. 63);  
Page: 154  
and the date of judgment (for example: Booth v. Alliance Windsor Insurance Brokers  
Inc., 2007 ONCA 805, 40 B.L.R. (4th) 238, at para. 16).  
[880] The date the proceeding is commenced is often selected as the valuation date, in  
situations where the commencement of the proceeding is found to constitute the plaintiff  
shareholder’s declared desire to be “bought out”. Similarly, in circumstances in which  
share value has decreased between the date the proceeding was commenced and the date  
of judgment, as a result of the oppressing shareholder’s conduct, it may be most fair for  
the shares to be valued using the date the proceeding was commenced, in order to protect  
the oppressed shareholder from the diminishment in share value.  
[881] Conversely, where, through no fault of either party, share value has fallen since the date  
the proceeding was commenced, the fairest approach may be to decline to shield the  
oppressed shareholder from the reduction in share value, by selecting the date of  
judgment as the valuation date: see Chiaramonte v. World Wide Importing Ltd. (1996),  
28 O.R. (3d) 641, [1996] O.J. No. 1389, at para. 43.  
[882] Where share value has increased since the date of the oppressive conduct and/or the date  
the proceeding was commenced, there are some circumstances in which the date of  
judgment will be the fairest valuation date, including situations where the plaintiff’s past  
efforts have continued to contribute, directly or indirectly, to ongoing increases in share  
value, even though the oppressed shareholder is no longer involved in the corporation’s  
business.  
[883] Finally, the date of the oppressive conduct, as found, may be justified as the fairest  
valuation date in circumstances in which a departing shareholder/employee contributes  
nothing further to the corporation and share value has increased between the time of the  
oppressive conduct and the date the proceeding was commenced (and/or the date of  
judgment). Since the increased share value is not the result of the oppressed plaintiff’s  
efforts or contribution, in some circumstances, it may be most fair to allow the remaining  
shareholders to retain the increase in share value.  
[884] As a result of the case-specific circumstances in this instance, I find that the fairest  
valuation date is the date that the original oppressive conduct occurred, namely 2010,  
when CCI first failed to produce audited financial statements, in the absence of a  
shareholders’ resolution exempting it from the OBCA’s audit requirements.  
[885] I arrive at the foregoing conclusion for the following reasons:  
a) The parties contemplated that Cheryl’s contribution to CCI would be made  
through her employment-related efforts. She resigned from CCI in 2010,  
following a relatively short period of employment;  
b) At the time that she resigned, CCI’s liabilities were in excess of both half a  
million dollars and the recorded value of its assets;  
c) Cheryl did not make any contribution to CCI’s business after July 2010;  
Page: 155  
d) CCI did not achieve profitability until approximately six years after Cheryl  
resigned and withdrew from any involvement in its operations. The evidence  
does not establish that CCI’s eventual profitability was, in any way,  
attributable to the specific time spent and efforts made by Cheryl prior to July  
2010. Instead, I find that CCI’s eventual profitability was solely attributable to  
Rob’s (and related corporations) ongoing financial contributions, coupled with  
Mr. Tsirimbis’ strategic planning and implementation of systematic changes  
to CCI’s operations. Following Cheryl’s departure: CCI added a private  
dining space, which increased its seating capacity; the Retro Suites’ banquet  
facilities were renovated and its capacity was expanded; the restaurant’s “front  
of house” was completely renovated, on at least two occasions; Mr. Tsirimbis  
implemented stage-based improvements to CCI’s menu, service model, and  
atmosphere; and eventually, he engaged in sustained promotion and  
advertising related to CCI. While I am mindful of the aspects of the evidence  
that indicate that some of NFE’s clientele became patrons of CCI in 2009, the  
evidence does not disclose that their patronage continued until and after 2016.  
To the contrary, Cheryl testifies that there was slippage in CCI’s retention of  
NFE’s former clientele dating back to 2009-2010, while she was still actively  
involved in CCI’s day-to-day operations;  
e) Cheryl was fully compensated for her employment-related efforts in the  
period of January 1, 2009 to July 2010, through her salary;  
f) Rob financed all aspects of the restaurant’s development and operations, both  
before and after Cheryl resigned, including its initial capital expenses and its  
multi-year operating losses;  
g) My previous determination that Rob held a reasonable expectation that  
Cheryl’s shares would be purchased as of the date of her resignation, in the  
context of the case-specific facts;  
h) My previous determination that any expectation that Cheryl held that she  
would remain a shareholder despite her voluntary resignation and withdrawal  
from active contribution to CCI’s operations (whether as an employee, officer  
or director) at such an early stage in its existence was not reasonable, in the  
context of the case-specific facts.  
[886] In determining the fairest valuation date, I also considered “the date the proceeding was  
commenced” and “the date of judgment”, but neither date is appropriate in the case-  
specific circumstances. The difficulty with selecting “the date that the proceeding was  
commenced”, arises from Cheryl’s failure to expressly request relief, in the form of a  
court imposed purchase of her shares, in her statement of claim. Through her pleadings,  
she did not declare a desire to be “bought out”. Instead, she sought to oust Rob as an  
officer and director of CCI and to insert herself as its sole controlling mind, together with  
other ancillary relief. Therefore, unlike the circumstances in Booth, it was not open to the  
defendants in this case to admit oppressive conduct and the appropriateness of a share  
purchase remedy, in response to the statement of claim.  
Page: 156  
[887] Similarly, the date of judgment is also not the fairest valuation date. Although the value  
of CCI’s shares has increased between the date of the defendants’ oppressive conduct and  
the date of judgment, there is no nexus between CCI’s current share value and Cheryl’s  
contributions to CCI before she resigned in July 2010, when CCI’s share value was nil. In  
the circumstances, it would be unfair to select a valuation date that would result in Cheryl  
receiving an enhanced value for her shares, when CCI’s current share value is solely  
attributable to Rob’s continued financial contribution and the management efforts of  
others, after Cheryl’s departure from CCI.  
[888] I will now determine the value of Cheryl’s shares using December 31, 2010 as the  
valuation date.  
(xv) The Value of Cheryl’s Shares at the Determined Valuation Date (December  
31, 2010)  
[889] The only evidence concerning the value of CCI’s shares as of December 31, 2010, comes  
from Ms. Campbell’s estimate of value through an “asset-based approach”. That is the  
appropriate valuation approach because CCI had a negative adjusted cash flow in the  
years 2009 and 2010 (after deducting the management fees that were recorded in 2010, as  
unusual or non-reoccurring revenue). The same circumstances existed in 2011.  
[890] Ms. Campbell’s evidence, which I have detailed earlier, concerning the specific  
methodology that she used in applying an asset-based approach to arrive at an estimate of  
value for CCI’s shares at December 31, 2010 (and December 31, 2011), was not  
undermined in cross-examination or challenged through Mr. Tracey’s evidence. I find  
Ms. Campbell’s evidence reliable and I accept it, in its entirety.  
[891] I also accept Ms. Campbell’s opinion that pursuant to an asset-based approach, the  
estimated FMV of the share capital of CCI is nil, when either December 31, 2010 or  
December 31, 2011 (the date the proceeding was commenced), are used as the valuation  
date.  
[892] Therefore, I find that the “purchase price” for the remedial purchase of Cheryl’s shares  
ought to be fixed at $1.00. Presumptively, the remedial purchaser of Cheryl’s shares will  
be RJM Holdings. However, the parties did not make submissions on that point, and the  
evidence reveals that a corporate re-organization of the RM companies occurred in 2015.  
At the end of the reasons, I will prescribe a procedure by which the parties may make  
submissions on the terms of the remedial share purchase.  
[893] In the event I have erred in determining the valuation date, I would have concluded that  
the date the proceeding was commenced is a fairer valuation date than the date of  
judgment. I provisionally find that the value of Cheryl’s shares at the date the proceeding  
was commenced is also $1.00.  
[894] Below, I will make provisional findings with respect to value of CCI’s share capital,  
using December 31, 2017 as the valuation date.  
Page: 157  
(xvi) Provisional Findings with Respect to CCI’s Share Value Using December 31,  
2017 as the Valuation Date  
[895] Had I determined that the appropriate valuation date for Cheryl’s shares is December 31,  
2017, I would have found that the FMV of CCI’s share capital, en bloc, is $53,900,  
reflecting the mid-point of Ms. Campbell’s en bloc estimate of FMV. As a result, I  
would have determined that the purchase price for the remedial purchase of Cheryl’s  
shares ought to be set at $26,950 using the date of judgment as the valuation date. I will  
explain.  
[896] For reasons that I will set out below, I accept Ms. Campbell’s opinion evidence with  
respect to her estimate of the FMV of CCI’s shares as of December 31, 2017, and I prefer  
it over Mr. Tracey’s evidence in that regard.  
[897] Although the date of judgment is not December 31, 2017, Ms. Campbell’s evidence  
remains the best evidence of the FMV of CCI’s shares as of the date of judgment. When  
they prepared their respective reports in 2018, both experts performed their FMV analysis  
with an assumed valuation date of December 31, 2017, and CCI’s 2018 year-end  
financial information was unknown at the time their reports were prepared. Although  
CCI’s 2018 preliminary draft internal financial statements were adduced in evidence at  
trial, they remain subject to potential adjusting entries, which had not yet been identified  
and implemented. Audited financial statements for 2018, were not available at the time of  
trial.  
[898] In the foregoing context, I decline to give effect to the plaintiffs’ counsel’s submission  
that the discord between the actual date of judgment and the valuation evidence being  
premised on a valuation date of December 31, 2017, ought to be addressed by ordering  
one half of CCI’s draft net income in 2018 (total $131,160), i.e. $65,580, be paid in  
addition to the FMV of Cheryl’s shares as of December 31, 2017. The approach is  
problematic for at least two reasons.  
[899] First, CCI’s 2018 internal draft financial statements remain subject to adjusting entries. I  
am not confident that the income reflected in the draft of the statements adduced as  
evidence is accurate, in the sense that it will remain unchanged when the statements are  
finalized and audited.  
[900] Second, the approach ignores CCI’s outstanding debt obligations. Specifically, the  
plaintiffs’ proposal of CCI paying one half of CCI’s 2018 net income, in addition to the  
share purchase price being paid by RJM Holdings, is consistent with a tacit request to  
distribute a portion of CCI’s 2018 net income to Cheryl qua shareholder, in the form of a  
disguised dividend. Pursuant to the shareholders’ compact, profit distributions, such as  
the one implicit in the plaintiffs’ request, were not anticipated until CCI’s related-party  
debt was retired, which has yet to occur.  
[901] I will now explain why I prefer and accept Ms. Campbell’s approach and evidence on  
share value as of December 31, 2017, over Mr. Tracey’s corresponding approaches and  
evidence, which I reject.  
Page: 158  
[902] First, Ms. Campbell produced “estimates of value” of CCI’s capital shares. Mr. Tracey  
acknowledges that from a business valuation perspective, an “estimate of value” is of a  
higher quality than the “calculations of value” that he performed, which is the lowest  
quality of report that can be prepared in accordance with the practice standards of the  
Canadian Institute of Chartered Business Valuators (“CICBV”).  
[903] Second, Ms. Campbell does not express equivocation over her ability to provide an  
appropriate valuation report. Mr. Tracey does. Despite receiving substantial information  
from Mr. Tsirimbis and Ms. Temesy in response to his detailed questions, Mr. Tracey  
still felt that he did not have all of the information that he required to complete an  
appropriate report. As a result, in his September 10, 2018 report, Mr. Tracey states that he  
remained unable “to provide an appropriate report and critique within the CICBV’s  
standards” pending the receipt of additional information. Conversely, Ms. Campbell was  
able to complete an estimate of value, without any express reservation about her ability to  
do so.  
[904] Third, in my view, an aspect of Mr. Tracey’s analysis tilts away from his duty to provide  
objective opinion evidence for the benefit of the court, and towards a more partisan  
approach to his calculations of value. Specifically, both experts acknowledge that in the  
capitalized cash flow valuation approach, the determination of the applicable multiplier  
range is a function of the valuator’s assessment of certain risk factors, some of which are  
subject to the valuator’s subjective exercise of professional judgment. In his original  
report, Mr. Tracey determined that an EBITDA multiplier in the range of 3.63 to 4.83  
was applicable to the calculation of the FMV of CCI shares as of December 31, 2017. In  
his second report, after identifying the same risk factors that he did in his original report,  
Mr. Tracey increased the multiplier that he used to a range of 4.17 to 5.55. His report  
does not explain why the same risk factors justified a higher multiplier than he originally  
identified.  
[905] In his evidence, Mr. Tracey agrees that the change he made to the multiplier served to  
increase the calculated FMV of CCI’s share value, but he does not offer a compelling  
explanation for the change. In my view, the change was designed to secure a higher  
calculated FMV of CCI’s shares as of December 31, 2017, which was a result that  
favoured the position advocated by the party that retained Mr. Tracey.  
[906] Conversely, Ms. Campbell’s EBITDA multiplier remained consistent between her first  
and second reports concerning the estimate of value of CCI’s shares as of December 31,  
2017. Further, rather than simply adopting Mr. Tracey’s initial multiplier range, Ms.  
Campbell lent her independent judgment to the issue and determined that the appropriate  
range was higher than the range initially identified by Mr. Tracey, which was a  
conclusion that did not favour the position advocated by the parties that retained her. I  
find that in so doing, Ms. Campbell acted in an objective and non-partisan manner.  
[907] Finally, Ms. Campbell’s opinion on the estimate of value of CCI’s shares is primarily  
informed by CCI’s actual historical financial performance, as recorded in its annual  
financial statements. Conversely, Mr. Tracey has calculated the value of CCI’s shares  
under three scenarios, all of which ignore CCI’s related-party debt and two of which  
Page: 159  
reject significant portions of CCI’s financial statements, as inaccurate (including CCI’s  
final audited 2016 and 2017 statements) and instead adopt alternative “assumptions”  
about CCI’s historical financial performance that are not persuasively supported by the  
evidence. I am satisfied that Ms. Campbell’s reliance on CCI’s actual recorded financial  
performance produced a more reliable and accurate estimate of value of CCI’s shares  
than the calculations of value arrived at by Mr. Tracey.  
[908] To more fully explain my rejection of Mr. Tracey’s evidence, I will set out some, but not  
all, of my concerns over the assumptions and aspects of the methodology that underwrite  
each of the valuation “scenarios” he put forth.  
[909] As it relates to all scenarios, Mr. Tracey’s primary calculated FMV is premised on an  
assumption that the value of CCI’s related-party debt is nil. For reasons that I have set out  
previously, the evidence does not support that assumption. Although Mr. Tracey provided  
alternative calculations of share FMV under each of his three scenarios, using the  
recorded balance for CCI’s related-party debt, the primary calculations of value he was  
asked to make ignore aspects of CCI’s audited financial statements for 2016 and 2017,  
which do not express any qualifications or concerns over CCI’s recorded related-party  
debt. Despite acknowledging that audited financial statements are the “gold standard” of  
financial reporting, Mr. Tracey still proceeded with calculations of share FMV that  
implicitly assumed that the content of the 2016 and 2017 audited financial statements,  
related to CCI’s related-party debt were inaccurate and unreliable. The evidence does not  
support such an assumption.  
[910] Further, with respect to “scenario one”, as he was instructed to do, Mr. Tracey arrived at  
calculations of the value of CCI’s shares, on the assumption that CCI made unrecorded  
sales throughout the period of 2009 to 2018, inclusive. He quantified CCI’s assumed  
unrecorded sales by referring to a relatively broad “industry benchmark ratio” of “cost of  
sales to revenue”, which he derived from the IBIS World Industry Reports for Full  
Service Restaurants and Caterers in Canada. Pursuant to that approach, he calculated  
CCI’s “estimated loss of income from 2009 to 2018 due to potential unrecorded sales” to  
be $1,593,094.  
[911] Mr. Tracey acknowledges that if the available evidence does not support his assumption  
of unrecorded sales, his calculated FMV pursuant to “scenario one” will be of no  
assistance to the court. He concedes that he is not aware of any evidence that establishes  
that CCI actually generated revenue through sales that were not recorded in its financial  
statements, in any year. Further, there is no persuasive evidence that supports a finding  
that CCI made unrecorded or unreported sales.  
[912] In his September 10, 2018 report, Mr. Tracey quotes a portion of Mr. Da Sacco’s April 7,  
2017 correspondence, applicable to each of 2012, 2013, 2014 and 2015:  
In testing banquet sales [BDO was] unable to verify if cash was received  
from Retro Suites hotel for several transactions. The risk of unreported  
revenue as a result of subsequent adjustments to the sale is therefore high,  
as it is not possible to verify the amount of the sale to the actual payment.  
Page: 160  
[913] Despite Mr. Da Sacco’s specific reference to banquet sales, Mr. Tracey set about  
recalculating all of CCI’s sales in each of its years of operation, whether the sales were  
derived through banquets, restaurant dining or catering, by adjusting the sales to an  
“industry benchmark”. Apart from simply assuming that all forms of CCI’s sales were  
consistently unrecorded, it is unclear why Mr. Tracey adopted this approach, particularly  
given the real-time manner that CCI’s restaurant sales are recorded through its P.O.S.  
system.  
[914] Further, Mr. Da Sacco’s commentary must be read in context. In his evidence,  
Mr. Da Sacco confirms that the amounts that CCI received from the Retro Suites Hotel,  
for the banquet revenue that Retro Suites collected, was consistent with the amounts that  
CCI was entitled to receive pursuant to the specific contracts for the banquet events.  
BDO’s primary concern, was its inability to confirm whether the revenue for banquet  
sales received at first instance by Retro Suites Hotel, matched the contract price for the  
respective banquet events (i.e. whether Retro Suites received more, the same, or less  
money than the contract price). Mr. Tracey does not persuasively explain how Mr. Da  
Sacco’s concern in that regard reliably founds an assumption that CCI made unrecorded  
sales in excess of $1.5 million over the 10-year period that he sets out. More  
fundamentally, Mr. Da Sacco’s evidence does not establish that CCI did, in fact, make  
any unrecorded sales in any year of its operations.  
[915] Mr. Tracey’s September 2018 unrecorded sales and “loss of income” calculations also  
conflict with other evidence that I accept. Based on his assumptions, Mr. Tracey  
calculates that CCI’s unrecorded sales/revenue in 2009 totalled $192,000. Yet Cheryl,  
who managed CCI’s day-to-day operations during that year, testifies that CCI had no  
unrecorded sales in 2009. I accept her evidence in that regard.  
[916] Similarly, Mr. Tracey’s assumption of unrecorded sales in 2016 and 2017 (cumulatively  
totalling in excess of $330,000) is inconsistent with CCI’s audited financial statements  
for 2016 and 2017. In those audited statements, BDO opined that the recorded revenue in  
each year, which was lower than the amounts recalculated by Mr. Tracey, presented  
fairly, in all material respects, CCI’s financial position as of December 31, 2016 and  
2017, respectively. If Mr. Tracey’s assumptions and calculations concerning CCI’s  
unreported income in 2016 and 2017 are accurate then necessarily, the audited financial  
statements prepared by BDO for those years are inaccurate. The evidence does not  
support that conclusion. In my view, the discrepancy between Mr. Tracey’s “scenario  
one” results and the content of CCI’s audited financial statements demonstrates that the  
assumptions founding “scenario one” are flawed and the results produced are unreliable.  
[917] “Scenario one”’s unreliable and inaccurate results, are not surprising, considering the  
broad scope of the “benchmark” data that was used to recalculate CCI’s historical annual  
revenue. The “scenario one” model assumes that CCI financially performed as an entity  
falling within the “average” of IBIS data for full service restaurants in Canada. The  
“average” bench mark used by Mr. Tracey was not derived from a homogenous sample  
size of restaurants that were materially comparable to CCI’s operation. Given the nature  
of CCI’s labour intensive business model, as described by Mr. Tsirimbis, it is reasonable  
to expect that it would have a “higher cost of sales to revenue ratio” than the “average”  
Page: 161  
restaurant in the broad comparator class underwriting the industry benchmark to which  
Mr. Tracey resorted.  
[918] Artificially recalculating CCI’s revenue to a level consistent with “benchmark averages”  
therefore, attracts the very risk that was realized in this instance. Specifically, an  
assumption of revenue that was, ultimately, overstated which, in turn, led to the  
overstatement of sustainable EBITDA for the purpose of Mr. Tracey’s “scenario one”  
calculations, and ultimately, an overstated value of CCI’s shares as of December 31,  
2017.  
[919] The calculation of value of CCI’s shares that Mr. Tracey arrived at, through “scenario  
one” is not helpful.  
[920] In “scenario two”, Mr. Tracey accepted that CCI’s revenue was accurately recorded in its  
annual financial statements, but he assumed that its “cost of sales” (including its wages  
and benefits expenses) ought to be equalized to “average industry benchmarks”, derived  
from the IBIS data described above. Mr. Tracey concluded that CCI’s wage expenses  
were significantly higher than the average of the IBIS data. For the purpose of “scenario  
two”, Mr. Tracey assumed that the variance between CCI’s actual wage expenses and  
average IBIS data was attributable to wages and benefits being misallocated between CCI  
and Retro Suites. He concludes that the detailed information provided by CCI  
management failed to adequately address his concerns over the assumed “misallocation”  
of such expenses.  
[921] In my view, the evidence of Mr. Tsirimbis and Ms. Temesy, which I accept, conclusively  
addresses any concern of misallocation of wages in this instance. Both of them offer  
thoughtful, credible, and reliable evidence. Prior to Mr. Tracey’s second report, they  
provided him with detailed information concerning CCI’s employees, their various job  
duties and respective remuneration. Through their summary and in their evidence, they  
confirmed that only two employees consistently performed services for both CCI and  
Retro Suites (one of which was Ms. Temesy herself). Those employees split their time  
equally between the two entities and their salaries are paid on an equal basis, by each of  
CCI and Retro Suites. The evidence conclusively establishes that other employees, who  
are primarily employed by Retro Suites, but perform periodic services for CCI, are paid  
by the hour. Only the hours incurred in relation to CCI-related activities are charged to  
CCI.  
[922] Moreover, I accept Mr. Da Sacco’s evidence that in preparing CCI’s 2016 and 2017  
audited financial statements, BDO specifically examined and considered the allocation of  
wages between CCI and Retro Suites. It found no evidence of improperly allocated wages  
between them. Further, BDO was satisfied that it had obtained sufficient audit evidence  
to opine that CCI’s financial statements were presented fairly for the years 2016 and  
2017, including its recorded wage expenses.  
[923] Since the evidence does not establish that the annual expenses incurred by CCI, including  
for wages, are overstated in its annual financial statements, the “industry benchmark”  
Page: 162  
adjustments that Mr. Tracey made to normalize and recalculate CCI’s historical annual  
“cost of sales” are not justified.  
[924] The calculation of value of CCI’s shares developed under “scenario two” is not helpful.  
[925] In “scenario three”, Mr. Tracey did not recalculate CCI’s revenue or its costs of sales,  
other than certain expenses categorized as supplies. Specifically, in order to arrive at a  
normalized EBITDA, he adjusted various expense categories to their 2015 “percentage of  
revenue” levels, to account for any non-reoccurring expenses that might have been  
incurred in a specific year, when determining the amount of CCI’s expense that could  
reasonably be expected to occur on an annual basis.  
[926] Mr. Tracey also reviewed CCI’s 2016 general ledger and identified two transactions that  
were recorded as expenses, which he felt were capital in nature. As a result, he  
recalculated: CCI’s expenses for 2016, reducing them by $8,738; and CCI’s expenses in  
2017, reducing them by $38,483. Those changes increased CCI’s 2016 and 2017 net  
income and, as a result, the calculated value of its shares.  
[927] In my view, the evidence does not justify the adjustments that Mr. Tracey made to recast  
those expenses as capital in nature. Apart from the line item descriptions that were set out  
in the general ledger, Mr. Tracey was not aware of the particulars of the expenses.  
Further, to the extent that two items he identified could justifiably be recharacterized as  
capital expenditures, Mr. Tracey acknowledges that he did not know whether BDO had  
already made those adjustments in the course of its audit work. The plaintiffs did not  
adduce evidence from Mr. Da Sacco on the point, despite the opportunity to do so.  
[928] Turning to a different issue, the manner in which Mr. Tracey “normalized” CCI’s  
expenses when he calculated its EBITDA, differs between his March 2018 report and his  
September 2018 report. In the former, he normalized expenses based on the average of  
CCI’s recorded expenses over a five-year period. In his September 2018 report, for all  
scenarios, Mr. Tracey adjusts “expenses as a percentage of revenue”, in accordance with  
2015 levels, only (i.e. the 2015 supplies expense as a percentage of 2015 revenue). Mr.  
Tracey explained the latter approach on the basis that 2015 was the most recent year-end  
prior to a significant increase in CCI’s expenses and CCI’s sales in 2015 were  
significantly higher than its sales in any of 2012 to 2014.  
[929] I accept Ms. Campbell’s evidence that the foregoing approach implies that due to an  
increase in CCI’s revenue in 2015, its 2012 to 2014 expense levels are not relevant in  
projecting CCI’s ongoing future expenses. The approach is problematic because its  
uniform application yields a conclusion that CCI’s 2015 expense levels, upon which Mr.  
Tracey exclusively relies, are similarly not relevant to the projection of CCI’s ongoing  
future expenses. Specifically, CCI’s revenue in 2015 increased 16 percent over its 2014  
revenue and its revenue in 2016 increased by 32 percent over its 2015 revenue.  
Therefore, if revenue growth from 2014 to 2015 rendered CCI’s 2012-2014 expense  
levels irrelevant, as Mr. Tracey posits, then its revenue growth from 2015 to 2016 would  
Page: 163  
similarly render its 2015 expense levels irrelevant in determining its normalized  
EBITDA.  
[930] Finally, CCI’s expenses as a percentage of revenue, during the period of 2012 to 2015,  
were at their lowest level in 2015. I accept Ms. Campbell’s evidence that by normalizing  
CCI’s “supplies” expenses exclusively to 2015 levels (as opposed to the five year average  
he originally used), Mr. Tracey’s approach implies that on a go-forward basis, CCI’s  
supplies “expenses as a percentage of its revenue”, are capable of being maintained in the  
future at the lowest level achieved during the period from 2012 to 2015, and that any  
deviations from that level ought to be characterized as non-reoccurring expenses.  
[931] I accept Ms. Campbell’s evidence that such an approach overstates the necessary  
normalization adjustment, resulting in an overstatement of normalized EBITDA from  
CCI’s operations, which in turn, leads to a higher than justified calculation of the FMV of  
CCI’s shares. I also accept Ms. Campbell’s evidence that the use of a multi-year average  
to normalize expenses yields a more reliable normalized expense amount, and, in turn, a  
more reliable estimate of the FMV of CCI’s shares as of December 31, 2017.  
[932] As a result of the totality of the foregoing, I accept Ms. Campbell’s evidence with respect  
to the FMV of CCI’s share capital as of December 31, 2017, and I prefer it over the  
calculations of value performed by Mr. Tracey. I am mindful that I am not required to  
accept the evidence of either expert, in whole or in part. My acceptance of Ms.  
Campbell’s evidence is not merely a function of my rejection of Mr. Tracey’s evidence.  
Instead, I accept her evidence because: it was given in an objective and non-partisan  
manner, free from internal inconsistencies; it sounds in logic; and her opinions are  
founded on more reliable information about CCI’s annual financial performance, than  
that offered by unproven assumptions.  
[933] As a result, had I found the fairest valuation date to be the date of judgment, I would  
conclude that the FMV of CCI’s share capital en bloc as of December 31, 2017, is  
$53,900 and, therefore, 50 percent of its shares, as held by Cheryl, have a value of  
$26,950. In turn, I would have ordered that the remedial share purchase occur at a  
purchase price of $26,950.  
[934] With Cheryl’s claim for oppression determined, I will now address the remainder of the  
plaintiffs’ pleaded claims.  
(e) The Determination of the Plaintiffs’ Other Pleaded Causes of Action  
[935] At para. 28 of their amended statement of claim, the plaintiffs “plead and rely” on the  
doctrine of unjust enrichment in support of their asserted remedial claims. In that regard,  
they allege that the defendants: appropriated Cheryl’s business (NFE) and its assets and  
goodwill; eliminated a “major competitor (NFE)”; and made it impossible for Cheryl to  
carry on her profession as a restauranteur and caterer in Chatham, Ontario. Cheryl also  
pleads that as a result of Rob’s misrepresentation of a “joint and equal partnership”, she  
Page: 164  
was induced to close her own business and re-open another, with the defendants, using  
her goodwill and existing client base.  
[936] Bruce alleges that in relying on Rob’s “misrepresentations”, he provided services to the  
defendants for which he was not compensated. These claims were not the subject of  
much comment in the plaintiffs’ submissions. Nonetheless, I will address each of them  
below.  
[937] The plaintiffs have failed to establish that Rob or CCI were “unjustly enriched” by the  
“elimination” of NFE as a potential competitor of CCI. In order to establish a claim for  
unjust enrichment, the plaintiffs must establish: an enrichment on the defendants’ part; a  
corresponding deprivation to the plaintiffs; and a lack of juristic reason for the  
enrichment: see Peter v. Beblow, [1993] 1 S.C.R. 980, at para. 3. The plaintiffs have  
failed to prove those elements.  
[938] In her evidence, Cheryl explains the basis for her conclusion that her current restaurant,  
Zee’s Bistro, is not a “competitor” of CCI. Her evidence also discloses that the business  
of Zee’s Bistro and the business of her pre-CCI restaurant, NFE, are very similar: both  
offer a lunch service and a dinner service; their respective lunch services involve  
homemade healthy food; and their dinner service involves a bistro experience. If Zee’s  
Bistro is not CCI’s “competitor”, it follows that NFE would not have been its competitor  
either. I find that the small “bistro”-style dinner experience that NFE offered was not a  
potential “major competitor” to the fine casual dining experience that CCI planned to  
offer at the time of Rob and Cheryl’s discussions in 2008. The end of NFE’s operation  
did not equate to the elimination of a “major competitor” of CCI.  
[939] Further, to the extent that CCI was “enriched” by the cessation of NFE’s business, it was  
not to Cheryl’s (its sole proprietor’s) detriment and it was not without juristic reason. As  
part of CCI’s “acquisition” of NFE, Cheryl’s NFE-related liabilities were assumed by  
CCI. Cheryl also received 50 percent of CCI’s shares and she was paid an annual salary  
of $50,000 related to her employment with CCI, as a part of the overall bargain that lead  
to the termination of NFE’s business. In those circumstances, I find that Cheryl has failed  
to establish the requisite element of deprivation.  
[940] Finally, Cheryl’s acceptance of Rob’s 2008 proposal to become a “partner” in CCI and  
the subsequent steps taken by the parties, including CCI’s contractual acquisition of  
NFE’s assets and liabilities (with Cheryl’s consent) constituted a juristic reason for the  
alleged enrichment.  
[941] Turning to the remainder of the plaintiffs’ pleaded claims, contrary to the allegations in  
para. 28 of the statement of claim, it is clear that after Cheryl resigned from CCI, she was  
not impeded from working in the catering and restaurant industry in Chatham. By  
October 2010 (over a year before the statement of claim was issued), she was cooking  
and making deliveries on behalf of Healthy Choice Catering. In 2011, she acquired,  
renovated and commenced operating the Zee’s Bistro restaurant, which she has operated  
continuously to date. In those circumstances, there is no basis to conclude that the  
Page: 165  
defendants’ actions compromised her ability to work in the restaurant industry, in a  
manner warranting compensation, or at all.  
[942] Further, I do not give effect to the plaintiffs’ pleaded claims that appear to be founded in  
allegations of fraudulent misrepresentation against Rob. In order to establish liability on  
that basis, the plaintiffs bear the onus of proving on a balance of probabilities that: Rob  
made a false representation; the representation was made knowing it was false; the  
representation caused the plaintiffs to act; and the representation resulted in damages or  
loss: see 3Com Corporation v. Zorin International Corp., [2006] O.J. No. 2184 (C.A.),  
211 O.A.C. 222, at para. 7; and Bruno Appliance and Furniture v. Hryniak, 2014 SCC 8,  
[2014] 1 S.C.R. 126, at para. 21.  
[943] The evidence does not persuade me that Rob, on behalf of himself or the balance of the  
defendants, made any false statements to Cheryl, let alone representations that were  
knowingly false. Through their statement of claim, the plaintiffs seem to suggest that  
Rob’s 2008 representation of “equal partnership” was false. I have already disposed of a  
similar issue, in determining the parties’ reasonable expectations arising from their 2008  
negotiations and the documents they executed in 2009. I determined that in 2008, the  
parties agreed that they would share equally in CCI’s ownership, but Rob would retain  
ultimate control over its financial aspects, based on the nature of his planned  
contributions to the business. That understanding formed, in part, the broad parameters of  
the shareholders’ compact. The documents executed by the parties in 2009, was  
consistent with their prior agreement in that regard. I am not satisfied that Rob made a  
false representation, knowingly or otherwise, during the course of the parties’ 2008  
negotiations. Therefore, I do not give effect to this aspect of the plaintiffs’ claim.  
[944] Similarly, Bruce has not led any evidence that I accept, to support a viable  
misrepresentation claim. In the statement of claim, he alleges that he was induced by  
representations made by Rob to provide unpaid labour to CCI. This issue was not argued  
by the plaintiffs in their submissions. Further, the evidence does not persuasively  
establish that Rob made any representations specifically to Bruce that induced Bruce to  
provide unpaid labour to CCI. Instead the evidence supports that Rob represented to  
Cheryl that he did not want Bruce involved in CCI’s operations.  
(f) The Determination of the Defendants’ Counterclaim  
[945] The defendants commenced a counterclaim seeking compensatory, aggravated and  
punitive damages, together with compensation under the oppression provisions of the  
OBCA, primarily as a result of Cheryl’s alleged breach of certain non-competition  
provisions set out in the Contract of Employment.  
[946] At the opening of trial, the defendants’ counsel advised that the non-competition aspect  
of the counterclaim would not be pursued. Instead, the only “counterclaim” being  
pursued is a claim by Rob against Cheryl for defamation. For the reasons that follow, I do  
not give effect to that claim because it was not properly pleaded.  
Page: 166  
[947] In submissions, Rob claims damages in the amount of $50,000 for defamation on the  
basis of Cheryl’s evidence that after she left CCI, she told certain individuals that Rob  
was a “cheat”. Rob submits that as a professional businessman engaged in the operation  
of a restaurant and fine-car restoration and auction businesses, his reputation in the  
Chatham community is important to him. He says Cheryl’s words were both false and  
damaging to his reputational interests.  
[948] In my view, the evidence supports a finding that the words spoken by Cheryl were false.  
Rob did not engage in behaviour that was consistent with her characterization of him as a  
“cheat”.  
[949] However, the defendants’ counterclaim as pleaded, does not support a personal claim in  
defamation by Rob. Specifically, in their amended statement of defence and  
counterclaim, at para. 23, the defendants’ assert a claim for “damages, including  
aggravated and punitive damages, for breach of contract, economic loss and  
compensation for oppressive conduct pursuant to the Ontario Business Corporations Act  
in the amount of $500,000”. Defamation is not pleaded.  
[950] Similarly, there is no specific allegation in the counterclaim that Rob’s reputation has  
been damaged by defamatory comments. The only aspect of the counterclaim that alludes  
to “defamation” concerns CCI (not Rob) and reputational damage suffered by CCI (not  
Rob). Specifically, para. 26 reads:  
The plaintiffs have made defamatory comments about the Chilled Cork  
Restaurant that have harmed the reputation of the Chilled Cork Restaurant  
by lowering the establishment’s standing in the community. [Emphasis  
added.]  
[951] In response to a demand for particulars dated February 15, 2012, arising out of the  
defendants’ original statement of defence and counterclaim, the defendants indicated that  
“defamatory statements were made with respect to CCI and its staff, the Retro Suites  
Hotel and its staff, RM Auctions Inc. and its staff and Rob’s family personally”. The  
response failed to fully address the scope of the demand for particulars, which also  
requested details concerning: the exact words used in the alleged defamatory comments;  
who spoke them; the date they were spoken; and to whom they were spoken. None of that  
information was particularized.  
[952] Nonetheless, it remains that the defamation claim at trial was argued on the basis of  
reputational damage to Rob as opposed to CCI. No request was made to amend the  
counterclaim to include a claim by Rob, in his personal capacity, for defamation. As a  
result, I do not give effect to that claim.  
[953] If I have erred in my assessment of the scope of the pleadings and/or their impact on  
Rob’s ability to advance a claim for damages to his personal reputation, I would  
provisionally assess his damages in the amount of $7,500 which I find to be a fair and  
reasonable award having regard to all the circumstances of the case: see Carrington v.  
Corrigan, 2010 CarswellOnt 4916 (S.C.), at paras. 14 and 15.  
Page: 167  
V)  
CONCLUSION AND TERMS OF THE FORMAL ORDER  
[954] For the foregoing reasons, I conclude that:  
(a) The wrongful dismissal claims brought by Cheryl and Bruce ought to be  
dismissed;  
(b) Cheryl’s damages for wrongful dismissal are provisionally assessed as  
$9,566.34 representing a six-month notice period, net of the amounts that she  
was paid for the period of July 10, 2010 to August 31, 2010, and mitigation  
considerations;  
(c) Cheryl has established that CCI and Rob engaged in conduct falling within the  
scope of s. 248(2) of the OBCA and a declaration ought to issue accordingly  
(as requested in paragraph 1(b) of the amended statement of claim);  
(d) Pursuant to the accord in the parties’ submissions, the remedy for the conduct  
falling within the scope of s. 248(2) of the OBCA, as found, is an order  
compelling the sale of Cheryl’s shares, presumptively, to RJM Holdings;  
(e) The fairest valuation date for the shares is December 31, 2010;  
(f) The value of CCI’s issued share capital as of December 31, 2010 is nil. As a  
result, the consideration for the share purchase transaction shall be fixed as  
$1.00;  
(g) On a provisional basis, the value of CCI’s issued share capital on December  
31, 2011 is nil. Therefore, if “the date the proceeding was commenced” was  
determined to be the fairest valuation date, the consideration for the share  
purchase ought to be fixed at $1.00;  
(h) On a provisional basis, the value of CCI’s issued share capital on December  
31, 2017, is $53,900 en bloc. Therefore, the value of Cheryl’s shares as of  
December 31, 2017 is $26,950. If “the date of judgment” was determined to  
be the fairest valuation date, the consideration for the share purchase ought to  
be fixed at $26,950.  
(i) The balance of the plaintiffs’ claims, as pleaded, and the balance of the relief  
requested in the amended statement of claim, except for the plaintiffs’ claim  
for costs, ought to be dismissed;  
(j) The defendants’ counterclaim ought to be dismissed, without prejudice to the  
defendants’ claim for costs, pleaded in their statement of defence; and  
(k) Rob’s damages for defamation, against Cheryl, are provisionally assessed at  
$7,500.  
Page: 168  
(l) The parties have not made fulsome submissions on the appropriate identity of  
the share purchaser and other ancillary terms of the share purchase  
transaction. Therefore, within 40 days of the date of these reasons, the parties  
may deliver written submissions with respect to the appropriate purchaser of  
Cheryl’s shares, together with any other ancillary terms required to give effect  
to the remedial share purchase transaction. Alternatively, the parties may  
arrange a further date, through the trial coordinator in Chatham, to address the  
issues before me.  
(m)On the issue of costs, there is divided success in this proceeding. The  
plaintiffs were not successful in their wrongful dismissal claims and Cheryl  
was partially successful in her oppression claim. The defendants were  
relatively more successful on remedies issues. The defendants were successful  
on the wrongful dismissal claims. Rob was unsuccessful in the counterclaim  
that was advanced at trial. The rest of the counterclaim appears to have been  
abandoned at trial.  
In the circumstances, the parties are at leave to deliver costs outlines and  
written submissions on issues including entitlement to costs, scale of costs,  
and quantum of costs, together with the particulars of any relevant offers to  
settle, within 40 days of the date of these reasons. Written submissions shall  
be double-spaced in 12-point font and shall not exceed 15 pages.  
Thereafter, the parties are afforded an additional 30 days to deliver written  
submissions in response to the original costs submissions delivered by the  
respective opposite parties. Responding submissions shall be double spaced in  
12-point font and shall not exceed 10 pages.  
(n) Judgment shall go in accordance with paras. (a), (c), (d) (subject to the  
specification of purchaser and ancillary terms), (f), (i), (j) and (m);  
(o) If the parties are unable to settle the terms of the judgment, they may arrange  
an appointment with me to do so, through the trial coordinator in Chatham.  
Original signed by Justice Gregory J. Verbeem  
Gregory J. Verbeem  
Justice  
Released: December 11, 2019  
CITATION: McInerney v. RJM Holdings Limited, 2019 ONSC 7179  
COURT FILE NO.: 5245/11 (Chatham)  
DATE: 20191211  
ONTARIO  
SUPERIOR COURT OF JUSTICE  
BETWEEN:  
Cheryl Anne McInerney & Bruce McInerney  
Plaintiffs  
– and –  
RJM Holdings Limited, Chilled Cork Inc. & Robert  
Joseph Myers  
Defendants  
REASONS FOR JUDGMENT  
Verbeem J.  
Released: December 11, 2019  


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission