CITATION: Etedali et al. v. Disi-Peri Mgt. Inc., 2022 ONSC 2184  
COURT FILE NO.: CV-17-587414  
DATE: 20220408  
ONTARIO  
SUPERIOR COURT OF JUSTICE  
)
)
BETWEEN:  
ARASH ETEDALI and ARACON CORP.  
) Dena N. Varah and Christopher Yung, for  
) the Plaintiffs  
Plaintiffs )  
)
)
– and –  
)
DISI-PERI MGT. INC.  
) Rahul Shastri and David Winer, for the  
) Defendant  
Defendant )  
)
)
)
)
HEARD: September 27-29, October 1, 4-7,  
2021  
VELLA J.  
REASONS FOR JUDGMENT  
[1]  
This is an action arising from a failed venture in which the two founding principals of the  
defendant corporation, Disi-Peri Mgt. Inc. (“DPI”), invited the individual plaintiff, Arash Etedali  
(“Etedali”) to join their closely held corporation to grow the business. The plaintiffs seek various  
orders including an order setting the purchase price of Aracon’s common shares under the  
oppression remedy section of the Ontario Business Corporations Act, R.S.O. 1990, c. B.16  
(“OBCA”), and a finding that Etedali was dismissed without cause.  
[2]  
The essence of this trial focused on what transpired during the course of an approximately  
30-minute meeting held on November 7, 2017 at the head office of DPI attended at by the three  
principals.  
[3]  
Initially DPI pleaded that Etedali resigned or alternatively was dismissed for cause.  
However, DPI withdrew the dismissal for cause on September 11, 2018 after the completion of  
the examinations for discovery, and relied solely at trial on the theory that Etedali resigned.  
Page: 2  
[4]  
Etedali submits that he never resigned but rather was dismissed without cause and was  
further the victim of oppressive conduct by the founding principals, Rick Perin (“Perin”) and Elvio  
DiSimone (“DiSimone”).  
[5]  
The nature of the severance of Etedali’s employment matters because if he resigned, he  
forfeited his rights under the Employment and Share Acquisition Agreement duly signed by the  
parties on June 24, 2014 (the “Employment Agreement”), including his common shares (held on  
his behalf by Aracon Corp.). However, if he was terminated without cause, then DPI is obliged to  
buy the common shares at fair market value from him and provide him with pay by way of  
contractual notice as provided in the Employment Agreement.  
[6]  
All parties agree that as of November 7, 2017, Etedali was no longer an employee of DPI.  
[7]  
For the reasons that follow, the action succeeds, and judgment is granted in favour of  
Etedali and his holding corporation, Aracon Corp. (“Aracon”). Etedali was terminated without  
cause and was the victim of oppressive conduct.  
I. PRELIMINARY ISSUE: Proposed Amendment to Plead the Oppression Remedy  
[8]  
At the outset of the trial, Etedali and Aracon moved to amend their statement of claim to  
plead reliance on s. 248(2) of the OBCA, commonly referred to as the oppression remedy section.  
No new facts were sought to be added to the statement of claim.  
[9]  
DPI objected primarily on the grounds that this amendment, if permitted, would be a new  
claim. However, in my view, the necessary facts were already pleaded to sustain this ground of  
relief. What was being sought was the pleading of a new legal claim based on the existing facts as  
pleaded.  
[10] Rule 26.01 mandates that amendments to pleadings (even as late as trial) must be granted  
unless to do so would cause prejudice that cannot be compensated by costs or an adjournment.  
[11] DPI did not raise any such prejudice and did not seek an adjournment.  
[12] Accordingly, for oral reasons given, I permitted this amendment.  
II. ISSUES  
(a)  
Was Etedali terminated without cause at the November 7, 2017 meeting or did he  
resign?  
(b)  
(c)  
How many common shares did Aracon own at the time of his severance from DPI?  
If Etedali was terminated without cause, what is the “market value” of Aracon’s  
common shares?  
Page: 3  
(d)  
Was Etedali oppressed by the remaining shareholders of DPI, and if so, what is the  
appropriate remedy particularly as relates to the valuation of his shares?  
(e)  
(e)  
What other compensation is Etedali entitled to under the Employment Agreement?  
Are punitive damages warranted against DPI?  
III. AGREED CHRONOLOGY AND STIPULATIONS  
[13] By way of general overview, the following facts were agreed upon by the parties in a joint  
chronology:  
(i)  
July 24, 2013: Rick Perin (“Perin”) and Elvio Di Simone (“Di Simone”), who were  
at the time the sole shareholders of DPI, presented Etedali with a term sheet setting  
out an offer of employment at DPI;  
(ii)  
August 1, 2013: Etedali started working at DPI with the title of Vice President of  
Business Development;  
(iii) June 24, 2014: Etedali and DPI enter into both an Employment Agreement and a  
Shareholder Agreement;  
(iv)  
August 1, 2014: DPI appoints Etedali to its Board of Directors by shareholders’  
resolution;  
(v)  
October 5, 2017: Etedali commences a two-week leave of absence on medical  
advice;  
(vi)  
October 16, 2017: Etedali returns to work. He is provided with an email giving  
notice of a shareholders meeting of DPI to remove him as a director;  
(vii) November 1, 2017: Etedali is removed from the Board of Directors of DPI;  
(viii) November 2, 2017: Perin asks Etedali to provide a two day look ahead (of his  
schedule);  
(ix)  
(x)  
November 3, 2017: Etedali responds to the request for a two day look ahead;  
November 5, 2017: DiSimone requests Etedali to attend a meeting with himself and  
Perin on November 7, 2017;  
(xi)  
November 7, 2017: Etedali, Perin and DiSimone meet at 8:30 a.m. for  
approximately 30 minutes in DPI’s boardroom (the “Severance Meeting”);  
(xii) November 28, 2017: Etedali commenced this action;  
Page: 4  
(xiii) September 11, 2018: DPI repays $305,000 outstanding to Aracon (Etedali’s holding  
company) for outstanding shareholder loans and dividends.  
[14] The parties also stipulated that:  
(i)  
Section 1.12(c) of the Employment Agreement provides that if Etedali is dismissed  
without cause, he is entitled to eight months of base salary if his term of service  
exceeds four years;  
(ii)  
As at November 7, 2017, Etedali’s term of service exceeded four years, being from  
August 1, 2013 to November 7, 2017; and  
(iii) If this Court determines that Etedali was dismissed without cause he is entitled to  
eight months of base annual salary under s. 1.12(c) of the Employment Agreement.  
IV.  
ANALYSIS – The Nature of Etedali’s Severance from DPI  
[15] The key issue is whether Etedali resigned at the meeting held on November 7, 2017 in the  
DPI boardroom, as claimed by DPI, or was dismissed without cause, as claimed by Etedali.  
[16] The respective versions of what occurred at the November 7, 2017 meeting offered by each  
of the parties are diametrically opposed in some, though not all, material aspects. The meeting was  
not recorded and no other contemporaneous record of the meeting was taken.  
[17] Accordingly, the court will have to examine all of the relevant surrounding circumstances,  
including the events leading to and following the meeting and a review of the documentary record.  
A credibility assessment of the witnesses who testified about what happened at this meeting will  
be critical, in order to determine what, in fact, likely transpired at the severance meeting within  
this surrounding factual context, and the legal effect of those actions and words.  
[18] The burden of proof lies on Etedali to establish on a balance of probabilities that he was  
dismissed without cause at the severance meeting. If Etedali did not resign, DPI concedes that he  
was terminated without cause.  
[19] This exercise requires an approach that brings to bear the commercial context of the  
relationship between Etedali, Perin and DiSimone and a good measure of common sense.  
[20] The British Columbia Court of Appeal’s observations in R. v. Pressley (1948), 94 C.C.C.  
29 (B.C. C.A.) at p. 34 are particularly apt to the court’s challenge in this proceeding:  
The Judge is not given a divine insight into the hearts and minds of the witnesses  
appearing before him. Justice does not descend automatically upon the best actor in  
the witness-box. The most satisfactory judicial test of truth lies in its harmony or lack  
of harmony with the preponderance of probabilities disclosed by the facts and  
circumstances in the conditions of the particular case.  
Page: 5  
i.  
Events leading to November 7, 2017 Severance Meeting  
[21] In order to understand what likely happened at the severance meeting, an understanding of  
the events leading up to the meeting and a review of the key contractual provisions relating to both  
those events and the consequences of the words and actions at that meeting, is necessary.  
[22] DPI is in the construction management business. It was founded in 1999 by Perin and  
DiSimone. Perin looked after the operations and DiSimone was responsible for marketing. All of  
the issued common shares were owned by Perin and DiSimone’s holding company, DPI  
Construction Management Inc., and they were the only directors of DPI.  
[23] It is undisputed that before Etedali joined DPI, it was a closely held business founded and  
operated by Perin and DiSimone. Perin and DiSimone were looking for a third principal to help  
grow the business of DPI. They approached Etedali because they wanted to expand DPI’s customer  
base. Etedali had business development skills and experience in the general industry. At the time  
of his recruitment to DPI, Etedali was working for a competitor.  
[24] Perin and DiSimone provided a term sheet on July 24, 2013 to initiate discussions about  
employment. However, that term sheet was never finalized and the terms were not ultimately  
reflected in the Employment Agreement.  
[25] Etedali started working at DPI on August 1, 2013 without a formal employment agreement  
in place. He was given the title of Vice President of Business Development. However, it was  
understood that he would become a minority shareholder and director as well as employee of DPI,  
as was ultimately reflected in his Employment Agreement.  
[26] As already indicated, on June 24, 2014, DPI entered into a formal written employment  
agreement with Etedali. At the same time, DPI, DPI Construction Management Inc., and Aracon  
entered into a shareholder agreement. There were no written amendments to either of these  
agreements.  
[27] During the initial three years of Etedali’s employment, DPI’s business grew. There were  
no significant disagreements that arose as amongst Perin, DiSimone and Etedali. However, Etedali,  
despite earning a significant income, found himself increasingly in financial difficulties due, in  
part, to buying two condominium units that he was unable to close. He was financially  
overcommitted. These financial difficulties led Etedali to ask for advances against his salary or  
loans from DPI.  
[28] Etedali’s financial difficulties hit a boiling point when he became the subject of an audit  
by the Canada Revenue Agency in or around May 2017. This audit coincided with a steep and  
rapid decline in the relationship as between Etedali, on one hand, and Perin and DiSimone on the  
other.  
[29] This decline was triggered after Etedali met with Perin and DiSimone at a restaurant near  
DPI’s offices. This breakfast meeting occurred on May 9, 2017 at Etedali’s request. Etedali  
Page: 6  
explained his financial difficulties, and advised he was the subject of an audit. He asked for a loan  
of $130,000 from DPI. He said he was facing financial ruin and was desperate. Perin and DiSimone  
said they would think about how they might be able to assist him.  
[30] By this time, DPI was already in receipt of $305,000 from Etedali as a shareholder loan.  
This sum was financed by Etedali by his own 2016 DPI dividend of $180,000 that was withheld  
by DPI and a cash contribution of $125,000 deducted from his salary. These cash calls were  
demanded by Perin and DiSimone to meet DPI’s bonding and operational requirements. Perin and  
DiSimone similarly made good on this cash call proportionate to their respective equity holdings  
in DPI.  
[31] The propriety of Perin and DiSimone having demanded that Etedali assist in financing  
DPI’s bonding and operational requirements was the subject of dispute and will be returned to later  
in these reasons. However, this demand was contrary to s. 3.2 of the Shareholder Agreement, since  
DPI made no effort to obtain financing from a bank or other lender before taking Etedali’s dividend  
and contribution. Furthermore, no written notice was issued by DPI making the requisite demand  
for a shareholder loan.  
[32] Section 3.2 of the Shareholder Agreement provides:  
3.2 Cash Calls and Personal Guarantees  
(a)  
The Shareholders agree that all funds required for the purposes of the  
Corporation shall be obtained, to the greatest extent possible, by borrowing from a  
chartered bank or other lender. The decision whether such funds are required, from  
whom such funds will be borrowed and the terms and conditions of such borrowing  
shall be determined by the Board from time to time. Each of the Shareholders  
covenants to use his reasonable best efforts to obtain such funds and covenants to  
execute and deliver all necessary documents, statements and assurances as may be  
required by such bank or other lender. The Shareholders and their respective  
principals further agree that they shall attempt to obtain such funds upon their several  
guarantees only limited in an amount which is proportional to their holdings of fully-  
participating Common Shares of the Corporation; provided that if such funds can  
only be obtained upon the joint and several guarantees of the Common Shareholders  
and their respective principals, the Common Shareholders and the principals  
covenants to execute and deliver such guarantees or other assurances as may be  
required in that regard.  
(b)  
If, notwithstanding compliance by the Shareholders with the provisions of  
Section 3.2(a), the Corporation shall not have obtained all or part of the said funds  
from a bank or other lender, then, within ten (10) days after a demand in writing by  
the Corporation is given by the Corporation to the Shareholders, each Shareholder  
shall advance to the Corporation such portion of the said funds, or the part thereof  
that the Corporation shall not have obtained from a bank or other lender, as is  
Page: 7  
proportionate to their then beneficial ownership of full-participating Common Shares  
of the Corporation. All advances made to the Corporation pursuant to this section  
shall be treated as Shareholder’s loans and shall be upon the security and at the rate  
of interest (which shall be the same for all Shareholders), if any, as shall be  
determined by the Board from time to time and, if required by the Corporation at the  
time of the making of the loan or at any time thereafter, shall be subordinated to any  
other secured arm’s-length indebtedness of the Corporation made in accordance with  
the terms thereof. None of those loans shall be called by the Shareholders or repaid  
to them, in whole or in part, except as is determined by the Board; provided that  
whenever any amounts on account of such loans are repaid to the Shareholders, they  
shall be repaid to them on a basis proportionate to their then total outstanding  
advances to the Corporation.  
[33] As a result of the May 2017 breakfast meeting and the email exchanges flowing from it,  
Etedali learned for the first time that Perin and DiSimone took the view that he only owned 10%  
of the common shares of DPI. Etedali’s view was and is that he owned 15% of the common shares  
at that time according to the terms of the Employment Agreement. Etedali’s common share  
ownership stake was also hotly contested at trial and will be returned to later in these reasons.  
[34] In any event, Perin and DiSimone provided Etedali with an ostensible solution to his  
financial difficulties. They would buy out his “10%” equity stake by paying him back the $125,000  
advanced by Etedali to DPI for its operating and bonding requirements.  
[35] Not surprisingly, Etedali turned down this offer as it amounted to him receiving back part  
of his shareholder loan and losing his shares. Effectively, Perin and DiSimone’s proposal was that  
Etedali’s common shares would be purchased by cancelling part of DPI’s debt owed to Etedali, as  
DiSimone, but not Perin, eventually admitted under cross examination. Neither DiSimone nor  
Perin were prepared to concede that this was a fundamentally unfair proposal. It is an indication  
that tends to suggest that DiSimone and Perin were quite prepared to squeeze Etedali, who was in  
an untenable financial situation in 2017.  
[36] By this time it is apparent that Etedali’s trust in Perin and DiSimone was waning. He sent  
emails indicating that he felt that he was not being respected or treated equally as a “partner”. He  
began asking for access to financial information as he suspected that his partners were running  
personal expenses through DPI and spending too much on business development activities like  
Raptors’ tickets. Given DPI’s strong financial performance, Etedali wanted to know why DPI  
required shareholder loans for its bonding and operational requirements.  
[37] On May 4, 2017, Etedali sent an email to DPI’s controller, Liana Perin. Ms. Perin is related  
to Perin. Etedali demanded that Ms. Perin provide him with detailed information about the  
company’s finances. Ms. Perin took offense to this demand and relayed her displeasure to Perin.  
She wrote a formal complaint against Etedali based on this incident. DPI did not pursue the  
complaint with Etedali.  
Page: 8  
[38]  
Etedali also wrote to DPI’s corporate lawyer, Manilo Raponi, seeking clarification of the  
number of common shares allocated to him. Mr. Raponi did not reply to his inquiry.  
[39] The increasingly hostile atmosphere was not helped by the fact that in March 2017, an  
article was published in Canada Business profiling DPI. DPI won a prestigious management  
award. Perin was interviewed for this article. For some reason, unexplained at trial, Etedali’s name  
was omitted from the article. It only mentioned Perin and DiSimone as the partners of DPI. When  
Etedali complained, Perin said he would rectify the error, but never did. In response, feeling  
slighted, Etedali did not attend the award dinner even though it was a significant event from a  
business development perspective for DPI.  
[40] Perin and DiSimone were also unhappy with Etedali. They complained that Etedali was  
avoiding important company retreats that were morale boosters for DPI’s employees and pointed  
out at trial that Etedali never attended at the weekly cheque signing meetings at which time he  
could have scrutinized the invoices and receipts attached to the cheques to be signed in order to  
see what the expenditures were. Etedali did not attend at weekly management meetings, preferring  
to work from home since he did not keep “9:00 – 5:00” hours which he testified was consistent  
with the fact that business development initiatives often occurred after normal business hours.  
Perin and DiSimone felt he was absent from the office too much, and they did not really know  
what he was doing. In short, they did not find him to be a team player.  
[41] This escalation of tensions culminated in Etedali announcing that he was ordered by his  
doctor to take a medical leave of absence for two weeks commencing October 3, 2017 because of  
the stress he attributed to the work environment. Etedali advised that he would, however, honour  
any pre-existing work commitments with client development matters. In response, Perin told  
Etedali to not engage in any work whatsoever, consistent with the medical advice, and also added  
that the leave would be without pay.  
[42] When Etedali returned to work on October 16, 2017, he received a notice of a shareholders’  
and directors’ meeting to occur on November 1, 2017 by email. The sole agenda item was the  
proposed removal of Etedali as a director of DPI. Etedali received no prior indication that Perin  
and DiSimone were considering such a move, nor did they provide him with any explanation as to  
how they came to this decision.  
[43] In his email to Etedali, copied to DiSimone, Perin suggested that “It may, however, be best  
if you simply agreed to tender your resignation as a Director. Doing so, will have no impact on  
your position as an Officer and an employee/contractor of the Corporation.”  
[44] Etedali was understandably alarmed at this move and taken off guard. He asked for  
permission to bring a lawyer to this meeting but was denied. While generally no one other than  
voting members and DPI’s corporate lawyer, Mr. Raponi, were allowed to attend at these meetings,  
there was discretion vested in the chairperson to allow a third party to attend. That discretion was  
not exercised to permit Etedali to bring a personal lawyer.  
Page: 9  
[45] The special shareholder meeting was held on November 1, 2017. Etedali was removed as  
a director, by a majority vote of 2 – 1, with Perin and DiSimone voting to remove him.  
[46] Etedali contested the propriety of his removal as director on the basis that it was a term of  
the Shareholder Agreement, in his view, that he would remain a director so long as he was a  
common shareholder.  
[47] DPI submits that s. 4.3 of the Shareholder Agreement permits a change in the number of  
directors of DPI to be changed by a majority vote of the shareholders. However, that is a general  
clause that can also anticipate an increase in the number of directors. The guarantee of a seat on  
the board was a condition of Etedali’s employment and is reflected in s. 4.2 of the Shareholders  
Agreement that provides:  
4.2 Further Directors  
At such time that Aracon Corp. becomes an owner of any Common Shares in the  
Corporation, the Board of Directors shall be increased to consist of three (3)  
directors, who shall include the current directors as set forth in paragraph 4.1 hereof  
[Perin and DiSimone] and Arash Etedali, who shall become the third (3rd) member  
of the Board.  
Each Shareholder shall vote its Shares at any meeting at which directors are to be  
elected, or execute any written resolutions of the shareholders at the request of the  
Corporation, to elect the directors nominated in accordance with this Agreement.  
[48] Then s. 4.3(b) of the Shareholder Agreement follows:  
Matters Requiring Prior Approval  
In addition to any approval, authorization or ratification required by the Act, none of  
the following shall be carried out and effected by the Corporation without the prior  
approval of the Board and the prior written approval of a majority of the  
Shareholders:  
(b)  
any changes in the number of directors of the Corporation;  
[49] To allow the founding directors and shareholders to vote Etedali off the board by majority  
vote at any time, without cause or explanation, while Etedali continued to be an employee and  
shareholder is inconsistent with the mandatory language of s. 4.2 that states Etedali “shall become  
the third (3rd) member of the Board”.  
[50] On November 2, 2017, Perin asked Etedali to essentially provide him with his agenda of  
events on a two day “look ahead” basis. This was a new requirement but was intended to replace  
Page: 10  
the weekly management meetings that Etedali generally never attended. Neither Perin nor  
DiSimone gave Etedali a similar two day look ahead report.  
[51] By email dated November 3, 2017 to Perin, Etedali objected to providing such a report and  
stated that in his view such a request amounted to a constructive dismissal and was inconsistent  
with his position as a partner. Nonetheless Etedali provided the two day look ahead report to Perin,  
and Perin testified that the report satisfied his request.  
[52] Perin and DiSimone then called a meeting for the three principals to occur on November  
7, 2017 ostensibly to discuss Etedali’s concerns about his treatment at DPI.  
ii.  
The November 7, 2017 Severance Meeting  
[53] The Severance Meeting occurred at 8:30 a.m. on November 7, 2017 in the boardroom of  
the DPI offices. It lasted approximately 30 minutes.  
[54] The only people in attendance at the Severance Meeting were Perin, DiSimone and Etedali.  
As stated earlier, the meeting was not recorded, and there were no contemporaneous notes made  
by anyone at the meeting. Further, no minutes of the meeting or any written record of the meeting  
were prepared after it ended.  
[55] In addition, there was one witness, an employee - Kate Reeder, who testified that she  
overheard part of the conversation that transpired near the end of the meeting when she was outside  
of the boardroom.  
[56] Accordingly, I must assess the credibility and reliability of each of the meeting participants  
and of Ms. Reeder and consider that testimony within broader factual matrix.  
[57] All three participants in the meeting testified that the meeting was tense, heated and that  
there were raised voices.  
Etedali’s testimony  
[58] Etedali admitted that he did not remember all that was said at the Severance Meeting. He  
only recalled those things that were important and made an impression on him.  
[59] Etedali testified that DiSimone spoke first and stated that “this wasn’t working” and that  
they must “part ways”. Etedali testified that he told DiSimone he agreed their relationship was not  
working but said that he suggested they must try to correct it. Etedali was adamant in his testimony  
that Perin terminated the meeting by offering to have DPI return Etedali’s shareholder loan in the  
sum of $305,000 and paying him $125,000 for his common shares. According to Etedali, Perin  
advised that the offer would be open for two days until November 9, and if not accepted DPI would  
terminate him for cause and “go to war”.  
Page: 11  
[60] Etedali also testified that he was told to leave his keys, fob and corporate credit card on the  
board table, and he obliged. When he left the meeting he went to his office and collected his  
personal items. He briefly encountered Ms. Reeder in that office and left.  
[61] Etedali denied that he resigned or said words that could reasonably lead to that conclusion.  
He denied using the word “quit” or “resign” or the phrase “wit’s end”.  
[62] Under cross examination, Etedali’s examination for discovery was put to him to challenge  
his evidence in chief regarding the alleged resignation. In chief he testified that he told DiSimone  
that “you’re right, it is not working, we cannot continue like this – we have to correct this”.  
However at his examination for discovery, he testified that “I said things are not doing—things are  
not going well. We can’t continue like this, and we probably need to —part ways”. DPI submits  
that the reason why Etedali changed his evidence on trial was because, in its view, his answer on  
examination for discovery is consistent with him admitting he resigned. I do not agree. The  
suggestion that it was time to part ways is not synonymous with a unilateral resignation. Indeed,  
the Employment Agreement provided for the various scenarios for the parting of ways, including  
termination without cause, termination with cause, and resignation.  
Perin and DiSimone’s respective testimony  
[63] DiSimone’s and Perin’s respective accounts of the meeting at trial were virtually identical,  
notwithstanding neither took notes at the severance meeting or following the meeting. Both  
testified that Etedali accused them of not knowing how to be partners, told them that he was “done”  
and that he “had enough”. They testified that at the end of the meeting, Etedali told them “I’m  
done with this” and exited, leaving his keys and credit card on the table. They deny that Perin made  
Etedali an offer to buy out his shares for $125,000 and return his shareholders’ loan of $305,000  
and that if refused, they would say his termination was for cause and go to war.  
[64] Perin testified that the meeting opened with DiSimone asked Etedali how it was going, and  
Etedali became immediately aggressive responding “you know how it’s going”. He also testified  
that Etedali became agitated, and that DiSimone tried to calm the atmosphere, saying that this  
situation could be fixed.  
[65] They both testified that they were stunned, shocked and caught completely off guard by  
what they understood, based on their interpretation of his words and actions, to be Etedali’s sudden  
resignation.  
[66] Under cross examination, both Perin and DiSimone agreed that Etedali never used the  
words “I quit” or “I resign”. Neither testified that Etedali used the phrase “wit’s end”.  
[67] After Etedali left the meeting, Perin and DiSimone arranged to have DPI immediately cut  
off Etedali’s access to his email account, removed his name from the DPI website, and called  
certain clients to inform them of his departure from DPI.  
Page: 12  
[68] DiSimone instructed Ms. Perin to ask Etedali to return DPI’s laptop which she did by email  
sent to Etedali approximately one hour after the end of the Severance Meeting.  
[69] Perin and DiSimone confirmed that neither of them contacted Etedali again. They did not  
reach out to him to confirm their understanding that he had resigned or ask if that had been his  
intention. They also did not send any written confirmation of their understanding that he had  
resigned, or the consequences of a resignation under the Employment Agreement or Shareholder  
Agreement.  
[70] Under cross examination, Perin and DiSimone acknowledged receiving a letter dated  
November 9, 2017 from Etedali’s lawyer that substantially reflects Etedali’s evidence at trial in  
terms of what was allegedly said and done at the Severance Meeting and setting out his position  
that he was terminated without cause and rejecting the alleged offer. While this letter does not  
prove that these things were said or done in fact, they reflect what Etedali claims was said and  
done only two days after the meeting. There is no suggestion in that letter that Etedali may have  
indicated that he inadvertently resigned. Further, the date coincides with Etedali’s testimony that  
he was given until November 9th to accept the alleged offer. The letter sets out Etedali’s  
understanding that if he did not accept the offer by noon on November 9th DPI would take the  
position he was terminated with cause. That letter was not responded to by DPI. This would have  
been an opportunity for DPI to set out its position that Etedali resigned.  
Kate Reeder’s testimony  
[71] Ms. Reeder is DPI’s Marketing Coordinator. She testified on behalf of DPI. Her  
workstation was close enough to the boardroom that she would be able to overhear loud  
conversations. Therefore, as was the practice with confidential boardroom meetings, Ms. Reeder  
was asked to move to Perin and DiSimone’s office for the duration of the meeting. She was not  
told the purpose of this meeting.  
[72] Ms. Reeder testified that she had to retrieve some records from her desk so she went back  
to her workstation to retrieve them. It was at that time that she overhead raised voices from the  
boardroom belonging to each of Perin, DiSimone and Etedali. Because the voices were raised, she  
could hear what was being said.  
[73] Ms. Reeder testified that she overheard less than 10 minutes of the conversation, and it was  
towards the end of it. She did not hear the beginning or the end of this meeting. She heard angry  
and heightened voices and could tell the meeting was concluding. She heard DiSimone telling  
Etedali that he was barely at the office and was dropping the ball and neglecting his duties. She  
heard Etedali deny these accusations. She specifically recalled that Etedali, in anger, said he was  
at his “wit’s end”, he was ready to quit, Perin and DiSimone did not know how to be partners, he  
was fed up, he had enough and that he was done.  
Page: 13  
[74] She also heard a noise consistent with keys being placed on the table. She said that she then  
hurried back to the office for fear of being discovered to have been eavesdropping, and that Etedali  
followed within minutes of her return.  
[75] Under cross examination, Ms. Reeder agreed that the first time anyone asked her about this  
meeting was approximately 10 – 11 months later in September 2018 when she was interviewed by  
DPI’s lawyer for this litigation. She confirmed that she did not make any written recordings of her  
recollection either at the time of the severance meeting or any time thereafter. However, she was  
certain that she heard Etedali use the phrase that he was at his “wit’s end”. She confirmed that all  
three of DiSimone, Perin and Etedali’s voices were raised and that they were arguing.  
iii  
Was Etedali Terminated at the November 7, 2017 Severance Meeting?  
[76] Both DiSimone and Perin were unequivocal in their characterization of Etedali at the  
meeting and of the meeting itself. It was a tense, heated, emotional and highly charged meeting in  
which two were pit against one. They also agreed that Etedali did not use the word quit or resign.  
Rather according to them he said he “had enough” and was “done” and threw his keys, fob and  
corporate credit card on to the table, storming out of the office and leading to their inference he  
had resigned.  
[77] Perin and DiSimone chose to interpret Etedali’s words and actions as a resignation. It suited  
their agenda to have Etedali quit the company forfeiting not only his job and associated notice, but  
also his shares reflecting his equity investment and contributions over the prior four years.  
[78] A reasonable employer faced with this type of situation would have done something after  
a cooling off period to confirm the employee’s intentions. This is magnified in the situation of an  
employee who is also an officer, principal and shareholder in a closely held private company.  
[79] DiSimone and especially Perin had a practice of communicating with Etedali in writing  
through email correspondence as evidenced by the volume of emails tendered at trial with respect  
to the material issues. Yet, they did not send so much as one email to Etedali at any point  
confirming his intention to resign or their understanding for that matter. They did not contact him  
at all. As stated they also did not refute in writing Etedali’s version of what happened during the  
severance meeting as set out in his lawyer’s letter either.  
[80] It is also remarkable that DiSimone and Perin had tried to take advantage of Etedali’s  
financial difficulties in May 2017 by “offering” to buy back his shares with his own money.  
[81] The circumstances under which Etedali was compelled to provide a shareholder loan  
(including giving up his $180,000 dividend at a time when he needed it), also show a pattern of  
exploitation of Etedali’s financial difficulties by DiSimone and Perin. The Shareholder Agreement  
stipulates at s. 3.2 that DPI will only resort to cash calls by way of shareholder loans if it is unable  
to secure alternative financing for its bonding and operational requirements from other sources.  
DiSimone and Perin unilaterally opted to bypass any attempt to obtain third party financing forcing  
Etedali to pay up with them. This was contrary to the express terms of the agreement.  
Page: 14  
[82] DPI submits that there was an oral agreement to amend the Employment Agreement  
amongst the three principals such that this provision was replaced by an agreement to self-fund  
DPI’s financial requirements. It submits that the fact that there is an entire agreement clause is of  
little assistance to Etedali since those clauses are retrospective in nature. I agree. Section 3.16 of  
the Employment Agreement states:  
3.16 The foregoing constitutes the entire Agreement and understanding between  
the Parties hereto with respect to the matters contemplated under this Agreement.  
Each Party represents to the other parties that he, she or it is not relying upon any  
representations, except as set forth herein. This Agreement supercedes, rescinds and  
replaces any and all other prior agreements or understandings, whether written or  
oral, dealing with the agreement concerning employment. By signing this  
Agreement, each Party does bind itself to this Agreement. Each Party further  
acknowledges that all shares in DPI are subject to a Shareholder Agreement of even  
date herewith among the Employer, the Employee and DPI construction and that  
Shareholder Agreement is binding and effective in accordance with its terms,  
anything herein notwithstanding.  
However, this clause is relevant because it incorporates by reference the Shareholder Agreement.  
It is also relevant because in examination in chief, Perin testified that Etedali was made aware prior  
to signing the Employment Agreement that he would have to contribute to the bonding and  
operation requirements as a condition of his share conversion. This assertion also violates the  
parol evidence rule.  
[83] More to the point, the Employment Agreement and the Shareholder Agreement each  
contain clauses requiring that amendments must be in writing and signed and, in the case of  
amendments to the Shareholder Agreement, must also be approved by the board and the  
shareholders. There is no such written agreement to amend signed by any of the parties, and no  
resolutions authorizing any such written amendments either. In addition no written demand was  
issued by DPI to the shareholders.  
[84] Section 3.04 of the Employment Agreement states:  
3.04 Neither this Agreement, nor any term thereof, shall be changed, altered or  
modified, except in writing signed by all Parties, hereto, except as otherwise provided  
herein.  
[85] Similarly s. 9.4 of the Shareholder Agreement states:  
Amendment  
No amendment, supplement or modification of this Agreement is binding unless  
approved by the Board, and approved in writing by all of the Shareholders. This  
Agreement may be executed by the Parties in counterparts and may be executed and  
Page: 15  
delivered by fax or other electronic means, and all such counterparts and facsimiles  
together constitute one agreement.  
[86] The fact that Etedali complied with Perin’s demand that he forfeit his dividend or salary  
entitlement is not sufficient to evidence an intention to amend the agreement in the face of s. 3.04  
of the Employment Agreement nor does it prove that Etedali has waived or is estopped from  
relying on this provision. Rather, it is evidence of Etedali’s efforts to go along with what was being  
asked of him at the time, as the new director, officer, and employee not to mention minority  
shareholder. Etedali was trying to be a team member with his new partners. Had the parties  
intended to amend the Employment Agreement, that intention would have been reflected by a  
written amendment pursuant to the Employment Agreement. The same can be said with respect to  
the any alleged amendment to s. 3.2 of the Shareholder Agreement.  
[87] In addition, counsel for DPI did not cross examine Etedali on his evidence that Perin made  
the offer for DPI to repay the shareholder’s loan and that he and DiSimone would buy out the  
common shares. This notwithstanding the fact that Perin and DiSimone subsequently testified in  
chief that no such offer was made at the Severance Meeting. I agree with Etedali’s submission that  
this failure on a critical piece of evidence, in the face of what Perin and DiSimone were likely to  
testify, violated the rule in Browne v. Dunn. Etedali’s credibility was attacked with respect to his  
version of what transpired at this critical meeting but he was not given the opportunity to respond  
to this critical piece of evidence. The objective of this rule is to prevent unfairness to the witness  
whose credibility is being attacked by requiring that the witness be given an opportunity to explain  
the alleged contradiction (R. v. Quansah, 2015 ONCA 237, 125 O.R. (3d) 81, at paras. 75, 77).  
[88] Furthermore, given Etedali’s focus on how many common shares he owned and the  
financial difficulties he was under, it is unlikely that he would act in a way that would result in his  
forfeiting the fair market value of his common shares in exchange for the nominal sum he paid for  
them. Section 1.13 of the Employment Agreement states:  
In the event the Employee resigns or is terminated with cause by the Employer, all  
of the Employee’s rights to receive, acquire, purchase or convert shares immediately  
terminates and expires as of the date of termination or notice of resignation.  
[89] There is no documentary evidence from DPI stating that Etedali had resigned.  
[90] DPI retained a lawyer after receiving the November 9, 2017 letter from Etedali’s lawyer,  
but no response was ever sent by or on behalf of DPI to deny or confirm any of that letter’s  
assertions.  
[91] This litigation was started shortly thereafter by Etedali claiming he was terminated without  
cause.  
[92] In the oft-quoted case of Faryna v. Chorny, [1952] 2 DLR 354 (B.C. C.A.) at p. 357, the  
British Columbia Court of Appeal stated this about the approach to be taken by a trier of fact in  
assessing who is telling the truth accurately:  
Page: 16  
The credibility of interested witnesses, particularly in cases of conflict of evidence,  
cannot be gauged solely by the test of whether the personal demeanour of the  
particular witness carried conviction of the truth. The test must reasonably subject  
his story to an examination of its consistency with the probabilities that surround the  
currently existing conditions. In short, the real test of the truth of the story of a  
witness in such a case must be its harmony with the preponderance of the  
probabilities which a practical and informed person would readily recognize as  
reasonable in that place and in those conditions.  
[93] I have considered the evidence as a whole within the context of the circumstances of this  
matter. Overall, Etedali’s story is more consistent with the surrounding circumstances. It makes  
no sense that an individual, who was so focused on his financial problems, would set out to do the  
one thing that would constitute a severe blow – namely to resign and forfeit his entitlements under  
his employment agreement including the fair market value of his shares and the associated  
compensation.  
[94] Etedali’s testimony was largely straight forward and candid. For example, he testified  
candidly that he did not remember the entirety of the meeting, word for word. This is a forthright  
admission and consistent with the likelihood that, in the absence of any written or other recording,  
individuals will not remember every word spoken at a meeting several months, and then years,  
later. While he appeared defensive at times under cross examination, overall his testimony  
withstood the rigors of cross examination. It defies logic that Etedali intended to resign and  
forfeited the fair market value of his common shares and contractual notice in the process when  
he was in financial difficulty and cash strapped.  
[95] On the other hand, the evidence of DiSimone and Perin was contrived and lacked an air of  
reality. This is evident by the contradictions of their conduct by their words and their selective  
memory concerning matters that they, as owners of DPI, should have remembered.  
[96] For example, they testified that they were shocked, stunned and surprised by Etedali’s  
purported resignation. However, the steps leading to the meeting including, notably, stripping  
Etedali of his position of director, contrary to the provision in the Employment Agreement that  
guaranteed him a position on the board of directors, and without any explanation or any real  
opportunity to defend himself, together with Etedali’s growing vocal unhappiness and frustration  
directed towards them, they ought, acting reasonably, to have anticipated Etedali’s reaction and  
hostile attitude at the severance meeting.  
[97] Perin and DiSimone’s testimony appeared, at times, to be rehearsed. Their examinations  
appeared to be tightly controlled. There were unexplained gaps in their memory when they were  
pressed under cross examination concerning matters supportive of Etedali’s positions. Their  
interactions with Etedali, by their own accounts, were inconsistent with their expressed sentiments  
of shock at Etedali’s frustration and desperation he displayed at the Severance Meeting. On an  
objective standard, they showed a disregard of Etedali’s position as an officer, director and  
minority shareholder, and tried to take unfair disadvantage of his financial desperation (albeit of  
Page: 17  
his own making) when they tried to take his shares in exchange for DPI repaying his shareholders  
loan invested in the company for its bonding and operation requirements which I have found was  
also a contrived situation that flew in the face of the Shareholders’ Agreement.  
[98] Ms. Reeder’s testimony was also of limited value given that she only overheard a small  
portion of the Severance Meeting.  
[99] Kate Reeder is not reliable and is still under the influence of DPI as an employee. She is  
the only one who purported to hear Etedali use the phrase that he was ready to “quit” or that he  
was at his “wit’s end”. Reeder testified that she did not take any notes of what she heard nor did  
she come forward to Perin or DiSimone with the fact that she overheard this fundamental  
discussion until approximately 10-11 months later because she was concerned that she would get  
in trouble for having left Perin and DiSimone’s office contrary to her instructions. She first  
recounted her recollection to DPI’s lawyer in September 2018 in the course of this litigation and  
had to rely solely on her memory.  
[100] In other words, she did not put her mind to what she had ostensibly overheard until 10-11  
months later. By the time of trial, she based her testimony on her recollection of overhearing part  
of a conversation over four years prior, without the benefit of any notes, and having not turned her  
mind to those events for the first time until 11 months after the meeting. If Etedali had said he was  
ready to “quit” it is highly unlikely that both Perin and DiSimone would have forgotten that critical  
word given their position that they inferred from his other words and conduct that he resigned.  
Less compelling, but telling, is the fact that none of Perin, DiSimone or Etedali claimed Etedali to  
have used the phrase that he was at his “wit’s end” either. Etedali denied having any familiarity  
with that phrase noting that English is his second language. Ms. Reeder’s memory was not reliable.  
Rather, she has reconstructed a narrative that supports her employer’s position in the context of  
being interviewed for this litigation.  
[101] Accordingly, I prefer Etedali’s evidence where it diverges from Perin and DiSimone’s  
respective testimony, most notably with respect to what was likely said and done at the severance  
meeting. I find as a fact that Etedali did not unequivocally and clearly resign but rather was  
terminated without cause by DPI at the Severance Meeting.  
If Etedali resigned in fact, was it legally effective?  
[102] In the event Etedali’s words and gestures at the Severance Meeting constituted a  
resignation in fact, I find in the alternative that he did not evince a clear and unequivocal intention  
to resign and that the ostensible resignation was not legally effective at law for the reasons that  
follow.  
[103] Had I found that Etedali’s words and actions could reasonably amount to a resignation, in  
fact, DPI’s position is that it did not owe what it described as a “paternalistic duty to an employee  
to second-guess what they are thinking” (para. 36, DPI’s written closing submissions). DPI states  
that Etedali’s alleged statement that “I’m done” as he was putting his key and credit card on the  
Page: 18  
boardroom table constituted a “clear and unequivocal” resignation” when viewed through the lens  
of distrust and frustration toward DiSimone and Perin.  
[104] However, in order for an employee’s resignation to be legally effective, it must meet certain  
requirements, assessed on an objective basis. The employee’s expression of their resignation must  
“clearly and unequivocally indicate an intention to be no longer bound by the employment  
contract” (Nagpal v. IBM Canada Ltd., 2019 ONSC 4547, 57 C.C.E.L. (4th) 303 at para. 31, citing  
Kieran v. Ingram Micro Inc. (2004), 189 O.A.C. 58 (C.A.) at para. 27; Gebreselassie v. VCR Active  
Media Ltd., 2007 45710 (Ont. S.C.) at para. 43).  
[105] In Kieran, the Court of Appeal held at para. 27:  
A resignation must be clear and unequivocal. To be clear and unequivocal, the  
resignation must objectively reflect an intention to resign, or conduct evidencing  
such an intention: Skidd v. Canada Post Corp., [1993] O.J. No. 446 (Gen. Div.),  
aff’d [1997] O.J. No. 712 (C.A.).  
[106] In Johal v. Simmons da Silva LLP, 2016 ONSC 7835, 2017 C.L.L.C. 210-019, at paras. 35,  
49 and 107, the court confirmed that when facing an employee’s resignation which is ambiguous,  
the employer must follow up to confirm the employee’s intention to resign.  
[107] Once again I have examined the events of the Severance Meeting within the constellation  
of events leading to, and immediately following, the Severance Meeting, as summarized in the  
preceding section.  
[108] The events leading to the meeting, set into motion by Perin and DiSimone in response to  
Etedali’s expressions of financial distress and frustration as to how he felt he was being treated by  
them, were designed to push Etedali’s emotional buttons and this was successful. All agree that  
the severance meeting was volatile with raised voices. A resignation verbally expressed under such  
circumstances is not legally effective without confirmation on the intent to resign by the employee  
as it lacks voluntariness to make an informed decision to resign (Johal, at paras. 35, 45, 102-107;  
Avalon Ford Sales (1996) Ltd. v. Evans, 2017 NLCA 9, 2017 C.L.L.C. 210-028 at para. 25; Nagpal  
at paras. 38-39). An emotional utterance in the spur of the moment is not, generally, in and of itself  
sufficient to constitute a clear and unequivocal intention to resign.  
[109] In Johal, the court put it thus at paras. 102-104, 107:  
On the evidence before me, it was to the Defendant’s financial advantage if the  
plaintiff resigned, since the evidence is clear that at least currently, the firm was top-  
heavy with family law clerks. Therefore if one resigned “of her own free will” the  
firm would not have to pay any severance and of course if she resigned the defendant  
would not have to continue to find work for her and pay her ongoing salary.  
Page: 19  
At the time of the alleged resignation, Mr. Clark’s family law section of the firm had  
recently lost two family law lawyers and had a senior family law clerk returning from  
maternity leave.  
So when the “opportunity” of accepting the plaintiff’s resignation arose, Mr. Clark  
and/or the remaining management members of the firm, by their inaction decided to  
“let sleeping dogs lie” and simply accept what they thought was a resignation, after  
what they thought was a reasonable length of time.  
…
While I agree with the Defendant that it does not owe a paternalistic duty to the  
Plaintiff, on the facts of this case, it was required to do more to determine the  
Plaintiff’s true and unequivocal intention.  
[110] All of the witnesses to this Severance Meeting, including Ms. Reeder, formed the  
impression that it was tense and volatile. Voices were raised, and the principals were arguing  
amongst themselves. Etedali’s behaviour can fairly be characterized as angry, upset, and frustrated.  
Irrespective of DiSimone and Perin’s evidence that they entered that meeting with good intentions,  
the meeting quickly escalated in a heated manner. No solutions were proposed by DiSimone or  
Perin to get things back on track with Etedali.  
[111] Etedali was angry, upset and frustrated at this meeting and likely indicated a frustration  
with the joint venture and his diminished role in it which he found to be unjust. Even if from an  
objective standpoint, I had accepted Perin and Di Simone’s version, and I do not, I would have  
found that Etedali did not intend to resign, and DPI failed to give him an opportunity to calm down  
and assess whether he intended to forfeit his shares and with it all of his investment in DPI  
reflecting four years of work and his financial investment in support of the company. Accordingly,  
and in the alternative, I would have found that Etedali’s resignation was not legally effective in  
the circumstances of this case.  
[112] Rather than being shocked, I would have found that Perin and DiSimone’s unilateral  
removal of Etedali as a director without the dignity of an explanation or the opportunity for Etedali  
to respond, the unilateral request for more stringent requirements of Etedali to account for his time  
to ensure that Perin and DiSimone had a detailed and immediate handle on the clients and new  
business opportunities Etedali was working on, the complaint by Liana Perin which was never  
responded to by Perin or DiSimone, and the immediate steps to severe DPI’s relationship with  
Etedali internally and externally, all lead to the conclusion that Perin and DiSimone either  
constructed a situation in which, knowing Etedali as they did, would lead him to do something  
erratically; or, they found themselves presented with an opportunity to be done with Etedali at  
minimal expense to DPI. They seized on the ability to acquiesce to his ostensible resignation,  
shocked and stunned though they said they were.  
Page: 20  
[113] Even under Perin and DiSimone’s own description, Etedali’s utterance of “I’m done” with  
the simultaneous gesture of putting his keys and credit card on the boardroom table and marching  
out of the boardroom to collect his personal items amounts to a spontaneous emotional outburst in  
a volatile situation and does not meet the objective standard of an unequivocal and informed  
intention to resign and forfeit his entitlements (upon termination without cause) under the  
Employment Agreement. The lack of any attempt to confirm Etedali’s intentions in the aftermath  
of the meeting or any time thereafter for that matter, leads to the inference that DiSimone and Perin  
were not sure of his intentions either, but rather took advantage of an opportunity to get rid of what  
was clearly an aggravation to them at no cost to DPI.  
[114] As I have found that Etedali was terminated without cause at the Severance Meeting, the  
next issue is to determine what remedies flow to Etedali.  
V.  
REMEDIES  
i. Buy Back of Etedali’s Common Shares  
[115] The remedies sought by Etedali, following a termination without cause, are: contractual  
notice under s. 1.12 of the Employment Agreement, buy back of his common shares at fair market  
value under s. 248 of the OBCA, and punitive damages for bad faith and lack of fair dealing on  
the part of DPI.  
[116] The key area of dispute regarding the remedies is the appropriate price to be paid by DPI  
for Aracon’s common shares. More specifically, the parties contest the valuation date, valuation  
method and the number of common shares Etedali owned through Aracon.  
[117] Etedali urges a finding of oppression under the OBCA to support an equitable valuation  
date for his common shares that is later than the date stipulated in the Employment Agreement;  
namely fiscal year end for 2018. DPI replies that the valuation date ought be the date of Etedali’s  
termination in accordance with the express terms of the Employment Agreement.  
[118] Section 2.13 of the Employment Agreement provides:  
In the event that the Employee shall resign from his position with the Employer or  
be discharge for caused by the Employer, and any shares he holds in DPI shall be  
reacquired by the Employer, at its sole option, for the sum paid to it by the Employee  
to acquire the shares, and this Agreement and all rights hereunder, shall terminate  
upon the effective date of the Employee’s resignation, except those rights and  
obligations herein specifically provided to survive termination of this agreement. In  
the event that the Employee is discharged or terminated from his position without  
cause, then the Employer shall reacquire any shares the Employee owns in DPI for  
that then market value of those shares, by paying the said market value to the  
Employee, upon the Employer’s election, either in full upon the date of Employee’s  
termination without cause, or in twelve (12) equal, consecutive monthly instalments,  
the first of which shall be due and payable on the first of the month immediately  
Page: 21  
following the month in which the Employee’s termination without cause or occurred,  
and the first day of each month thereafter until fully paid. All payments shall be  
without interest. The market value discussed above may be determined by the Board  
of Directors of DPI from time to time such business evaluators engaged by the Board  
of Directors, acting reasonably. Any reference contained herein and in this agreement  
to the Employee’s shares shall also enclose it include shares held by the Employee’s  
holding company. (emphasis added)  
In the Employment Agreement, the “Employee” is defined as Etedali, the “Employee’s holding  
company” is Aracon, and the “Employer” is DPI.  
[119] There is no suggestion that the Board of Directors placed a market value on the common  
shares at any time prior to Etedali’s termination.  
Number of Common Shares Owned by Etedali at the date of his termination  
[120] For purposes of this analysis, the maximum number of Common Shares that could be  
acquired by Etedali under the Employment Agreement was 25. Furthermore the conversion was  
to be completed by August 1, 2017.  
[121] DPI states that Etedali’s holding corporation, Aracon, only owns 12 common shares  
representing 10.7% of the issued and outstanding common shares as at the date of termination.  
[122] Etedali states that Aracon should own 25 common shares as at the date of his termination  
under the written terms of the Employment Agreement. This would represent 20% of DPI’s issued  
and outstanding common shares.  
[123] On the shareholder registry of DPI, Aracon is shown to hold 12 common shares.  
[124] Etedali relies on the share issuance and conversion formula stipulated in his Employment  
Agreement at sections 2.04 to 2.08 as follows:.  
2.04. Upon the execution of this Agreement, the Employee shall receive eleven (11)  
Class A Shares in DPI, such shares to bear and issue price of $0.10 per share. Upon  
August 1, 2014, the Employee shall receive an additional seven (7) Class A Shares in  
DPI, such shares to bear an issue price of $0.10 per share. Upon August 1, 2015, the  
Employee shall receive an additional seven (7) Class A Shares in DPI, such shares to  
bear an issue price of $0.10 per share.  
2.05. Upon August 1, 2014, six (6) of the Class A shares owned by the Employee shall  
be converted, on a one share to one share basis, into Common shares, at no cost to the  
Employee.  
Page: 22  
2.06. Upon August 1, 2015, another six (6) of the Class A shares owned by the  
Employee shall be converted, on a one share to one share basis, into Common shares,  
at no cost to the Employee.  
2.07. Upon August 1, 2016, another six (6) of the Class A shares owned by the  
Employee shall be converted, on the one share to one share basis, into Common shares,  
at no cost to the Employee.  
2.08. Upon August 1, 2017, the remaining seven (7) of the Class A shares owned by  
the Employee shall be converted, on the one share to one share basis, into Common  
shares, at no cost to the Employee.  
[125] Under this share conversion formula, the Class A shares were to be automatically converted  
each fiscal year of Etedali’s tenure at DPI without any payment requirement by Etedali. This was  
a negotiated term of the Employment Contract. By August 1, 2017, and prior to his termination, it  
is clear that Etedali, through Aracon, would own 25 Common shares under the Employment  
Agreement, absent any amendment.  
Was the Employment Agreement Amended by Way of an Oral Agreement?  
[126] DPI counters that the subject provision was amended pursuant to an oral agreement reached  
as amongst Etedali, Perin and DiSimone in or around 2015, after the Employment Agreement and  
Shareholder Agreement, were signed, and after the share conversions for the prior years occurred.  
[127] In order to prove that the three principals amended Etedali’s Employment Agreement,  
Perin and DiSimone must demonstrate that an agreement to amend was formulated. The Ontario  
Court of Appeal set out the basic requirements underpinning enforceable contracts in UBS  
Securities Canada, Inc. v. Sands Brothers Canada, Ltd., 2009 ONCA 328, 95 O.R. (3d) 93 at para.  
47:  
For a contract to exist, there must be a meeting of minds, commonly referred to as  
consensus ad idem. The test as to whether there has been a meeting of the minds is  
an objective one – would an objective, reasonable bystander conclude that, in all the  
circumstances, the parties intended to contract? As intention alone is insufficient to  
create an enforceable agreement, it is necessary that the essential terms of the  
agreement are also sufficiently certain. However, an agreement is not incomplete  
simply because it calls for the execution of further documents.  
[128] The evidence from the parties establishes that DPI required a total of $1,250,000 for its  
operating and bonding requirements. This was broken down by way of $500,000 for operating  
requirements and $750,000 for bonding requirements.  
[129] The evidence also establishes that Aracon Corp.’s Class A shares were converted into  
Common Shares in accordance with s. 2.05 (2014 fiscal year) of the Employment Agreement  
Page: 23  
without cost or documentation converting those shares, and that no shares were converted after the  
2015 fiscal year.  
[130] DPI justifies the departure from ss. 2.04, 2.06, 2.07 and 2.08 reflected in the Employment  
Agreement on the basis that there was an oral agreement to amend. Etedali denies that he consented  
to any such amendment.  
[131] There is no written agreement signed by the three principals (as directors, shareholders, or  
principals) evidencing the alleged amendment.  
[132] DPI’s position is that the three principals agreed, orally, to change the terms of Etedali’s  
share conversion such that the Common shares would be conditional on Etedali, along with Perin  
and DiSimone, contributing their proportionate equity share to the cost of DPI’s $500,000  
operating and $750,000 bonding requirements in 2015. In other words, Etedali would not have his  
Class A shares converted into Common shares unless and until he contributed his pro rata share of  
DPI’s operating and funding requirements each year.  
[133] Etedali’s Class A shares were converted in 2015 because, according to DPI, he made the  
requisite contribution to DPI’s operating and bonding requirements.  
[134] DPI relies on the fact that Etedali made the financial contribution in 2015, and on email  
correspondence that it claims corroborates the fact of the oral agreement to amend. It relies on five  
emails and one email trail between April 21, 2015 and May 29, 2017 to support its claim.  
[135] However, a close examination of these emails shows that, apart from the email of May 29,  
2017 from Perin to Etedali and an email trail between Ms. Perin and DPI’s banker, the emails  
relied upon dated April 21, 2015, November 16, 2015, September 9, 2016, and May 29, 2017, are  
all from Perin to Etedali telling or “reminding” him that his contributions are due.  
[136] In answer to the September 9, 2016 email from Perin, Etedali responds that he is “tired,  
exhausted and at the end of the rope financially”, but does not deny the assertion that he must  
“pony up [his] additional portions of the bonding and operating cash calls as well in the next short  
while”.  
[137] However, in none of the emails relied upon does DPI link a requirement to contribute to  
operating and bonding requirements to Etedali’s entitlement to have his Class A shares  
automatically converted to Common shares. Furthermore, there is no suggestion that any  
consideration was paid to Etedali in exchange for this purported amendment to his Employment  
Agreement nor are the alleged other terms of the alleged amendment reflected in writing such as  
what provisions in the Employment Agreement are being amended. In addition, DPI failed to  
address the fact that the Employment Agreement (and Shareholder Agreement) expressly  
stipulates that any subsequent amendment to this Employment Agreement must be in writing and  
signed by the principals.  
Page: 24  
[138] In an email dated October 6, 2016 from Etedali to Perin and DiSimone, he reports that he  
has told DPI’s bank that he is a 10% shareholder at DPI. In the following email trail between  
October 7 and 13, 2016 from Ms. Perin to Naishant Saini (DPI’s banker), Ms. Perin confirms that  
Etedali owns 10% of the common shares (equity). Etedali is copied but does not correct that  
assertion. By 2016, under the share conversion schedule in the Employment Agreement, Etedali  
would have acquired 15% of the Common shares of DPI.  
[139] In his testimony, however, Etedali maintained that the 2016 exchange was in error and that  
he should have had 15% of the Common shares by that fiscal year, he never agreed to amend the  
share conversion formula reflected in his Employment Agreement, and he did not receive any  
consideration for this alleged amendment.  
[140] DPI also relies on the evidence of Perin, DiSimone, and Liana Perin, that its accountant,  
Angelo Santorelli, advised at the fiscal year end 2015 Board meeting that Etedali’s share  
conversion for that year did not take place. Perin, DiSimone and Ms. Perin also testified that Mr.  
Santorelli was advised at the year-end Board meeting, that Aracon’s conversion never took place  
after the 2015 fiscal year end. At the material times, Mr. Santorelli was DPI’s accountant. It is  
notable that DPI failed to call Mr. Santorelli. Etedali denies this exchange occurred at the yearend  
Board meeting.  
[141] Furthermore, in a highly contentious matter, DPI asserted that the approved 2016 year-end  
financial statements of DPI contained an incorrect footnote. In the original approved 2016 financial  
statement provided under cover of Mr. Santorelli’s letter dated February 3, 2017, it stated that  
Etedali’s Class A shares had been converted in 2016 and that his remaining Class A shares would  
be converted into Common shares on August 1, 2017 consistent with the express terms of the  
Employment Agreement. There is no indication in the original approved financial statement that  
there had been an alleged oral agreement to make Etedali’s share conversion conditional on his  
financial contributions to DPI’s funding requirements.  
[142] Perin, DiSimone and Ms. Perin all testified that this was a mistake and they asked Mr.  
Santorelli to correct it. However, they could produce no documentary evidence of the instructions  
nor particulars about any verbal instructions other than to fix the alleged error. The covering letter  
from Mr. Santorelli enclosing the corrected 2016 financial report with the revised footnote was  
produced and is dated March 5, 2018. No explanation was provided for the late timing of the  
correction which was, notably, after this litigation commenced. The court did not have the benefit  
of Mr. Santorelli’s evidence on this important matter.  
[143] DPI’s claim that it instructed Mr. Santorelli to amend footnote 5 and its reflection of the  
share conversions is contradicted by his email to Etedali dated October 11, 2017. In that email,  
Mr. Santorelli confirmed to Etedali that his final seven Class A shares had been converted to seven  
Common shares on August 1, 2017, consistent with the Employment Agreement.  
[144] The timing of the email is notable since it postdates the timing of the ostensible instructions  
given to him by Ms. Perin. Ms. Perin testified, and maintained under cross examination, that she  
Page: 25  
was instructed by Perin at the annual board meeting to approve the 2016 financial statements to  
have Mr. Santorelli correct the alleged mistake. She testified that she asked Mr. Santorelli several  
times to make the correction but it took Mr. Santorelli over a year to make this correction. It is also  
notable that Ms. Perin, as DPI’s controller, did not document the ostensible error or communicate  
her instructions in writing to Mr. Santorelli in any way. This is simply not credible given the  
magnitude and importance to DPI of this alleged error.  
[145] Etedali submits that the only reasonable conclusion, in the absence of Mr. Santorelli’s  
evidence, is that Mr. Santorelli knew nothing about an alleged oral amendment to the Employment  
Agreement and the contractual share conversion, supporting Etedali’s claim that there was no such  
oral amendment.  
[146] Perin then asserted in cross examination, for the first time, that the three principals had also  
agreed to change the share conversion date from August 1st of each year to DPI’s financial year  
end of September 30th. Neither DiSimone nor Ms. Perrin testified to this further alleged oral  
amendment to the share conversion schedule. Perin’s assertion is not credible. It is unlikely that  
such a detail would have slipped the minds of DiSimone and Ms. Perin, if this assertion was true.  
[147] The Supreme Court of Canada, in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC  
53, [2014] 2 S.C.R. 633 at paras. 47, 48, 50-51 and 55, set out the general principles of contractual  
interpretation:  
(a) it is necessary to read the contract as a whole, giving the words used their ordinary and  
grammatical meeting, consistent with the contractual circumstances known to the  
parties at the time of the formation of the contract;  
(b) interpretation of contracts requires a common-sense approach not dominated by  
technical rules of construction;  
(c) the meaning of words in a contract is often derived from several contextual factors  
including the purpose of the agreement and the nature of the relationship created by the  
agreement; and  
(d) the primary goal of contractual interpretation is to ascertain the objective intention of  
the parties as expressed in the written agreement, considered in the light of the factual  
matrix existing and known to the parties at the time of the contract formation.  
[148] The terms of the share conversion formula are clearly expressed in the Employment  
Agreement entered into in June 2014, approximately 10 months after Etedali assumed his role at  
DPI.  
[149] Section 2.10 of the Employment Contract does away with any requirement that share  
certificates evidencing the conversion be issued:  
Page: 26  
2.10 The Employer acknowledges and agrees, together with all the Parties, that the  
conversion rights set forth in paragraphs 2.05-2.09 of this Agreement, are sufficiently  
documented and stated with sufficient clarity and detail in this Agreement and this  
Agreement shall serve as enforceable evidence of those rights without the need to  
issue further certificates.  
[150] The share conversion was expressly to take place at no cost or condition to Etedali. This  
was a term that was negotiated by the parties. Of note, under the initial term sheet provided to  
Etedali, prior to his employment, he would have received “Class B” shares, and been entitled to  
convert a certain number to common shares each year at a cost to him of 50% of the net value of  
the shares. In the Employment Agreement, this cost component was eliminated, and the Class B  
shares were called Class A shares. The Class A shares were ascribed a nominal value of ten cents  
a share and would be converted to common shares at no cost in accordance with s. 2 of the  
Employment Agreement. There is no dispute as to the meaning of the share conversion provisions  
contained in the Employment Agreement.  
[151] Under a plain reading of sections 2.04 – 2.08, Etedali was entitled to a total of 25 Class A  
shares converted to 25 Common shares at no cost to him as of August 1, 2017, leaving him with  
no outstanding Class A shares. In other words, by this date Etedali was to have his full complement  
of common shares under the Employment Agreement. He would always have remained a minority  
shareholder under the current Employment Agreement. Twenty five common shares reflected a  
20% equity stake in DPI. Perin and DiSimone owned the remaining equity equally through their  
own holding company.  
[152] The Employment Agreement contains both an entire agreement clause and a clause  
requiring amendments to be in writing and signed. Of particular note is the latter clause:  
3.04 Neither this Agreement, nor any term there off, shall be changed, altered or  
modified, except in writing signed by all Parties hereto, except as otherwise provided  
herein.  
[153] There is no suggestion that the Employment Agreement was amended in writing signed by  
the parties to it. In order for this provision to have any meaning, it must be strictly adhered to. The  
purpose of this type of provision is to avoid the very type of dispute that has arisen; namely whether  
or not the Employment Agreement was amended and if so to clearly identify the terms of that  
amendment.  
[154] Perin and DiSimone’s respective testimony reveals the mischief intended to be prevented  
by s. 3.04. Neither were able to express the essential terms of the purported agreement to amend  
or the date of that agreement. No consideration was made to Etedali in exchange for ostensibly  
having to contribute to DPI’s operating and bonding requirements as a condition of share  
conversion. While Perin testified that Etedali was told prior to the execution of the Employment  
Agreement that he would have to provide a contribution to the bonding and operational  
requirements proportionate to his equity stake in order to acquire the earmarked common shares  
Page: 27  
under the conversion schedule, this evidence not only violates the parol evidence rule, but it runs  
contrary to the entire agreement clause that states:  
3.16 The foregoing constitutes the entire Agreement and understanding between the  
Parties hereto with respect to the matters contemplated under this agreement. Each  
Party represents to the other Parties that he, she or it is not relying upon any  
representations, except as set forth herein. This Agreement supersedes, resins and  
replaces any and all other prior agreements or understandings, whether written or  
oral, dealing with the subject matter of this agreement, including without limitation  
any prior agreement concerning employment. By signing this Agreement, each Party  
does bind itself to this Agreement. Each Party further acknowledges that all shares  
in DPI are the subject to a Shareholder Agreement of even date herewith among the  
Employer, the Employee and DPI Construction and that Shareholder Agreement is  
binding and effective in accordance with its terms, anything herein notwithstanding.  
[Emphasis added]  
Not only does the Employment Agreement expressly supersede all prior understandings, it also  
incorporates by reference the terms of the concurrently signed Shareholder Agreement.  
[155] In addition, Perin’s weak explanation is contradicted by the fact that according to DPI’s  
own evidence, Etedali’s initial tranche of Class A shares were converted, without cost or condition,  
in 2014.  
[156] Furthermore, Perin and DiSimone’s respective testimony to the effect that DPI was entitled  
to unconditionally seek contributions from the shareholders for its bonding and operational  
requirements is also contradicted by s. 3.2 of the Shareholder Agreement.  
[157] Perin agreed that both the $500,000 operational requirement and the $750,000 bonding  
requirement of DPI constituted funds which were, in turn, “required for the purposes of the  
Corporation” within the meaning of s. 3.2.  
[158] Perin and DiSimone conceded that they did not seek financing from DPI’s banker or any  
other source. However, they sought to place the responsibility for seeking such financing on  
Etedali. If Etedali wanted DPI to seek alternative financing, he was free to have made those  
attempts, but did not. This position does not relieve Perin and DiSimone, as the majority and  
controlling shareholders and directors, from having to cause DPI to attempt to find alternative  
financing and resorting to shareholder loans as a last resort. It also does not make commercial  
sense to have expected Etedali to have attempted to obtain such financing when he held the  
smallest percentage of common shares, had no signing authority, and no relationship with DPI’s  
bank. This seems to be another attempt by DPI to reconstruct the past to suit the narrative that  
Etedali does not deserve to have his contractual obligations honoured because of a falling out with  
the two founding and controlling principals of this business.  
Page: 28  
[159] Etedali was not cross examined on the issue of whether his alleged obligation to contribute  
to the bonding and operations, which he denied in his examination in chief, would alter his share  
conversion under the express terms of the Employment Agreement. This violates the rule in  
Browne v. Dunn. Even if I did not find Perin, DiSimone, and Ms. Perin’s explanations supporting  
DPI’s contention that there had been an oral amendment to the Employment Agreement lacking  
in credibility, I would have found that their evidence should be disregarded under this fairness  
rule.  
[160] Perin and DiSimone unilaterally bypassed s. 3.2(a) of the Shareholder Agreement and  
instead implemented the structure under s. 3.2(b) upon each of the three shareholders. However,  
they did not even purport to follow the precondition under s. 3.2(a) or the procedure under s. 3.2(b).  
There was no attempt by DPI to obtain financing from a bank or other lender, and no resolution  
was passed by the Board to make a cash call. The alleged oral amendment agreement simply  
purports to do away with s. 3.2(a) in its entirety, and then modify s. 3.2(b) such that Perin and  
DiSimone, and not DPI, made the decision to require each of the shareholders to self-finance DPI’s  
operational and bonding requirements proportionately to their respective equity stakes. They then  
imposed that decision on Etedali. This non-compliance with s. 3(2) was not addressed in their  
testimony.  
[161] The evidence of Perin, DiSimone, and Ms. Perin did not address the essential components  
of the amending agreement, and no consideration was provided to Etedali in exchange. Perin and  
DiSimone purported to act on behalf of DPI but they failed to recognize that DPI has an  
independent legal identity from them such that any such action required a resolution from the  
Board. This is evidence that they treated DPI as their own enterprise, to deal with as they wished.  
[162] The combined testimony of Perin, DiSimone, and Ms. Perin lacked credibility as evidenced  
by the internal inconsistences in their respective testimony on important matters, the lack of  
compliance with DPI’s governance procedures, the failure to properly document the terms of the  
alleged oral amendment and the request to Mr. Santorelli to correct Footnote 5 to the 2016  
unaudited financial statements, and their failure to call Mr. Santorelli to corroborate aspects of  
their testimony.  
[163] The original approved 2016 financial statements, with its original Footnote 5, corroborates  
Etedali’s position. I find that the evidence of Perin, DiSimone, and Ms. Perin was a contrived  
attempt to change Etedali’s entitlement to 25 Common shares under the Employment Agreement,  
after the fact of his termination. For these reasons, I prefer Etedali’s evidence over that of DPI’s.  
[164] I find that there was no oral amendment to the Employment Agreement or the Shareholder  
Agreement for that matter. Accordingly, as of August 1, 2017, prior to Etedali’s termination  
without cause, his holding company, Aracon, held 25 Common shares or 20% of the equity of DPI  
pursuant to the terms of the Employment Agreement. Aracon continues to hold the 25 common  
shares.  
ii.  
Has Etedali been oppressed as a minority shareholder?  
Page: 29  
[165] In order to proceed with a share valuation process, the court must first determine whether  
Etedali has been oppressed within the meaning of s. 248 of the OBCA. This is because Etedali’s  
primary argument is that he is entitled to an equitable valuation that will fairly compensate him in  
the circumstances of this case, starting with the selection of his valuation date, being September  
30, 2018 as opposed to the date of his termination, November 7, 2017.  
[166] Section 248(2) of the OBCA states:  
248(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.  
[167] In BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, [2008] 3 S.C.R. 560, at para. 68, the  
Supreme Court of Canada set out the analytical framework for the oppression remedy as follows:  
In summary, the foregoing discussion suggests conducting two related inquiries in a  
claim for oppression: (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?  
Reasonable Expectations of Etedali as Minority Shareholder  
[168] Etedali submits that his interests as a minority shareholder have been unfairly disregarded  
by DPI through the actions and omissions of its majority shareholders and directors, Perin and  
DiSimone. The burden is on Etedali to prove this allegation.  
[169] Etedali’s reasonable expectations as a minority shareholder must be determined on an  
objective basis. The source of Etedali’s reasonable expectations are measured by the Shareholder  
Agreement, which, in turn, was incorporated by reference into the Employment Agreement. These  
agreements reflect the arrangement by which the shareholders agreed to be bound in terms of  
governance of DPI and their respective rights and obligations and shareholders as, in Etedali’s  
case, was informed by the terms of his Employment Agreement.  
Page: 30  
[170] Of particular relevance to the issues at hand, and as has been reviewed, the Employment  
Agreement set out the process for share conversion and Etedali’s entitlement to have his Common  
shares valued and bought back upon termination without cause. Section 2.13 of the Employment  
Agreement sets out the Common share valuation timing and process.  
[171] In addition, the Shareholder Agreement set out the terms and conditions for the cash calls  
and shareholder loans at s. 3.2, Etedali’s entitlement to be a director so long as he owned Common  
shares at s. 4.2, and his right to access interim and year-end financial results and information under  
s. 5.1.  
[172] In addition, parties to a contract are under a duty to perform their obligations honestly and  
in good faith: Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494, at paras. 73-74.  
[173] It is Etedali’s position that DPI unfairly disregarded his interests (as determined by the  
Agreements) as a minority shareholder as follows:  
He was forced to contribute funding by way of forfeited dividend and salary to fund  
the operational and bonding requirements of DPI by Perin and DiSimone contrary to  
s. 3.2(a) of the Shareholder Agreement;  
He was unilaterally and in bad faith removed as a Director of DPI contrary to s. 4.2  
of the Shareholder Agreement to ostensibly incentive him as an employee by Perin  
and DiSimone;  
He was not provided with appropriate and timely access to the financial information  
of DPI, contrary to s. 5.1 of the Shareholder Agreement by DPI’s controller, Ms.  
Perin, acting on Perin’s instructions;  
The majority shareholders’ assertion that Etedali, through Aracon, only owned 12  
Common shares contrary to ss. 2.04-2.08 of Employment Agreement;  
In order to support their claim as to the reduced number of Common shares owned  
by Aracon, Perin and DiSimone, as majority shareholders, directed DPI’s accountant,  
after this litigation was commenced, to improperly change footnote 5 to the 2016  
Financial Statements to reverse the prior Footnote’s iteration that stated all 25 of  
Etedali’s Class A shares would be converted into Common shares by August 1, 2017;  
DPI declined to pay back his shareholder’s loan of $305,000 until September 11,  
2018 due to the commencement of this lawsuit, thus delaying payment by  
approximately ten months from the date of his termination;  
DPI declined to institute a proper valuation process for Etedali’s Common shares buy  
back as required under s. 2.13 of the Employment Agreement once it terminated him  
without cause;  
Page: 31  
DPI deprived Etedali of his rights under the Shareholder Agreement after his  
termination as an employee, notwithstanding the fact that he remained a common  
shareholder, and indeed remains a common shareholder pending the resolution of  
this litigation.  
[174] DPI rejects Etedali’s claims and says that, in fact, Etedali was treated in the same manner  
as Perin and DiSimone in all respects. Furthermore, Etedali could have insisted on compliance  
with the terms of the Employment Agreement and Shareholder Agreement. As well, it was  
reasonable for DPI to withhold the shareholder’s loan and refuse to engage the valuation/buy out  
process for Etedali’s common shares so long as it held the belief, in good faith, that he had  
resigned. Finally, Etedali’s reasonable expectations must be informed by the fact that he was a  
minority shareholder, holding fewer common shares than each of Perin and DiSimone, and  
therefore he could not reasonably have expected to have played a controlling role at DPI, and knew  
he would always face the prospect of being outvoted by Perin and DiSimone.  
Were Etedali’s Reasonable Expectations Violated by DPI’s Oppressive Conduct?  
[175] Of note, while oppressive conduct is generally alleged against the directors of the  
corporation, it can also be alleged against the majority shareholders. This is a fact-driven analysis  
that requires a consideration of the context of the impugned conduct. What may constitute  
oppressive conduct in one circumstance, may not in another. In this case, the majority shareholders  
happen to overlap with the directors and, after Etedali was removed as director, Perin and  
DiSimone comprised the entire board.  
[176] In BCE Inc., the Supreme Court of Canada provides a two-part test for assessing whether  
the alleged conduct is oppressive, at paras. 56-59:  
In our view, the best approach to the interpretation of s. 241(2) is one that combines  
the two approaches developed in the cases. One should look first to the principles  
underlying the oppression remedy, and in particular the concept of reasonable  
expectations. If a breach of a reasonable expectation is established, one must go on  
to consider whether the conduct complained of amounts to “oppression”, “unfair  
prejudice” or “unfair disregard” as set out in s. 241(2) of the CBCA.  
We preface our discussion of the twin prongs of the oppression inquiry by two  
preliminary observations that run throughout all the jurisprudence.  
First, oppression is an equitable remedy. It seeks to ensure fairness — what is “just  
and equitable”. It gives a court broad, equitable jurisdiction to enforce not just what  
is legal but what is fair: Wright v. Donald S. Montgomery Holdings Ltd. (1998), 39  
B.L.R. (2d) 266 (Ont. Ct. (Gen. Div.)), at p. 273; Re Keho Holdings Ltd. and  
Noble (1987), 38 D.L.R. (4th) 368 (Alta. C.A.), at p. 374; see, more generally,  
Koehnen, at pp. 78-79. It follows that courts considering claims for oppression  
Page: 32  
should look at business realities, not merely narrow legalities: Scottish Co-operative  
Wholesale Society, at p. 343.  
Second, like many equitable remedies, oppression is fact-specific. What is just and  
equitable is judged by the reasonable expectations of the stakeholders in the context  
and in regard to the relationships at play. Conduct that may be oppressive in one  
situation may not be in another.  
[177] In Maple Leaf Foods Inc. v. Schneider Corp. (1998), 42 O.R. (3d) 177 (C.A.), the Court of  
Appeal, at paras. 66 and 68, emphasized that the aggrieved shareholders’ interests can go beyond  
their strictly legal rights in determining whether they have been oppressed:  
Conduct which disregards the interests of any shareholder and not simply a  
shareholder's legal rights will infringe s. 248 of the OBCA. This is because the  
oppression remedy is basically an equitable remedy and the court has jurisdiction to  
find an action is oppressive, unfairly prejudicial, or unfairly taken in disregard of the  
interests of a security holder if it is wrongful, even if it is not actually unlawful:  
Westfair Foods Ltd. v. Watt (1990), 4 W.W.R. 685 (Alta. Q.B.), aff’d (1991) 4  
W.W.R. 695, 79 D.L.R. (4th) 48 (Alta. C.A.), leave to appeal refused [1991] 2 S.C.R.  
viii…  
While s. 248 protects the legitimate expectations of shareholders, those expectations  
must be reasonable in the circumstances and reasonableness is to be ascertained on  
an objective basis. The interests of the shareholders of a company are intertwined  
with the expectations that have been created by the company's principals: Naneff v.  
Con-Crete Holdings Ltd. (1995), 23 O.R. (3d) 481 (C.A.).  
[178] The evidentiary record is replete with evidence demonstrating that Perin and DiSimone ran  
DPI in a manner that unfairly disregarded Etedali’s interests as a minority shareholder. As  
conceded by Perin, there was no attempt to seek outside financing before making a cash call to  
Etedali. The fact that Perin and DiSimone also had to contribute cash, and indeed in a higher  
amount given their greater equity stakes, does not justify ignoring what was provided for in the  
Shareholder Agreement. In doing so, Perin and DiSimone knew that Etedali found it financially  
unfeasible to fulfil these cash calls which were deducted from his dividends which he needed to  
support his personal requirements. Perin and DiSimone, who collectively owned 80% of DPI’s  
equity, and also controlled through their position as directors the issuance of dividends, had a  
greater ability to finance DPI’s operational and bonding requirements than did Etedali who was  
newly recruited to DPI. This is no excuse for forcing Etedali to do so, and in so doing, they acted  
oppressively with the effect of squeezing Etedali into a desperate financial situation to the point  
where Perin thought he could induce Etedali to give up his shares in exchange for DPI paying back  
what it owed him. Perin’s email to Etedali on this issue reflects DPI’s oppressive attitude towards  
him, “that’s how It is and that’s how it will continue to be” [sic].  
Page: 33  
[179] I reject DPI’s claim that Etedali waived compliance with s. 3.2(a) of the Shareholder  
Agreement. As stated by the Supreme Court of Canada in Saskatchewan River Bungalows Ltd. v.  
Maritime Life Assurance Co., [1994] 2 S.C.R. 490 at p. 500:  
Waiver will be found only where the evidence demonstrates that the party waiving  
had (1) a full knowledge of rights; and (2) an unequivocal and conscious intention to  
abandon them. The creation of such a stringent test is justified since no consideration  
moves from the party in whose favour a waiver operates. An overly broad  
interpretation of waiver would undermine the requirement of contractual  
consideration.  
[180] It is undisputed that no consideration was made to Etedali to waive compliance with s.  
3(2)(a) of the Shareholder Agreement. Similarly, the evidence did not establish that Etedali made  
an “unequivocal and conscious intention to abandon” this provision and replace it with a personal  
funding commitment. Etedali was essentially boxed into this position by his partners who did not  
give him a choice and who controlled the financial affairs of DPI. Furthermore, Etedali testified  
that he was not aware of what efforts DPI had made to obtain financing from other sources despite  
making inquiries. Accordingly, DPI, through Perin in particular, was not transparent on this issue  
with Etedali. DPI has not established waiver by Etedali in the evidentiary record.  
[181] Etedali’s interests as a shareholder was also unfairly disregarded when he was removed,  
without explanation to him, from the Board. Perin testified that they removed him in order to give  
him incentive to work harder as an employee. That is not an appropriate reason and is unrelated to  
his role as a director. Accordingly, Etedali was removed as director for an ulterior purpose. The  
right to be on the board of directors, so long as he was a shareholder, was provided at s. 4.2 of the  
Shareholder Agreement. Accordingly, it was reasonable for Etedali to expect that he would  
continue to be a director unless and until he was no longer a shareholder.  
[182] In addition, Etedali’s reasonable expectations as a shareholder were unfairly disregarded  
when, contrary to the express terms of the Employment Agreement, DPI refused to pay him back  
the shareholder loan until September 11, 2018, some ten months after his termination and the  
commencement of this litigation. No explanation was given for the delay in repaying the  
shareholder loans except for a claim of set off pleaded by DPI which was ultimately not advanced.  
At the examination for discovery, DPI admitted was the shareholder loan was due and owing upon  
termination. The wrongful refusal to buy back shares in a comparable employee/shareholder  
situation was held to be oppressive conduct by the Court of Appeal in Murray v. Pier 21 Asset  
Management Inc., 2021 ONCA 424, 156 O.R. (3d) 197, at para. 35.  
[183] When Etedali demanded financial information from Ms. Perin, he was met with an official  
complaint filed against him by Ms. Perin. The merits of that complaint were never addressed with  
Etedali. While Etedali could have attended at the weekly cheque signing sessions at the DPI offices  
at which time he could have seen the backup data verifying the veracity and accuracy of the  
cheques being signed, I do not agree that he was restricted to obtaining the financial information  
Page: 34  
he sought through that laborious process. In any event, it only showed the money going out, not  
the money coming in.  
[184] Finally, Etedali’s interests as a shareholder were unfairly disregarded when, contrary to s.  
2.13 of the Employment Agreement, DPI neglected to engage a business valuator and embark on  
a fair market valuation of his common shares promptly upon termination with a view to buying  
them back. While DPI states that its reason for not doing so is that it held the genuine belief that  
Etedali resigned of his own volition, or, initially that he was alternatively terminated for cause, I  
have found that on an objective basis Etedali did not resign, or alternatively his resignation was  
not legally effective. Accordingly, this failure unfairly disregarded Etedali’s interests as a  
shareholder.  
[185] Furthermore, DPI did not treat Etedali as a shareholder with his attendant rights under the  
Shareholder Agreement, post termination, even though he was still a shareholder pending having  
his shares bought back.  
[186] At the end of the day, the evidence establishes that Perin and DiSimone continued to  
operate DPI without regard to Etedali’s interests. They may have been disappointed with Etedali’s  
productivity as Vice President of Business Development, but this does not justify their disregard  
of Etedali’s status as their partner.  
[187] In the alternative, DPI submits that any remedy fashioned under s. 248 of the OBCA should  
be for purposes of achieving corrective justice, not exacting punitive measures (Murray v. Pier 21  
Asset Management Inc., 2021 ONCA 424, 156 O.R. (3d) 197, at para. 34).  
[188] In Wilson v. Alharayeri, 2017 SCC 39, the Supreme Court considered the equivalent  
oppression remedy section under the Canada Business Corporations Act, R.S.C. 1985, c. C-44. At  
para. 27, the Supreme Court stated:  
Any order made under s. 241(3) exists solely to “rectify the matters complained of”, as  
provided by s. 241(2). The purpose of the oppression remedy is therefore corrective: “…  
in seeking to readdress inequities between private parties”, the oppression remedy seeks to  
“apply a measure of corrective justice”. In other words, an order made under s. 241(3)  
should go no further than necessary to correct the injustice or unfairness between the  
parties. [Citations omitted]  
[189] Furthermore, in 820099 Ontario Inc. v. Harold E. Ballard Ltd. (1991), 3 B.L.R. (2d) 123  
(Ont. Gen. Div.) aff’d at p. 113 (Ont. Div. Ct.), at para. 140, this court cautioned about the limits  
of the court’s discretionary powers to fashion a remedy under s. 248:  
The court should not interfere with the affairs of a corporation lightly. I think that  
where relief is justified to correct an oppressive type of situation, the surgery should  
be done with a scalpel, and not a battle axe. I would think that this principle would  
hold true even if the past conduct of the oppressor were found to be scandalous. The  
job for the court is to even up the balance, not tip it in favour of the hurt party.  
Page: 35  
[190] The jurisprudence developed under s. 248 of the OBCA has recognized that the person  
asserting the remedy must meet a high bar of proving that the oppressor’s conduct was  
“burdensome, harsh and wrongful”. Bad faith will often be associated with oppressive conduct  
(Brant Investments Ltd. v. KeepRite Inc. (1991), 3 O.R. (3d) 289 (C.A.) at para. 32).  
[191] Accordingly, I find that Etedali’s interests as a shareholder and director were unfairly  
disregarded by DPI in a manner that constitutes oppressive conduct, and that he is entitled to relief  
under s. 248 of the OBCA. I will address the appropriate remedy to rectify this oppressive conduct  
in the next section.  
iii.  
What is the fair market value of Aracon’s common shares?  
[192] The parties agreed that the reference to “market value” in s. 2.13 of the Employment  
Agreement was intended to mean “fair market value” as a matter of business efficacy. The parties  
jointly submitted that there is no common meaning to the phrase “market value” as applied to  
common shares. I note parenthetically that the Court of Appeal had occasion to consider “market  
value” in the context of a valuation of the shares of dissenting minority shareholders which, in the  
context of that case, was held to be the equivalent of fair market value (Brant Investments Ltd.).  
[193] James Hoare provided expert opinion evidence on behalf of Etedali.  
[194] Jim Muccilli was DPI’s expert who provided expert opinion evidence as to his fair market  
valuation of Aracon’s common shares.  
[195] Both experts are Chartered Business Valuators.  
[196] The experts agreed that “fair market value” is “the highest price available in an open and  
unrestricted market between informed and prudent parties, acting at arm’s length and under no  
compulsion to act, expressed in terms of cash” (Muccilli Report, para 21; Hoare Report at para. 6  
is comparable).  
[197] According to the experts, this task inherently required the exercise of considerable  
professional judgment because they were dealing with a privately held company whose shares are  
not available on the public market.  
[198] Muccilli was instructed to prepare an opinion as to the estimated en bloc fair market value  
of DPI, as of the date of Etedali’s termination, November 7, 2017, and resulting in the fair market  
value of Aracon’s common shares as of that date.  
[199] Hoare was instructed to prepare an opinion as to an estimate of the en bloc fair market  
value of the share capital of DPI as at the fiscal 2018 year-end, being September 30, 2018. Hoare  
was not asked to estimate Aracon’s proportionate interest in the fair market value of DPI, and did  
not consider an estimate of the minority interest discount, if any, that might be attached to Aracon’s  
interest in the en bloc fair market value of DPI.  
Page: 36  
[200] Each of the experts employed different methods to reach their respective opinions, though  
both agreed that the methodologies were ultimately comparable as applied to DPI. Hoare employed  
a capitalized cashflow method and Muccilli employed a capitalized earnings approach.  
[201] They reached considerably different results.  
[202] In summary, Hoare estimated DPI’s “en bloc” fair market value at between $3,497,000  
million to $3,864,900 with a mid-point of $3,680,95 million as of September 30, 2018.  
Extrapolating from this en bloc fair market value of DPI’s share capital, leads to a valuation of  
Aracon’s common shares at between $700,000 and $767,000. Muccilli valued Aracon’s common  
shares, based on an en bloc fair market value of $750,000 at between $82,500 and $120,000 or at  
between $120,000 to $180,000 based on an estimated en bloc fair market value of DPI as of  
November 7, 2017, and assuming an equity stake of 20%. These amounts do not account for the  
minority interest and liquidity discount applied by Muccilli. For illustrative purposes, Muccilli  
opined that based on an en bloc fair market value of $750,000, a 20% equity interest would yield  
a fair market value as at November 7, 2017 of $150,000 but reduced to between $82,500 to  
$120,000 applying a minority interest and liquidity discount of 20-44%.  
[203] The main factors that distinguished the respective valuation (en bloc and common share)  
were:  
a) Valuation date chosen;  
b) The weighted average cost of capital (“WACC”);  
c) The tax rate applicable to the “notional” purchaser;  
d) An application (by Muccilli only) of a minority interest and liquidity discount; and  
e) The reduction of certain advertising and promotional expenses and professional  
fees by Hoare in the course of normalization of DPI’s operating expenses..  
Selection of Valuation Date  
[204] The selection of the valuation date was critical to the valuation. This is because it also  
determined which three years would inform the en bloc value of DPI. Simply put, Hoare chose  
September 30, 2018, thus including a very profitable 2018 financial year whereas Muccilli used  
September 30, 2017 year end financials to calculate his en bloc estimate of the fair market value  
of DPI’s shares as at November 7, 2017. The 2017 fiscal year was a very poor year for DPI relative  
to its immediately preceding years and the 2018 fiscal year and therefore contributed to a lower en  
bloc valuation.  
Page: 37  
[205] The challenge for the experts was the fact that Etedali’s termination was November 7, 2017  
which just falls into the 2018 fiscal year but is at neither year end. Under s. 2.13 of the Employment  
Agreement, the valuation date is the date of termination.  
[206] The challenge was compounded by the fact that DPI did not produce any contemporaneous  
financial forecasts that would have allowed the respective experts to have more accurately assessed  
the en bloc value of DPI as at November 2017. While the general ledger for the 2018 fiscal year,  
which reflected all of DPI’s expenses and revenues on a daily basis, including for the period  
October 1 to November 7 2017, was produced, Muccilli did not take these into account in his en  
bloc assessment, favouring the year-end financial reports instead. Accordingly, each expert had to  
estimate the value using professional judgment, taking into account that over the course of a year,  
a company’s fortunes can go up and down.  
[207] Muccilli’s assessment was also informed by direct information provided by Perin. This is  
both a strength and a potential weakness in Muccilli’s assessment. For example, the 2018 fiscal  
year was relatively successful for DPI despite having a bad debt valued by DPI at $1 million which  
lowered its profitability. However, under cross examination, Perin was unable to provide details  
about what comprised the $1 million debt. This memory failure strains credulity given the nature  
of this closely held corporation and Perin’s role as in charge of the operations, including oversight  
over Ms. Perin’s role as the financial controller.  
[208] However, by including the 2018 fiscal year, Hoare included revenues earned by DPI for  
approximately 10 and a half months past Etedali’s termination date. This also had the effect, based  
on the five-year financial window used, of eliminating the 2013 fiscal year. This had the overall  
effect of increasing DPI’s average income before taxes by $190,000 and decreasing DPI’s average  
debt by $542,296 thus accounting for an increased en bloc value than Muccilli’s calculation.  
[209] Both experts relied on DPI’s annual financial statements. By including the 2018 financial  
statement, Hoare showed that, in fact, profits recovered quickly and strongly. Furthermore these  
financial results are more in keeping with the recent history of DPI (from 2013) demonstrating that  
the relatively poor 2017 fiscal year was likely an anomaly.  
[210] For the reasons developed under the oppression remedy analysis, I find that the fiscal year  
end date September 30, 2018 is the appropriate date upon which to value Aracon’s common shares.  
This date fairly recognizes the fact that DPI held on to Etedali’s shareholder loan for most of the  
2018 fiscal year, and failed to ever initiate the valuation process thus maintaining Etedali as a  
shareholder without any of the associated benefits. The selection of this date is necessary to rectify  
the oppressive conduct Etedali suffered.  
Weighted Average Cost of Capital (“WACC”)  
[211] The WACC calculation is intended to reflect the risk that a notional purchaser will incur  
by purchasing a company like DPI.  
Page: 38  
[212] One contentious issue under the respective WACC calculations was the value assigned to  
the goodwill of DPI and its attribution to Perin and DiSimone. In other words, what would DPI be  
worth if Perin and DiSimone, together with all of their client relationships and reputation, left DPI?  
[213] Muccilli assigned a higher percentage of risk to goodwill than did Hoare on the basis that  
Perin and DiSimone are in effect DPI. This approach excluded Etedali’s contributions to DPI  
particularly in the areas of business development and client relations.  
[214] Hoare countered that there are common measures that can be put in place to deal with this  
type of contingency such as having non-compete agreements and ensuring succession planning.  
[215] Hoare’s approach to the treatment of the WACC, and in particular the lower weighting he  
assigned to the goodwill component, resulted in a higher en bloc valuation than Muccilli.  
[216] Hoare testified that the inclusion or the exclusion of the 2018 financial statements had a  
significant impact on the respective WACC calculations. Muccilli projected that DPI was on a  
downward trend of profitability based, in part, on a representation by Perin and DiSimone provided  
to him in the context of developing this litigation opinion. No evidence was offered by Perin or  
DiSimone to support their advice that profits would likely recover slowly based on the 2017  
projection. As stated earlier, while DPI produced a General Ledger showing individual  
transactions from October 1 to November 7 2017, Muccilli did not reference this record. DPI did  
not produce any interim financial reports for the period from October 1 to November 7, 2017, nor  
any financial forecast prepared for the 2018 fiscal year or any other year.  
[217] Hoare estimated the WACC to be in the range of 21.12% to 22.53%. Muccilli estimated  
the WACC to be between 24.75% and 27.69%. These estimates reflect the respective assessments  
of DPI’s specific risk premiums.  
[218] Overall, I found Hoare’s approach to the WACC to be more compelling than Muccilli’s.  
[219] Accordingly, I accept the weighting of the various factors under WACC used by Hoare  
over that of Muccilli.  
Tax Rate  
[220] Each expert took a different approach to assessing the tax rate that would be payable by  
the notional purchaser acquiring Aracon’s shares.  
[221] Hoare assumed that the notional purchaser would take advantage of the small business  
deduction which would result in a blended tax rate of between 20.95% and 21.4%. More  
specifically, Hoare used a combined rate of 12% tax payable on the first $500,000 of taxable  
income of the purchase price (taking advantage of the small business deduction) and 26.5% oof  
taxable income in excess of $500,000.  
Page: 39  
[222] Muccilli assumed that the notional purchaser would not be able to take advantage of the  
small business deduction and thus applied the standard tax rate of 26.5% of taxable income for the  
entire purchase price. This had a downward impact on his valuation.  
[223] In my view Muccilli’s position is reasonable. It is pure speculation to forecast that the  
notional purchaser would likely qualify for the small business tax deduction based on the evidence.  
Minority Interest and Liquidity Discount  
[224] Minority and liquidity discounts reflect the typical reality that a minority shareholder’s  
interest in a company is worth less than a majority or controlling interest while a liquidity discount  
reflects the reality that in a privately held company, there is no publicly traded forum in which to  
sell one’s shares. (See Locke v. UWE Quast, 2021 ONSC 3988, 156 O.R. (3d) 384 at para. 47).  
[225] Hoare acknowledged that he did not take into account any minority interest or liquidity  
discount as that was not part of his terms of reference.  
[226] There was no reasonable expectation that Etedali would have become a majority  
shareholder under Employment Agreement which capped the number of common shares he could  
acquire through Aracon. Furthermore, he knew he was getting into a privately and closely held  
business in which he would be a minority shareholder.  
[227] Muccilli’s estimate of an appropriate minority and liquidity discount was between 20 and  
45% from the value of the shares, and mid-point of 32.5%, was not seriously challenged. Hoare  
did not provide an alternative discount rate.  
[228] Accordingly, I find that a minority interest and liquidity discount at the rate of 32.5% is  
appropriate.  
Normalization of Expenses  
[229] In creating the financial picture of DPI, each expert undertook a normalization of its  
operating expenses to account for any anomalies.  
[230] Muccilli accepted the expenses to be true as stated on the consecutive financial statements.  
However, Hoare adjusted some of the operating expenses based on his observation that (a) in 2018  
there was a marked increase in professional fees leading to his conclusion that DPI was paying the  
legal fees for this litigation and (b) the advertising and promotional expenses showed a marked  
increase in 2017 and 2018 including an expenditure of $135,000 for Leafs and Raptors tickets  
alone. Hoare concluded that these expenses, averaging over half a million dollars annually, was  
too high and a flag that inappropriate personal expenses were being run through DPI.  
[231] However, no concrete evidence of inappropriate advertising and promotional expenses,  
artificially inflating those expenses was adduced. While there was an admission that generators  
were installed at Perin and DiSimone’s respective homes, this is not enough to persuade me that  
Page: 40  
this was reflective of any misconduct or misappropriation of funds. Furthermore, Etedali agreed  
that DPI spent a considerable amount on client relations and business development and that these  
were, generally speaking, necessary types of expenditures.  
[232] While the promotional and advertising expenses were higher in 2017, it must be  
remembered that Etedali was not terminated until after the conclusion of the 2017 fiscal year.  
Furthermore, there is insufficient evidence to establish the magnitude of any allegedly  
inappropriate expenses having been charged under this category.  
[233] The evidence led at trial does not support Hoare’s reduction based on his normalization.  
While Etedali testified that he did not believe that all of the charges run through as advertising and  
promotional fees were legitimate, he was unable to provide any evidence to support that belief.  
[234] Hoare also deducted the one-time litigation expense in 2018 of $350,000 attributed to this  
litigation in normalizing the professional fees line item in those financial statements.  
[235] Hoare reduced the advertising and promotional fees expense item from what was reflected  
in the statements to reflect an allocation of 1% of DPI’s sales over the five-year period.  
[236] Accordingly, I reject Hoare’s deduction from the advertising and promotional fees as stated  
in the financial statements of DPI.  
[237] As for the reduction of the professional fees incurred by DPI in 2018 attributable to this  
litigation, Etedali relies on Booth v. Alliance Windsor Insurance Brokers Inc., 2007 ONCA 805,  
40 B.L.R. (4th) 238 at para. 9. However that case is distinguishable as in that wrongful dismissal  
matter, two shareholders used the corporate funds to defend them in the litigation. In this case, the  
funds have been used to defend DPI. Therefore, this was not an appropriate deduction in  
normalizing the professional fees. However, this sum did not have a material impact on the overall  
valuation by Hoare.  
Conclusion – Fair Market Value of the Common Shares  
[238] Each of Hoare’s and Muccilli’s respective estimated en bloc fair market valuations of DPI  
have problems. The challenges posed derive at least in part from the speculative nature of the  
exercise of projecting what a notional buyer would be prepared to pay for shares of a closely held  
private company as of a very specific date in a hypothetical marketplace.  
[239] One flaw undermining Muccilli’s opinion lies on the fact that his assessment was based, in  
part, on representations made by Perin and DiSimone who, obviously, have a self-interest in an  
undervaluation of their company. Hoare’s assessment, on the other hand, was based entirely on  
the financial records of DPI and is more objective when viewed through the documentary lens.  
[240] Muccilli based his en bloc estimate of DPI using the year end 2017 financial statements  
and assuming they accurately reflected DPI’s financial status on November 7, 2017, rather than  
factoring in either the more specific financial information contained in the General Ledger for the  
Page: 41  
early part of the 2018 fiscal year. He also did not take into account the fact that DPI continued to  
wrongfully hold on to Etedali’s shareholder loan for approximately ten months post termination  
taking it to virtually the end of fiscal 2018. DPI had the benefit of these funds for its operational  
and bonding requirements, and yet Etedali was not provided with any of the profits from the 2018  
financial year, which all acknowledge was a very successful year.  
[241] Furthermore, the financial circumstances of DPI as found by Muccilli appear to be out of  
sync with the evidence presented at trial concerning DPI’s overall financial health. For example,  
in the original term sheet provided to Etedali in 2013, Perin and DiSimone wrote that they  
estimated DPI’s value to between $3 million and $5 million. At trial, both tried to downplay the  
significance of this approximation saying it was just a number pulled out of the air and was not  
intended to reflect a serious estimate. This lacks credibility since they were trying to attract Etedali  
to join the business with the promise of a healthy future. Either Perin and Di Simone were reckless  
with, or intentionally misleading Etedali or this figure was a reasonable estimate. Furthermore, it  
is undisputed that DPI’s revenues grew significantly following Etedali joining DPI.  
[242] During the period of 2014 – 2017, the shareholders received a total of $3.7 million in  
dividends. That reflects an annualized amount of just under $1 million dollars a year in dividends,  
including the substandard 2017 fiscal year.  
[243] DPI is an established business of approximately 20 years and has grown each year,  
consisting of approximately 30 employees.  
[244] While these factors do not suggest, in and of themselves, what a company’s en bloc value  
is, they are indicative of a company that is likely at least worth more than the dividends paid out  
to its shareholders as long as it remains a going concern. The evidence established that DPI is a  
going concern, and there was no evidence that it was facing financial difficulties threatening its  
survival.  
[245] Finally, Hoare used the valuation date that I have determined is the correct one under the  
oppression remedy analysis which I will discuss next.  
[246] Overall, I favour Hoare’s approach over that of Muccilli’s.  
[247] Turning now to the price DPI must pay to buy back Aracon’s common shares, as I have  
stated the key factor driving the substantial difference in the respective opinions as to the estimated  
en bloc fair market value of DPI is the valuation date. The selection of September 30, 2018 versus  
November 7, 2017 determines whether the fiscal 2018 financial statements are included in the five-  
year average or whether the 2017 financial statements attract a weightier position in the respective  
averages by excluding the fiscal 2018 financial statements.  
[248] If there has been oppressive conduct, then the court can consider a remedy that will rectify  
the oppression as a matter of corrective justice. This gives rise to a wide range of equitable  
remedies to suit the particular circumstances, but one that is tempered by the objective of the  
oppression remedy.  
Page: 42  
[249] In Booth, at para. 12, the Ontario Court of Appeal said this with respect to choosing a  
valuation date for the purchase of shares under the oppression remedy section of the OBCA:  
In determining the valuation date for valuing shares in cases like this, the court should  
select the fairest date based on the particular facts. There is no rigid rule or formula. Rather,  
all of the circumstances of the case must be considered in making the decision.  
See Chiaramonte v. World Wide Importing Inc. (1996), 28 O.R. (3d) 641 at 656.  
In Booth, at paras. 6-18, the Court upheld the trial judge’s assignment of a valuation date  
subsequent to the plaintiff’s termination as an employee; namely the most recent financial year  
end of the corporation to the trial, as in that case the termination triggered the oppressive conduct.  
The plaintiff was also a shareholder of the corporation, and yet he was improperly excluded from  
participating in the corporation’s profits after his termination.  
[250] While Etedali’s termination date, as I have found, was on November 7, 2017, just five  
weeks into the 2018 financial year, DPI withheld his shareholder’s loan until approximately 10  
months later. In light of my findings, this was a wrongful withholding and disregarded Etedali’s  
rights under the Shareholder Agreement.  
[251] DPI therefore had the benefit of Etedali’s shareholder’s loan for its operational and funding  
requirements during this time, yet Etedali was deprived of any participation in dividends or profits  
arising from 2018, contrary to the Shareholder Agreement (Booth, at paras. 13, 16).  
[252] The Employment Agreement specifies the valuation process upon termination of Etedali  
at s. 2.13. This clause provides that where the termination is without cause, then “the Employer  
shall re-acquire any shares the Employee owns in DPI for the then market value of those shares,  
by paying the said market value to the Employee, upon the Employer’s election, either in full upon  
the date of Employee’s termination without cause, or in twelve (12) equal, consecutive monthly  
installments…All payments shall be without interest. The market value discussed above may be  
determined by the Board of Directors of DPI from time to time or such business valuators engaged  
by the Board of Directors, acting reasonably.”  
[253] Section 2.13 pinpoints the date of valuation as at the date of termination without cause.  
However, DPI has not abided by this clause. It did not commence any valuation process until well  
after this litigation was commenced. Nor did it offer any price to Etedali for his shares which they  
had the option of doing “acting reasonably” (see Booth at para. 17).  
[254] In Booth, the Court of Appeal upheld the trial judge’s finding linking the termination of  
the plaintiff’s employment with the triggering of the oppression as a shareholder. Rather than  
buying out his shares at fair market value at termination, the corporate employer chose to defend  
the litigation. In the interim, the plaintiff remained a shareholder of the corporate employer, but  
was not provided with any of his rights as a shareholder. The plaintiff was also improperly  
excluded from the management of the corporation. This is similar to the way DPS has treated  
Etedali as a shareholder post termination. The fact that Etedali’s expectations as informed by his  
Page: 43  
employment agreement was that upon termination he would no longer be a shareholder does not  
help DPS in this circumstance where it is DPS who has failed to offer to purchase Aracon’s shares,  
taking the position that Etedali had resigned and thus forfeited his shares to the nominal price for  
which they were purchased (ten cents a share).  
[255] In these circumstances, it is fair and equitable that the valuation date is the fiscal year end  
of 2018. This measure will rectify the oppressive conduct, without bringing to bear the “battle  
axe”.  
[256] However, I have also found that Hoare took into account some factors that increased his  
valuation which I have rejected in favour of Muccilli’s position: namely, the treatment of the  
minority interest and liquidity discount. I am fixing this discount at the midpoint of the range put  
forward by Muccilli; namely 32.5%.  
[257] Taking into account this and the other (less significant) factors in which I found Muccilli’s  
approach to be more appropriate (notably the tax rate and the non-reduction of the professional  
fees in the normalization process), I find that a fair and equitable result in the circumstances of this  
case is to reduce Hoare’s calculation by 40%.  
[258] Accordingly, I am fixing the fair market value of the common shares owned by Acracon at  
the mid-point valuation provided by Hoare in the sum of $733,500 less 40% ($293,400). The  
buyback price of the common shares to be paid by DPI to Aracon is therefore set at $440,100,  
reflecting Aracon’s 20% equity stake in DPI.  
iv.  
Pay in lieu of notice for wrongful termination  
[259] The parties have already stipulated that, if I found Etedali was terminated without cause,  
he is entitled to eight months’ base salary. The base salary was $150,000. Accordingly Etedale is  
entitled to $100,000 as pay in lieu of notice.  
v.  
Punitive Damages  
[260] Etedali seeks punitive damages in the range of $75,000 to $100,0000 for the following  
conduct which he characterizes as reprehensible, malicious, oppressive and high handed as well  
as “a marked departure from the ordinary standards of decent behaviour (Morison v. Ergo-  
Industrial Seating Systems Inc., 2016 ONSC 6725, 38 C.C.E.L. (4th) 312 at para. 49):  
a) Requiring Etedali to take a work-related medical stress leave unpaid;  
b) Issuing a notice to remove Etedali from the Board of Directors with no explanation  
and delivered on the same day as his return from his stress leave;  
c) Requiring the two day look ahead report the day following Etedali’s removal as a  
director;  
Page: 44  
d) Failing to attempt to discuss with Etedali the source of the work stress;  
e) After terminating Etedali without cause, threatening to assert cause and “got to war”  
if he did not accept DPI’s offer with knowledge of his precarious financial position;  
f) Unreasonably asserting cause after the offer was rejected, and failing to pay the  
shareholder loan (which was due and owing irrespective of the reason for  
termination) for approximately 11 months;  
g) Taking advantage of Etedali’s precarious financial position by withholding his  
shareholder loan to gain an unfair advantage in this litigation.  
[261] DPI submits that the above conduct does not warrant an award of punitive damages. It  
withdrew the allegation of cause shortly after examinations for discovery were completed and at  
the same time caused the shareholder loan to be repaid. Further, it maintained its allegation that  
Etedali resigned and therefore forfeited any entitlement to contractual notice and buy back of  
Aracon’s common shares at fair market value. It did not act in bad faith by maintaining this position  
throughout trial.  
[262] Punitive damages are only awarded in exceptional situations to sanction the losing party  
for conduct which is reprehensible, malicious, high-handed or arbitrary (Whiten v. Pilot Insurance  
Co., 2002 SCC 18, [2002] 1 S.C.R. 595 at para. 94; see also, Szczypiorkowski v. Coast Capital  
Savings Credit Union, 2011 BCSC 1376, 94 C.C.E.L. (3d) 270 at para. 105).  
[263] I have found that some of the conduct alleged by Etedali as supporting a claim for punitive  
damages was wrongful and oppressive.  
[264] However, in fashioning an award under the oppression remedy section, I have already  
compensated Etedali for this harsh and oppressive conduct.  
[265] I also accept DPI’s submission that an initially alleged cause does not automatically attract  
a punitive damages or “Wallace” damages type of an award, provided the allegation was made in  
good faith (Mulvihill v. Ottawa (City), 2008 ONCA 201, 90 O.R. (3d) 285 at para. 49). By analogy,  
the same position follows DPI’s allegation that Etedali resigned and was therefore disentitled from  
contractual notice and fair market value of Aracon’s common shares.  
[266] The Supreme Court of Canada, in Honda Canada Inc. v. Keays, 2008 SCC 39, [2008] 2  
S.C.R. 362 (at para 62), held that a breach of contractual duty of good faith and fair dealing  
constitutes an independent actionable wrong from the underlying breach of contact.  
[267] The issue is whether, in light of the oppression remedy awarded, a sanction in the form of  
punitive damages to reflect objectives of retribution, deterrence, and denunciation of the impugned  
conduct is warranted in this case.  
Page: 45  
[268] As I have found, when DiSimone and Perin removed Etedali as a director, they did so for  
improper purposes – to teach him a lesson that if he did not fall into line with their expectations,  
they could deal with him as they wished, irrespective of the provisions of the Employment  
Agreement and the Shareholder Agreement. Further, there was no good reason to withhold his  
shareholder loan of $305,000 for ten months. Even if he had resigned, he was entitled to the prompt  
return of his money. DPI breached its contractual duty of good faith and fair dealing toward  
Etedali.  
[269] These incidents, in particular, constitute the type of reprehensible and high-handed conduct  
that warrants a punitive damages award as an expression of condemnation by this court.  
[270] As stated in Wilson, the objective of the oppression remedy is to provide a measure of  
corrective justice and only to the extent necessary to rectify the unfairness occasioned by the  
oppressive conduct. Therefore, it does not mirror the function of punitive damages.  
[271] While the oppression remedy imposes a higher fair market value on the common shares  
than would have been the case had the valuation date been November 7, 2017 as per the  
Employment Agreement, it is not a punitive measure. Rather it reflects the fact that, inter alia, DPI  
held on to Etedali’s shareholder loan for most of the fiscal 2018 year, maintained him as a common  
shareholder, but did not provide to him any of the benefits of being a holder of common shares  
(through Aracon) for the majority of that year and generally disregarded his rights as a shareholder.  
This all occurred within the context of DPI knowing Etedali’s precarious financial situation. It  
took advantage of that knowledge and delayed repayment of the shareholder loan.  
[272] Etedali proposes an award between $75,000 and $100,000. DPI did not propose a range.  
[273] In the circumstances of this case, I am fixing punitive damages at $75,000. This award will  
send the appropriate message to DPI of deterrence, denunciation and retribution.  
VI.  
DISPOSITION AND COSTS  
[274] Judgment is granted in favour of Etedali and Aracon as follows:  
a) DPI will purchase the 25 Common Shares held by Aracon for the sum of $440,100.00;  
b) DPI will pay Etedali the sum of $100,000 as damages for contractual notice arising from  
termination without cause under the Employment Agreement;  
c) DPI will pay the sum of $75,000 by way of punitive damages to Etedali;  
d) Prejudgment interest and postjudgment interest to be determined; and  
e) Costs in an amount to be fixed.  
Page: 46  
[275] I have not yet had the benefit of submissions regarding the issues of prejudgment interest,  
postjudgment interest, or costs. Accordingly, if agreement cannot be achieved on any or all of  
these issues, the parties will provide me with written submissions as follows:  
(a) Etedali the Aracon will deliver their submissions on the issues of interest and costs, not to  
exceed two pages in length, and their submissions on costs, not to exceed five pages in  
length, in addition to their cost outline, within twenty days from the release of these  
reasons.  
(b) DPI will deliver its responding written submissions, of the same length, within twenty days  
thereafter.  
(c) The written submissions will be delivered to my judicial assistant.  
Justice S. Vella  
Released: April 08, 2022  
CITATION: Etedali et al. v. Disi-Peri Mgt. Inc., 2022 ONSC 2184  
COURT FILE NO.: CV-17-587414  
DATE: 20220408  
ONTARIO  
SUPERIOR COURT OF JUSTICE  
BETWEEN:  
ARASH ETEDALI and ARACON CORP.  
Plaintiffs  
– and –  
DISI-PERI MGT. INC.  
Defendant  
REASONS FOR JUDGMENT  
VELLA J.  
Released: April 08, 2022  


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