Venini v Venini, 2023 ABKB 524

Court of King’s Bench of Alberta Citation: Venini v Venini, 2023 ABKB 524 Date: 20230915 Docket: 1901 10836 Registry: Calgary Between: George Frederick Venini and David Venini Applicants - and - Eugene Venini Respondent _______________________________________________________ Reasons for Decision of the Honourable Justice M.A. Marion _______________________________________________________ I. Introduction [ 1 ] This matter is part of a dispute amongst four siblings ( Siblings ) who are equal 25% shareholders in a closely held family business started or continued by their father in 1946.

For ease of reference, I refer to the family-members by their first names. The Siblings are George Venini ( George ), David Venini ( David ), Eugene Venini ( Eugene ) and Mary Ann Lyons (née Venini) ( Mary Ann ). [ 2 ] Since 1992, the family business has been operated through John G Venini Investments Limited ( JGVI ), which is the namesake of their father John Venini ( John ).

The Siblings appear unable to agree about whether Eugene, who has managed the business for years, should continue to manage the business, how much work is required to manage JGVI’s business since its asset base was reduced in 2015, and what the manager of the business should be paid. [ 3 ] By way of originating application ( Originating Application ), George and David (together, Applicants ) seek: (

a) an order declaring that Eugene may not vote at a JGVI directors’ meeting with respect to Eugene’s employment with JGVI pursuant to section 120(6) of the Alberta Business Corporations Act , RSA 2000 c. B-9 ( ABCA ); (

b) an order declaring that Eugene’s employment with JGVI be set aside pursuant to section 120(9) of the ABCA ; and (

c) an order directing that Eugene’s legal costs in respect of this application cannot be paid by JGVI.

[ 4 ] Eugene opposes the application.

Mary Ann takes no position. [ 5 ] This application raises issues about the use of originating applications for declarations in the context of corporate governance, when and whether directors may vote on a resolution in which they may have a conflict of interest, and the exercise of the court’s discretion under section 120(9) of the ABCA . [ 6 ] For the reasons set out below, I grant the declaration sought in respect of Eugene’s right to vote on a director’s resolution with respect to the termination of his employment, but I decline to set aside his employment contract as requested.

The question about the payment of Eugene’s legal costs by JGVI is adjourned sine die . II. Background [ 7 ] Originating applications are only to be used where there is no substantial factual dispute: rule 3.2. The factual background to this matter, summarized below, is somewhat complex, in part because John and the Siblings have not consistently followed formal or written procedures regarding the management and control of JGVI. Much of the factual background is not disputed. A.

JGVI’s Historical Context and Family Member Roles [ 8 ] In 1946, John incorporated a corporation named Venini Investments Ltd. ( VIL ) for his business. [ 9 ] In 1992, JGVI was incorporated in what appears to have been an estate planning transaction, as successor of, and to hold the assets and carry on the business of, VIL. JGVI’s business has been described as real property investment and management. [ 10 ] Following the 1992 transaction, John was JGVI’s sole director until he died in 2007. At the time of John’s death, JGVI owned three properties with a total of 27 commercial and residential tenants.

After John’s death in 2007, David, Eugene and Mary Ann became directors. George became a director in 2014. The Siblings are currently the only directors. Since at least approximately 2008, the Siblings have each been receiving monthly dividends from JGVI. [ 11 ] It appears on the uncontested evidence that Eugene was an officer of JGVI, although this was disputed by the Applicants in oral argument. If Eugene was an officer, the role does not appear to have been documented and his precise officer position is unclear. Eugene’s evidence is that he has been President since John passed away in 2007.

There is no evidence disputing this, and JGVI board meeting minutes prepared by George in 2019 refer to Eugene as “Officer/Property Manager”. In any event, it is not necessary for me to resolve whether Eugene was or is an officer of JGVI for the purposes of the application before me as my decision would be the same regardless. [ 12 ] The parties agree that Eugene has been the only employee of JGVI for years, and the only one of the Siblings that has been an employee of JGVI. [ 13 ] John originally hired Eugene in 1988 to be VIL’s employee, and Eugene managed VIL’s business.

When JGVI was incorporated in 1992, Eugene became JGVI’s employee. Eugene’s employment relationship with VIL, and then JGVI, has always been oral and unwritten. Eugene’s role has included looking after building maintenance, tenant relations, taxes, banking, commercial leasing and dealing with legal and accounting issues. [ 14 ] As of 2005, when his father was the sole director, Eugene’s salary was $72,000 annually. That continued after John’s death, until 2010.

Starting in 2010, at a time when Eugene, David and Mary Ann were JGVI’s directors, Eugene’s salary was increased to $84,000 annually and it remained roughly the same until at least 2019 and possibly to the present (most recently between approximately between $84,000 and $88,000). For many years, JGVI paid Eugene’s membership and dues at the Calgary Petroleum Club and allowed him to use a parking stall at one of JGVI’s properties, on 8 th Avenue SW ( Building ). [ 15 ] There is no evidence that any issues were raised with Eugene being paid his salary until 2016 or 2017.

George asserts in his affidavit that Eugene “paid himself a salary without regard to how much compensation was reasonable in the circumstances”. However, in questioning, George acknowledged that this just meant that Eugene wrote the cheques and George acknowledged that he was aware that Eugene was being paid, and how much he was being paid. [ 16 ] There is no evidence that, from 2010 to 2016, any of the directors took any steps to reduce or change Eugene’s employment compensation. [ 17 ] Since John’s death, the Siblings have regularly discussed and been involved in big decisions about JGVI. B.

The 2015 Divestiture of Some JGVI Properties and the Remaining Building [ 18 ] In approximately 2014-2015, JGVI divested of two of its three real estate properties ( Divestiture ), leaving only the Building. [ 19 ] With respect to the sale of one of the properties in the Divestiture, George, David and Mary Ann agreed to the price offered but Eugene did not because he wanted a higher price. George offered that Eugene be paid an additional $50,000 from the proceeds of sale to get his agreement.

The Siblings all agreed to the payment to Eugene and the payment was later characterized as a bonus by JGVI’s accountant without George’s agreement. The Siblings equally shared the rest of the proceeds of sale, which appear to have been at least $4,000,000.

[ 20 ] The Building has been JGVI’s main asset since the Divestiture. It is a three-tenant low rise commercial building attached to the CORE shopping centre, on Stephen’s Avenue, across from Banker’s Hall. [ 21 ] The Building includes JGVI’s office. George’s evidence is that each of the Siblings has always been given free access to the JGVI office, and that David and Eugene attend it regularly. As noted above, Eugene uses one of the parking spaces.

David and Mary Ann appear to each use parking spaces at the Building from time to time. [ 22 ] Until 2012, a restaurant space in the Building was occupied by a JGVI entity managed by David, the Dakota Bar and Grill, which paid below-market rent of about $8,000 per month to JGVI. The Dakota Bar and Grill closed in 2012, and since then the restaurant space has been leased by Joey Restaurant Group which operates Local Public Eatery and pays a significantly higher rent than had been paid by Dakota Bar and Grill. In 2013, the Building was significantly renovated. C.

The Amount of Work Required to Manage JGVI’s Assets [ 23 ] In 2016, George, David and Mary Ann began to question how JGVI’s business was being conducted and, sometime in 2017, they determined that Eugene’s role did not appear necessary or reasonable for the amount of work that was needed following the Divestiture. They consulted human resource professionals. [ 24 ] In 2017, JGVI hired a consultant to evaluate Eugene’s position.

The consultant’s report concluded that Eugene’s salary was more-or-less adequate for his position, but also that JGVI should review whether the role is in fact a full-time position and consider prorating it. [ 25 ] There remains a dispute about the number of hours required to manage JGVI’s business. Eugene’s evidence is that he works approximately 30-40 hours a week and is on call 24 hours a day to deal with emergencies. The Applicants’ view is that a part-time position is all that has been required for the management of the business since the Divestiture.

This appears to have been the core of the dispute amongst the Siblings. D. The “Termination Notice” [ 26 ] Sometime in 2017, George, David and Mary Ann met and decided that Eugene’s employment should be terminated. Eugene was not given notice of and did not participate in this meeting. In questioning, George explained that he, David and Mary Ann had decided that the proper way to make changes at JGVI was to terminate “the property manager’s contract and create a new contract to offer Eugene”.

Eugene believes there was a verbal suggestion by the other three directors for him to take a salary cut, but he was not agreeable to it. [ 27 ] On September 25, 2017, by way of a letter signed by David (stating to be on behalf of himself, George and Mary Ann) ( Termination Notice ), Eugene was advised that his employment was terminated without cause effective March 31, 2019 ( Termination Date ).

The Termination Notice informed Eugene that he would receive his regular salary until the Termination Date and that the JGVI Board would prepare a draft Employment Agreement, with new terms and conditions of employment, for his consideration.

There is evidence from both George and Eugene that, sometime later, a version of the Termination Notice was signed by all three of George, David and Mary Ann and provided to Eugene’s legal counsel, but a copy of that document is not before the Court. [ 28 ] On October 25, 2017, Eugene’s legal counsel wrote to George, David and Mary Ann, and took the position that the Termination Notice was a nullity and of no force and effect, and that Eugene “will not be considering himself terminated” as of the Termination Date.

The letter also asserted, among other things, that the Termination Notice was motivated by David being disgruntled about no longer being involved in the JGVI business, that Eugene’s salary was reasonable, and that termination of Eugene would be detrimental to JGVI and its shareholders generally and specifically oppressive to Eugene. [ 29 ] If there was a specific written response to the October 25, 2017 letter, it has not been put before the Court.

Following the Termination Notice and the October 25, 2017 letter, Eugene appears to have carried on managing JGVI’s business as before. [ 30 ] On November 30, 2017, George sent Eugene’s legal counsel a draft Employment Agreement for Eugene’s consideration, to commence on March 1, 2019, which was offered for acceptance until January 15, 2018. The draft Employment Agreement included a part-time employment role (20 hours per week) at a salary of $42,000. Eugene did not accept the offer. E.

George’s Application to Obtain Information from JGVI [ 31 ] By 2016, George had started requesting information about JGVI’s expenses. [ 32 ] In April 2018, George filed an originating application against JGVI for an order compelling JGVI to provide George with access to JGVI’s corporate and accounting records. [ 33 ] The application was resolved by a Consent Order which provided that JGVI would, by June 2018, provide George: (

a) accounting records relating to JGVI cheques used to pay Eugene’s personal credit card; (

b) records relating to JGVI’s Shaw cable account; (

c) records relating to Petroleum Club expenses paid by JGVI; and (

d) full and detailed corporate records of JGVI’s alleged employment of Eugene’s wife. Eugene’s evidence is that his wife has been an administrative assistant but is paid out of his salary. [ 34 ] George found some expenses he felt were unusual and made a demand to Eugene to return some funds to JGVI. Eugene did not do so, and there is no evidence that George took any further steps on the demand. [ 35 ] Since the Consent Order, according to George, Eugene has provided George all the documents George has requested.

F. 2019 Board Meetings and the March 31, 2019 Termination Date [ 36 ] In early 2019, George started taking minutes of JGVI board meetings.

By March 2019, Eugene’s employment became the topic of discussion at those meetings. [ 37 ] Board minutes from March 15, 2019 reflect that Eugene was asked whether he intended to acknowledge or accept the previous actions in respect of the Termination Notice and the new employment offer, but the matter was deferred. [ 38 ] The March 29, 2019 JGVI board meeting minutes prepared by George state: The issue of the previously issued Termination Notice (effective March 31, 2019) and Offer of New Employment was again raised. [Eugene] has stated there is no change to his position on the matter.

It was agreed that a day of time remained for [Eugene] to reconsider. [ 39 ] There is no evidence of anyone objecting to the contents of this meeting minute. [ 40 ] There is no other evidence of what, if anything, transpired between March 29 and the Termination Date. G. Post March 31, 2019 [ 41 ] Following the Termination Date, no arrangements were put in place to replace Eugene. He carried on managing JGVI’s business and continued to be paid as he had been before. [ 42 ] On April 5, 2019, the JGVI board met.

Board meeting minutes from that meeting reflect a resolution was passed 2-1 ( April Resolution ), with George and David voting in favour and Eugene voting against. Mary Ann was absent. [ 43 ] Specifically, the April 5, 2019 meeting minutes prepared by George state (emphasis added): 1. Changes to Position of JGVIL Property Manager a. There was discussion regarding EGV’s lawyer’s (T Kent) assertions regarding the authority of JGVIL Directors to make decisions regarding JGVIL management. EGV clarified that T. Kent did not assert that JGVIL Directors lacked the authority of make decisions about JGVIL management. b.

A resolution was put forward to include the previous actions re: the termination and an offer of employment on this matter in the JGVIL minutes of this meeting, and to subsequently be recorded in the JGVIL Minute Book. RESOLUTION: The Notice of Termination (08/25/2017) and Employment Agreement (attached for reference) are hereby entered into the Minutes of JGVIL Voted in Favour: DJV, GFV / Voted Against: EGV A majority vote in Favour of the above Resolution has been passed. [ 44 ] There is no evidence anyone objected to the contents of this meeting minute.

Eugene was questioned on the Board meeting minutes and his evidence can be fairly characterized as acknowledging that, at the April 5 meeting, the directors discussed his termination and a potential new position. [ 45 ] Sometime before April 22, 2019, George (and possibly David and Mary Ann), made inquiries of JGVI’s bank about having Eugene removed as a signing officer for JGVI, but the bank would not discuss the matter. [ 46 ] The directors met again on May 6, 2019 ( May 6 Meeting ). All four directors were present.

It is undisputed that there was a director’s vote ( May 6 Vote ) on a resolution George proposed ( George’s Resolution ). [ 47 ] The May 6 Meeting minutes prepared by George reflect: 1. JGVIL Management / Manager’s Position The meeting was begun by noting that the JGVIL Property Manager position has been terminated as of March 31, 2019 (per [David, George, Mary Ann] providing a 2017 Notice of Termination which included 18 months of full salary as severance). A subsequent Employment Agreement offering a new position was provided to the then-employed JGVIL Officer/Property Manager, and the offer was not accepted.

Discussion followed: - Adding to the 04/03/19 Resolution that ratified the 03/31/19 Termination there was a call for agreement among the directors on this matter in order to proceed to the next business. [George] and [David] proposed [Eugene] disclose his material interest and therefor [sic] declare a conflict of interest in decisions specifically regarding his position and compensation. [Eugene] and [Mary Ann] contended that all directors had a conflict of interest on this matter. [David] and [George] stated that [Eugene]’s interest in this specific matter was materially different that [sic] that of the other directors.

There was not agreement on the issue of whether [Eugene] had specific material interest that posed a conflict of interest in the specific issue of his own compensation. - There was discussion of the property management role and duties as well as the HR consultant’s 2017 report on this matter.

[Eugene] maintained that the property management duties for the one remaining property required a full-time employee, whereas [David] and [George] proposed that it did not and the added cost of a full-time salary could not be justified and is therefore not in the interests of shareholders. There was not agreement on the issue of whether property management required is a full-time job. There was agreement that a future meeting would be held to discuss the work required and appropriate compensation. [...] [ 48 ] George’s evidence is that he circulated these minutes to the other directors, which is not disputed.

There is no indication that these minutes have been formally objected to or accepted by the directors. Eugene noted in his evidence that there was no director meeting on April 3, 2019 as indicated in the May 6 Meeting minutes.

That appears likely to be an erroneous reference to the April 5 meeting and the April Resolution. [ 49 ] According to George’s affidavit, at the May 6 Meeting, the directors discussed matters “including the confirmation of the termination of Eugene’s position as property manager”, that he and David voted to “confirm termination of Eugene’s employment”, Mary Ann voted against it, and Eugene purported to vote against it. George stated: “we reached an apparent deadlock on the issue at the meeting”.

In questioning, George referred to the May 6 Vote as “a vote that was taken ... regarding a termination - - letter of termination” and that Mary Ann voted no — “she did not want to terminate his contract”. [ 50 ] According to Eugene’s affidavit, at the May 6 Meeting, George “moved by resolution that I was validly terminated on March 31, 2019”. Eugene disputes that there had been any prior resolution passed by JGVI’s board terminating his employment, and states that he and Mary Ann voted against George’s Resolution.

In questioning, Eugene confirmed that the May 6 Vote was “on [his] termination” and that Mary Ann voted against his termination. H. Post May 6, 2019 Meeting [ 51 ] In June 2019, George contacted another property management firm to have another property manager take over from Eugene if necessary. However, to date, no further steps have been taken to hire a new property manager or to remove Eugene. In fact, I was advised by the parties in oral argument that, since the filing of the Originating Application, Eugene has continued to manage the Building similar to how he did previously.

Eugene appears to have been paid his fully salary at least until he swore his affidavit in October 2020. [ 52 ] Accordingly, there does not appear to be a dispute that Eugene has been an employee of JGVI since the May 6 Vote.

This is inherent in the relief sought in the Originating Application, which includes a declaration that the “oral employment contract between JGVI and Eugene” be set aside (which would not be necessary if it did not exist in the first place), George’s affidavit which speaks to Eugene’s employment in the present tense, and George’s questioning in which he acknowledged the Applicants seek to terminate Eugene’s employment contract “that’s already in place”.

Also, subsequent director’s meeting minutes refer to Eugene as the property manager and, in November 2019, all four directors voted on Eugene’s vacation benefits / paid vacation days (the vote was 3-1, with Eugene voting against it). As such, I proceed on the basis and find that Eugene is currently JGVI’s employee. III. The Record [ 53 ] The Originating Application was supported by George’s affidavit sworn July 29, 2019. George’s affidavit includes JGVI’s bylaws ( Bylaws ). He was questioned on his affidavit on November 21, 2019, provided undertakings, and was further questioned on December 2, 2020.

His questioning transcripts and undertaking responses are before the Court. [ 54 ] Eugene swore an October 19, 2020 affidavit, and an October 23, 2020 amending affidavit, in opposition to the Originating Application. Eugene was questioned on October 19, 2020, provided undertakings, and was further questioned on August 12, 2021. His questioning transcripts and undertaking responses are before the Court. IV. Issues [ 55 ] As noted earlier, the Originating Application only seeks declaratory relief under sections 120(6) and 120(9) of the ABCA , and in respect of the payment of legal costs for the application.

Importantly, it does not specifically claim damages or other relief against Eugene other than the setting aside of his employment contract. It does not seek to commence a derivative action on behalf of JGVI against Eugene pursuant to

section 240 of the ABCA , relief under

section 241 of the ABCA , relief from oppression under

section 242 of the ABCA , or a restraining order under

section 248 of the ABCA . [ 56 ] Notwithstanding the limited nature of the relief sought in the Originating Application, the Applicants’ Brief states that the issues before the Court are whether Eugene is properly employed by JGVI, whether his purported employment contract is void as a result of his failure to disclose, whether Eugene should be terminated from his employment as of May 6, 2019, or otherwise, and what damages, if any, are owing by Eugene to JGVI as a result of his refusal to accept the termination of his employment and his refusal to uphold his obligations as a director of JGVI.

Some of the cases relied on by the Applicants are oppression or derivative action cases which may not be directly applicable to the issues raised in the Originating Application because they have their own specific legal frameworks. [ 57 ] In my view, the Applicants’ characterization of the issues before the Court attempts to impermissibly expand the scope of the Originating Application actually filed.

Courts have emphasized that as a matter of fairness lawsuits are to be decided on the pleadings and it is generally inappropriate for the court to decide a case on a basis not pleaded: Sumner v PCL Constructors , 2011 ABCA 326 at para 26 ; Armstrong v Gula , 2023 ABKB 270 at para 18 , citing Malton v Attia , 2016 ABCA 130 at para 39 and Motkowski Holdings Ltd v County of Yellowhead , 2010 ABCA 72 at para 20 . [ 58 ] In his questioning, George explained that he understood the Originating Application related to the May 6 Vote and getting

“resolution of a conflict of interest situation”. In oral argument, the Applicants’ counsel confirmed that the Applicants’ focus was on thefuture – they want a decision on the question of whether Eugene is entitled to vote on the issue of the termination of his employment. [59] Eugene framed the issues more consistent with the relief sought in the Originating Application, including whether Eugenewas entitled to vote at the May 6 Meeting “with respect to the ratification of the termination of his employment”. [60] In my view the issues on this application are: (

a) Was Eugene entitled to vote on the May 6 Vote in respect of the George Resolution? (

b) Should the Court declare that Eugene “may not vote at a director’s meeting on the termination of his own employment”pursuant to section 120(6) of the ABCA? (

c) Should the Court declare that the Eugene’s employment contract be set aside pursuant to section 120(9) of the ABCA? (

d) Should Eugene’s legal costs incurred in opposing the Originating Application be paid by JGVI? V. Analysis [61] As noted earlier, rule 3.2 provides that a statement of claim must be used to start an action unless, among other things, there isno “substantial factual dispute”: rule 3.2(a).

Even where there is not a substantial factual dispute, courts have significant discretion underthe Rules as to whether and how originating application proceedings proceed: rule 3.2(6); rule 3.12; rule 3.14(1)(g); rule 1.4(1).Accordingly, courts may decide that claims commenced with originating applications are better suited to trial or some other process withviva voce evidence: Royal Bank of Canada v Racher, 2017 ABQB 181 at para 17; Royal & Sun Alliance Insurance Company ofCanada v Co-Operators General Insurance Company, 2023 ABKB 426 at para 38. [62] Courts have further discretion because Alberta courts have, with some modifications, effectively harmonized the originatingapplication process with the

summary judgment process, by confirming that the test for whether a matter is appropriate for

summaryjudgment, as set out in Hryniak v Mauldin, 2014 SCC 7 and Weir-Jones Technical Services Incorporated v Purolator Courier Ltd,2019 ABCA 49, applies to originating applications: Kathryn Farms Ltd v 1572548 Alberta Ltd, 2021 ABQB 245 at para 38 affirmed2022 ABCA 21at para 20; Statt v SGI Insurance Services Ltd, 2021 ABCA 268 at para 59; Lloyd v de Walle, 2022 ABCA 321 at paras8-12; Rifco Inc (Re), 2020 ABQB 366 at para 38; Energy Construction and Directional Drilling (Re), 2022 ABQB 268 at para 10;Hotchkiss v Budding Gardens Inc, 2020 ABQB 794 at para 10. [63] Finally, courts have additional discretion to refuse to grant declaratory relief, including based on equitable principles: Judicature Act, RSA 2000, c J-2,

section 11; Piikani Investment Corporation v Piikani First Nation, 2008 ABQB 775 at paras 220-221; Wawanesa Mutual Insurance Co v Lindblom, 2001 ABCA 102 at para 53; Hong Kong Bank of Canada v Wheeler Holdings Ltd, (SCC), [1993] 1 SCR 167 at 192; Ewart v Canada, 2018 SCC 30 at paras 81 and 83. [64] In arriving at my decision in this matter, I have considered all of these principles. In exercising my discretion, I haveconsidered whether there is a substantial factual dispute, and the proper approach to

summary dispositions set out by the Court of Appealin Weir-Jones at para 47: [47] The proper approach to

summary dispositions, based on the Hryniak v Mauldin test, should follow the core principles relating tosummary dispositions, the standard of proof, the record, and fairness. The test must be predictable, consistent, and fair to both parties.The procedure and the outcome must be just, appropriate, and reasonable. The key considerations are: (

a) Having regard to the state of the record and the issues, is it possible to fairly resolve the dispute on a

summary basis, or douncertainties in the facts, the record or the law reveal a genuine issue requiring a trial? (

b) Has the moving party met the burden on it to show that there is either “no merit” or “no defence” and that there is nogenuine issue requiring a trial? At a threshold level the facts of the case must be proven on a balance of probabilities or the applicationwill fail, but mere establishment of the facts to that standard is not a proxy for

summary adjudication. (

c) If the moving party has met its burden, the resisting party must put its best foot forward and demonstrate from the record thatthere is a genuine issue requiring a trial. This can occur by challenging the moving party’s case, by identifying a positive defence, byshowing that a fair and just

summary disposition is not realistic, or by otherwise demonstrating that there is a genuine issue requiring atrial. If there is a genuine issue requiring a trial,

summary disposition is not available. (

d) In any event, the presiding judge must be left with sufficient confidence in the state of the record such that he or she isprepared to exercise the judicial discretion to summarily resolve the dispute. To repeat, the analysis does not have to proceed sequentially, or in any particular order. The presiding judge may determine, during anystage of the analysis, that

summary adjudication is inappropriate or potentially unfair because the record is unsuitable, the issues are notamenable to

summary disposition, a

summary disposition may not lead to a “just result”, or there is a genuine issue requiring a trial. [65] I now proceed to address the issues on this application. A. Was Eugene Entitled to Vote on the May 6 Vote in respect of the GeorgeResolution?

[66] Section 120(6) of the ABCA, as it applied at the time of the May 6 Vote,[1] prohibited a director referred to in section 120(1)of the ABCA from voting on any resolution to approve a material “contract or transaction”, except in certain circumstances:

(6) A director referred to in subsection (1) shall not vote on any resolution to approve the contract or transaction unless the contractor transaction is (

a) an arrangement by way of security for money lent to or obligations undertaken by the director, or by a body corporate inwhich the director has an interest, for the benefit of the corporation or an affiliate, (

b) a contract or transaction relating primarily to the director’s remuneration as a director, officer, employee or agent of thecorporation or an affiliate, (

c) a contract or transaction for indemnity or insurance under

section 124, or (

d) a contract or transaction with an affiliate. [67] Section 120(1) of the ABCA provides: 120(1) A director or officer of a corporation who (

a) is a party to a material contract or material transaction or proposed material contract or proposed material transaction with thecorporation, or (

b) is a director or an officer of or has a material interest in any person who is a party to a material contract or materialtransaction or proposed material contract or proposed material transaction with the corporation, shall disclose in writing to the corporation or request to have entered in the minutes of meetings of directors the nature and extent of thedirector’s or officer’s interest. [68] In his Brief, and in oral argument, Eugene made several arguments against the application of section 120(6) of the ABCA: (

a) the onus is on the Applicants and they have not proven that there was an actual resolution, only a discussion, so section120(6) was never involved; (

b) the May 6 Vote was not for the approval of a contract, but was in respect of ratifying a previous decision of some boardmembers to terminate Eugene’s employment, and therefore there was never a resolution to approve a “contract or transaction” ascontemplated in section 120(6); and (

c) Eugene was entitled to vote because the exceptions in one or both of section 120(6)(

a) and (

b) of the ABCA apply. [69] I address these arguments below. 1. Was there a Resolution at the May 6 Meeting that was the Subject of the May 6 Vote? [70] As noted earlier, all four directors were present at the May 6 Meeting and I find that it is undisputed on the record before methat the May 6 Vote occurred in respect of the George Resolution. It was incumbent on Eugene to put his best foot forward if he disputesthis evidence: Weir-Jones at para 37.

While the May 6 Meeting minutes do not expressly refer to a “resolution”, they do indicate thatthere was a “call for agreement among the directors” in respect of an earlier resolution (perhaps dated incorrectly) that “ratified the03/31/19 Termination”. As noted earlier, both George and Eugene’s evidence (and Eugene’s Brief) confirmed there was a vote, andEugene expressly testified that George “moved by resolution”. [71] Eugene’s argument that there was only a discussion and not a resolution is rejected as being inconsistent with his ownevidence and the undisputed record. 2.

Was there a Resolution as Contemplated in ABCA section 120(6)? [72] Section 120(6) of the ABCA refers to a vote “on any resolution to approve the contract or transaction”, with reference tosection 120(1) of the ABCA. Section 120(1) applies to material contracts, transactions, or proposed contracts or transactions. [73] In his Brief, Eugene argues that the May 6 Meeting was “specifically to deal with” Eugene’s employment contract, and themeeting was held “with respect to the ratification of the termination of his employment”. He says that the “vote of May 6, 2019 was notfor the approval of the contract.

It was with respect to ratifying a prior decision of some board members to terminate a contract”. Heargues that, as a result, section 120(6) is not engaged. [74] The modern approach to statutory

interpretation requires a court to consider the words of a statute in their entire context and intheir grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of theLegislature: Alberta Securities Commission v Hennig, 2021 ABCA 411 at para 22; Tokio Marine & Nichido Insurance Company vSecurity National Insurance Company, 2020 ABCA 402 at paras 213-214; Rizzo & Rizzo Shoes Ltd (Re), [1998] 1 SCR 27, at para 21; Geophysical Service Incorporated v EnCana Corporation, 2017 ABCA 125 at para 77. [75]

Section 120 of the ABCA imposes duties on directors and officers to the corporation and its shareholders: 1216808 AlbertaLtd (Prairie Bailiff Services) v Devtex Ltd, 2014 ABCA 386 at para 17. It governs conduct when directors and officers are in a conflictof interest and must be interpreted in the context of the scheme of the ABCA as a whole. This context includes that directors owefiduciary duties to the corporation at common law and as also reflected in

section 122 of the ABCA or similar legislation: BCE Inc v

1976 Debentureholders, 2008 SCC 69 at para 37; Peoples Department Stores Inc (Trustee of) v Wise, 2004 SCC 68 at para 35. Thefiduciary duty supercedes any contract and any articles, bylaws or directors’ resolutions (unless the directors’ powers to manage thecorporation are restricted by a unanimous shareholder agreement): ABCA, sections 122(3) and 146(7). [76] In Peoples, the Supreme Court of Canada has described director and officer fiduciary duties as follows, at para 35: The statutory fiduciary duty requires directors and officers to act honestly and in good faith vis-à-vis the corporation.

They must respectthe trust and confidence that have been reposed in them to manage the assets of the corporation in pursuit of the realization of the objectsof the corporation. They must avoid conflicts of interest with the corporation. They must avoid abusing their position to gainpersonal benefit. They must maintain the confidentiality of information they acquire by virtue of their position. Directors and officersmust serve the corporation selflessly, honestly and loyally: see KP McGuinness, The Law and Practice of Canadian BusinessCorporations, (1999) at p.715. [Emphasis added.] [77] In my view,

section 120 of the ABCA must be interpreted consistent with director and officer fiduciary duties as set out insection 122 of the ABCA. That is, it must be interpreted in a liberal manner to support compliance with and enforcement of director andofficer fiduciary duties, not in a narrow or technical manner that could frustrate the ABCA’s overall scheme and purpose. [78] Part of the purpose of

section 120 of the ABCA has been recognized as the protection of shareholders of a corporation fromdirectors or officers of the corporation “feathering their own nest or acting in a manner that may not be in the best interests of thecorporation because of a conflict with their personal interests”: Kazakoff Estate v Camrose Crown Care Corporation, 2016 ABQB 99at para 19. The Court of Appeal has interpreted the equivalent

section under the

Canada Business Corporations Act, RSC 1985 c C-44(CBCA) as generally requiring “a director to disclose any conflicts of interest and to refrain in voting on any related director’sresolutions” [emphasis added]: Piikani Energy Corporation (Re), 2013 ABCA 293 at para 35 [Piikani]. [79] In Ontario, the equivalent

section of the Ontario Business Corporations Act, RSO 1990 c B.16 (OBCA) has been described asthe “safe-haven” or the “mandatory conflict avoidance” provision which permits transactions between corporations and their directorsand officers “provided full disclosure of the material interest is made, the interested party refrains from voting on the transaction inquestion, and the contract is fair and reasonable to the corporation”: Gazit

(1997) Inc v Centrefund Realty Corp, (ONSC), 8 BLR (3d) 81 at para 58; Gambin Estate v Di Battista Gambin Developments, 2018 ONSC 4905 at para 56 aff’d 2019 ONSC1376. [80] I interpret

section 120 of the ABCA as being designed to ensure that directors and officers make timely and full disclosure oftheir conflicts of interest so that other directors have full information and can appropriately factor in those conflicts when makingdecisions for the corporation. It is also designed to prevent conflicted directors from using their vote to frustrate the corporate decision-making of the non-conflicted decision-makers on matters in which the director is conflicted (except in the specific statutorily exceptedcircumstances). [81] Eugene’s

interpretation of

section 120 is too narrow as it suggests there must effectively be an approval of a new contract towhich the director is a party or has an interest for the voting prohibition to apply. A liberal

interpretation of “transaction” is moreconsistent with the purpose of the ABCA and consistent with the director and officer fiduciary duties. [82] “Transaction” is not defined in the ABCA. Given its use as an alternative to contract in

section 120, it is something differentthan a contract and the legal elements of a contract are not required. A “transaction” has been defined as the “act or an instance ofconducting business or other dealings; esp., the formation, performance, or discharge of a contract.” Bryan A Garner, Black's LawDictionary, 11th Ed. (St. Paul, MN: Thomson Reuters, 2019) sub verbo "transaction". [83] Further, “transaction” is used elsewhere in the ABCA. Section 33(2) allows a corporation to hold its own shares by way ofsecurity “for the purposes of a transaction entered into by it in the ordinary course of business”.

Section 100 requires a receiver orreceiver-manager to keep detailed accounts of all “transactions carried out by the receiver or receiver- manager”. Sections 114 and 135refers to the “transaction of any business” at director and shareholder meetings, respectively.

Section 130 refers to the sale or purchase ofthe corporation’s securities as a transaction. The exceptions in section 120(6) of the ABCA indicate that a transaction can be for directorindemnity or insurance, or relating primarily to director’s remuneration (including severance arrangements): Piikani at para 35. All ofthis suggests “transaction” in

section 120 is intended to have a broad meaning. [84] In my view, a transaction as used in sections 120(1) and 120(6) of the ABCA can include the transaction of any business,affairs or exercise of powers by a corporation within its capacity as per

section 16 of the ABCA. If the transaction of the corporation’sbusiness, affairs or powers is material and a director or officer is party to it, then

section 120 is engaged. Further, it is not limited to thetransaction of new business in the sense that it involves the creation of a new relationship.

The termination of a material contract orrelationship is as much a transaction of business as the creation of a new one. [85] I find that Eugene was in a clear conflict of interest in respect of the May 6 Vote on the George Resolution, whether theGeorge Resolution is characterized as “a call for agreement among the directors” on a previous termination (as per the May 6 Meetingminutes), a “confirmation of the termination of Eugene’s position as property manager” (as per George’s affidavit at para 15), a vote“regarding a termination - - a letter of termination” (as per George’s questioning transcript at p 5) or on a “resolution that [Eugene] wasvalidly terminated on March 31, 2019” (as per Eugene’s affidavit at para 23).

Accordingly, I find that there is not a substantial factualdispute about the George Resolution that would preclude my determination of this issue. [86] Regardless of the precise characterization, the evidence is consistent that the George Resolution and the May 6 Vote wasabout the termination of Eugene’s employment with JGVI. Eugene was a party to the employment contract with JGVI, and is a party to,and directly and personally interested, in any termination of that employment relationship. [87] Materiality must be proven: Krulc v Krulc, 2015 ABQB 213 at para 63.

As Eugene was JGVI’s only employee, I find that thetermination of his employment was material.

[88] As a result, I find that Eugene was prohibited from voting on the George Resolution pursuant to section 120(6) of the ABCAunless he falls within one of the enumerated exceptions. 3. Did the Exceptions in Section 120(6)(

a) or (

b) of the ABCA Apply? [89] As noted earlier, the version of section 120(6)(

a) of the ABCA relied on by Eugene was not in existence at the time of the May6 Vote, as it was enacted in 2021: Business Corporations Amendment Act, 2021, SA 2021, c 18. In any event, in my view, section120(6)(

a) of the ABCA could not have been engaged because Eugene, under any feasible

interpretation of the George Resolution and theMay 6 Vote, did not undertake any obligation or obligations for the benefit of JGVI. It was the opposite, as the directors voted about thetermination of his employment. [90] Section 120(6)(

b) of the ABCA provides that a director may vote on a contract or transaction “relating primarily to thedirector’s remuneration as a director, officer, employee or agent of the corporation...”. According to Piikani, at para 35, this can includewhen directors are “negotiating their own compensation (or severance arrangements)”. However, even if a director has the power and isentitled to vote under this exception, it does not mean they must do so; if they choose to vote they must still exercise their powers in thebest interests of the corporation pursuant to

section 122: BCE at paras 24, 37, 39; Peoples at paras 35 and 42; VanDuzer, The Law of Partnerships & Corporations, 4th ed (Toronto: Irwin Law, 2018) [VanDuzer] at 409; Unique Broadband Systems, Inc, (Re), 2014ONCA 538 at para 46. In my view, in most cases it will not be in the best interests of the corporation for a director in a conflict ofinterest to vote on his or her own remuneration even if entitled to do so.

This is particularly so where there is only one director, where thedirector’s vote is a casting vote, or where the director’s vote could create a deadlock. [91] “Primarily” has been interpreted in other contexts and in dictionaries to mean “of the first importance, principal, chief”: Mid-West Feed Ltd et al v MNR, , [1987] 2 CTC 2101, citing the Shorter Oxford Dictionary, at 2110; see also “First,principal, chief” R S Vasan, The Canadian Law Dictionary (New York: Law and Business Publications, 1980) sub verbo “primary”. [92] I interpret section 120(6)(

b) to mean that, for the exception to apply, the principal or chief aspect of the resolution in questionis the director’s remuneration as a director, officer, employee or agent of the corporation or affiliate. In this case, there is some indicationthat one of the concerns of David, George and Mary Ann at the time of the Termination Notice was that Eugene was being paid toomuch for the work he did, so his remuneration as an employee was involved. This concern appears to have continued at the time of theMay 6 Vote.

However, based on the undisputed evidence before me, I find that the Termination Notice and the George Resolution wereprimarily related to the termination of Eugene’s employment and the creation of a new manager position to address the perceived currentrequirements of that role, not Eugene’s remuneration. It seems to me that, in most cases, for a transaction to be primarily related toremuneration, it would be based on the expectation that the remuneration is being voted upon for a person starting or continuing a role,not ending that role.

For example, this is why Eugene was entitled to vote at the resolution at the director’s meeting in November 2019which primarily related to his vacation days (as a form of remuneration). [93] In some cases, based on Piikani at paragraph 35, a vote could primarily relate to remuneration if it primarily dealt with aterminated employee’s severance. In this case, I find that the George Resolution was not primarily related to the severance amount butrather the termination of Eugene’s employment. [94] I am satisfied there is no substantial factual dispute on this issue and the exception under section 120(6)(

b) did not apply to theMay 6 Vote. 4. Conclusion Re: Section 120(6) of the ABCA [95] In

summary, I find that Eugene was prohibited from voting on the George Resolution in the May 6 Vote pursuant to section120(6) of the ABCA. There is no substantial factual dispute. The Applicants have met the evidentiary burden to show that Eugene’sposition has no merit and that there is no genuine issue requiring a trial of this issue. I also find that Eugene has not discharged his onusto put his best foot forward and show a genuine issue requiring a trial. I have sufficient confidence in the record to make this decision. B.

Should the Court Declare that Eugene “May Not Vote at a Director’sMeeting on the Termination of his Own Employment”? [96] Whether Eugene is entitled to vote on a resolution in the future will depend on the proper characterization of the substance ofthat resolution and whether

section 120 is engaged. However, I am satisfied there is a current dispute and there likely will be ongoingdisputes about Eugene’s entitlement to vote at a director’s meeting respecting his termination and that some guidance from the court isappropriate and helpful. [97] Accordingly, based on my findings with respect to the May 6 Vote, I exercise my discretion to declare that Eugene is notentitled to vote on a JGVI director vote about the termination of his employment with JGVI, provided that none of the exceptions insection 120(6) apply. C.

Should the Court Declare that the Eugene’s Employment Contract be SetAside Pursuant to section 120(9) of the ABCA? [98] Section 120(9) of the ABCA provides that:

(9) If a director or an officer of a corporation fails to comply with this section, a Court may, on application of the corporation or anyof its shareholders, set aside the material contract or material transaction on any terms that it thinks fit, or require the director or officer toaccount to the corporation for any profit or gain realized on it, or both.

[99] Liberally and generously interpreting the Applicants’ arguments, they argue that Eugene’s oral employment contract withJGVI should be set aside because

(1) Eugene failed to properly disclose his conflict of interest pursuant to the requirements of section120(1) of the ABCA;

(2) Eugene paid himself excessive compensation since the Divestiture;

(3) Eugene breached section 120(6) of theABCA by purporting to vote in the May 6 Vote; and (4) the actual effect of the May 6 Vote was to terminate Eugene’s employment. Theyseek damages or an order requiring him to account for any profit he realized. [100] Eugene argued that 120(9) of the ABCA is simply not engaged. However, I have found that Eugene breached section 120(6) byvoting on the May 6 Vote. Section 120(9) is engaged. [101] Section 120(9) of the ABCA gives the court a broad discretion in the event of non-compliance or breach of

section 120 of theABCA: McAteer v Devoncroft Developments Ltd, 2001 ABQB 917 at para 383. [102] In my view, in addition to the general principles related to

summary dispositions and granting declaratory relief discussed earlierin these Reasons, some of the non-exhaustive factors that courts may consider in exercising discretion under section 120(9) of the ABCAinclude: (

a) whether the non-compliance or breach was a technical breach, but the substantive purpose of the relevant requirements werenonetheless met. For example, in the case of non-disclosure, if the directing minds of the corporation are actually aware of the director orofficer’s interest even if not formally disclosed it may militate against setting aside the transaction: McAteer at para 290; Joy Estate v 1156653 Ontario Limited, , 38 BLR (4th) 69 (ONSC) at para 324; Casey v CopperLeaf Technologies Inc, 2010BCSC 417 at para 166; Reeves v Russell, (ON SC), [2009] OJ No 1126 at para 90 (ONSC)(QL); (

b) the degree of materiality of the non-compliance or breach and whether it would have changed or impacted the corporatedecision-making: Hunter v Ingarfield, 2010 ABQB 74 at para 88; VanDuzer at 387; Baranowski v Binks Manufacturing Co, , 49 CCEL (2d) 170 at paras 112-116; (

c) the degree of materiality of the contract or transaction to the corporation and whether the director or officer’s conduct causedany damage to the corporation or its shareholders: Hanemaayer v Freure, , 2 BLR (3d) 269 (ONSC) at para 88;Baranowski at paras 112-116; (

d) whether the non-compliance or breach was intentional, negligent, innocent or inadvertent, or caused by another’swrongdoing to the director: McAteer at para 385(

c) and (k); Waddilove v 1748960 Ontario Ltd, 2018 ONSC 448 at paras 49-50;Trentfab Inc v Kinmond, 2011 ONSC 773 at paras 228-229 aff’d 2012 ONCA 914; (

e) whether there has been delay in applying to seek relief: Limitations Act, RSA 2000, c L-12, sections 3, 10 and 11; Urichuk vKent, 2017 ABQB 432 at para 26; Hanemaayer at paras 85-86; Pii Photovision International v Thayer, , 30 BLR (2d)286 at paras 49 and 53 (BCSC); (

f) whether the party seeking the relief has, since becoming aware of impugned conduct, acquiesced in, condoned or ratified thenon-compliance or breach: Pii Photovision at para 53; Phoenix Homes Limited v Takhar, 2023 BCSC 184 at para 458; (

g) whether the contract or transaction, or proposed contract or transaction, was procedurally and substantively reasonable andfair to the corporation, or was in its best interests; ABCA, section 120(8); McAteer at para 385(a); Dimo Holdings Ltd v H JagerDevelopments Inc, [1998] AJ No 1781 (ABQB)(QL), 43 BLR (2d) 123 at para 20; Georgakakos v Georgakakos, 2020 ONSC 2256 at para 33; Baranowski at paras 120-121; Catalyst Fund General Partner Inc v Hollinger Inc, (ONSC), 20 BLR (4th)249 at paras 31-34; Casey at para 167; Western Canadian Coal Corp v Fawcett, 2006 BCSC 463 at para 38; UPM-Kymmene Corp vUPM-Kymmene Miramichi Inc, , 214 DLR (4th) 496 (ONSC) at paras 197-198 [UPM] affirmed ,250 DLR (4th) 526 (ONCA); Waddilove at para 52; (

h) whether the non-compliance or breach was associated with other conduct that was in breach of director or officer statutoryor common law duties, or whether the director or officer was otherwise acting honestly and in good faith in the best interests of thecorporation: ABCA, sections 120(8.1) and 122; Gambin Estate at paras 70-71; Waddilove at para 52. Compliance with some director andofficer obligations, such as disclosure of a conflict, does not relieve a director from the overall obligation to act honestly and in the bestinterests of the corporation: Unique Broadband Systems at para 48; UPM at para 117; VanDuzer at 409; (

i) whether the non-compliant director or officer earned profit or other benefits as a result of the non-compliance: section120(9); Dimo Holdings at para 21; UPM at para 194; Kazakoff at para 19; Trentfab at para 194; (

j) whether granting the remedy would effectively provide a benefit to a person that is not deserved: McAteer at para 385(k); (

k) whether arm’s length or legitimate third-party interests have intervened: McAteer at para 385(g); (

l) whether it is not practical, possible or useful to set aside the contract or transaction, for example because it is spent orpartially performed: Kazakoff at para 19; Hanemaayer at para 85; Dimo Holdings at para 27; McAteer at paras 383-384 and 385(e);Phoenix Homes at para 458; and (

m) whether there are other remedies or processes available under the ABCA or otherwise that may be more appropriate or havealready been engaged to remedy the non-compliance or breach: McAteer at para 385(d). [103] In this case, there is a dispute about the amount of work, at least since 2015, that has been or continues to be required to manageJGVI’s business, and what a reasonable amount of compensation is for that work.

Accordingly, there is a dispute about whetherEugene’s employment and compensation has been reasonable and appropriate since the Divestiture, and whether Eugene’s ongoingemployment with JGVI, at his salary or otherwise, was or is in JGVI’s best interest. Sometimes a dispute about whether the challengedconduct was reasonable and fair or in the best interests of the corporation may warrant the matter proceeding to a trial process: Catalyst

Fund at paras 36-40; Response Energy Corporation v Barr , 2021 ABCA 109 at para 23 ; Pii Photovision at paras 55-59. However, it depends on all the circumstances and whether there is a substantial factual dispute or a genuine issue requiring a trial. [ 104 ] In my view, I find that the dispute about the scope and compensation of the property manager role does not give rise to a genuine issue requiring a trial and, therefore, is not a substantial factual dispute.

This is, in part, because, for the reasons set out below, my decision on the exercise of my discretion would be the same even if I assumed the disputed issues are resolved in the Applicants’ favour in the way most positive to them – namely that the property manager role did not need to be full-time and that Eugene was overpaid. That is, I would nonetheless decline to exercise my discretion to set aside Eugene’s employment contract on this application.

Accordingly, any factual dispute related to that is not substantial for the purposes of this application, and I am satisfied that the dispute does not raise a genuine issue requiring a trial. Accordingly, I need not and do not make any findings about whether Eugene’s employment contract or compensation has been or is reasonable, or about the appropriate scope or time required for the property manager role. [ 105 ] Further reasons for these conclusions are further set out below. [ 106 ] First, Eugene became employed by JGVI before he became a director.

The Applicants cannot possibly seek to set aside Eugene’s employment contract based on non-disclosure for the period 1992 to 2007. [ 107 ] Second, section 120(2) (

d) of the ABCA provides that the disclosure required under section 120(1) shall be made “if a person who is interested in a contract or transaction later becomes a director, at the first meeting after the director becomes a director”. Eugene became a director in 2007, after John’s death. I do not have evidence about whether Eugene formally complied with section 120(2) (

d) when he became a director 16 years ago, which was more than 10 years before the Originating Application was filed. Under any analysis, too much time has passed to rely on any failure to disclose his interests prior to or in 2007: Limitations Act ,

section 11 ; Urichuk at para 26 . [ 108 ] Third, for the period following 2007, the Applicants have not shown that there has been a substantive failure by Eugene to disclose his employment and compensation. JGVI is a closely held family corporation. Everyone appears to have known (or should have known) about Eugene’s employment and his salary. David and Mary Ann became directors by 2009 at the latest, and George in 2014. Since then, there have been regular board meetings and financial information has been disclosed which contain the compensation being paid to Eugene as JGVI’s only employee.

George acknowledged in his questioning that he was aware that Eugene was being paid and how much he was being paid.

Even if Eugene did not formally meet the requirements to disclose the terms of his unwritten employment contract, or his compensation, pursuant to section 120(9) of the ABCA , the Applicants had actual or constructive knowledge of his employment and his compensation. [ 109 ] Fourth, even after events in 2016-2018, including (1) when Mary Ann, David and George became concerned about how JGVI was being managed and about Eugene’s employment and JGVI expenses; (2) the 2017 Termination Notice and Eugene’s advising that he treated it to be of no force and effect; and (3) the 2018 consent order by which JGVI provided George information, which caused George concerns and to issue Eugene a demand for return of funds, the directors did nothing further to confirm Eugene’s termination or to alter his compensation.

In fact, by sending the Termination Notice, David, George and Mary Ann each confirmed Eugene’s employment contract and that he was to receive his “regular salary” until the Termination date. [ 110 ] Ultimately, it is the shareholders who elect or remove directors: ABCA sections 107 - 109 ; Bylaws at paras 4.02, 4.03.

And it is the directors (including the Applicants and Mary Ann) who have had the power to manage or supervise the management of the business and affairs of JGVI, including determining the scope of its employees and fixing Eugene’s compensation as employee or officer pursuant to the ABCA and JGVI’s bylaws: ABCA , sections 101 and 125(1) ; Bylaws at paras 7.01, 7.04, 7.12. [ 111 ] Therefore, the fact Eugene was and continues to be an employee, director (and officer, if he was one) and compensated as he has been, has been the responsibility of all the Siblings, not just Eugene.

Accordingly, I give little weight on this application to the Applicants’ arguments or implications that Eugene was secretly paying himself excessive compensation, or that it was Eugene’s responsibility alone to reduce his compensation after the Divestiture.

Further, the implication in George’s affidavit that Eugene was paying himself bonuses without a legitimate or corporate purpose is also given little weight – the only “bonus” in evidence was a payment made Eugene as part of the Divestiture that was agreed to by all four directors. [ 112 ] Fifth, since the Termination Date, the May 6 Vote, and the filing of the Originating Application, the directors have allowed JGVI to continue Eugene’s employment and to pay his compensation.

While they have been pursuing the narrow declarations sought in this Originating Application, the Applicants have not otherwise exercised their rights as shareholders and directors to deal with Eugene’s employment and compensation. As noted earlier, they have not sought leave to start a derivative action, an oppression action, or a restraining order under

section 248 of the ABCA . Further, the Applicants and Mary Ann have not exercised their voting rights as shareholders, or exercised their duties as directors, to change Eugene’s directorship or employment.

In all the circumstances, given the complexities inherent with the fact that Eugene has been an employee since the Originating Application was filed, and there is only limited evidence since that time, in my view there are other processes within the power of the JGVI directors and shareholders which may be available to the parties that are more appropriate to deal with issues relating to Eugene’s employment, compensation and remedies sought. [ 113 ] I do not exercise my discretion to declare that Eugene’s employment contract should be set aside as requested by the Applicants.

That portion of the Origination Application is dismissed. By dismissing that portion of the application, I do not make any final findings that might be made on a more complete record in another process, nor do I make, or need to make, any findings on any of the disputed matters on the record before me. It will be up to the parties to decide whether they wish to continue litigating these issues. D. Should Eugene’s Legal Costs Incurred in Opposing the Originating Application be paid by JGVI?

[ 114 ] It is unknown whether Eugene has charged or intends to charge JGVI for his costs associated with the Originating Application. The parties did not address this relief in their arguments and no authorities have been provided. In my view, it is premature and inappropriate for me to decide this issue in a vacuum without more information and proper argument.

This aspect of the Originating Application is adjourned sine die and, if necessary, can be brought back before me in the event Eugene intends to charge JGVI for his counsel’s costs responding to this Originating Application and the parties and JGVI cannot agree to whether he should be indemnified for those costs. VI. Conclusion [ 115 ] I make the following order: (

a) it is declared that Eugene was not permitted to vote in the May 6 Vote and that, in doing so, he breached section 120(6) of the ABCA : (

b) it is declared that Eugene is not entitled to vote on any future JGVI director’s vote about the termination of Eugene’s employment with JGVI, provided that none of the exceptions in section 120(6) of the ABCA apply; (

c) the Applicants’ request for a declaration that Eugene’s employment contract with JGVI be set aside pursuant to section 120(9) of the ABCA , is denied; (

d) the Applicants’ request for an order that Eugene’s legal costs in response to this Originating Application cannot be paid by JGVI is adjourned sine die . [ 116 ] If the parties cannot agree on an appropriate costs order for this Originating Application within 30 days of this decision, they may make written submissions to me of no more than 5 pages (excluding authorities). Heard on the 12 th day of April, 2023. Dated at the City of Calgary, Alberta this 15 th day of September, 2023. M.A. Marion J.C.K.B.A. Appearances: Robyn Graham for the Applicants Peter W. K. Ridout for the Respondent