Case snapshot
At a glance
- Case
- Can a Shareholder's Salary Be Reinstated by Court Order in Ontario?
- Court / Tribunal
- Ontario Superior Court of Justice
- Citation
- 2026 ONSC 5810 ↗
- Date
- October 14, 2026
- Area of law
- Litigation Law
- Key issue
- Whether an interim order freezing payments from a 50/50 closely held corporation should be varied, pending the hearing of an oppression application, so the shareholder who runs the business day to day could be paid his salary.
- Outcome
- The motion was granted. The court varied the March 10, 2026 interim order to authorize payment of $7,500 per month to Mr. Peters for operating the business, retroactive to March 10, 2026, as remuneration rather than dividends or shareholder distributions, without prejudice to the other shareholder's claims. Mr. Delduca was ordered to pay $2,712 in costs, the amount the parties had agreed the winning party would receive.
- Why it matters
- Interim freeze orders in shareholder disputes are meant to preserve the business until the hearing. This decision shows an Ontario court refusing to let such an order leave the only shareholder still running the company working without pay, because that risked the very business the order was meant to protect.
Legal principle
The rule from this case
Sections 248 and 249 of Ontario's Business Corporations Act (OBCA) give the court broad authority in an oppression proceeding to make any interim or final order it thinks fit, including orders about the compensation paid to people involved in running the corporation. The court noted the two-part test from BCE Inc. v. 1976 Debentureholders, as discussed in Guttin v. Creber, 2026 ONSC 3460: whether the evidence supports the reasonable expectation asserted, and whether that expectation was violated by conduct amounting to oppression, unfair prejudice or unfair disregard. It also noted that these remedial powers may only rectify oppressive conduct and may protect only a person's interest as a shareholder, director or officer. On this motion, the court found that the shareholders would reasonably expect the business's key employee to be paid at his ordinary rate. It declined to vary the order under Rule 59.06(2) of the Rules of Civil Procedure, because it was not persuaded that new facts had arisen since the order was made. Instead, it concluded that a blanket ban on his pay went further than necessary to preserve the business, risked the business failing, and that the original order had always contemplated that later changes might become necessary.
Important limits
What this does not mean
This decision does not decide the oppression application itself. That hearing was set for November 25, 2026, and the order was expressly without prejudice to the applicant's claims, including any claim for the loss of his own $7,500 monthly salary. The court also did not decide whether $7,500 a month was fair pay for the work; it left that for the hearing judge if it becomes an issue. It also does not mean any shareholder-employee can have pay restored just by asking. The court relied on uncontested evidence that the business was founded on Mr. Peters' reputation, that he still ran it day to day, and that a court-appointed Monitor was already overseeing the corporation's finances. It did not find that new facts justified varying the order under Rule 59.06(2).
Can a court restore a shareholder-employee’s salary during a shareholder dispute?
In this case, yes. In Delduca v. Peters et al, 2026 ONSC 5810 (CanLII), the Ontario Superior Court of Justice in Brampton varied an interim order that had stopped all payments to the two 50/50 shareholders of a gymnastics business. The court authorized the shareholder who still ran the business to be paid his $7,500 monthly salary again, retroactive to March 10, 2026, while the oppression application waits for its hearing.
What happened in this case?
Mr. Delduca and Mr. Peters each own 50% of Gymnastic Giants Brampton Inc., which operates a gymnasium and offers coaching and high-performance athletic services. Mr. Peters, a former Olympic gymnast, founded the business in 1995 and has always run its day-to-day operations. Both men were paid $7,500 a month by the business until their personal and business relationship broke down in December 2025.
In February 2026, Mr. Delduca issued an application on an urgent basis, seeking injunctive relief after an “operational lockout” excluded him from the business. He seeks oppression and other remedies in that application. On March 10, 2026, Justice Stewart set a litigation timetable, froze the corporation’s payments except ordinary payroll and remittances for arm’s-length staff and coaches, and ordered that neither shareholder was entitled to payment pending the hearing. A Monitor was appointed on March 16, 2026. The application was set for a four-hour hearing on November 25, 2026.
Mr. Peters kept running the gym without pay and brought a motion to have his salary reinstated.
What is the oppression remedy, and how did it apply here?
Under sections 248 and 249 of the Business Corporations Act (OBCA), the court can make any interim or final order it thinks fit to rectify oppressive conduct, including orders about the compensation paid to people involved in running the corporation. The court noted the two-part test from the Supreme Court of Canada’s decision in BCE Inc. v. 1976 Debentureholders: does the evidence support the reasonable expectation asserted, and was that expectation violated by oppression, unfair prejudice or unfair disregard?
On this motion, Justice McGee asked whether the shareholders would reasonably expect the business’s key employee to be paid at his ordinary rate, and found that they would. The court noted three things. The Monitor was already protecting the corporation’s finances, so there was no risk of unauthorized withdrawals. Neither side had challenged whether $7,500 was fair pay. And it was not contested that the business was built on Mr. Peters’ reputation and that he still managed it, taught students and coached.
Why did the court change the freeze order?
The court found the existing arrangement asymmetrical: Mr. Peters carried the whole burden of running the gym without pay, while the corporation and both shareholders kept the benefit of his work. If he had to earn income elsewhere, the business would fail. Because the purpose of the freeze order was to preserve the business, a blanket ban on his pay went further than necessary and risked the business failing. The court also noted that the original order had always contemplated that later changes might become necessary.
The court ordered that the payments are remuneration for services, not dividends, shareholder distributions, advances or shareholder-loan payments. The order is without prejudice to Mr. Delduca’s claims, including any claim for the loss of his own salary.
Did the court find new facts under Rule 59.06(2)?
No. Rule 59.06(2) of the Rules of Civil Procedure lets a party ask the court to vary an order because of facts arising or discovered after it was made. The court was not persuaded that new facts had arisen: a Monitor had been contemplated from the start, and the application was still scheduled to be heard within nine months of the original order. The variation rested on the court’s broad remedial authority under the OBCA and the purpose of the freeze order, not on a change in circumstances.
What happened to the other shareholder’s evidence?
Mr. Delduca, who was self-represented with agent counsel for the motion, uploaded a 254-page document that looked like an affidavit but was neither dated nor sworn. It carried a California notary acknowledgement, which verified only the signer’s identity, not the truth of the contents. The court found it did not meet Ontario’s requirements for an affidavit. It also appeared to have been prepared for a different motion, contained hearsay and inflammatory allegations, and included exhibits that were inadmissible on their face.
The court said the motion succeeded on default on that basis alone, but went on to decide it on the merits using the submissions of Mr. Delduca’s agent counsel. Mr. Delduca was ordered to pay $2,712 in costs, the amount the parties had agreed would go to the winning party.
Why does this matter for shareholders in a closely held corporation?
When the owners of a small business fall out, interim orders often freeze the company’s money until a hearing. This decision shows the court looking at whether a freeze still serves its purpose of preserving the business, and adjusting it when it does not. Our Ontario litigation lawyers advise on shareholder disputes and remedies under the OBCA, and our Brampton litigation page explains how to reach us about matters in Peel Region.
Questions and records to discuss with a lawyer
- What written or informal agreements exist about your role, salary, and expectations as a shareholder-employee?
- Is there an interim order in place, and what exactly does it say about payments to shareholders or employees?
- Who is running the business day to day, and what evidence shows that work?
- Has a Monitor or Receiver been appointed, and what is their role?
- Are your affidavits sworn or affirmed in a form that meets Ontario’s Rules of Civil Procedure?
If a shareholder dispute is affecting your income or your business, you can reach UL Lawyers through /connect to discuss your circumstances.
This article is automated commentary on a public court decision and is for general information only — not legal advice. Decisions rely on facts unique to each case. If you are affected by a similar issue, contact a lawyer for advice specific to your situation.
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