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Closely held, family-run companies can be caught in the crossfire when personal and business relationships collide. Tari v. Darolfi,1 a recent judgment of the Ontario Superior Court of Justice, illustrates how and why.
The top-line takeaways from the Tari decision are that: (i) the oppression remedy aims to protect reasonable expectations and to reflect business realities, not to remedy hurt feelings or illiquidity; and (ii) a court has the power to order a buyout to resolve deadlock or dysfunction in a closely held company, even in the absence of a finding of oppression.
Tari provides important guidance to those who run or advise closely held family businesses. In this post, we explain why.
The facts, briefly
For nearly three decades, the plaintiff, Massimo Tari, worked in his now-estranged in-laws' businesses, D&R Electronics and Darta Enterprises. He also worked with two real estate holding companies, 152 and 240. Through the family's estate planning, Mr. Tari held significant equity shares in these companies: a 50% interest in Darta and a 25% interest in each of the holding companies.2
Things began to unravel after Mr. Tari's spouse noticed a suspicious bank draft. An internal investigation uncovered a fraudulent invoicing scheme, which Mr. Tari had orchestrated to defraud the companies of more than $500,000.3
Mr. Tari was terminated for cause and locked out. He sued his family members for oppression and wrongful dismissal and asked the Court to compel buyouts of his interests in Darta, 152, and 240. The Darolfis counterclaimed for fraud, deceit, and conversion, among other things.4
The Court's decision
The Court dismissed Mr. Tari's oppression and wrongful dismissal claims and allowed the family's counterclaims for fraud, deceit, and conversion.5 Below, we focus on: (i) the oppression claim, which the Court rejected; and (ii) the Court's decision to order the Darolfis to buy Mr. Tari's shares in Darta, at a price to be established by a neutral valuator, even though Mr. Tari had not been oppressed.
Mr. Tari was not oppressed
In Ontario, the oppression remedy under s. 248 of the Business Corporations Act6(the "OBCA") protects stakeholders' reasonable expectations and guards against conduct that is oppressive, unfairly prejudicial, or that unfairly disregards their interests. Under the framework announced by the Supreme Court of Canada in the BCE case,7 a court first identifies the complainant's reasonable expectations and then determines whether the impugned conduct violates those expectations. A court has broad discretion to "make any interim or final order it thinks fit" to rectify oppression.8
Here, the Court concluded that Mr. Tari was not oppressed for three main reasons.
First, context mattered. These family businesses ran informally for years. There were no formal board or shareholder meetings or related party arrangements. Mr. Tari benefitted from that informality; his reasonable expectations were therefore shaped by a longstanding pattern of informal corporate governance. The Court held that it was not reasonable, after being terminated for cause, for Mr. Tari to expect corporate formalities (or access) that had never been the norm.9
Second, Mr. Tari's exclusion from management and his removal as director and officer were justified given that he had breached his fiduciary duty by engaging in fraudulent conduct. The exclusion and removal were therefore not oppressive; Mr. Tari could not have reasonably expected to retain his management and governance roles after breaching his fiduciary duty through fraud.10
Third, the Court held that illiquidity alone is not oppression. In other words, absent explicit exit rights or oppressive conduct, an inability to sell a minority interest in a closely held company does not constitute oppression. Without more, a court will not intervene to extricate the minority shareholder from their position.11
No oppression necessary for a court-ordered buyout
Despite making no findings of oppression, the Court ordered a buyout by the Darolfis of Mr. Tari's 50-percent stake in Darta — at a price to be established by a neutral valuator, under the Court's supervision if necessary12 — because of the "tremendous acrimony" and the impracticality of continued co‑ownership in a 50-50 operating company.13 The Court determined that a windup would have been drastic and unnecessary given Darta's viability and its workforce.14
In ordering a buyout, the Court exercised a broad power to craft equitable remedies in corporate disputes, even absent findings of oppression. The Ontario courts have previously determined that this power is derived from corporation statutes, even though it is not expressly created by them.15
The Court ordered the parties to go through a buyout process by which Mr. Tari's shares in Darta would be valued and then purchased from him.16 The decision does not state what would happen if the Darolfis lacked sufficient liquidity to purchase Mr. Tari's shares once they had been valued. This appears not to have been a concern in this case, as "[t]he Darolfis [had] acknowledge[d] that ... it could be reasonable to order a buyout of [Mr. Tari] in Darta".17
No buyout to rescue a minority shareholder from illiquidity
With respect to the holding companies, the Court rejected Mr. Tari's request that buyouts be ordered. Unlike Darta, the holding companies were not operating companies, and Mr. Tari had only a minority interest in each. His continued participation as a minority shareholder thus would not compromise the holding companies' ability to operate or jeopardize the interests of employees.18
The Court concluded that, because there was no oppression and no contractual exit right with respect to the holding companies, and because their articles of incorporation restricted transfers without board approval, there was no basis on which to intervene.19 The Court observed that the illiquidity of Mr. Tari's shares in the holding companies was inherent in the companies' corporate structures and did not constitute grounds for relief. It held that, absent oppression or a contractual right, courts will not retrofit liquidity into holding companies.20
Key takeaways
- Document exit strategies from day one. If liquidity matters to minority shareholders, it should be negotiated and documented (e.g., in the form of a shotgun or ROFR clause). Courts will not impose liquidity to extricate minority shareholders, particularly from holding companies.
- Reasonable expectations are fact-driven. Longstanding informal governance narrows future expectations. A party's reasonable expectations are shaped by existing practice, particularly when they participated in and benefitted from those informalities.
- Buyouts may be ordered even in the absence of oppression. While excluding a fiduciary who committed fraud is not oppressive, courts may consider a buyout to preserve otherwise viable enterprises that are beset by deadlock or dysfunction.
Footnotes
1 2025 ONSC 5104 [Tari].
3 Tari, at paras. 57-58, 74, 103, 107.
5 Tari, at paras. 86, 120, 126, 130, 146, 188.
6 R.S.O. 1990, c. B. 16 [OBCA].
7 BCE Inc. v. 1976 Debentureholders, 2008 SCC 69.
8 OBCA, s. 248(3). See also Canada Business Corporations Act, R.S.C. 1985, c. C-44, s. 241(3); Wilson v. Alharayeri, 2017 SCC 39, at paras. 1, 25-26.
10 Tari, at paras. 83-85, 103, 107-108.
12 Tari, at para. 188(k)4.
13 Tari, at para. 157.
14 Tari, at para. 154.
15 See, e.g., Wittlin v. Bergman (1995), 25 O.R. (3d) 761 (C.A.); Muscillo v. Bulk Transfer Systems Inc. (2009), 61 B.L.R. (4th) 92 (Ont. S.C.), at paras. 10, 22, 52, 87.
16 Tari, at para. 188(k).
17 Tari, at para. 155. In other cases, Ontario courts have ordered corporations to obtain financing to facilitate a buyout (Mroz v. Shuttleworth (1996), 30 O.R. (3d) 205 (Gen. Div.), or even to undergo a public sale process (Polano v. Brissette, [1992] O.J. No. 4027 (Gen. Div.), Endorsement at para. 8; Order at para. 1), all to resolve deadlock or dysfunction — and all in the absence of an oppression finding.
18 Tari, at para. 155.
19 Tari, at paras. 146-147, 156.
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