Case Study – Damages Resulting from Oppression and Breach of Employment Agreement
We were engaged to determine the value of a company (“Company”) at two points in time to in support of litigation proceedings involving oppression, misrepresentation, unjust enrichment, failure to pay bonuses / wrongful dismissal.
2. **Client Background**
Our client, Plaintiff, began employment as a sales manager with the rapidly growing Company in December 2009. On or about July 2010, Plaintiff and Defendants entered into an additional employment agreement (“Equity Agreement”) in which Plaintiff was to receive additional renumeration in the form of a five percent (5%) equity stake in the Company (“Equity Interest”). In December 2012, the Defendants notified that the Company’s shareholders are bound by a Unanimous Shareholder Agreement (“USA”) which requires the unanimous approval of all shareholders before any new shares may be issued and that the Board of Directors passed a resolution on April 12, 2012 preventing any new share issuances or redistributions of equity to employees and that the Board will no longer entertain discussions or requests for new shares. In March 2013, the Plaintiff alleged that he had fulfilled his obligations pursuant to the Equity Agreement yet had not been provided with the Equity Interest in accordance with the Agreement. He issued a written demand for delivery of the Equity Interest and conveyed his desire to continue employment with the Company.
Unable to obtain satisfactory results in his negotiation with Company, Plaintiff filed a Statement of Claim and an amended Statement of Claim in August 2018. In February 2023, Plaintiff engaged Troy Valuations to determine the en bloc fair market value of the equity of the Company as at March 31, 2013 and March 31, 2020.
What actions did you and your team undertake to resolve the problem? We prepared a valuation of the Company at the corporate year end of 2013 and of 2020. The value of the Company is presented below in Table 1.
Table 1 - Valuation Summary
The expert opinion valuation report prepared by Troy Valuations identified a gain of $3.25 million in the 5% Equity Interest between the two dates. Plaintiff settled for an undisclosed amount with Company prior to the court proceedings.
Plaintiff writes, "Troy Valuations Inc. diligently performed a complex business valuation for me. The financials straddled multiple years, and historical valuations for a legal dispute matter. I give the Troy Valuations team the utmost credit for a service professionally performed and delivered on time and on budget. The price I was quoted was less than other quotes that I had. The work was expertly done within the price quoted and the finished product was high quality. The team knows what they are doing and highly professional. I am grateful for the service provided and offer this review for a strongly positive reference. I would use them again and recommend them to anyone."