Digest: Jahnke v Johnson, 2018 SKCA 59

• Date: July 18, 2019

Reported as: 2018 SKCA 59

Docket Number: CA17170 , CACV 3029

Court: Court of Appeal

Date: 2019-07-18

Judges:

• Richards
• Caldwell
• Whitmore

Subjects:

• Corporations � Shareholder Remedies � Derivative Action � Leave to Commence � Appeal
• Statutes � Interpretation � Business Corporations Act, Section 232

Digest: The appellant appealed the decision of a Queen�s Bench chambers judge that dismissed his application for leave to commence a derivative action on behalf of 101200723 Saskatchewan Ltd. (Sask Corp) against 1013660 B.C. Unlimited Liability Co. (BC Corp) and others (see: 2017 SKQB 13). The action proposed by the appellant was based on claims of breach of fiduciary duty, unjust enrichment and conspiracy. The appellant was a former shareholder and director of Sask Corp that purchased property for a development project. Sask Corp obtained financing from Larson Manufacturing. Sask Corp was unable to proceed with the development and marketing of the land as quickly as possible and failed to make payments on the loan to Larson. By 2014 the loan had risen to over $9 million USD. One of the directors and shareholders of Sask Corp, P.T., proposed a plan to the appellant that Larson develop the land where title would be transferred to it and it would finance the development costs. The appellant executed a share purchase agreement in September 2014 pursuant to which he transferred all the Sask Corp shares he and his corporation owned to P.T. and his corporation for $1.00 per share a total of $178. He alleged that he sold his shares relying on P.T.�s representation there would be a written agreement with Larson whereby he and P.T. would receive 30 percent of the net profits from the development of the land. That agreement never materialized. After P.T. had acquired all of the shares of Sask Corp, he sold them to BC Corp. Sask Corp was voluntarily dissolved in September 2015. At the time of dissolution, BC Corp was its sole shareholder and its directors were the respondents. On August 12, 2016, the appellant sent a notice by registered mail to the respondents advising them of his intention to commence a derivative action on behalf of Sask Corp against P.T. and his corporation if the respondents as directors did not seek relief against the proposed defendants. On August 19, 2016, the appellant revived Sask Corp without notifying any of the other parties who had been shareholders of it. The respondent J.R. resigned as a...