Hatskin v. Prober et al., (2011) 269 Man.R.(2d) 144 (QB)

• Judge: Schulman, J.
• Court: Court of Queen's Bench of Manitoba (Canada)
• Case Date: September 09, 2011
• Jurisdiction: Manitoba
• Citations: (2011), 269 Man.R.(2d) 144 (QB);2011 MBQB 216

Hatskin v. Prober (2011), 269 Man.R.(2d) 144 (QB)

MLB headnote and full text

Temp. Cite: [2011] Man.R.(2d) TBEd. SE.035

Ruben Hatskin, by his Litigation Guardian and Power of Attorney, Candice Stearns (applicant) v. James Prober (also known as Jay Prober), Rosalind Prober, Charles Prober and Triangle Acceptance Ltd. (respondents)

(CI 10-01-69685; 2011 MBQB 216)

Indexed As: Hatskin v. Prober et al.

Manitoba Court of Queen's Bench

Winnipeg Centre

Schulman, J.

September 9, 2011.

Summary:

A 50% shareholder of a company applied for an oppression remedy against his co-shareholders and the company (Corporations Act, s. 234). Alternatively, the shareholder sought an order under s. 207(2) of the Act on the ground that it was just and equitable to make such an order.

The Manitoba Court of Queen's Bench dismissed the application.

Company Law - Topic 2170

Shareholders - Shareholders' rights - To rectify oppressive or unfairly prejudicial act - The Hatskin family and the Prober family were equal shareholders of a company that owned a mall - The company had three directors in accordance with the general bylaw - In January 2004, the directors were Ruben Hatskin, Benjamin Hatskin's executor (Mercury) and James Prober - The shopping mall was managed by James' wife (Rosalind) who had acted in that capacity for 15 years - In March 2004, the shareholders signed a resolution appointing a four person board consisting of Ruben, Mercury, James and Rosalind - In March 2009, Ruben was disqualified from acting as a director due to dementia - His daughter (Candice) and wife (Phyllis), acting under an enduring power of attorney, notified the Probers that they wished to have Candice's husband (Guy) act on their behalf in connection with the company - Guy asserted that at a meeting in April 2009, it was agreed that Guy and Candice would replace Mercury and Ruben as directors - Rosalind disputed that assertion - Rosalind became president - Notices were filed with the Companies Branch indicating that Mercury and Ruben were no longer directors and that Candice was a director - Thereafter Guy complained about several matters respecting the mall's operation - Guy's request to amend the bylaws so as to give the Hatskin family equal representation on the board was refused - Candice, on Ruben's behalf, applied for an oppression remedy (Corporations Act, s. 234) - The Manitoba Court of Queen's Bench dismissed the application - No agreement was reached to appoint Guy as a director - Rosalind was properly appointed as president, with the voting advantage that carried - In a small closely held corporation, the factors to be stressed in determining the reasonable expectations were the nature of the corporation, the relationships and past practice - The reasonable expectations, though not static, were part of the compact of shareholders - They were not a wish list - For 50 years the two families harmoniously ran the corporation - Major decisions were made by resolution - There was no suggestion until 2009 of an expectation that the bylaws were inadequate or required updating - There was no evidence that James and Rosalind were unwilling to revise the bylaws for an improper motive - They did not cause the board to act in order to benefit the Probers - They continue to conduct themselves in accordance with the shareholders' reasonable expectations - There was no oppressive conduct or other conduct to support a finding under s. 234 - See paragraphs 1 to 17.

Company Law - Topic 2176

Shareholders - Shareholders' rights - Liquidation or dissolution of company or alternate order - The Hatskin family and the Prober family were equal shareholders of a company that owned a mall - The company had three directors in accordance with the general bylaw - In January 2004, the directors were Ruben Hatskin, Benjamin Hatskin's executor (Mercury) and James Prober - The shopping mall was managed by James' wife (Rosalind) who had acted in that capacity for 15 years - In March 2004, the shareholders signed a resolution appointing a four person board consisting of Ruben, Mercury, James and Rosalind - In March 2009, Ruben was disqualified from acting as a director due to dementia - His daughter (Candice) and wife (Phyllis), acting under an enduring power of attorney, notified the Probers that they wished to have Candice's husband (Guy) act on their behalf in connection with the company - Guy asserted that at a meeting in April 2009, it was agreed that Guy and Candice would replace Mercury and Ruben as directors - Rosalind disputed that assertion - Rosalind became president - Notices were filed with the Companies Branch indicating that Mercury and Ruben were no longer directors and that Candice was a director - Thereafter Guy complained about several matters respecting the mall's operation - Guy's request to amend the bylaws to give the Hatskin family equal representation on the board was rejected - Candice, on Ruben's behalf, applied for an oppression remedy (Corporations Act, s. 234) or, alternatively, an order under s. 207(2) on the ground that it was just and equitable to make such an order - He relied on the Probers refusal to adopt his proposal since April 2009 - The Manitoba Court of Queen's Bench denied both requests - With respect to s. 207(2), the key feature was the measure of hostility that existed between Guy and the Probers and that Guy's radical approach was not grasped by the Probers - The deadlock required to justify a remedy under s. 207 was one that defeated the parties' reasonable expectation and put at risk the corporation's proper business - The disharmony that existed here was Guy's attempt to renegotiate the shareholders' relationship - Guy's rejected proposal showed a mistrust that was not warranted - It was also impractical given that he and Candice lived in Minneapolis and had little time to attend to the shopping centre - See paragraphs 18 to 21.

Company Law - Topic 9785

Actions against corporations and directions - Action for oppressive conduct - Oppression, prejudice or disregard of interests - [See Company Law - Topic 2170 ].

Cases Noticed:

Matthews Investments Ltd. et al. v. Assiniboine Medical Holdings Ltd. et al. (2008), 227 Man.R.(2d) 9; 2008 MBQB 52, refd to. [para. 8].

Clarfield v. Manley (1993), 14 B.L.R.(2d) 295 (Ont. Gen. Div.), dist. [para. 8].

Walsh v. Erectoweld Co., [1993] O.J. No. 24; 37 A.C.W.S.(3d) 1039 (Gen. Div.), refd to. [para. 8].

Animal House Investments Inc. et al. v. Lisgar Development Ltd. et al., [2007] O.T.C. 2278; 87 O.R.(3d) 529 (Sup. Ct.), affd. (2008), 237 O.A.C. 261 (Div. Ct.), refd to. [para. 10].

Sparco Holdings Inc. et al. v. Willdamerle Holdings Ltd. et al. (2008), 233 Man.R.(2d) 231; 2008 MBQB 281, dist. [para. 23].

Aegon Capital Management Inc. et al. v . BCE Inc. et al., [2008] 3 S.C.R. 560; 383 N.R. 119; 2008 SCC 69, refd to. [para. 16].

Authors and Works Noticed:

Morritt, David S., Bjorkquist, Sonia L., and Coleman, Allan D., The Oppression Remedy (2010), §§ 3:10.20, 3:20:30 [para. 16].

Counsel:

Robert L. Tapper, Q.C., and Peter Halamandaris, for the applicant;

Dave Hill and Derek M. Olson, for the respondents.

This application was heard by Schulman, J., of the Manitoba Court of Queen's Bench, Winnipeg Centre, who delivered the following judgment on September 9, 2011.