Khela v. Phoenix Homes Ltd. et al., 2015 BCCA 202

• Judge: Frankel, Neilson and Bennett, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: May 08, 2015
• Jurisdiction: British Columbia
• Citations: 2015 BCCA 202;(2015), 372 B.C.A.C. 122 (CA)

Khela v. Phoenix Homes Ltd. (2015), 372 B.C.A.C. 122 (CA);

    640 W.A.C. 122

MLB headnote and full text

Temp. Cite: [2015] B.C.A.C. TBEd. MY.027

Kundan Singh Khela and Kamaljit Kaur Khela (appellants/respondents on cross-appeal/petitioners) v. Phoenix Homes Limited and Nirmal Takhar (respondents/appellants on cross-appeal/respondents)

(CA041438; 2015 BCCA 202)

Indexed As: Khela v. Phoenix Homes Ltd. et al.

British Columbia Court of Appeal

Frankel, Neilson and Bennett, JJ.A.

May 8, 2015.

Summary:

The Khelas claimed that Takhar was operating Phoenix Homes Ltd. ("Phoenix") in a manner that was oppressive and unfairly prejudicial to their interests as shareholders, and sought remedies under s. 227 of the Business Corporations Act. They also sought leave under s. 233 of the Act to commence a derivative action in Phoenix's name against Takhar and related companies on the basis that they had misappropriated business opportunities belonging to Phoenix. Takhar applied under s. 233 for leave to prosecute a derivative action in Phoenix's name against Mr. Khela, whom he alleged had breached both his duties as a director of the company and an agreement with Takhar and Phoenix.

The British Columbia Supreme Court, in a decision reported at [2013] B.C.T.C. Uned. 2079, dismissed the Khelas' petition for an oppression remedy but granted Mr. Khela leave to bring a derivative action against Takhar on behalf of Phoenix. The Court dismissed Takhar's application for leave to commence a derivative action. The Khelas appealed the dismissal of their claims of shareholder oppression. Takhar cross-appealed the denial of his application for leave to prosecute an action in Phoenix's name.

The British Columbia Court of Appeal dismissed the appeal and the cross-appeal.

Company Law - Topic 2164

Shareholders - Shareholders' rights - Derivative actions - See paragraphs 41 to 48, 70 to 79.

Company Law - Topic 2170

Shareholders - Shareholders' rights - To rectify oppressive or unfairly prejudicial act - See paragraphs 41 to 48.

Company Law - Topic 9781

Actions against corporations and directors - Action for oppressive conduct - When available (incl. time for) - See paragraphs 52 to 55.

Company Law - Topic 9784

Actions against corporations and directors - Action for oppressive conduct - Conditions precedent - See paragraphs 39 to 48.

Company Law - Topic 9785

Actions against corporations and directors - Action for oppressive conduct - Oppression, prejudice or disregard of interests - See paragraphs 49 to 59.

Courts - Topic 583

Judges - Duties - Re reasons for decisions - See paragraphs 60 to 62.

Cases Noticed:

Foss v. Harbottle (1843), 2 Hare 461; 67 E.R. 189 (H.L.), refd to. [para. 23].

Goldbelt Mines Inc. (N.P.L.) v. New Beginnings Resources Inc. et al. (1985), 59 B.C.L.R. 82 (C.A.), refd to. [para. 37].

Stahlke et al. v. Stanfield et al. (2010), 305 B.C.A.C. 18; 515 W.A.C. 18; 2010 BCCA 603, refd to. [para. 38].

1216808 Alberta Ltd. v. Crown Capital Corp., [2014] A.R. Uned. 405; 2014 ABCA 386, refd to. [para. 38].

BCE Inc. v. 1976 Debentureholders - see Aegon Capital Management Inc. et al. v. BCE Inc. et al.

Aegon Capital Management Inc. et al. v. BCE Inc. et al. (2008), 383 N.R. 119; 2008 SCC 69, refd to. [para. 39].

Furry Creek Timber Corp. v. Laad Ventures Ltd. (1992), 75 B.C.L.R.(2d) 246 (S.C.), refd to. [para. 41].

Discovery Enterprises Inc. v. Ebco Industries Ltd. (1998), 109 B.C.A.C. 255; 177 W.A.C. 255; 50 B.C.L.R.(3d) 195 (C.A.), refd to. [para. 42].

Pasnak et al. v. Chura et al. (2004), 201 B.C.A.C. 15; 328 W.A.C. 15; 2004 BCCA 221, refd to. [para. 42].

Holdyk et al. v. Adolph et al., [2012] B.C.A.C. Uned. 7; 2012 BCCA 37, refd to. [para. 42].

Hercules Management Ltd. et al. v. Ernst & Young et al., [1997] 2 S.C.R. 165; 211 N.R. 352; 115 Man.R.(2d) 241; 139 W.A.C. 241, refd to. [para. 42].

Ludlow et al. v. McMillan et al., [1995] B.C.T.C. Uned. 394; 6 B.C.L.R.(3d) 163 (S.C.), refd to. [para. 52].

Jaska v. Jaska, [1997] 2 W.W.R. 86; 141 D.L.R.(4th) 385 (Man. C.A.), refd to. [para. 53].

Mostyn v. Schmiing et al., [2011] B.C.T.C. Uned. 275; 2011 BCSC 275, refd to. [para. 55].

Shannon v. Shannon (2011), 311 B.C.A.C. 208; 529 W.A.C. 208; 2011 BCCA 397, refd to. [para. 61].

Gartenberg v. Raymond et al., [2005] B.C.A.C. Uned. 141; 2005 BCCA 462, refd to. [para. 73].

Statutes Noticed:

Business Corporations Act, S.B.C. 2002, c. 57, sect. 227(2), sect. 227(3)(a), sect. 227(3)(f), sect. 227(4) [para. 22]; sect. 232(2) [para. 23]; sect. 233(1) [para. 24].

Counsel:

R. Hira, Q.C., and P. Waldkirch, for the appellants;

G.A. Cuttler and M. Steinbach, for the respondent, N. Takhar.

This appeal and cross-appeal were heard on December 4-5, 2014, at Vancouver, British Columbia, before Frankel, Neilson and Bennett, JJ.A., of the British Columbia Court of Appeal. In reasons written by Neilson, J.A., the Court delivered the following judgment, dated May 8, 2015.