Landvis Canada Inc. et al. v. Ocean Choice International Limited Partnership et al., (2016) 377 Nfld. & P.E.I.R. 250 (NLTD(G))

• Judge: Orsborn, J.
• Court: Supreme Court of Newfoundland and Labrador (Canada)
• Case Date: January 12, 2016
• Jurisdiction: Newfoundland and Labrador
• Citations: (2016), 377 Nfld. & P.E.I.R. 250 (NLTD(G))

Landvis Can. v. Ocean Choice (2016), 377 Nfld. & P.E.I.R. 250 (NLTD(G));

    1173 A.P.R. 250

MLB headnote and full text

Temp. Cite: [2016] Nfld. & P.E.I.R. TBEd. JA.014

Landvis Canada Inc. (first plaintiff) and Landvis ehf (second plaintiff) and Andrew Wissler (third plaintiff) and Gudjon Thorbjornsson (fourth plaintiff) v. Ocean Choice International Limited Partnership (first defendant) and 55104 Newfoundland and Labrador Inc. (second defendant) and Ocean Choice Holdings Inc. (third defendant) and MBS Investments Inc. (fourth defendant) and Martin Sullivan (fifth defendant) and Blaine Sullivan (sixth defendant) and Ocean Choice International 2005 Inc. (seventh defendant) and Ocean Choice PEI Inc. (eighth defendant) and Chesley Penney (ninth defendant) and Quota Holdco NL Inc. (tenth defendant) and Her Majesty In Right of Newfoundland and Labrador (eleventh defendant)

(201501G4961; 2016 NLTD(G) 4)

Indexed As: Landvis Canada Inc. et al. v. Ocean Choice International Limited Partnership et al.

Newfoundland and Labrador Supreme Court

Trial Division (General)

Orsborn, J.

January 12, 2016.

Summary:

The Icelandic plaintiffs were a minority limited partner, a major creditor and two directors of the general partner. The partnership operated a vertically integrated seafood business. Two of the plaintiffs claimed that the majority partners acted contrary to the best interests of the partnership and treated the plaintiffs' minority interests unfairly. As an oppression remedy, the plaintiffs sought removal of the general partner, establishment of a process whereby they were given the first option to buy out the majority interest in the partnership, and other ancillary relief. Some of the defendants applied to, inter alia, strike the statement of claim on the ground that there was no legal or jurisdictional basis upon which the claim could succeed.

The Newfoundland and Labrador Supreme Court, Trial Division (General), allowed the application, struck the claim on that ground, and dismissed the action. It was plain and obvious that the oppression claim could not succeed. The statutory oppression remedy was limited to corporations. It did not apply to partnerships. Further, the court did not have inherent jurisdiction to grant the requested relief. The claim, as framed in the pleadings, had no reasonable prospect of success. Even if an oppression remedy was available, the asserted facts did not provide the necessary elements, particularly a specific prejudicial consequence to any particular plaintiff because of an oppressive act.

Company Law - Topic 9781

Actions against corporations and directors - Action for oppressive conduct - When available - The Newfoundland and Labrador Supreme Court, Trial Division (General), stated that "The oppression remedy is a remedy, as codified by statute, designed to give relief to a specific class of complainants from oppressive (unfair) conduct on the part of a corporation or any of its affiliates or on the part of the directors of a corporation or any of its affiliates. Recourse to the statutory remedy is only available when the complaint concerns corporate conduct or affairs. It is not available when the complaint relates to the functioning of a relationship such as a partnership. It will be remembered that a partnership, including a limited partnership, is not, unlike a corporation, a legal entity or person. It is simply a group of persons, corporate or individual, carrying on a business with a view to profit. ... Relief from oppression pursuant to statutory jurisdiction is not available to address issues arising within a partnership, limited or otherwise. The statutory regime is intended to address oppressive (unfair) conduct in the legal context of a corporation, not conduct within what is regarded by the law simply as a relationship." - See paragraphs 157, 158, 169.

Company Law - Topic 9781

Actions against corporations and directors - Action for oppressive conduct - When available - A number of corporations operated a business through a limited partnership - Minority partners sought an oppression remedy under the Canada Business Corporations Act or under the court's inherent jurisdiction - The Newfoundland and Labrador Supreme Court, Trial Division (General), struck the statement of claim as having no reasonable prospect of success - The court stated that "in circumstances involving sophisticated participants in a commercial relationship which was entered into on the basis of comprehensive written agreements, it would be the exceptional case where a complainant could establish, for the purpose of pursuing an oppression claim, a reasonable expectation that exists independently from the rights and obligations set out in the agreements. In any commercial relationship with serious participants and serious money at stake, the reasonable observer would expect the negotiated agreements to represent the sum total of the parties' expectations of each other. And further, in circumstances where a reasonable expectation is established, a complainant must go on to establish oppressive conduct in breach of the expectation and compensable loss caused by such breach. Importantly, any relief ordered must go to rectify the particular consequences of the breach in question. The remedy is remedial, not punitive." - See paragraph 141.

Courts - Topic 2004

Jurisdiction - General principles - Inherent jurisdiction - [See both Courts - Topic 6340 ].

Courts - Topic 6340

Provincial courts - Newfoundland - Supreme Court - Inherent jurisdiction - A number of corporations operated a business through a limited partnership - Minority partners sought an oppression remedy under the Canada Business Corporations Act or under the court's inherent jurisdiction - As an oppression remedy, the plaintiffs sought removal of the general partner and establishment of a process whereby they were given the first option to buy out the majority interest in the partnership - The Newfoundland and Labrador Supreme Court, Trial Division (General), struck the statement of claim - The statutory oppression remedy was limited to corporations - It did not apply to partnerships - The court rejected the argument that it had inherent jurisdiction to grant an oppression remedy - The court had no inherent jurisdiction to grant the relief sought - See paragraphs 172 to 342.

Courts - Topic 6340

Provincial courts - Newfoundland - Supreme Court - Inherent jurisdiction - The Newfoundland and Labrador Supreme Court, Trial Division (General), stated that "inherent jurisdiction is a source of authority which the court must possess - as part of its constitution as a court - in order to protect its proper functioning and to ensure that it can carry out its responsibility of doing justice between parties. It is an ancillary authority, an authority the exercise of which is focused on the court's ability to function according to law. ... Recourse to and the exercise of inherent jurisdiction does not come out of the air, so to speak. To reiterate, it is an authority which flows from the nature of a superior court as a court of law, an authority which allows the court to ensure that its functions and processes are respected and followed and that there is no 'clogging or obstruction in the stream of justice'. ... ' the doctrine of inherent jurisdiction operates to ensure that ... there will always be a court which has the power to vindicate a legal right independent of any statutory grant' . ... The emphasis in these passages is on the notion of inherent jurisdiction as a source of authority needed to ensure that a recognized legal right may be enforced and a legal wrong remedied. The right is enforced, but not created by the court's inherent jurisdiction. ... Inherent jurisdiction is an authority which serves to protect and preserve rights. It does not create them." - See paragraphs 180, 182, 189, 190, 193.

Practice - Topic 2230

Pleadings - Striking out pleadings - General - Failure to disclose a cause of action or defence - A vertically integrated seafood business was operated by a limited partnership - The partnership was controlled, as required by Canadian law, by the majority Canadian partners - The minority partners were from Iceland - The plaintiffs, a minority limited partner, a major creditor and two directors of the general partner, brought an action under the Canada Business Corporations Act, or the inherent jurisdiction of the court, claiming oppressive conduct by the majority partners related primarily to refinancing plans and the decision to restate certain debt as equity - The plaintiffs alleged that the majority partners acted contrary to the best interests of the partnership by favouring the majority partners to the detriment of the minority partners - As a remedy, the plaintiffs sought removal of the general partner and an imposed shotgun buy-sell arrangement giving them the option of buying out the majority partners - The Newfoundland and Labrador Supreme Court, Trial Division (General), allowed the defendants' application to strike the statement of claim and dismissed the action as framed - It was plain and obvious that the oppression claim could not succeed - The statutory oppression remedy was limited to corporations - It did not apply to partnerships - Further, the court did not have inherent jurisdiction to grant the requested relief - The claim, as framed in the pleadings, had no reasonable prospect of success - Even if an oppression remedy was available, the asserted facts did not provide the necessary elements, particularly a specific prejudicial consequence to any particular plaintiff because of an oppressive act - See paragraphs 157 to 308.

Counsel:

Barry Landy and Pete Browne, Q.C., for the plaintiffs;

Barry Bresner and Maureen Doherty, for the first, second and tenth defendants;

Peter O'Flaherty, for the third to eighth defendants;

Barry Learmonth, Q.C., for the ninth defendant (not appearing);

David Rodgers, for the eleventh defendant.

This application was heard on December 8-10, 2015, at St. John's, N.L., before Orsborn, J., of the Newfoundland and Labrador Supreme Court, Trial Division (General), who delivered the following judgment on January 12, 2016.