Lizotte v. Arseneault et al., 2012 NBCA 89

• Judge: Larlee, Robertson and Green, JJ.A.
• Court: Court of Appeal (New Brunswick)
• Case Date: June 21, 2012
• Jurisdiction: New Brunswick
• Citations: 2012 NBCA 89;(2012), 395 N.B.R.(2d) 298 (CA)

Lizotte v. Arseneault (2012), 395 N.B.R.(2d) 298 (CA);

    395 R.N.-B.(2e) 298; 1023 A.P.R. 298

MLB headnote and full text

Sommaire et texte intégral

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2012] N.B.R.(2d) TBEd. OC.036

Renvoi temp.: [2012] N.B.R.(2d) TBEd. OC.036

Cindy Lizotte (applicant/appellant) v. Darie Arseneault, Kurt Bird, Patricia LeBlanc, 051536 N.B. Ltd., Elmwood Veterinary Hospital Ltd. and Kim Maillet (respondents/respondents)

(148-11-CA; 2012 NBCA 89)

Indexed As: Lizotte v. Arseneault et al.

Répertorié: Lizotte v. Arseneault et al.

New Brunswick Court of Appeal

Larlee, Robertson and Green, JJ.A.

October 18, 2012.

Summary:

Résumé:

The applicant, a minority shareholder in a corporation, sought a determination as to whether she was in breach of a unanimous shareholders agreement. The respondents included the majority shareholder and other minority shareholders.

The New Brunswick Court of Queen's Bench, Trial Division, in a decision reported [2009] N.B.R.(2d) Uned. 21, ruled that the applicant was not in breach of the agreement. The respondents appealed.

The New Brunswick Court of Appeal, in a decision reported 356 N.B.R.(2d) 332; 919 A.P.R. 332, dismissed the appeal. The majority shareholders/directors voted resolutions to (a) reimburse the respondents for their legal fees and disbursements, and (b) issue shares to a new shareholder. The applicant then applied for an "oppression remedy" under s. 166(2) of the Business Corporations Act (N.B.).

The New Brunswick Court of Queen's Bench, Trial Division, in a decision not reported in this series of reports, dismissed the application. The applicant appealed.

The New Brunswick Court of Appeal allowed the appeal in part. The s. 166(2) remedy was granted with respect to the reimbursement of the respondents' legal fees and disbursements. The s. 166(2) remedy was premature with respect to the issuance of the shares where no shares had yet been issued.

Company Law - Topic 2170

Shareholders - Shareholders' rights - To rectify oppressive or unfairly prejudicial conduct - A unanimous shareholders agreement provided that a shareholder who wanted to transfer her shares had to give notice of the transaction to the other shareholders and the company - The applicant and Beaulieu were minority shareholders and parties to the agreement - Beaulieu sold her shares to the applicant without having given the notice required by the agreement - An arbitrator found that the sale contravened the agreement and set it aside - The applicant returned the shares to the other shareholder - On application by the applicant, the court determined that the applicant had not been in breach of the agreement - The respondents included the majority shareholder and other minority shareholders - The majority shareholders/directors voted a resolution to reimburse the respondents for their legal fees and disbursements - The applicant now sought the "oppression remedy" under s. 166(2) of the Business Corporations Act (N.B.) - On appeal, the New Brunswick Court of Appeal granted the remedy - While this was "not a true case of oppression" the applicant was unfairly prejudiced in her interests - She had a "reasonable expectation that the majority would not exercise its dominant position to direct the corporation to use its income or retained earnings to reimburse the majority for expenses incurred in pursuing litigation with the minority over the interpretation of a unanimous shareholders agreement" - That expectation was breached - See paragraphs 20 to 42.

Company Law - Topic 7013

Fundamental changes and shareholders' rights - Rights of minority or dissenting shareholders - Oppression - What constitutes - [See Company Law - Topic 2170 ].

Courts - Topic 583

Judges - Duties - Re reasons for decision (incl. notes) - An application judge ruling on an application brought under rule 16 of the Rules of Court (N.B.) delivered an "oral decision" - He began with an admission that he was unable to find the time to write a "well-structured" written decision - Citing his inability to "keep up with the workload" and the need to produce timely judgments for the parties, the application judge concluded that what was important was that he be "comfortable" with his conclusions - While the transcript covered 35 pages, it did not "reveal a conventional legal analysis, but one infused with observations or findings that arguably informed the application judge's decision to dismiss the application in its entirety" - In reversing in part the application judge's decision, the New Brunswick Court of Appeal stated as follows: "Bluntly stated, the adumbrated approach to judgment writing which the application judge applied is not an acceptable model for judicial decision making. Factually, this is not a difficult case. The entire application record is in written form, there being no cross-examination on the affidavits. The parties expected the application judge would have clearly set out the positions of the two parties, cited the appropriate jurisprudence, made any necessary findings of fact, drawn any necessary inferences and applied these findings in arriving at a determination on each issue" - See paragraphs 13 to 19.

Droit des compagnies - Cote 2170

Actionnaires - Droits des actionnaires - Droit à la rectification d'un acte oppressif ou injustement préjudiciable - [Voir Company Law - Topic 2170 ].

Droit des compagnies - Cote 7013

Modifications de structure et droits des actionnaires - Droits des actionnaires minoritaires ou dissidents - Oppression - Éléments constitutifs - [Voir Company Law - Topic 7013 ].

Tribunaux - Cote 583

Juges - Devoirs - Motifs de décision (y compris les notes) - [Voir Courts - Topic 583 ].

Cases Noticed:

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

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. 4].

New Brunswick (Minister of Social Development) v. G.B. et al. (2012), 392 N.B.R.(2d) 209; 1016 A.P.R. 209; 2012 NBCA 62, refd to. [para. 15].

F.H. v. McDougall, [2008] 3 S.C.R. 41; 380 N.R. 82; 260 B.C.A.C. 74; 439 W.A.C. 74; 2008 SCC 53, refd to. [para. 16].

R. v. MacDonald, [1977] 2 S.C.R. 665; 9 N.R. 271, refd to. [para. 16].

R. v. Sheppard (C.), [2002] 1 S.C.R. 869; 284 N.R. 342; 211 Nfld. & P.E.I.R. 50; 633 A.P.R. 50; 2002 SCC 26, refd to. [para. 16].

R. v. R.E.M., [2008] 3 S.C.R. 3; 380 N.R. 47; 260 B.C.A.C. 40; 439 W.A.C. 40; 2008 SCC 51, refd to. [para. 16].

Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817; 243 N.R. 22, refd to. [para. 16].

R. v. S.S. (2011), 376 N.B.R.(2d) 146; 970 A.P.R. 146; 2011 NBCA 75, refd to. [para. 16].

Blanchard v. Légère (2009), 339 N.B.R.(2d) 357; 870 A.P.R. 357; 2009 NBCA 2, refd to. [para. 16].

P.R.H. v. M.E.L. (2009), 343 N.B.R.(2d) 100; 881 A.P.R. 100; 2009 NBCA 18, refd to. [para. 16].

R. v. Chapelstone Developments Inc. et al. (2004), 277 N.B.R.(2d) 350; 727 A.P.R. 350; 2004 NBCA 96, leave to appeal refused (2005), 343 N.R. 199, refd to. [para. 16].

Doucet et al. v. Spielo Manufacturing Inc. et al. (2011), 372 N.B.R.(2d) 1; 961 A.P.R. 1; 2011 NBCA 44, consd. [para. 20].

Brant Investments Ltd. et al. v. KeepRite Inc. et al. (1991), 45 O.A.C. 320 (C.A.), refd to. [para. 25].

820099 Ontario Inc. v. Harold E. Ballard Ltd., [1991] O.J. No. 266 (Gen. Div.), refd to. [para. 26].

Naneff v. Con-Crete Holdings Ltd. et al., [1993] O.J. No. 1756 (Gen. Div.), varied (1994), 73 O.A.C. 334 (Div. Ct.), refd to. [para. 26].

Discovery Enterprises Inc. v. Ebco Industries Ltd., [2002] B.C.J. No. 1957; 2002 BCSC 1236, consd. [para. 27].

Gibbons v. Medical Carriers Ltd. et al. (2001), 161 Man.R.(2d) 198; 2001 MBQB 310, consd. [para. 29].

Safarik v. Ocean Fisheries Ltd. et al. (1995), 69 B.C.A.C. 294; 113 W.A.C. 294 (C.A.), consd. [para. 29].

Authors and Works Noticed:

Beck, Stanley M., Minority Shareholders' Rights in the 1980s, [1982] L.S.U.C. 311, generally [para. 21].

Peterson, Dennis H., and Cumming, Matthew J., Shareholder Remedies in Canada (2nd Ed. 2009), looseleaf, para. 17.56 et seq. [para. 21].

Counsel:

Avocats:

G. Robert Basque, Q.C., for the appellant;

Edwin G. Ehrhardt, Q.C., for the respondents.

This appeal was heard on June 21, 2012, by Larlee, Robertson and Green, JJ.A., of the New Brunswick Court of Appeal. The Court of Appeal delivered the following decision in both official languages on October 18, 2012.