Recent Developments Regarding the Oppression Remedy

• Author: Peter C. Wardle and Daniel Bernstein
• Pages: 421-448

Recent

Developments

Regarding

the

Oppression

Remedy

Peter

C.

Wardle

and

Daniel

Bernstein

A.

INTRODUCTION

It

is

often

said that oppression remedy jurisprudence

is

highly

fact

spe-

cific.1

In

essence,

the

remedy

is

based

on

fairness

and

reasonable expec-

tations.

In

addition,

the

court's jurisdiction

is

discretionary

in

nature,

both with respect

to a

finding

of

oppression

and the

granting

of a

rem-

edy.2

Because each case turns

on its

facts,

examining jurisprudence over

a

relatively short

timeframe

in an

attempt

to

highlight

or

outline trends

is

only

helpful

to a

limited extent.

Nevertheless,

the

decisions summarized

in

this

paper characterize

some

of the

prevailing issues

and

continuing themes

in the

evolution

of

the

oppression remedy

in

Canada:

1)

continued resort

to the

remedy

by

individual creditors,

or,

increas-

ingly,

trustees

in

bankruptcy acting

on

behalf

of all

creditors;

2)

the

need

for

reasonable expectations

in the

context

of the

large, pub-

lic

company where shareholders arguably "buy

in" to the

oppression;

3)

the

need

for

reasonable expectations

in the

context

of the

small,

closely

held "partnership" company;

Of

Wardle Daley

LLP,

Toronto.

1 See

Ferguson

v.

Imax

Systems

Corp.

(1983),

43

O.K.

(2d)

128 at 137

(C.A.).

2

Olympia

&

York

Developments

Limited

(Trustee

of)

v.

Olympia

&

York

Realty

Corp.,

[2003]

O.J.

No.

5242

at

para.

42

(C.A.),

per

Goudge J.A.

[Olympia

<&

York

2003].

421

422

PETER

C.

WARDLE

AND

DANIEL BERNSTEIN

4)

the

interplay between

the

oppression remedy

and a

complainant's

contractual remedies;

and

5)

the

declining application

of the

business judgment rule

as a

defence

to

oppression

claims.

It

is

clear that Canadian courts continue

to

view

the

oppression remedy

as a

powerful tool

for

rectifying

corporate unfairness.

In

1989

one

author described

the

remedy

as

follows:

It

is

broad

and

flexible,

allowing

any

type

of

corporate activity

to be

the

subject

of

judicial

scrutiny.

The

potential protection

it

offers

stake-

holders

is

awesome.

Nevertheless,

the

legislative intent

of the

oppres-

sion remedy

is to

balance

the

interests

of

those claiming rights

from

the

corporation against

the

ability

of

management

to

conduct

business

in

an

efficient

manner.

The

remedy

is

appropriate only where,

as a

result

of

corporate activity, there

is

some discrimination

or

unfair dealing

amongst corporate stakeholders,

a

breach

of a

legal

or

equitable right,

or

appropriation

of

corporate

property.3

That summary

continues

to be

accurate.

However,

some

of the

recent

case

law

suggests

that,

in

addressing

the

"balance

of

interests,"

the

courts

are

reluctant

to

defer

to the

exercise

of

business

judgment

on the

part

of

management

or the

board

of

directors

as to the

exigencies

of the

business.

Nor is it

necessarily

the

case,

as the

decision

in

Ford

Motor

Co.

of

Canada

v.

Ontario Municipal Employees Retirement

Board4

demonstrates,

that

a

respondent

can

rely

on

long-established business practices

in

defending

an

oppression claim. Given increasing levels

of

public aware-

ness

of

corporate wrongdoing

and the

application

of a

stricter regulato-

ry

standard,

it

seems likely that

we

will

see an

expanded

use of the

oppression remedy

by

Canadian courts

in the

near

future.

B.

OVERVIEW

OF THE

OPPRESSION

REMEDY

The

relevant

provisions

of the

Canada

Business Corporations

Act5

are as

follows:

3

D.H. Peterson,

Shareholder

Remedies

in

Canada

(Toronto:

Butterworths,

1989)

at

para.

18.1.

4

[2004]

OJ.

No. 191

(S.CJ.)

[Ford

Motor

Co.

of

Canada].

5

R.S.C.

1985,

c.

C-44,

as

amended

[CBCA].