Richards v. Richards et al., (2013) 331 N.S.R.(2d) 202 (SC)

• Judge: Muise, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: February 01, 2013
• Jurisdiction: Nova Scotia
• Citations: (2013), 331 N.S.R.(2d) 202 (SC);2013 NSSC 163

Richards v. Richards (2013), 331 N.S.R.(2d) 202 (SC);

    1051 A.P.R. 202

MLB headnote and full text

Temp. Cite: [2013] N.S.R.(2d) TBEd. JL.005

Sandra Lynn Richards (applicant) v. Robert James Richards, Jaylynn Enterprises Limited, Holm Realty Limited, Duane Robert Richards, Jay Robert Richards and Richards Family Trust (2002) (respondents)

(Hfx. No. 390959; 2013 NSSC 163)

Indexed As: Richards v. Richards et al.

Nova Scotia Supreme Court

Muise, J.

June 10, 2013.

Summary:

The spouses married in 1976 and separated in 2010. They had incorporated two companies (1976 and 1989), from which they drew no employment income. However, the parties received dividends from one company and funds from a family trust that received the dividends from the other company. The husband controlled the flow of all the money. After separation, the husband made offers to resolve spousal maintenance and marital property issues. When the wife refused those offers, the husband decided that neither of them would get any funds from the companies and the family trust. The wife sought interim spousal maintenance under the Divorce Act.

The Nova Scotia Supreme Court, in a judgment not reported in this series of reports, dismissed the motion. The wife appealed.

The Nova Scotia Court of Appeal, in a judgment reported (2012), 312 N.S.R.(2d) 282; 987 A.P.R. 282, allowed the appeal. The court imputed income of $157,000 per year to the husband and ordered him to pay spousal support of $72,000 per year or $6,000 per month. Steps were taken to exclude the wife from the operation of the companies. The wife applied under the Companies Act for oppression remedies, including injunctive relief. Pending that hearing, the wife applied for an interim injunction to prohibit her husband and others from contravening a special resolution respecting her consent required for any company transactions exceeding $50,000. She also sought interim production of, and access to, the corporate and financial records of the two companies. Although the companies had produced much of the requested information, the wife sought more detailed and extensive production and more complete access to information.

The Nova Scotia Supreme Court allowed the motion in part. The court declined to grant an interim injunction, but did order more detailed production of, and access to, the corporate and financial records.

Company Law - Topic 4308

Directors - Duty to company and shareholders - Duty to inform shareholders - Financial and other information - [See second Company Law - Topic 9796.1 ].

Company Law - Topic 9784

Actions against corporations and directors - Action for oppressive conduct - Conditions precedent - The Nova Scotia Supreme Court set out the two part test for oppression claims generally: "(1) Does the evidence support the reasonable expectation asserted by the claimant? and (2) Does the evidence establish that the reasonable expectation was violated by conduct falling within the terms 'oppression', 'unfair prejudice' or 'unfair disregard' of a relevant interest?" - The court referred to and discussed the principles and factors to be considered in assessing whether the asserted reasonable expectation existed - See paragraphs 76 to 96.

Company Law - Topic 9796.1

Actions against corporations and directors - Action for oppressive conduct - Interim relief - A shareholder to two family companies sought an oppression remedy (injunctive relief) and applied for interim injunctive relief pending the hearing - The Nova Scotia Supreme Court referenced a prior decision where it was determined that interim oppression remedies "only will be given where it is necessary to preserve rights pending the hearing of an action on the merits. ... The purpose of an interim order is to attempt, if possible, to preserve balance, and to encourage the parties to resolve the issues themselves without damaging the business. ... the responsibility of the court is to take only measures that are absolutely necessary to preserve the status quo until trial" - The court stated that "where an injunctive interim oppression remedy is sought, the test for interlocutory injunctions set out in RJR-MacDonald ... generally applies" - That required the applicant to show a serious question to be tried, irreparable harm if the interim injunction was not granted, and that the balance of convenience favoured an interim injunction - The court stated that "the higher strong prima facie case does not automatically apply simply because the interlocutory injunction is sought in the oppression remedy context." - Where the interim injunctive relief sought was mandatory, as opposed to prohibitory, a standard of proof more onerous than "a serious question to be tried" was required - See paragraphs 22, 23, 26, 38, 45.

Company Law - Topic 9796.1

Actions against corporations and directors - Action for oppressive conduct - Interim relief - Spouses separated in 2010 after 34 years' marriage - They had incorporated two companies (1976 and 1989), from which they drew no employment income - They received dividends from one company and funds from a family trust that received the dividends from the other company - The husband controlled the flow of all the money - After separation, the husband made offers to resolve spousal maintenance and marital property issues - When the wife refused those offers, the husband decided that neither of them would get any funds from the companies and the family trust - Steps were taken to exclude the wife from the operation of the companies - The wife applied under the Companies Act for oppression remedies, including injunctive relief - Pending that hearing, the wife applied for an interim injunction to prohibit her husband and others from contravening a special resolution and shareholder's agreement of one of the companies, which required her consent for company transactions exceeding $50,000 - She also sought interim production of, and access to, the corporate and financial records of the two companies - Although the companies had produced much of the requested information, the wife sought more detailed and extensive production and more complete access to information - The Nova Scotia Supreme Court declined to grant an interim injunction, but did order more detailed production of, and access to, the corporate and financial records - There was no automatic application of the strong prima facie case standard in interlocutory oppression remedy cases - The wife established a serious issue to be tried - However, she failed to show irreparable harm and the balance of convenience favoured not granting interim injunctive relief - The wife's failure to come to the court with "clean hands" provided an additional reason for denying equitable relief - See paragraphs 97 to 488.

Cases Noticed:

Naneff v. Con-Crete Holdings Ltd. et al. (1995), 85 O.A.C. 29 (C.A.), refd to. [para. 21].

UPM-Kymmene Corp. v. Repap Enterprises Inc. et al. (2004), 183 O.A.C. 310 (C.A.), refd to. [para. 21].

Merks Poultry Farms Ltd. v. Wittenberg et al. (2010), 294 N.S.R.(2d) 42; 933 A.P.R. 42; 2010 NSSC 278, refd to. [para. 22].

Deluce Holdings Inc. v. Air Canada, [1992] O.J. No. 2382 (Gen. Div.), refd to. [para. 24].

RJR-MacDonald Inc. et Imperial Tobacco Ltd. v. Canada (Procureur général), [1994] 1 S.C.R. 311; 164 N.R. 1; 60 Q.A.C. 241, refd to. [para. 26].

Stern v. Imasco Ltd. et al., [1999] O.T.C. Uned. C80; 1999 CarswellOnt 3546 (Sup. Ct.), refd to. [para. 28].

Amaranth LLC v. Counsel Corp., [2005] O.T.C. 882; 2005 CarswellOnt 4944 (Sup. Ct.), refd to. [para. 29].

Maitre Ltd. et al. v. Segeren et al., [2007] O.T.C. Uned. B04 (Sup. Ct.), refd to. [para. 30].

JLL Patheon Holdings LLC et al. v. Patheon Inc., [2009] O.T.C. Uned. C78 (Sup. Ct.), refd to. [para. 33].

Tullio Developments Inc. v. 2177314 Ontario Ltd., 2009 CarswellOnt 7643 (Sup. Ct.), refd to. [para. 35].

Mealla v. Salba Corp. et al., [2009] O.T.C. Uned. N07 (Sup. Ct.), refd to. [para. 36].

Boffo Family Holdings Ltd. et al. v. Mountainview Developments Ltd. et al., [2010] B.C.T.C. Uned. 560; 2010 BCSC 560, refd to. [para. 38].

Gallant and Virk v. Casino Taxi Ltd. (1996), 158 N.S.R.(2d) 128; 466 A.P.R. 128 (S.C.), refd to. [para. 41].

Burnside Industrial Packaging Ltd. v. Canada Post Corp., [1994] N.S.J. No. 204 (S.C.), refd to. [para. 41].

Canada (Attorney General) v. Maritime Harbours Society et al. (2001), 197 N.S.R.(2d) 322; 616 A.P.R. 322; 2001 NSSC 127, refd to. [para. 41].

Hardman Group Ltd. v. Alexander, [1998] N.S.R.(2d) Uned. 135 (S.C.), refd to. [para. 41].

Movie Gallery Canada Inc. v. 9070-7720 Quebec Inc., [2005] N.S.R.(2d) Uned. 33 (S.C.), refd to. [para. 41].

D.E. & Sons Fisheries Ltd. v. Goreham et al. (2004), 223 N.S.R.(2d) 1; 705 A.P.R. 1; 2004 NSCA 53, refd to. [para. 42].

Connelly v. Connelly-McKinley Ltd. et al., [2010] A.R. Uned. 587; 2010 ABQB 515, refd to. [para. 43].

Natpao Holding Inc. et al. v. Evanov Communications Inc. et al., [2008] O.T.C. Uned. B32 (Sup. Ct.), refd to. [para. 43].

Potash Corp. of Saskatchewan Inc. v. Mosaic Potash Esterhazy Limited Partnership (2011), 377 Sask.R. 78; 528 W.A.C. 78; 2011 SKCA 120, refd to. [para. 44].

Gazit (1997) Inc. et al. v. Centrefund Realty Corp. et al., [2000] O.T.C. 638; 2000 CarswellOnt 2876 (Sup. Ct.), refd to. [para. 48].

Air Canada Pilots Association v. Air Canada et al., [2007] O.T.C. 34 (Sup. Ct.), affd. [2008] O.A.C. Uned. 733; 2008 ONCA 531, refd to. [para. 50].

Vincent Corp. v. Provis Inc. et al., [2010] O.T.C. Uned. 750; 2010 ONSC 750, refd to. [para. 54].

Gulf Canada Ltd. v. Martin and Irving Oil Ltd. (1985), 70 N.S.R.(2d) 322; 166 A.P.R. 322 (T.D.), refd to. [para. 61].

Aegon Capital Managment Inc. et al. v. BCE Inc. et al. (2008), 383 N.R. 119; 2008 SCC 69, refd to. [para. 76].

Main et al. v. Delcan Group Inc. (1999), 105 O.T.C. 27 (Sup. Ct.), refd to. [para. 78].

Brant Investments Ltd. v. Keeprite Inc., 1987 CarswellOnt 135 (H.C.J.), refd to. [para. 82].

Pente Investment Management Ltd. et al. v. Schneider Corp. et al. (1998), 113 O.A.C. 253 (C.A.), refd to. [para. 83].

Maple Leaf Foods Inc. v. Schneider Corp. et al. - see Pente Investment Management Ltd. et al. v. Schneider Corp. et al.

Harbert Distressed Investment Master Fund Ltd. et al. v. Calpine Canada Energy Finance II ULC et al. (2005), 235 N.S.R.(2d) 297; 747 A.P.R. 297; 2005 NSSC 211, refd to. [para. 84].

SCI Systems Inc. v. Gornitzki Thompson & Little Co. et al. (1997), 29 O.T.C. 148; 1997 CarswellOnt 1769 (Gen. Div.), refd to. [para. 86].

Ferguson and Imax Systems Corp., Re, [1983] O.J. No. 3156 (C.A.), refd to. [para. 89].

Gibbons v. Medical Carriers Ltd. et al. (2001), 158 Man.R.(2d) 259; 2001 MBQB 229, refd to. [para. 90].

Paley v. Leduc et al., [2002] B.C.T.C. 1757; 2002 BCSC 1757, refd to. [para. 92].

Safarik v. Ocean Fisheries Ltd. et al. (1995), 69 B.C.A.C. 294; 113 W.A.C. 294 (C.A.), refd to. [para. 94].

Sidaplex-Plastic Suppliers Inc. v. Elta Group Inc. et al., [1995] O.J. No. 4048 (Gen. Div.), refd to. [para. 95].

American Cyanamid Co. v. Ethicon Ltd., [1975] 1 All E.R. 504 (H.L.), refd to. [para. 99].

Bayliss v. Harris, [1993] O.J. No. 2655 (Gen. Div.), refd to. [para. 295].

Rogers Communications Inc. v. Shaw Communications Inc., [2009] O.T.C. Uned. M41; 2009 CarswellOnt 5489 (Sup. Ct.), refd to. [para. 312].

Ellins et al. v. Coventree Inc. et al., [2007] O.T.C. Uned. 335 (Sup. Ct.), dist. [para. 444].

Noreco Inc. v. Laserworks Computers Services Inc. et al. (1994), 136 N.S.R.(2d) 309; 388 A.P.R. 309 (S.C.), refd to. [para. 452].

820099 Ontario Inc. v. Ballard (Harold E.) Ltd., [1991] O.J. No. 266 (Gen. Div.), refd to. [para. 468].

Authors and Works Noticed:

Morrit, Bjorkquist and Coleman, The Oppression Remedy (2004), p. 6-7 [para. 88].

Sharpe, Robert J., Injunctions and Specific Performance (2012 Looseleaf), pp. 1-1 [para. 60]; 5-23 [para. 56].

Counsel:

Rubin Dexter, for Sandra Richards;

William Ryan, Q.C., for Robert Richards;

Joseph Burke, for Jaylynn Enterprises Ltd. and Holm Realty Ltd.;

Duane Richards, self-represented during the hearing (his counsel, Lesley Mercer and David Byers were not in attendance);

Colin Bryson, for Jay Richards;

Richards Family Trust (2002), not represented.

This application was heard on December 3-5, 2012, and January 31 and February 1, 2013, at Halifax, N.S., before Muise, J., of the Nova Scotia Supreme Court, who delivered the following judgment on June 10, 2013.