Disputes among corporate stakeholders happen.  The oppression remedy is an equitable remedy that parties often rely upon to protect their interests when corporate stakeholder disputes arise[1]. 

General Template for Oppression Remedy Litigation

The oppression remedy seeks to ensure fairness and gives a court broad equitable jurisdiction to enforce interests that are both legal and fair.[2]  Courts will look to fact specific and contextual inquiries and will consider the business realities involved in the dispute.[3]

To obtain a court’s equitable jurisdiction addressing the wrongs that were committed a complainant[4] must: 

1. identify the expectations that the complainant claims have been violated by the conduct at issue and establish that the expectations were reasonably held; and

• show that the reasonable expectations were violated by corporate conduct that was oppressive or unfairly prejudicial to or that unfairly disregarded the interests of any security holder, creditor, director or officer. [5]

Oppression is fact specific.  Just and equitable is judged by the reasonable expectations of the stakeholders, within their specific context and within their specific relationships. [6]

What is a Reasonable Expectation

All stakeholders have expectations when they enter into relationships with a corporation or with other stakeholders within the corporation.  To trigger the first prong of the oppression remedy, the expectation must be reasonable.   Reasonable means that what a stakeholder subjectively believes is not determinative of whether the oppression remedy should be allowed.  Rather, the expectation must be considered within an objective and contextual analysis.  As the Supreme Court noted in BCE Inc.: 

The actual expectation of a particular stakeholder is not conclusive.  In the context of whether it would be “just and equitable” to grant a remedy, the question is whether the expectation is reasonable having regard to the facts of the specific case, the relationship at issue, and the entire context including the fact that there may be conflicting claims and expectations[7]. [Emphasis added]

One interesting point to consider is that the actions complained of, do not have to be unlawful to prompt the oppression remedy.  Rather, the actions must be wrongful, even if they are not unlawful[8].  Also, not all conduct that is harmful to a stakeholder will elicit the oppression remedy.  It very much is a contextual analysis.

Having said this, the Supreme Court has outlined certain general factors to assist with identifying whether a reasonable expectation exists[9].  They include[10]:

1. general commercial practice;
2. the size, nature and structure of the corporation;
3. the relationships between the claimant and other corporate actors;
4. past practices;
5. preventative steps that the claimant could have taken to protect itself against the prejudice it claims to have suffered;
6. representations and agreements; and
7. fair resolution of conflicting interests.

Conclusion

As a corporate stakeholder, you must first establish that your expectation is reasonable.  To support the claim, look back into all your correspondences and interactions with the other corporate stakeholders and review them to confirm that the expectations existed, in an objective manner.  Also, look to what the corporate actions did to change a pre-existing agreement, understanding, or manner of doing business with you.  These changes can form the basis of an oppression claim.    

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[1] For the purposes of this post we will relying on section 241 of the Canada Business Corporations Act RSC 1985, c. C-44 (“CBCA”).  Ontario has its own oppression remedy provision governing corporations incorporated in Ontario rather than federally.  See section 248 of the Business Corporations Act, RSO 1990, c. B. 16 (“OBCA”).  The law relating to the CBCA oppression remedy is generally applicable to the OBCA.

[2] BCE Inc. v. 1976 Debentureholders, 208 SCC 69 at para. 58 (“BCE Inc.”).

[3] Wilson v. Alharayeri, 2017 SCC 39 (CanLII), [2017 1 SCR 1037 at para. 23. (“Alharayeri”).

[4] A complainant is a defined term in the CBCA.  Pursuant to section 238, a complainant means:

1. a registered holder or beneficial owner, and a former registerd holder or beneficial owner, of a security of a corporation or any of its affiliates,
2. a director or an officer or a former director or officer of a corporation or any of its affiliates,
3. the Director, or
4. any other person who, in the discretion of a court, is a proper person to make an application under this part.

[5] Alharayeri at para. 24.

[6] BCE Inc. at para. 59.

[7] Ibid at para. 62.

[8] Ibid at para. 71.

[9] Ibid at para. 72ff.

[10] A detailed discussion of each factor is beyond the scope of this informational post.  However, the Supreme Court explains the understanding behind each factor.  See BCE Inc. at para 72ff.