Legal Blog

Oppression

Wilson v. Alharayeri 2017 SCC

A disgruntled diluted shareholder commenced an oppression application for losses under section 241(3) of the Canada Business Corporations Act against the directors of a corporation, rather than the corporation itself, for the damages that the shareholders suffered as a result of a reorganisation of the corporation. The court held that 2 directors, who personally benefited from the reorganisation, were liable for the applicant’s losses. In making the award, the court was guided by 2 requirements: the director or officer must be implicated in the oppressive conduct and the order must be fit in all the circumstances. Four criteria inform whether the order is fit: (1) the oppression remedy must in itself be a fair way to deal with the situation (resulting in 4 subcategories: personal benefit to the directors; breach of the personal duty they owed as directors; misuse of a corporate power; or a remedy against the corporation would unduly prejudice other security holders); (2) the order should go no further than necessary to rectify the oppression; (3) the order should serve only to vindicate the reasonable expectation of the complainant; and (4) director liability should not be a surrogate for other forms of statutory or common law relief that may be more fitting in the circumstances.

Written by Jonathan Speigel Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.