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CORPORATIONS - Oppression remedy - Powers of the court

Monday, October 21, 2019 @ 9:08 AM  

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Appeal by the plaintiff from an oppression remedy granted in respect of a shareholder dispute. The plaintiff was one of four equal shareholders of the corporate defendant. Each shareholder made an initial capital contribution of $200,000 in 2005. The company paid $1.2 million for agricultural land it transformed for use as a gravel truck lot. In 2012, the company agreed to sell the land for $2 million to the lot operator, the corporate defendants who owned Harry's Excavating. In 2013, Harry's Excavating paid a deposit of $200,000 that was divided equally between the four shareholders. However, the anticipated sale failed to close. For tax reasons, the parties decided to proceed by way of a sale of shares in the company that held the land rather than sell the land itself. The plaintiff refused to sell his shares, as he disagreed with a deduction to account for work Harry's Excavating had performed converting the lands. The plaintiff was removed as a director and his former company agreed to transfer the lands on the terms discussed by the other defendants. The intended proceeds of the sale of the plaintiff's shares, $329,000, were paid into court. The plaintiff commenced an oppression proceeding. The trial judge found that oppression was established based on the deviation from the procedure for an extraordinary sale of corporate land. The trial judge ordered the defendants to purchase the plaintiff's shares for $354,000. The plaintiff appealed the remedy.

HELD: Appeal dismissed. The trial judge sought to determine the plaintiff's reasonable expectations based on the evidence, and potential remedies. The remedy crafted by the trial judge reflected that some of the amounts claimed as appropriate deductions by Harry's Excavating were not supported by the evidence, with the remaining amounts serving as a reasonable estimate of the work conducted by Harry's. In addition, the amount awarded was based upon the only evidence of valuation at trial, as of the initial time of the oppression in 2013, being an amount that would vindicate the plaintiff's reasonable expectations while being no more than was necessary to rectify the oppression. The trial judge's decision was not contrary to law, based on wrong principles or irrelevant considerations, nor resulted in an injustice.

Toor v. 1176520 Alberta Ltd., [2019] A.J. No. 1220, Alberta Court of Appeal, M.G. Crighton, J. Antonio and K.P. Feehan JJ.A., September 13, 2019. Digest No. TLD-October212019001