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Corporations, Partnerships & Associations Law - Corporations - Oppression remedy - Standing - Complainant

Thursday, January 19, 2017 @ 7:00 PM  


Appeal by the plaintiff from summary dismissal of his action. The action was dismissed primarily because the appellant failed to provide any substantive evidence showing merit. The action was a proposed class action for oppression, misrepresentation and bad faith on behalf of shareholders arising from a failed investment in Birch Mountain Resources. Birch Mountain was initially thought to own a quarry with a value of $1.6 billion, but it was unable to fund its operations, and its assets were sold under receivership for less than $50 million. The appellant was a director and shareholder of Birch Mountain. The defendants were venture capital companies that provided financing to Birch Mountain. Many of the appellant’s claims relied on the allegation that the defendants were affiliates of Birch Mountain. The chambers judge concluded that, to a large extent, the claims amounted to a collateral attack on an unopposed and unappealed receivership order. The chambers judge concluded that the plaintiff class did not qualify as “complainants” for the purposes of the corporate oppression remedy. The chambers judge dismissed the claim based on the “good-faith doctrine” on the basis that this claim was a part of the law of contract, the proposed class did not have any contractual relationship with the defendants, and there was no independent tort of bad faith.

HELD: Appeal dismissed. The appellant failed to adduce sufficient evidence of oppressive conduct, misrepresentations or bad faith on the part of the defendants. There was no merit to the allegations that the defendants’ general statements of corporate philosophy could support a claim in negligent misrepresentation, either in their original form on the defendants’ website, or as repeated in press releases. The claim for an oppression remedy was barred by the rule against collateral attacks on final orders of the Court. The record did not support the appellant’s overall theory that the defendants were engaged in a scheme to obtain the quarry below its actual value. Their conduct in attempting to keep Birch Mountain going was inconsistent with the appellant’s thesis. The members of the proposed class did not qualify as complainants for the purposes of advancing the pleaded oppression claim. Birch Mountain and the defendants were not “affiliates” under the Business Corporations Act. Many of the allegations represented a collateral attack on the receivership orders. The various identified transactions were shown to be legitimate business transactions that did not amount to oppression.