Divorce and the Family Business

David Alderson, LL.B, LL.M (Commercial and Corporate), Lawyer, Qualified Arbitrator and MediatorBusiness Dispute Arbitrator, Business Litigation, Business Mediation, Business Mediator, Closely-Held Business Disputes, Commercial, Divorce & Family Business, Family Business Disputes, Oppression Remedies, Partnership Arbitrator, Partnership Dispute, Partnership Dispute Arbitrator, Partnerships and Shareholder Disputes, Shareholder Arbitrator, Shareholder Dispute Arbitrator0 Comments

Family Business Challenges from Divorce or Separation Many businesses in Canada are family businesses or have evolved from family businesses. Family businesses present unique challenges as they grow should the personal relationships of the key members of the family business change or deteriorate. Divorce and separation can have serious impact upon family-owned and family-run businesses, whether incorporated companies or partnerships. Changes in a family business and the challenges presented by change can often result in legal disputes between interested parties. Family business disputes are often be protracted, expensive, and disruptive, and may even result in the sale, division or winding up of the family business. Impact of Separation and Divorce on Family Businesses Complex questions arise in the division of property and assets when dealing with a family business during a separation or divorce. The value of the family business may be included in the equalization of net family property … Read More

Internal Business Disputes in Trades, Subtrades, Contractors and Subcontractors

David Alderson, LL.B, LL.M (Commercial and Corporate), Lawyer, Qualified Arbitrator and MediatorAppointing Auditor, Appointing Inspector, Business Disputes, Business Torts | Economic Torts, Closely-Held Business Disputes, Commercial, Corporate Disputes, Corporate Litigation, Derivative Actions, Directors' and Officers' Liability, Oppression Remedies, Partnership Dispute, Partnerships and Shareholder Disputes0 Comments

Internal Business Disputes in Trades, Subtrades, Contractors and Subcontractors Our Business Dispute Practice Group can represent shareholders in dispute with other shareholders and/or directors in Closely Held Businesses, Family Businesses, and Startup Businesses. Often a dispute arises because a shareholder cannot obtain access to financial information, financial statements, financial documents and records of the corporation, voting rights, rights with respect to meetings or fraud. In some circumstances, an application can be made by a shareholder for access to financial information, financial statements and records of the corporation.  Shareholders remedies include oppression remedy actions and derivative actions, and the appointment of an auditor or an an inspector.  One of our senior business litigation lawyers was a faculty member of the Osgoode PD professional development program concerning Shareholder Litigation and the Closely-Held Company.  Oppression Remedy The oppression remedy is a mechanism in the Ontario Business Corporations Act and the Canada Business Corporations Act to protect the interests … Read More

Ontario Court of Appeal Comments on the Oppression Remedy – Oppression is Focused on Fairness and Equity, not on Legal Rights

Gilbertson Davis LLPAppeals, Business Law, Business Litigation, Business Torts | Economic Torts, Civil Liability, Civil Litigation, Commercial and Contract Litigation, Corporate Litigation, Directors' and Officers' Liability, Oppression Remedies, Partnerships and Shareholder Disputes, Shareholder Dispute Arbitrator0 Comments

In the recent decision of the Ontario Court of Appeal (“ONCA”), Pereira v. TYLT Technologies Inc. (TYLTGO), 2023 ONCA 682, the appellant successfully appealed a judgment dismissing his application for an oppression remedy under the Canada Business Corporations Act, RSC 1985, c C-44 (the “CBCA”). The appellant argued that the application judge erred in only considering the appellant’s expectations as an employee and failing to consider his expectations as a shareholder. The ONCA opined that the application judge took an “overly narrow” approach by placing focus mostly on the documents signed by the parties and not considering all of the circumstances. The ONCA considered some of the major principles related to the oppression remedy, including the following: Oppression is an equitable remedy which seeks to ensure fairness. Thus, conduct found to be oppressive does not need to be “unlawful” per se, because oppression is focused on “fairness and equity”, rather … Read More

Impact of Divorce or Separation on a Family Business

David Alderson, LL.B, LL.M (Commercial and Corporate), Lawyer, Qualified Arbitrator and MediatorBusiness Disputes, Closely-Held Business Disputes, Commercial, Division of Property, Family Business Disputes, Family Law, Injunction & Specific Performance, Oppression Remedies, Partnership Dispute, Partnerships and Shareholder Disputes, Sale of Business Disputes0 Comments

Family Business Challenges from Divorce or Separation Many businesses in Canada are family businesses or have evolved from family businesses. Family businesses present many unique challenges as they grow should the personal relationships of the key members of the family business change or deteriorate. Divorce and separation can have serious impact upon family-owned and family-run businesses, whether incorporated companies or partnerships. Changes in a family business and the challenges presented by change can often result in legal disputes between interested parties. Family business disputes are often be protracted, expensive, and disruptive, and may even result in the sale, division or winding up of the family business. Impact of Separation and Divorce on Family Businesses Complex questions arise in the division of property and assets when dealing with a family business during a separation or divorce. The value of the family business is included in the equalization of net family property … Read More

Condo Arbitration, Condo Litigation, Condo Oppression Claims, and Piggybacking

David Alderson, LL.B, LL.M (Commercial and Corporate), Lawyer, Qualified Arbitrator and MediatorArbitration, Arbitrators, Commercial, Condo Arbitrator, Condo Litigation, Moving Litigation to Arbitration, Oppression Remedies, Real Estate Arbitrator0 Comments

As a Condo Dispute Arbitrator, I am very interested when the Court of Appeal for Ontario addresses an appeal concerning an arbitration clause in a condominium document and a motion to stay Superior Court proceedings in favour of arbitration. The Case In the very recent decision Toronto Standard Condominium Corporation No. 1628 v. Toronto Standard Condominium Corporation No. 1636, 2021 ONCA 360, the Court of Appeal for Ontario, allowed an appeal from the order of the motion judge dismissing the appellants’ motion to stay an application in favour of arbitration. The dispute concerned a cost-sharing agreement (“Reciprocal Agreement”), wherein the parties agreed to contribute to the costs of the operation and maintenance of defined Common Facilities.  A dispute arose as to the amounts due under the Reciprocal Agreement, which contained this arbitration clause: “The validity, construction and performance of this Agreement shall be governed by the laws of the Province … Read More

Shareholder’s Remedies

David Alderson, LL.B, LL.M (Commercial and Corporate), Lawyer, Qualified Arbitrator and MediatorAppointing Auditor, Appointing Inspector, Business Disputes, Business Litigation, Commercial, Corporate Disputes, Corporate Litigation, Derivative Actions, Directors' and Officers' Liability, Oppression Remedies0 Comments

Shareholder Remedies Under the Ontario Business Corporations Act (“OBCA”), shareholders of a corporation have a variety of rights. Outlined below are a few rights that all shareholders should be aware they possess. Voting Rights The board of directors, under s. 115 are ultimately responsible for managing or supervising the management of the business and affairs of a corporation. Major business decisions also involve the participation of the board of directors, though sales, leases, or exchanges of all or substantially all the property of the corporation that is not in the ordinary course of business requires the approval of shareholders (s. 184(3)). Shareholders also have voting rights that allow them to control the makeup of the board of directors (s. 119(4)), and also the ability to remove directors under s. 122(1) (though this is subject to exceptions under s. 120(f)). Shareholders have additional voting rights under s. 100(2). Access to Information Rights Under s. 140(1) corporations … Read More

Corporate Governance Considerations During the Covid-19 Pandemic

Sabrina Saltmarsh, B.A. (Hons), J.D.Business Interruption, Business Law, Business Litigation, Business Torts | Economic Torts, By-laws, Closely-Held Business Disputes, Commercial, Commercial and Contract Litigation, Commercial Contracts, Commercial Law, Commercial Leasing, Commercial List Matters, Commercial Litigation, Contract Disputes, Coronavirus, Corporate Disputes, Corporate Litigation, COVID-19, Derivative Actions, Directors' and Officers' Liability, Family Business Disputes, Oppression Remedies, Partnership Dispute, Partnerships and Shareholder Disputes, Retail Disputes, Retail Litigation, Sale of Business Disputes, Shopping Mall Lease Disputes, Shopping Mall Lease Litigation0 Comments

Corporate governance issues are top of mind for directors and businesses who are attempting to navigate through the Covid-19 Pandemic related closures and emergency measures. Boards of Directors still need to operate and make decisions in the best interests of the corporation, and this can involve tough decisions, particularly where there is little guidance as to how measures to lift Covid-19 related restrictions will play out. By example, while it may be in the best interest of investors and shareholders that the Board act to lay off employees in the short term, the impact of staff shortages when Covid-19 restrictions are lifted may pose it’s own challenges. Many businesses must consider how to hold governance meetings during Covid-19 times. On March 30, 2020, Ontario passed an Order under the Emergency Management and Civil Protection Act (EMCPA), (Ontario Regulation 107/20) entitled “Meetings for Corporations” making temporary changes to the Business Corporations … Read More

Measures of Last Resort – The Benefits of Exit Provisions in Shareholder’s Agreements

Sabrina Saltmarsh, B.A. (Hons), J.D.Business Law, Business Litigation, Business Torts | Economic Torts, Civil Litigation, Closely-Held Business Disputes, Commercial, Commercial and Contract Litigation, Commercial Contracts, Corporate Disputes, Family Business Disputes, Non-Compete, Non-Competition Agreement, Non-Solicitation Agreement, Non-Solicitation Clause, Oppression Remedies, Sale of Business Disputes, Shareholder Disputes0 Comments

The benefits of a shareholder’s agreement may not be fully considered when parties are intending to go into business together and become joint shareholders in a corporation. Perhaps the mood is optimistic and none of the participants anticipate that things might sour between them down the road. Sometimes corporations are formed absent such an agreement. However, among other benefits, these agreements become particularly useful in managing risk and guiding shareholders through governance issues and disputes that may arise, efficiently so as to minimize disruption to the corporation’s business. Absent a shareholder’s agreement, shareholders in a closely held corporation that cannot see eye-to-eye regarding the operation and path of the corporation, may become stuck in a deadlock where decision-making is effectively stifled due to a stalemate between them. Shareholder’s agreements can serve to provide mechanisms to address deadlock, protect the voice and rights of minority shareholders, provide a road map for … Read More

When Shareholders Need an Auditor or Inspector

David Alderson, LL.B, LL.M (Commercial and Corporate), Lawyer, Qualified Arbitrator and MediatorBusiness Dispute Arbitrator, Business Disputes, Commercial, Commercial List Matters, Commercial Litigation, Corporate Litigation, Directors' and Officers' Liability, Financial Services | Investment, Fraud Recovery, Injunction & Specific Performance, Mareva Injunction, Norwich Order, Oppression Remedies, Preservation Orders0 Comments

I address here in a general way the procedures available for a shareholder or group of shareholders seeking the assistance of the court to have an auditor or inspector appointed. Financial Statements  – None or Inaccurate  Shareholders in closely-held Ontario corporations sometimes have concerns about the accuracy of the financial statements when the company does not have an auditor. Oppressive or Unfairly Prejudicial Conduct In other cases, a shareholder in an Ontario corporation may consider that the corporation has been carried on, or the powers of the directors are, or have been, exercised, in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards, the interests of the shareholder. Corporation and Fraud One or more shareholders may have concerns that the corporation’s business is, or has been, carried on with the intent to defraud,  that the corporation was formed or dissolved for a fraudulent or unlawful purpose, … Read More

Liability of Directors and Officers | Oppression Remedy | Shareholders Claims

David Alderson, LL.B, LL.M (Commercial and Corporate), Lawyer, Qualified Arbitrator and MediatorBusiness Disputes, Business Fraud, Business Litigation, Business Torts | Economic Torts, Closely-Held Business Disputes, Commercial, Commercial Litigation, Directors' and Officers' Liability, Embezzlement, Family Business Disputes, Mareva Injunction, Norwich Order, Oppression Remedies, Partnerships and Shareholder Disputes, Shareholder Disputes, Start-Up Disputes0 Comments

The lawyers in our Business Dispute Practice Group have acted in Ontario and other jurisdictions for small, mid-sized and large corporations (incorporated in Ontario and in Canada), shareholders, directors, officers, and executives in corporate disputes and shareholder disputes. We have acted for clients in both oppression remedy action and derivative actions. Oppression Remedy The oppression remedy is a mechanism in the Ontario Business Corporations Act and the Canada Business Corporations Act to protect the interests of shareholders and stakeholders in a corporation against wrongful conduct.  Whether the Ontario or Canada Act will apply depends on the jurisdiction in which the corporation was incorporated. The oppression remedy can be used to protect the interests of shareholders, directors, officers or creditors against the acts of other shareholders, the board of directors or other affiliates of the corporation. The oppression remedy can be used to protect the interests of shareholders, directors, officers or creditors against the … Read More

Limitation Period Considerations in Derivative Proceedings

Sabrina Saltmarsh, B.A. (Hons), J.D.Business Fraud, Business Law, Business Litigation, Closely-Held Business Disputes, Corporate Disputes, Corporate Litigation, Directors' and Officers' Liability, Family Business Disputes, Oppression Remedies0 Comments

Under modern business corporation legislation, a claim for wrongdoing against a corporation can only be brought by the corporation itself, or by way of a derivative action for which leave from the court is required. In Ontario, there is a standard two-year limitation period that applies to the commencement of most lawsuits, including derivative claims on behalf of a corporation. When wrongs done to a corporation are alleged to have been done by a director or directors who exercise control and decision-making on behalf of the corporation, it is unlikely that those same directors will agree to commence a claim on behalf of the corporation for those wrongs. It is then up to other interested stakeholders, such as shareholders, to seek leave to commence a derivative claim on behalf of the corporation for the wrongs done to the corporation. Until the release of a 2015 Supreme Court of Canada ruling … Read More

Shareholders’ Remedies under the OBCA: An Overview (Part 2/2) 

Janice Perri, B.A. (Summa Cum Laude)Business Law, Business Litigation, Civil Litigation, Closely-Held Business Disputes, Commercial, Commercial and Contract Litigation, Commercial Contracts, Commercial Law, Commercial Litigation, Corporate Disputes, Corporate Litigation, Directors' and Officers' Liability, Oppression Remedies, Partnership Dispute, Partnerships and Shareholder Disputes, Shareholder Disputes0 Comments

When a shareholder’s rights are breached, there are a variety of legal remedies available under the Ontario Business Corporations Act (“OBCA”). For more information on shareholders’ rights, please click here to see part 1 of this post. Oppression Remedy It is first important to note that as per the Ontario Court of Appeal decision Maurice v. Alles, the standard two-year limitation period set out in the Limitations Act applies to oppression remedy claims. The “clock starts to run” when the oppressive conduct first began, meaning that individuals must not delay if they wish to pursue an oppression remedy. The oppression remedy under s. 248 of the OBCA is broad in nature, and there is a large amount of judicial discretion afforded in its application. The oppression remedy can be an especially strong tool in protecting minority shareholders. When the Court determines that there has been oppressive conduct, unfairly prejudicial conduct, or conduct that disregards the interests of any shareholder it may make an order to resolve the matter in a variety of ways. … Read More

Shareholders’ Rights under the OBCA: An Overview (Part 1/2) 

Janice Perri, B.A. (Summa Cum Laude)Business Law, Business Litigation, Civil Litigation, Closely-Held Business Disputes, Commercial, Commercial and Contract Litigation, Commercial Contracts, Commercial Law, Commercial Litigation, Corporate Disputes, Corporate Litigation, Directors' and Officers' Liability, Oppression Remedies, Partnerships and Shareholder Disputes, Shareholder Disputes0 Comments

Under the Ontario Business Corporations Act (“OBCA”), shareholders of a corporation have a variety of rights. Outlined below are a few rights that all shareholders should be aware they possess. Please click here to see part 2 of this post on shareholders’ remedies. Voting Rights The board of directors, under s. 115 are ultimately responsible for managing or supervising the management of the business and affairs of a corporation. Major business decisions also involve the participation of the board of directors, though sales, leases, or exchanges of all or substantially all the property of the corporation that is not in the ordinary course of business requires the approval of shareholders (s. 184(3)). Shareholders also have voting rights that allow them to control the makeup of the board of directors (s. 119(4)), and also the ability to remove directors under s. 122(1) (though this is subject to exceptions under s. 120(f)). Shareholders have additional voting rights under … Read More

Court Considers Oppression Claim by Creditors against Directors

Andrew Ottaway, B.A. (Hons.), LL.B.Business Law, Business Litigation, Civil Litigation, Directors' and Officers' Liability, Oppression Remedies, Summary Judgment0 Comments

In The Investment Administration Solutions Inc. v. Pro-Financial Asset Management Inc., 2018 ONSC 1220 (CanLII), the Ontario Superior Court considered an oppression claim under section 248 of the Ontario Business Corporations Act by a creditor against the directors of a debtor company. The Plaintiff company provided back office services to the Defendant Pro-Financial. Pro-Financial was an Ontario Corporation which carried on business as an investment dealer.   Pro-Financial was poorly managed and did not comply with the applicable regulatory requirements.  Pro-Financial’s assets were eventually sold to another dealer at the insistence of the Ontario Securities Commission (“OSC”). As a result of the sale, there was no money left to pay the Plaintiff’s significant outstanding accounts. The Plaintiff brought an action against, among others, directors of Pro-Financial.  The Plaintiff’s claim included a claim for an oppression remedy.  The Plaintiff argued that the directors of Pro-Financial had violated Pro-Financial’s reasonable expectation that the … Read More

Court of Appeal Majority Rejects Oppression Claim Against Condominium Corporation’s Leasing of Parking Spaces

Gilbertson Davis LLPCommercial, Commercial Leasing, Condo Litigation, Oppression Remedies, Real Estate Litigation, Retail Disputes, Retail Litigation0 Comments

In Cheung v. York Region Condominium, the appellant owned several units which were leased to tenants who operated a 230-seat restaurant out of those units. After complaints by other unit owners that restaurant customers were taking up most or all of the 162 shared common element parking spaces, the condominium corporation enacted a by-law to allow the corporation to lease four parking spots per unit owner “from time to time”, reducing the potential number of spaces available to restaurant guests by 80%. The applicant sought a declaration that the by-law was invalid since the leases could be perpetual and thereby essentially create exclusive use common elements, which can only be created by specific declaration, not through by-law. The applicant further argued that the by-law was oppressive and unfairly prejudicial to the applicant’s interests. The majority held that, since the by-law only approved the ability to enter into leases, which could be on whatever … Read More

Supreme Court Provides Guidance on Oppression Remedy

Andrew Ottaway, B.A. (Hons.), LL.B.Appeals, Appellate Advocacy, Business Litigation, Civil Litigation, Directors' and Officers' Liability, Oppression Remedies0 Comments

In Wilson v. Alharayeri, 2017 SCC 39, The Plaintiff, Alharayeri, was the president, CEO and a shareholder and a director of the subject Corporation.  The subject corporation was incorporated under the Canada Business Corporations Act (“CBCA”).  In addition to common shares, the Defendant held convertible A and B preferred shares issued only to him as performance-based incentives.  The A and B shares were convertible upon the corporation meeting certain performance targets in 2007.  The Plaintiff held convertible C preferred shares, issued to him as an incentive for finding financing.  The C shares were convertible into common shares upon the Corporation meeting a specific financial target. In early 2007, the Defendant, Wilson, began negotiating a merger with Company M to address the Corporation’s cash flow issues.  At the same time, the Defendant arranged to sell some of his common shares to Company M as a result of personal financial difficulties.  The Corporation’s Board … Read More

Family Business Dispute, Start Up Company Dispute, and Closely-Held Company Litigation

David Alderson, LL.B, LL.M (Commercial and Corporate), Lawyer, Qualified Arbitrator and MediatorBusiness Litigation, Civil Litigation, Closely-Held Business Disputes, Commercial Arbitration, Commercial Litigation, Contract Disputes, Directors' and Officers' Liability, Family Business Disputes, Injunction & Specific Performance, Oppression Remedies, Partnerships and Shareholder Disputes, Shareholder Disputes, Start-Up Disputes0 Comments

We have experience acting for, advising and representing those in closely-held company litigation, both arising from family business disputes and from start-up company disputes. Family Business Disputes Many businesses in Canada are family businesses or have evolved from family businesses. Family businesses present many unique challenges as they grow, as key members of the company or partnership leave the family business, or when personal relationships of the key members of the family business change or deteriorate. One of the most common differences between a family business and other established businesses, whether or not a shareholders’ agreement, partnership agreement and other legal documentation was used in the formation of the family business, is the informality in operation of the family business, including the often ignored distinction in fact between employees, shareholders, or partners – since family members take on multiple roles. Please see our webpage on Family and Closely Held Business Disputes. Start Up Company … Read More