http://www.thelitigator.ca/index.php/2009/11/05/oppression-does-not-guarantee-relief/ Competition Law and Commercial Litigation Updates Wed, 28 Apr 2010 06:17:05 +0000 http://wordpress.org/?v=2.9.1 hourly 1 http://www.thelitigator.ca/index.php/2009/11/05/oppression-does-not-guarantee-relief/comment-page-1/#comment-9 The Litigator – Affleck Greene McMurtry, LLP » Blog Archive » January 2010 Commercial Litigation Update Mon, 11 Jan 2010 18:42:45 +0000 http://www.thelitigator.ca/?p=509#comment-9 [...] Oppression does not guarantee relief Last spring an Ontario court held that in spite of suffering oppressive conduct, a minority corporate stakeholder was not entitled to monetary relief. In Hu v. Sung, Superior Court Justice Brown confronted the question of what to do when a shareholder in a private corporation has wrongfully excluded another from the affairs of the company, but by the time of trial the company has ceased operations, has not turned a profit and there is no evidence the offending shareholder personally benefited from the oppression. In this case, the answer was to do very little. In his action, Hu sought repayment of his investment in a company formed to operate a combined Second Cup and Great Canadian Bagel store in Aurora. Hu claimed he had been wrongfully excluded from the company’s affairs and that his business partners had sought to unilaterally reduce his holdings in the company. The court agreed, finding that Hu’s exclusion from management and the attempt to reduce his shareholdings were oppressive conduct contrary to s. 248 of the Business Corporations Act. Hu obtained a declaration that he was and remains a director of the company and the holder of 50% of the company’s common shares. However, that was the extent of Hu’s relief. Why? Because the Company had ceased operations, had no assets at the time of trial and owed significant sums for the arrears of sales taxes, no monetary relief was warranted. It made no sense to order the repurchase of Hu’s shares, nor was it appropriate to order compensation, when Hu had been excluded from an inactive corporation that had little or no value. This somewhat pyrrhic victory for Hu is a strong reminder that the oppression remedy is not aimed at penalizing wrongdoers. Even in situations of clearly oppressive conduct, some compensable injury is necessary for any damages or other monetary relief to be awarded. Additional analysis. (SI) [...] [...] Oppression does not guarantee relief Last spring an Ontario court held that in spite of suffering oppressive conduct, a minority corporate stakeholder was not entitled to monetary relief. In Hu v. Sung, Superior Court Justice Brown confronted the question of what to do when a shareholder in a private corporation has wrongfully excluded another from the affairs of the company, but by the time of trial the company has ceased operations, has not turned a profit and there is no evidence the offending shareholder personally benefited from the oppression. In this case, the answer was to do very little. In his action, Hu sought repayment of his investment in a company formed to operate a combined Second Cup and Great Canadian Bagel store in Aurora. Hu claimed he had been wrongfully excluded from the company’s affairs and that his business partners had sought to unilaterally reduce his holdings in the company. The court agreed, finding that Hu’s exclusion from management and the attempt to reduce his shareholdings were oppressive conduct contrary to s. 248 of the Business Corporations Act. Hu obtained a declaration that he was and remains a director of the company and the holder of 50% of the company’s common shares. However, that was the extent of Hu’s relief. Why? Because the Company had ceased operations, had no assets at the time of trial and owed significant sums for the arrears of sales taxes, no monetary relief was warranted. It made no sense to order the repurchase of Hu’s shares, nor was it appropriate to order compensation, when Hu had been excluded from an inactive corporation that had little or no value. This somewhat pyrrhic victory for Hu is a strong reminder that the oppression remedy is not aimed at penalizing wrongdoers. Even in situations of clearly oppressive conduct, some compensable injury is necessary for any damages or other monetary relief to be awarded. Additional analysis. (SI) [...]

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