Summary

40557

Edward James Callahan v. Robert Callahan, et al.

(British Columbia) (Civil) (By Leave)

Keywords

Commercial law — Corporations — Oppression remedy — What constitutes “unfair prejudice” — Whether minority shareholders’ access to relief under the oppression remedy is limited by their minority status — Business Corporations Act, S.B.C. 2002, c. 57, s. 227.

Summary

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The applicant is a minority shareholder in a family corporation. The corporation holds a parcel of valuable real estate (the “Property”), and an income-generating business that operates on the land. The remaining shareholders are the applicant’s brothers. The parties initially hoped to develop the Property and share in the profits. However, after years of family conflict with the applicant on one side and his brothers, collectively, on the other, the brothers passed a series of special resolutions at the corporation’s 2020 shareholders’ meeting (the “AGM Resolutions”) to liquidate and wind up the corporation. The applicant, preferring the status quo prior to the AGM Resolutions, applied for an oppression remedy.

The application judge held that the AGM Resolutions violated the applicant’s reasonable expectation that he would retain an interest in the Property through his shares in the corporation and share in the benefits of an eventual redevelopment. The application was allowed and the AGM Resolutions set aside.

The Court of Appeal allowed an appeal, holding that, while the applicant’s expectations may have been subjectively reasonable, it was not objectively reasonable for him to expect to defeat the will of a majority of shareholders where that would only lead to further conflict in the management of the corporation. It further noted that the liquidation process provides the applicant with an opportunity to acquire the Property for himself in any event.

Lower Court Rulings

January 19, 2022
Supreme Court of British Columbia

2022 BCSC 87, S2012670
Oppression application granted; certain shareholders’ resolutions set aside.
November 18, 2022
Court of Appeal for British Columbia (Vancouver)

2022 BCCA 387, CA48106, CA48108
Appeal allowed; resolutions reinstated.
 

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