The oppression remedy under the Ontario Business Corporations
Act1 is a broad remedy, that can be used in a wide range
of circumstances. One of these circumstances is where a corporation
has acted improperly in attempting to avoid paying a creditor. As
seen in the recent Court of Appeal case of Remo Valente v. Real
Estate (1990) Limited v. Portofino Riverside Tower
Inc.2, it is not every creditor that can take advantage
of the oppression remedy.
In Remo Valente, the plaintiff was a real estate company that
had a listing agreement to sell condominium units in a project to
be constructed by one of the corporate defendants, Portofino
Riverside Tower Inc. ("Portofino 1"). Before any units
were sold, Portofino 1 was restructured in a way that transferred
its interest in the corporation out of Portofino 1 and into the
hands of other related companies. The new corporate owners then
locked the plaintiff out of the project, replaced it with another
real estate agent. The plaintiff then sued the corporations and
their principal under the oppression remedy provisions of the OBCA,
as well as for breach of contract3.
Although successful at trial, the plaintiffs oppression remedy
claim was dismissed on appeal by a three member panel of the
Divisional Court. The Divisional Court's decision was further
upheld by the Court of Appeal. One of the issues on appeal was
whether the plaintiff was a proper "complainant" under
the oppression remedy. In turn, whether the plaintiff was a
"complainant" depended on whether the court agreed, as a
matter of law, that the plaintiff was a creditor of Portofino 1 at
the relevant time.
In a typical oppression case, a "complainant" will be
either a security holder or a director or officer of a corporation.
Section 241 of the OBCA, which defines a "complainant, also
has a catch-all provision, where a person can be a
"complainant" if they are "any other person who, in
the discretion of the court, is a proper person to make an
application [under the oppression remedy provisions]". This
has long been interpreted to include a person who is a creditor,
provided there is something that satisfies the court that it is
more than just a typical debtor-creditor situation. Typically, this
will involve a situation where those in control of a corporation
have stripped the company of its assets to render it immune from
The Remo Valente case shows that this basic concept is not
always easily applied by lawyers and judges. At trial, both the
lawyer for the defendants and an experienced trial judge accepted,
without challenge, that the plaintiff was a creditor, and therefore
an appropriate complainant. In the trial decision,5 the
trial judge approached the issue on the basis of whether the
plaintiff had a reasonable expectation that the defendants would
protect its interest. This, as noted by the minority concurring
decision at the Divisional Court, as well as the Court of Appeal,
missed, in essence, the first step of the analysis: whether the
plaintiff was a true creditor at the time of the alleged
Unfortunately for the plaintiff, it was determined that it was
not truly a creditor in the manner required by the oppression
remedy. Under its listing agreement, the plaintiff was entitled to
a 50% commission once certain conditions precedent were satisfied.
Although close, all of the prerequisites were not satisfied, as no
formal financing commitment had been finalized at the time of the
restructuring. As such, it was only a contingent creditor at the
time of the alleged oppression, and was not entitled to avail
itself of the oppression remedy.
This case demonstrates one of the pitfalls that a potential
plaintiff may face in bringing a claim based on the oppression
remedy. While the oppression remedy is a broad remedy, that often
leaves a great deal of discretion in the hands of a judge, there
are a number of technical aspects to an oppression claim that must
be addressed. It is often easy to get lost in considerations of the
equities of a case, and lose track of the technical requirements.
Care must be taken to ensure that these technicalities are not
1 RSO 1990, c B 16, s. 248 (the
2 2011 ONCA 784
3 Although The claim for breach of contract was not dealt
with at trial, and as a result, was ultimately sent back for a
retrial by the Ontario Court of Appeal.
4 Remo Valente Real Estate v Portofino Riverside Tower,
2010 ONSC 280 (Div Ct) at para 20
5 Remo Valente Real Estate v Portofino Riverside Tower,
86 OR (3d) 667 (Sup Ct)
The foregoing provides only an overview. Readers are
cautioned against making any decisions based on this material
alone. Rather, a qualified lawyer should be consulted.
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