If the affairs of a company are conducted in a manner that is
unfairly prejudicial to or that unfairly disregards the interests
of a complainant (such as a shareholder, director or officer), that
person may want to seek out an oppression remedy in a lawsuit or
application to the court. If steps are not taken to pursue the
remedy quickly, within the applicable limitation period, the chance
to obtain a remedy may be lost.
In a corporation, there can be a series of oppressive acts over
a number of years (e.g. a concerted, ongoing effort by a director
to exclude and prejudice a shareholder) or a single act which is
oppressive (e.g. the sale of a specific asset which is designed to
and does harm a specific shareholder).
There has been some uncertainty and several disputes about when
a two year limitation period under the Ontario Limitation Act, 2004
applies to bar oppression remedy claims. Do you need to sue when
you learn of the first oppressive act or the last act in a chain of
acts? This issue was discussed in a recent decision by the Court of
Appeal for Ontario - Maurice v. Alles, 2016 ONCA 287 (CanLII).
In Maurice v. Alles, the Court of Appeal held that a continuous
refusal to produce documents does not cause a limitation period to
be extended. The Court of Appeal commented in the decision that
courts "must be careful not to convert singular oppressive
acts into ongoing oppression claims in an effort to extend
limitation periods." This decision makes it clear that you may
lose your right to your claim and remedy if you wait until the last
refusal to sue over the previous refusals. In other words, the
repetition of the same oppressive act does not re-start the
On the other hand, the courts need to be mindful of the risk
that someone who commits oppression could escape liability if they
can successfully argue that all of the acts were part of the same
corporate scheme such that the limitation period begins to run when
the other side learned of the first act, not the last act.
According to the Court of Appeal in Maurice v. Alles, in analyzing
the allegedly oppressive conduct, courts should have regard to the
remedial nature of the oppression remedy and the fact that the
oppression remedy is designed to respond to the broadest range of
corporate malfeasance. The courts should seek to determine whether
there were any discrete acts of oppression within the two-year
period prior to the commencement of the lawsuit or application.
Parties should not be permitted to take additional oppressive steps
in furtherance of, or based upon, the initial oppressive conduct
and hide behind a limitation period based on the initial oppressive
While this decision will assist a complainant seeking a remedy
to address oppressive conduct to try to overcome a limitation
defence, it also highlights the areas where there will be ongoing
disputes - characterizing conduct as "ongoing, repetition of
conduct" versus "discrete acts" will have a
significant impact on whether claims will be barred if commenced
more than two years later. Waiting longer than two years from the
initial knowledge of oppressive acts remains risky and action
should be taken promptly to avoid having claims barred.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
While most are well aware that the sale of a business is generally a complex process, even sophisticated business owners are surprised by just how much cost and effort is required to complete the sale.
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