Canada: BLG Defends Clients In Battle For Major Seafood Company
Last Updated: January 19 2016

Toronto (January 15, 2016)— Borden Ladner Gervais LLP (BLG) was recently successful in having a claim dismissed in its entirety by the Supreme Court of Newfoundland and Labrador in a dispute for control of one of Canada's leading seafood companies, Ocean Choice International LP (OCI).

BLG acted on behalf of three of the defendants, OCI, its general partner 55104 Newfoundland & Labrador Inc. and Quota Holdco NL Inc., a company 51 per cent owned by OCI and 49 per cent by the provincial government, in defence of the claim brought against them, as well as a number of its related entities and senior executives, by Landvis Canada Inc., Landvis ehf and two of Landvis' principals. The plaintiffs were a limited partner with a 49 per cent interest in OCI and as a subordinated creditor of OCI, controlled by an Icelandic seafood company, Visir, which was seeking to take majority control of OCI and to prevent the re-financing of OCI's operations.

"We are pleased to have delivered positive results to our clients in this claim," said John Blair, QC, national group head of Commercial Litigation at BLG. "Our team drew from its experience in resolving complex shareholder and partnership disputes to ensure OCI could proceed with re-financing as planned, with no interruption to their ongoing operations."

In September 2015, while OCI was undergoing negotiations for re-financing, the plaintiffs initiated an action seeking relief from oppressive conduct on the part of the majority partners. Claiming oppression and breach of duty, the plaintiffs sought to remove the general partner; establish a process to enable them to buy out the majority partners' interests, as well as other ancillary relief. BLG argued on behalf of the defendants that the claim should be summarily dismissed on the basis that the plaintiffs' claims had no reasonable prospect of success.

On January 12, 2016, the Court released its decision, which held that as pleaded, the plaintiffs' allegations could not support a finding of oppression. In particular, there were no assertions of specific prejudicial consequences suffered by a particular plaintiff as a result of specific oppressive conduct. The Court rejected a global approach to the characterization of the impugned conduct. Importantly, the Court held that the conduct complained of was related to the business of the limited partnership and not to that of the general partner, which was a corporation under the Canada Business Corporations Act, thus precluding reliance on the statutory oppression remedy under that Act. The Court also found that it did not have the inherent jurisdiction to grant the requested relief.

The decision of the Court is also noteworthy for its determination that the Court did not have the jurisdiction to remove the general partner and for its emphasis on the importance of holding commercially sophisticated parties to their bargain.

There were two remaining requests for relief — for a declaratory order relating to breach of duty and for access to information by the Landvis appointees to the board of directors of the general partner. The Court held that these claims were not adequately supported and delineated in the pleadings. Since these two claims were only marginally related to the main claim for relief, the court exercised its discretion not to maintain the proceeding to allow those claims to go forward. In the result the statement of claim was struck out without leave to amend and the action was dismissed.

The BLG team was led by Barry H. Bresner and included Maureen Doherty, Heather Pessione and Graham Splawski.

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