Canada: Quebec's Business Corporations Act Allows The Court To Intervene To Prevent An Apprehended Act Of Oppression
Litigation Bulletin

Overview

In Turcotte v. Turcotte¹ the Court of Appeal of Quebec analyzed the situations that warrant intervention by the court in an oppression action under Quebec's Business Corporations Act.² Although the provision of the Quebec statute is similar to its federal counterpart,³ it is unique on some points. One particular difference is that it covers not only present or past conduct, but also apprehended conduct.

The facts

The action was brought in the context of a profound family conflict between the appellant and his sister and two brothers, all of whom were shareholders in three real estate and construction corporations. The conflict arose when the appellant, the youngest child in the family, decided to retire at the age of 55, thereby going against the respondents' family and business expectations.

To compel the other siblings to redeem the interests he held directly or indirectly in the corporations, the appellant initiated a series of legal proceedings, including an oppression action under sections 450 et seq. of the Q.B.C.A. The action was dismissed by the trial judge.

The appellant raised several grounds of appeal, including the following:

[TRANSLATION] [29] ... the judge misunderstood the nature of the alleged oppression by limiting the availability of the remedy under sections 450 et seq. Q.B.C.A. to cases in which there had already been an obvious and clear repressive act. ... [T]he remedy of oppression is available under the Quebec legislation even before any wrongful conduct has taken place, if the abuse of power or iniquity is established. An oppression action therefore has both a preventive and a remedial function.

Analysis by the Court

The Court of Appeal analyzed both the French and English versions of section 450 Q.B.C.A. For emphasis, it underlined the expressions "agit abusivement ou s'apprête à agir abusivement", "qu'elle se montre injuste ou s'apprête à se montrer injuste à leur égard", "are or are threatened to be conducted in a manner" and "are or are threatened to be exercised in a manner that is or could be oppressive or unfairly prejudicial."

The Court then reproduced section 241 C.B.C.A. and noted that there are differences between the provisions of the two statutes:

[TRANSLATION] [32] Thus, while an action under section 450 Q.B.C.A. is similar to an action under section 241 C.B.C.A., it differs in several regards, including the fact that the Quebec statute also applies to an apprehended future act of oppression based on the facts in addition to present or future conduct.[14]

The Court then examined the appellant's claims and concluded that the facts found by the trial judge did not, however, provide the evidentiary basis that would enable the Court to intervene to prevent the occurrence of an apprehended act of oppression.

Conclusion

The basis for an oppression action under the Quebec statute differs from the basis for the same action under the federal statute. A notable difference is that the Quebec provisions perform a preventive function that their federal counterparts do not offer.

This preventive function is modelled on the legislation of Ontario (s. 248 (2) of the Business Corporations Act) and British Columbia (s. 227 (2) (b) of the Business Corporations Act). The Minister of Finance discussed this in his comments on section 450 Q.B.C.A.:

[TRANSLATION] [...] the proposed wording is intended to be closer to the wording used in section 248 (1) OBCA, while providing additional clarification of the concept of "risque" in the French version of that Act, which appeared too broad and vague, and by stressing, rather, the imminent nature of the anticipated situation. That concept is better rendered by the word "s'apprête" than by the word "risque" and also appears to be more consistent with the cases decided under the Ontario provision, in which the English text uses the word "threatens".⁴

This unique aspect of the Quebec legislation is of significant interest since it makes it possible to seek the court's intervention even before an oppressive act has actually been committed. One would only have to show that the occurrence of the act could be imminent, and that its occurrence would be prejudicial, to justify applying one of the remedies listed in sections 451 et seq. of the Quebec statute. In Ontario, for example, the Superior Court of Justice has prevented the holding of a shareholders' meeting to change the structure of a board of directors, finding that the aim of the scheme was to influence a decision that could be prejudicial to the interests of the minority shareholders.⁵ In the opinion of the Court, the threat was sufficient to engage the powers conferred by section 248 of the Business Corporations Act. In a 1999 case the Ontario Supreme Court had recognized that even if there was no material loss or damage at the time of the application, an oppression action entitled the applicant to relief where there were reasonable grounds to apprehend the occurrence of a detriment.⁶

Footnotes

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