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Corporations - Oppression (4). First Walden Holdings Inc. v. Fenton ['reasonable expectations']
In First Walden Holdings Inc. v. Fenton (Ont Div Ct, 2025) the Ontario Divisional Court dismissed an appeal, here where the "application judge ordered respondents to pay the appellants $399,441.90 (including interest)" as an alternative corporate oppression remedy [under OBCA s.248].
Here the court reviews factors for determining oppression considered by the trial court, particularly the applicant's 'reasonable expectations':[36] The appellants submit (and the respondents do not dispute on appeal) that the application judge was correct in deciding that the appellants were proper complainants who were entitled to assert an oppression claim under s. 248 of the OBCA. The appellants argue, however, that having done so, the application judge erred in failing to consider whether the respondents engaged in oppressive conduct, which involves answering the following questions (see BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, [2008] 3 S.C.R. 560, at para. 68):a. Does the evidence support the reasonable expectation that the claimants assert?
b. Does the evidence establish that the reasonable expectation was violated by conduct falling within the terms “oppression”, “unfair prejudice” or “unfair disregard” of a relevant interest? ....
[38] Among other things, the appellants argue that the application judge failed to consider (or erred in considering) factors that the Supreme Court indicated are useful in determining whether a reasonable expectation exists, as outlined in BCE, at para. 72:Factors that emerge from the case law that are useful in determining whether a reasonable expectation exists include: general commercial practice; the nature of the corporation; the relationship between the parties; past practice; steps the claimant could have taken to protect itself; representations and agreements; and the fair resolution of conflicting interests between corporate stakeholders. [Emphasis added.] ....
[46] With respect to the first step of the oppression test, the application judge considered applicable factors for determining the appellants’ reasonable expectations (which the Supreme Court identified non-exclusively in BCE, at para. 72), including “the relationship between the parties”, “steps [Walden] could have taken to protect itself”, “representations and agreements”, and “the fair resolution of conflicting interests”. .... . First Walden Holdings Inc. v. Fenton [adequacy of reasons]
In First Walden Holdings Inc. v. Fenton (Ont Div Ct, 2025) the Ontario Divisional Court dismissed an appeal, here where the "application judge ordered respondents to pay the appellants $399,441.90 (including interest)" as an alternative corporate oppression remedy [under OBCA s.248].
Here the court considers whether the trial reasons regarding corporate oppression were adequate:[43] While the application judge did not explicitly set out the well-known two-part test for oppression, that does not amount to an error, and it does not mean that the test was not properly applied. The same error was alleged and rejected in Kikites v. York Condominium Corporation No. 382, 2024 ONCA 34, an appeal from a decision in an oppression application arising under a parallel provision of the Condominium Act, 1998, S.O. 1998, c. 19. In doing so, the court, at para. 33, cited as instructive the following passage from a criminal decision, R. v. G.F., 2021 SCC 20, 459 D.L.R. (4th) 375, at para 74, which the court indicated also applied in non-criminal cases:Legal sufficiency is highly context specific and must be assessed in light of the live issues at trial. A trial judge is under no obligation to expound on features of criminal law that are not controversial in the case before them. This stems from the presumption of correct application – the presumption that “the trial judge understands the basic principles of criminal law at issue in the trial” …. As stated in R. v. Burns, 1994 CanLII 127 (SCC), [1994] 1 S.C.R. 656, at p. 664, “[t]rial judges are presumed to know the law with which they work day in and day out”…. A functional and contextual reading must keep this presumption in mind. Trial judges are busy. They are not required to demonstrate their knowledge of basic criminal law principles. [Citations omitted.] [44] In Kikites, the appellant argued that the application judge failed to state and then properly apply the two-part test for oppression recognized in the case-law: Kikites, at para. 32. The Court of Appeal rejected that submission, finding that the application judge’s reasons, “when read as a whole … reveal an appreciation of the principles engaged by [the oppression] provision”: Kikites, at para. 34. The court further held that in reviewing an application judge’s reasons where oppression is alleged, the two steps of the oppression test may tend to merge; failure to consider the two steps separately does not itself amount to an error: Kikites, at paras. 35-39.
[45] As noted above, the application judge is presumed to know the two-part test for oppression, relating to the claimant’s reasonable expectations. Before the application judge, there was no dispute as to the applicable test. At para. 17 of the Reasons, the application judge found that the appellants were “entitled to claim the remedies available under section 248” of the OBCA and proceeded to fashion a remedy available under that provision. Reading the Reasons as a whole, it is clear that the application judge considered the respondents’ conduct and decided that it constituted oppression within the meaning of s. 248(2), a conclusion that the respondents do not dispute on appeal. I do not agree with the appellants that in reaching that conclusion, the application judge erred by failing to consider their reasonable expectations.
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[50] Accordingly, I do not agree that the application judge erred in his analysis by failing to consider the appellants’ reasonable expectations before determining a remedy for oppression. While he did not expressly set out the two-part test for oppression, it is clear from the Reasons, read as a whole, that the application judge considered the respondents’ conduct and decided that it constituted oppression within the meaning of s. 248(2). He did so after considering (and making findings of fact relating to) the appellants’ reasonable expectations and whether they had been violated. I see no basis for appellate intervention.
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