Category Archives: Corporate / Commercial

Director Liability and the Workers’ Compensation Scheme: The Divergence Between Policy Goals and Outcomes

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Case Commented On: Hall v Stewart, 2019 ABCA 98

The workers’ compensation scheme and its effect on directors’ personal liability for corporate torts is an area of law that pursues the right policy goals but fails to achieve those goals in its implementation.

This post is about directors’ personal liability, the interplay between the Workers’ Compensation Act, RSA 2000, c W-15 (Act) and common law, and the policy issues that arise from this scheme. When the workers’ compensation scheme is superimposed on the common law system, it immunizes the corporation for corporate torts while leaving directors open to suit if they do not purchase special coverage. Their liability is then determined by common law principles.

In Hall v Stewart, the director, Stewart, did not purchase additional insurance, leading the Court of Appeal to conclude he could be held personally liable for the tort of the corporation under the two-step Anns/Kamloops test (from Kamloops (City of) v Nielsen, 1984 CanLII 21 (SCC), [1984] 2 SCR 2). This post will discuss two issues arising from this decision; first, the policy issue this scheme engenders, which should have been addressed under the second step of the Anns/Kamloops test, and second, the influence of Nielsen Estate v Epton, 2006 ABCA 382 (CanLII), affm’g 2006 ABQB 21 (CanLII), on this decision, which the Court of Appeal did not apply. Continue reading →

Mennillo v Intramodal inc.: The Supreme Court of Canada Revisits the Oppression Remedy

By: Jassmine Girgis

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Case Commented On: Mennillo v Intramodal inc., 2016 SCC 51 (CanLII)

Mennillo v Intramodal inc. is the first oppression remedy case since BCE Inc. v 1976 Debentureholders 2008 SCC 69 (CanLII) (BCE) to reach the Supreme Court of Canada. The SCC had to determine whether the failure of a company to observe formalities required under the Canada Business Corporations Act, RSC 1985, c C-44 (CBCA) constituted oppression as against a former shareholder. The appeal of the former shareholder was dismissed on a finding that neither “sloppy paperwork on its own” nor “the corporation and its controlling shareholder treating [the former shareholder] exactly as he wanted to be treated” (at para 5) constituted oppression. There was a majority opinion (written by Cromwell J), a concurring opinion (McLachlin CJ and Moldaver J), and a strong dissent by Justice Côté.

This post deals with the comments made by the Court, including the dissent, on the oppression remedy. The oppression remedy is available when the court is satisfied that the corporation or its directors acted in a way that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, any security holder, creditor, director, or officer (CBCA, s 241(2)). Continue reading →

When is a Contract between Family Members Enforceable?

By: Evaristus Oshionebo

PDF Version: When is a Contract between Family Members Enforceable?

Case Commented On: Hole v Hole, 2016 ABCA 34

At common law a contract is not enforceable unless the parties intended the contract to create legal relations. Whether or not the parties intended to create legal relations is determined objectively by examining the circumstances existing at the time of execution of the contract. However, there is a general presumption that contracts between family members are not intended to create legal relations. This presumption “derives from experience of life and human nature which shows that in such circumstances men and women usually do not intend to create legal rights and obligations, but intend to rely solely on family ties of mutual trust and affection” (Jones v Padavatton, [1969] 2 All ER 616 at 621 (CA)). The presumption is equally based on the reality that agreements between family members are usually not bargained or negotiated. However, the presumption is rebuttable by evidence. Thus, a contract between family members is enforceable where there is evidence that the parties intended the contract to create legal relations. The presumption could be rebutted by evidence showing that, although the parties are family members, the contract was reached or executed in commercial circumstances. As Professor John McCamus puts it, “[c]ommercial arrangements between family members may obviously be intended to create enforceable agreements” (John D. McCamus, The Law of Contracts, 2^nd ed at 133).

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Analytical Framework for Oppression Remedy under the Business Corporations Act

By: Evaristus Oshionebo

PDF Version: Analytical Framework for Oppression Remedy under the Business Corporations Act

Case Commented On: Patel v Chief Medical Supplies Ltd, 2015 ABQB 694

In Patel v Chief Medical Supplies Ltd., 2015 ABQB 694, the Court of Queen’s Bench of Alberta was confronted with the issue of oppression of the interest of minority shareholders under the Business Corporations Act, RSA 2000, c B-9 [ABCA]. The judgment raises a number of important jurisprudential questions including the analytical framework for the oppression provision in section 242 of the ABCA and the scope of the remedy for oppression under the ABCA. In the ensuing discussion, this writer offers his opinion on these issues and posits that, in determining whether there is oppression in any given instance, Alberta courts ought to adopt the analytical framework enunciated by the Supreme Court of Canada (SCC) in BCE v 1976 Debentureholders [2008] 3 SCR 560 [BCE]. Doing so would enhance the development of the oppression remedy in Alberta.

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“Do Corporations Cry Wolf? — Comparing What Companies Tell Regulators With What They Tell Investors”

By: James Coleman

PDF Version: “Do Corporations Cry Wolf? — Comparing What Companies Tell Regulators With What They Tell Investors”

Corporations regularly complain that new regulations will harm their business and the broader economy. How seriously should we take those warnings? I’ve just posted a paper that presents a way of answering this perennial question.

It’s often said that corporations, “Cry Wolf,” falsely predicting that rules will be very costly. A prime example comes from 1970 when Ford’s President, Lee Iacocca warned that the U.S. Clean Air Act “could prevent continued production of automobiles” and was “a threat to the entire American economy and to every person in America.” So when industry says that new regulations such as the U.S. Environmental Protection Agency (EPA) Clean Power Plan or Alberta’s rules for cleaning up tailings ponds will be unworkable, some suggest that regulators should just ignore those warnings.

But the problem with crying wolf is that there are wolves. That is, false alarms are dangerous because they mean we won’t respond to true threats. And from time to time, regulations really are unworkable, and industry might be the first to recognize this, which is why regulators don’t just ignore industry warnings.

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