The Overlay Of A Matrimonial Dispute On The Oppression Remedy Under The Business Corporations Act

• Published date: 06 July 2021
• Subject Matter: Corporate/Commercial Law, Corporate and Company Law, Shareholders
• Law Firm: McLennan Ross LLP
• Author: Mr Pat Haughian

Legal Citation

Berman v 905952 Alberta Ltd, 2021 ABQB 434 (CanLII)

Facts

The Plaintiff, Ms. Berman, brought an action against her former husband, his business partner, and two corporations under sections 215 and 242 of the Business Corporations Act ("BCA"). She did so to recoup an equitable interest in the corporations granted to her at trial.

At trial, the Court awarded her child and spousal support, as well as an equalization payment on their matrimonial property. Since Mr. Berman claimed to be unable to pay this amount, Ms. Berman was granted an equitable interest in 70% of his shares. This made her a beneficial shareholder under the BCA.

She is now seeking to compel Mr. Berman and his partner, Mr. Sicherman, to liquidate and dissolve their corporations under ss. 215(1) and 242 of the BCA for satisfaction of her property interest. Ms. Berman claims oppression on the grounds that they have disregarded her interests as a beneficial owner for the purposes ordered by the court.

Decision

The Court begins by quoting cases in which family law intersected with corporate law. The Court notes that, per Aubin v Petrone, 2020 ABCA 13, "obligations imposed by family law are on equal footing with other legal obligations and deserve fair balancing where interests compete." This tension becomes something of a theme throughout the decision, as Mr. Berman argued that any perceived act of oppression can be explained as a valid business decision conducted in the best interests of the corporate entity and his business partner.

The Court notes the oppression remedy is sometimes used to dissolve family-run corporations following divorce proceedings. This case is complicated by the fact that the oppression remedy is being used to resolve a dispute over unrelated matrimonial property. It is further complicated by the presence of Mr. Berman's business partner who owns 50% of shares in both corporations and has nothing to do with the couple's separation. Sicherman is regularly identified as an innocent third party who was added as a defendant by the plaintiff, and not by the Court's earlier judgment.

The court mentions that Peregrym v Peregrym, 2015 ABQB 176 "raised the possibility of utilizing the oppression remedy in this particular context, but it appears the parties in that case ultimately resolved their matter outside of the court process." Therefore, the case is considered "novel."

S. 242 of the BCA imposes a two-part test for finding oppression in a corporate context. The...