2024 QCCS 306, 2024 QCCS 306

Grierson c. Rio Tinto PLC 2024 QCCS 306 SUPERIOR COURT (Commercial Division) CANADA PROVINCE OF QUEBEC DISTRICT OF MONTRÉAL No.: 500-11-062170-234 DATE: February 5, 2024 _____________________________________________________________________ BY THE HONOURABLE MARTIN F. SHEEHAN, J.S.C. _____________________________________________________________________ BRUCE J. GRIERSON, and MARTINE CAPLETTE and GILLES CHARETTE and JIM COOK and VICTOR CORMIER and ROGER LEBLANC and STEPHEN PREST and MARTIN THIBODEAU and JEAN-FRANCOIS TURGEON Plaintiffs v.

RIO TINTO PLC and RIO TINTO CANADA MANAGEMENT INC. and RIO TINTO FER ET TITANE INC. Defendants _____________________________________________________________________ JUDGMENT ON DEFENDANTS’ APPLICATION TO DISMISS _____________________________________________________________________ CONTEXT ...................................................................................................................................... 2 ANALYSIS ..................................................................................................................................... 3 1.

Applicable Law ............................................................................................................... 3 2.

Discussion ....................................................................................................................... 4 2.1 Plaintiffs’ Status as Proper Complainants Under the CBCA and the QBCA .... 4 2.2 The Motion to Dismiss based on Absence of Chances of Success .................. 9 [ 1 ] The Court is seized with an application by Defendants, Rio Tinto Canada Management Inc. (“ RTCMI ”) and Rio Tinto Fer et Titane Inc. (“ RTFT ”) for partial dismissal (the “ Application to Partially Dismiss ”) of the Re-Modified Originating Application for the Issuance of Rectification Orders, Declaratory and Injunctive Relief and Award in Damages (the “ Originating Application ”). [1] CONTEXT [ 2 ] Plaintiffs are former directors, officers or executives of RTFT and/or of RTCMI.

RTFT and RTCMI are fully owned Canadian titanium business units of the Defendant Rio Tinto plc (“ Rio Tinto plc ”). [ 3 ] Plaintiffs, now retired, are beneficiaries or former beneficiaries of the Multi-Employer Rio Tinto Canadian Business Units Pension Plan for Certain Non-Unionized Employees (the “ RTCBU Plan ”). Certain Plaintiffs are also beneficiaries of a Supplementary Executive Retirement Plan (the “ SERP ”).

[ 4 ] In their Origination Application, Plaintiffs allege that they were led to believe that their pension benefits under the RTCBU Plan or the SERP would be indexed biennially by 50% of the Consumer Price Index (the “ CPI ”), provided that the Canadian titanium business unit was shown to be profitable (the “ Indexation Policy ”). [ 5 ] Plaintiffs complain that as a result of conduct culminating in October 2012, Defendants, acting unilaterally and without notice, abolished the indexation of their pension plans. [ 6 ] Plaintiffs claim that Defendants’ actions prior to cancellation of the Indexation Policy, the cancellation itself and Defendants’ subsequent efforts to mislead them constitute: 6.1. breaches of contract by RTFT and RTCMI; 6.2. a delictual fault by Rio Tinto plc who would have encouraged and contributed to RTFT’s and RTCMI’s contractual breaches; and 6.3. abusive behaviour within the meaning of the

Canada Business Corporations Act (“ CBCA ”) [2] and the Québec Business Corporations Act (“ QBCA ”) [3] (the “ Oppression Claim ”). [ 7 ] On the merits, Defendants deny the existence of the Indexation Policy or any legal or contractual obligation to index Plaintiffs’ pensions. They conclude that the interruption of the Indexation Policy cannot amount to a fault (contractual or delictual). [ 8 ] As a preliminary matter, they submit that Plaintiffs’ recourse should be limited to its contractual and delictual components.

By way of their Application to Partially Dismiss, they ask that the Court: 8.1. refuse to grant the Plaintiffs the status of plaintiff to pursue their Oppression Claim within the meaning of the CBCA and QBCA; and 8.2. dismiss the first declaratory conclusion of the Original Application; [ 9 ] If these conclusions are granted, they also ask that the Court: 9.1. transfer the present file to the Civil Division of the Superior Court; and 9.2. strike the paragraphs of the Motion to Institute Proceedings containing allegations relating to the Oppression Claim. ANALYSIS 1.

Applicable Law [ 10 ] The principles applicable to a motion to dismiss at the pre-trial stage of litigation are well known. They can be summarized as follows: 10.1. The sound administration of judicial resources is essential to guarantee access to justice. To ensure this sound administration, the courts have been granted tools to terminate unfounded claims, even at the preliminary stage. [4] 10.2. However, the consequences of dismissing an action at a preliminary stage are serious. Thus, the cardinal principle of access to justice also requires the court to be circumspect in the exercise of this power.

As a general rule, the power to terminate litigation must be used “sparingly”. Premature termination should be avoided unless the recourse is “necessarily doomed to fail” and the situation is “clear and obvious” . [5] 10.3. In the case of a motion under

article 168.2 C.C.P., the purpose of the review is to determine whether the conclusions sought are consistent with the facts and exhibits alleged assuming that these are true. This assumption applies to the facts themselves not to their characterization by the parties. [6] 10.4. The motion to dismiss can apply to the whole proceeding or to part of it. [7] 10.5. The court must not consider the degree of difficulty that a party may have in proving its allegations. [8] 10.6.

If the situation is clear or, if it is based solely on the resolution of a specific question of law, the court must decide without unnecessarily postponing the analysis of the problem to a later stage. [9] 10.7. However, contested questions of fact or of mixed fact and law should be left to the trial judge, rather than being decided on a motion to dismiss, since they may likely benefit from further examination. [10] 2.

Discussion [ 11 ] In support of their Motion to Partially Dismiss, Defendants raise two arguments. [ 12 ] Firstly, they allege that Plaintiffs should not be granted complainant status under the CBCA or the QBCA.

[ 13 ] Secondly, they allege that even if Plaintiffs could be considered proper complainants, their Oppression Claim should be dismissed on the basis that other contractual or delictual recourses are available to them. 2.1 Plaintiffs’ Status as Proper Complainants Under the CBCA and the QBCA [ 14 ] The CBCA and the QBCA allow a current or former shareholder, a beneficial owner of shares, [11] a current or former director or officer [12] or any other person who, at the discretion of the Court, is a proper person [13] to apply for redress if the business or the affairs of a corporation or of any of its affiliates have been carried out in a manner that is oppressive, unfairly prejudicial or unfairly disregards their rights. [14] 2.1.1 Plaintiffs’ Status as Former Directors or Officers [ 15 ] Current or former shareholders, officers or directors are prequalified as proper complainants under the CBCA and QBCA [15] although there may be cases where even those persons should not be entitled to oppression remedies. [16] [ 16 ] Plaintiffs’ status as former directors or officers of the Defendants must be assessed in light of the

definitions of these terms in the CBCA and the QBCA. [ 17 ] While the term “director” is usually limited to board members, the term “officer” is broader. Even though the

definitions in the CBCA and the QBCA are not identical, the term officer may include the chairperson of the board, president, vice-president, secretary, treasurer, chief financial officer, chief executive officer, chief operating officer, comptroller, general counsel, general manager, a managing director as well as persons holding a similar position or occupying similar functions. [17] [ 18 ] Thus, “the category of persons who may potentially bring an application seeking an oppression remedy is relatively broad.

It includes not just named officers, but also those who perform functions similar to those normally performed by an officer.” [18] The fact that the oppressive conduct occurred after their time in office is no bar to an oppression claim where the oppressive actions relate to conditions established during their time in office. [19] [ 19 ] At this stage, the Court considers that the Originating Application contains allegations that could lead to the conclusion that Plaintiffs are either former directors or former officers of the Defendants. [ 20 ] For ease of reference, the Court reproduces the table contained in Plaintiffs' plan of arguments in this regard: Plaintiff Corporate role (year of appointment) Originating Application Dr.

Bruce J. Grierson CEO of QIT

(1984) Officer of RTIT

(1998) Chair of QIT (1985-2001) Director of QIT/RTFT/RTIT

(1981) Paras. 54 and 56.1 Mr. Jean-François Turgeon Vice-President, Technology

(2000) President and COO of RTFT

(2006) CEO of RTIT(UK) and RTFT

(2010) Paras. 68 and 69 Dr. Gilles Charette Senior Vice-President, Sales and Marketing

(1984) President and COO of QIT

(1986) Director of QIT/RTFT/RTIT

(1984) Paras. 75 to 76.1 Ms. Martine Caplette Director – Employee Benefits

(1992) Global Practice Principal Adviser – Global Benefits Practice

(2008) Paras. 81 and 82

Mr. Roger Leblanc Director of Financial Planning Sales Account Manager and Compliance Director Paras 88 and 89 Mr. Victor Cormier Director, Personnel and Staffing/Director, Personnel and Public Affairs

(1986) Para. 91 Mr. Martin Thibodeau Vice-President, Human Resources, QIT

(1978) Executive Vice-President, QMP (1988), President QMP

(1989) Paras. 96 and 97 Dr. Stephen Prest Vice-President, Technology, QIT

(1982) Senior Vice-President, Business Development and Exploration Directors of Diavik Diamond Mines Inc.

(1996) President of Diavik Diamond Mines Inc.

(1999) Director of QIT/RTFT/RTIT

(1982) Paras. 102, 103 and 104.1 [ 21 ] As the table sets out, most Plaintiffs are former directors of one or more Defendants. Only three (Ms. Caplette, Mr. Leblanc and Mr. Cormier) were not.

However, these three are alleged to have occupied high-level executive functions akin to those of officers. [ 22 ] Because the assessment of whether someone can bring a claim for oppression goes beyond the persons listed in the official corporate filings and may involve “a consideration of the nature of their job responsibilities, and whether these are similar to those of an officer”, [20] it would be improper to decide this matter on a preliminary basis without having heard the relevant evidence in this regard. [ 23 ] Furthermore, the claims that Plaintiffs wish to bring forth relate to conditions set out while they held office with the Defendants. [ 24 ] Thus, it is possible that a court, after hearing the relevant evidence, could consider the Plaintiffs proper complainants as former directors or officers.

This suffices to defeat the Application to Partially Dismiss. 2.1.2 Plaintiffs’ Status as Other Persons Considered to Be a Proper Person by the Court [ 25 ] Moreover, even if Plaintiffs’ status was limited to former employees or creditors of the Defendants, they could still be considered proper complainants under the residual discretionary category of “other persons”. [ 26 ] The Court of Appeal points out that the status of “other persons” as complainants is contingent upon the assessment of the court. [21] [ 27 ] When assessing whether an “other person” should be afforded the status of complainant under the CBCA or the QBC, Quebec courts have generally adopted the non-exclusive circumstances recognized by the Alberta Court of Queen’s Bench in First Edmonton Place Ltd. v. 315888 Alta.

Ltd. : [22] 27.1. The first is if the act or conduct of the directors or management of the corporation which is complained of constituted using the corporation as a vehicle for committing a fraud upon the applicant; 27.2.

The second is when the act or conduct of the directors or management of the corporation which is complained of constituted a breach of the underlying expectation of the applicant arising from the circumstances in which the applicant’s relationship with the corporation arose . [ 28 ] In either case, the persons’ debt must have existed at the time of the impugned corporate behaviour. [23] However, it isn’t necessary for the amount of the claim to be liquid or precisely determined at the time the act was committed. [24] [ 29 ] Again, the Origination Application contains sufficient allegations to allow a court to consider that these conditions are met. [ 30 ] Firstly, Plaintiffs allege that Defendants breached the reasonable expectations that were created when Plaintiffs were informed of the Indexation Policy and promised that it would be maintained in the event that the business was profitable.

The expectations were the result of Plaintiffs’ important role within the corporations.

[ 31 ] Secondly, Plaintiffs complain of improper conduct which occurred starting in 2007 and ending with the cancellation of the Indexation Policy in 2012.

At that time, Plaintiffs were creditors of the Defendants as they were beneficiaries or potential beneficiaries of the pension plans. [ 32 ] Based on the specific wording of s. 450 of the QBCA, some authors have suggested that, even when oppression is raised by “other persons”, the QBCA requires that the conduct be oppressive or unfairly prejudicial towards “any security holder, director or officer of the corporation” rather than towards the “other persons” themselves. [25] This wording differs from s. 241 of the CBCA which provides that the conduct can be oppressive or unfairly prejudicial towards “any security holder, creditor , director or officer” (our underlining). [ 33 ] This argument was discussed by the Court of Appeal in Abandonato c.

Corporation Steckmar [26] . The Court confirmed that creditors of the corporation could also be granted permission to sue under s. 439(3) of QBCA if they are “sufficiently inside the company”. [27] This definition potentially includes Plaintiffs. A final determination in this regard requires an analysis not only of the relationship between the potential complainants and each of the targeted companies but also of the nature of the complaint. [28] Again, this is a question of mixed fact and law best left to the trial judge. [ 34 ] In any event, even if the restrictive

interpretation were to be adopted, Plaintiffs are complaining about abusive conduct towards the former officers. Indeed, they argue that Rio Tinto plc has circumvented RTFT and RTCMI’s management to thwart the application of the Indexation Policy.

According to them, this conduct constitutes abuse towards the officers of RTFT and RTCMI. [ 35 ] Therefore, even if Plaintiffs relied exclusively on the discretionary “other person” status under the CBCA or QBCA, the Defendants’ motion should fail as it cannot be said at this stage that Plaintiffs should clearly be denied such status. [ 36 ] The decision to defer the determination of whether a person should be afforded proper plaintiff status under the acts to the judge tasked with the determination of whether an oppression remedy should be granted is supported by a number of cases who have refused to grant motions by defendants seeking the preliminary dismissal of an oppression claim on a similar basis. [29] [ 37 ] These rulings rely on the following considerations: 37.1.

A rule requiring a party to establish its status as proper plaintiff under the CBCA or QBCA in a separate proceeding prior to seeking its remedy would multiply litigation with no additional benefit. [30] 37.2. The question of whether the court will exercise its discretion to grant standing to a person to seek oppression remedies in accordance with the CBCA or QBCA usually involves deciding disputed questions of fact (for example if a party should be considered a shareholder in fact or a person who has responsibilities similar to those of an officer) which require hearing evidence. [31] 37.3.

Finally, the discretionary granting of the status of plaintiff is often intertwined with the existence of oppression itself or the identification of the proper remedy (as all three involve a consideration by the court of the conduct involved in light of the reasonable expectations of the complainant). [32] 2.2 The Motion to Dismiss based on Absence of Chances of Success [ 38 ] Oppression remedies require Plaintiffs to show: 38.1. that they had a “reasonable expectation” that the corporation or its corporate actors would behave in a certain way; and 38.2. that this reasonable expectation was violated by conduct which amounts to “oppression,” “unfair prejudice” or “unfair disregard” of a relevant interest. [33] [ 39 ] Oppression is “fact specific”. “What is just and equitable is judged by the reasonable expectations of the stakeholders in the context and in regard to the relationships at play.

Conduct that may be oppressive in one situation may not be in another.” [34] [ 40 ] Thus, denying a party the right to present its case at a preliminary stage is fraught with danger. It risks improperly denying a party rights which a court could, after a full consideration of all relevant facts, consider appropriate. [ 41 ] Defendants submit that the relationship between pensioners and their ex-employer is a contractual one akin to an employment contract.

They are correct in this regard. [35] They are also correct to point out that courts have often refused to grant discretionary oppression remedies when a contractual recourse is available. [36] Oppression remedies are not intended to be used by creditors to facilitate debt collection. [37] [ 42 ] Nonetheless, as indicated above, creditors can sometimes be considered proper complainants under the CBSA or the QBCA. [ 43 ] In addition, oppression claims may have an employment component. [38] In fact, oppression sometimes results from the improper removal of employment benefits.

In such cases, courts have used oppression remedies to restore such benefits. [39] [ 44 ] Courts have also recognized that oppression claims can be brought on behalf pensioners or retirees. [40] [ 45 ] This may be one of those cases. Plaintiffs’ recourse is hybrid in nature. They allege that Defendants have participated in corporate conduct that has violated their reasonable expectations with regard to the indexation of their pension plan. [ 46 ] For example, Plaintiffs allege that: 46.1.

Plaintiffs were led to believe that the pension benefits would be indexed as an “incentive to ensure a sustainable and ongoing profitability” of the Defendants’ Canadian business (Originating Application, paras. 6, 7, 12 and 14b).

46.2. Plaintiffs relied on these representations which created a legitimate expectation on their part that their pension benefits would be increased by an amount equal to 50 % of the increase of the CPI on the 1 st of January of every second year following 2011 as long as RTFT or RTCMI were profitable (Originating Application, paras. 51, 121, 122, 144 to 164 and 264 to 271). 46.3.

Plaintiffs’ expectations were supported by the Indexation Policy which was followed and consistently applied for more than 30 years and by the related corporate mechanisms in place (Originating Application, paras. 8, 9, 14 and 125 to 143). 46.4.

Because of the potential conflict between the interests of pensioners and those of shareholders, the QIT/RTFT pension board was created, an independent actuarial firm was retained and a Director, Employee Benefits, was appointed to work with the independent actuary to prepare a financial analysis regarding the indexation of Plaintiffs’ pension benefits (Originating Application, paras. 125 to 134). 46.5.

Defendants ultimately circumvented and bypassed this governing committee and other safeguards by illegally modifying internal structures, positions, processes, and practices (Originating Application, at paras. 126, 168, 178, 188 to 211). [ 47 ] These allegations are yet unproven, but they could, depending on the circumstances, give rise to oppression remedies. [ 48 ] Therefore, this is not a case where Plaintiffs recourse is “necessarily doomed to fail” or where the situation is “clear and obvious”. [ 49 ] In such circumstances, the adjudication of Plaintiffs’ Oppression Claim is best left to the trial judge. [ 50 ] This ruling does not prejudice the Defendants.

They retain the right to argue on the merits that Plaintiffs are improper complainants under the CBCA or QBCA or that the court should not grant the oppression remedies that they seek. [ 51 ] Moreover, dismissing the Oppression Claim would have little impact on the administration of these proceedings as Plaintiffs’ legitimate expectations or Defendants’ alleged abuse would still be relevant even if the claim was limited to its contractual and delictual components. [41] [ 52 ] On the other hand, granting the Application to partially Dismiss at stage would risk causing prejudice to the Plaintiffs depriving them of an essential legislative tool to support their lawsuit. [ 53 ] As the Defendants have indicated that their conclusions to strike allegations and to refer the matter to the general division of the court are contingent upon the dismissal of the Oppression Claim, there is no need to deal with these conclusions.

FOR THESE REASONS, THE COURT: [ 54 ] DISMISSES Defendants Application to Partially Dismiss; [ 55 ] THE WHOLE with costs to follow suit. __________________________________ MARTIN F. SHEEHAN, J.S.C. Mtre Bogdan-Alexandru Dobrota Mtre Laurence Ste-Marie Woods s.e.n.c.r.l. Counsel for the Plaintiffs Mtre Julie Himo Mtre Corina Manole Mtre Marie-Eve Gingras Société d'avocats Torys s.e.n.c.r.l. Counsel for the Defendants Hearing dates: January 8 and 9, 2024