Docket: CACV 2201 101114752 Saskatchewan Ltd. Appellant (Plaintiff) - v. -, 2012 SKCA 64

THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2012 SKCA 64 Date: 20120625 Between: Docket: CACV 2201 101114752 Saskatchewan Ltd. Appellant (Plaintiff) - and - Devonian Potash Inc., 101109711 Saskatchewan Ltd. Respondents (Defendants) - and – Viatcheslav Moshe Kantor, North Atlantic Potash Inc., Viasat Services Limited, TrustService Limited Liability Company, Joint Stock Company Acron, Dmitry Kantor, Lyubov Kantor, Tony Le-Ta, Mark Windsor-Smith, Dmitry Goloubkov and Arie Zuckerman Non-Parties (Defendants) Coram: Vancise, Jackson & Herauf JJ.A.

Counsel: Peter Bergbusch for the Appellant, 101114752 Saskatchewan Ltd. Joel Hesje, Q.C. and Tim Froese for the Respondents, Devonian Potash Inc. and 101109711 Saskatchewan Ltd. Appeal:

From: 2011 SKQB 446 Heard: May 8, 2012 Disposition: Appeal Allowed Written Reasons: June 25, 2012 By: The Honourable Madam Justice Jackson In Concurrence: The Honourable Mr. Justice Vancise The Honourable Mr. Justice Herauf Jackson J.A. I. Introduction [ 1 ] The current world-wide demand for potash has sparked a rapid increase in the value of Saskatchewan’s potash permits and a great deal of interest in the acquisition and resale of such assets.

This appeal concerns a dispute between the majority and the minority shareholders of a closely-held corporation as to who shares in the bonanza when the corporation sells its potash permits at a greatly enhanced value. [ 2 ] After commencing an action under the oppression provisions of The Business Corporations Act , R.S.S. 1978, c. B-10, the minority shareholder sought an interlocutory injunction requiring that the proceeds from the sale of the corporation’s potash permits be paid into Court, pending further order of the Court or the agreement of the parties.

The Queen’s Bench Chambers judge refused the injunction. He found little connection between the serious issues to be tried and the relief sought, and no meaningful risk of irreparable harm (see: 2011 SKQB 446 , 387 Sask. R. 175). [ 3 ] The appeal must be allowed. The decision of the Chambers judge reflects error that warrants intervention by this Court. II. Background [ 4 ] Viatcheslav Moshe Kantor engaged the services of Igor Medge and Jason Mann to identify and purchase Saskatchewan exploratory potash permits. Mr. Kantor is a Russian and Israeli citizen who currently resides in Switzerland. Mr.

Medge is a Russian citizen who presently lives in the United States. Mr. Mann is a Canadian citizen residing in Saskatchewan. [ 5 ] In accordance with Mr. Kantor’s instructions, Messrs. Mann and Medge negotiated the purchase of 100% of the shares of Devonian Potash Inc., a Saskatchewan corporation holding 11 potash permits, for $15 million dollars in 2008. At the same time, Messrs. Mann and Medge acquired 101109711 Saskatchewan Ltd. (“9711 SaskCo”) to hold the shares of Devonian. [ 6 ] As compensation for his assistance, a numbered corporation controlled by Mr.

Mann and his brother James Mann, 101114752 Saskatchewan Ltd. (“4752 SaskCo”), received approximately 14.3% of the Class A shares of 9711 SaskCo. (Other than being a co-owner of 4752 SaskCo, James Mann plays no role in this appeal and will not be mentioned again.) Viasat Services Limited, a Cyprus corporation, presently holds the remaining Class A shares of 9711 SaskCo. No shares of any other class have been issued, and the parties are restricted as to how their shares are sold (see:

Article 3.12 of the Unanimous Shareholders’ Agreement). [ 7 ] In 2011, Devonian sold the potash permits for US $150.5 million to a Chinese corporation, Yanzhou Coal Mining Company Limited. In the months leading up to the sale to Yanzhou, relations between Mr. Mann and Mr. Kantor soured amid Mr. Kantor’s allegations of a breach of fiduciary duty on the part of Mr. Mann. Two other law suits are ongoing with respect to those allegations (see: 101109718 Saskatchewan Ltd. et al. v.

Agrikalium Potash Corp. et al. , 2011 SKQB 66 , [2011] 9 W.W.R. 732, affirmed 2011 SKCA 82 , [2011] 9 W.W.R. 757). [ 8 ] According to the sale agreement with Yanzhou, US $100 million was paid on closing with the balance being held for certain other purposes, which are not relevant to this appeal. The remaining US $50 million has not yet been paid.

[9] In

summary, the parties before the Court are: 1. The applicant for the oppression remedy, 4752 SaskCo, which is owned by the Mann brothers; 2. 9711 SaskCo, of which 4752 SaskCo owns 14.3% and of which Viasat owns the balance. 9711 SaskCo is the corporation againstwhich the oppression remedy was sought. Devonian is not a party to the appeal, but it is a wholly-owned subsidiary of 9711 SaskCo. 9711 SaskCo’s only real asset is theDevonian shares. Mr. Kantor is not a party to the appeal but figures prominently in it as he is considered to be the controlling mindbehind Viasat.

Viasat has no assets other than the 9711 SaskCo shares. [10] Jason Mann was one of three directors of 9711 SaskCo until the problems that sparked the falling out between Mr. Kantor and himarose and Terry Lay replaced Mr. Mann as a director of 9711 SaskCo. On March 31, 2011, Viasat elected Dmitry Kantor to the Board ofDirectors of 9711 SaskCo. (Appeal Book, p. 516a.) [11] Once Mr. Mann and Mr. Viatcheslav Kantor were engaged in cross-litigation, Mr. Mann feared that Devonian would distribute theproceeds of the sale of the potash permits to 9711 SaskCo.

He feared that the monies would become untraceable, given that: (

i) themajority shareholder of 9711 SaskCo is Viasat; (ii) Viasat has no other assets other than the 9711 SaskCo shares; and (iii) Mr. Kantorcontrols Viasat. [12] To forestall the possible movement of the sale proceeds from Canada, 4752 SaskCo issued a statement of claim on August 11, 2011against 9711 SaskCo, claiming relief for various acts of oppressive and unfair conduct under s. 234 of The Business Corporations Act. On September 16, 2011, 9711 SaskCo filed its defence and a counterclaim, alleging again Mr.

Mann’s breach of fiduciary duty andseeking to extinguish completely the minority interest of 4752 SaskCo in 9711 SaskCo. [13] On August 23, 2011, 4752 SaskCo applied for an interlocutory injunction requiring that Devonian pay the full amount of the saleproceeds of the potash permits into Court or, alternatively, pay them into a trust account maintained by its Saskatchewan corporatecounsel, until a further court order could be obtained or until the parties had agreed as to the disposition of the funds. III.

Decision under Appeal [14] When the application for injunctive relief was heard, the Chambers judge determined that the amount of the claim could affect nomore than 14.3% of the portion of the purchase price that had been paid, i.e. 14.3% of US $100 million. Accordingly, at the close of thehearing, he ordered that US $14.3 million be paid into Court pending a decision on the merits. [15] The Chambers judge ultimately dismissed the application. He began his analysis by reviewing the requirements for aninterlocutory injunction according to the principles contained in RJR-MacDonald Inc. v.

Canada (Attorney General), (SCC), [1994] 1 S.C.R. 311 and Mosaic Potash Esterhazy Limited Partnership v. Potash Corporation of Saskatchewan Inc., 2011 SKCA120, 341 D.L.R. (4th) 407. He considered the first two issues outlined in RJR-MacDonald, notably the strength of the applicant's caseand the risk of irreparable harm to the applicant as determinative of the matter before him. [16] Regarding the first issue, the Chambers judge held that 4752 SaskCo had not established a link between the serious issues to betried and the relief sought and, as a minority shareholder, had no claim to the proceeds.

With respect to irreparable harm, he found therewas no meaningful risk. Finally, the Chambers judge found that it was “impossible as well as inappropriate” to consider the “balance ofconvenience” (para. 30), having found that there was no serious issue to be tried and no meaningful risk of irreparable harm.

If it werenecessary to consider the third arm of the RJR-MacDonald test, he found that the relief claimed was disproportionate to the contents ofthe claim, being the restriction of the corporation’s activities. [17] In the result, he ordered that the US $14.3 million be released 15 clear days after the date of his decision. 4752 SaskCo launched itsappeal to this Court within that time period. The appeal acted as a stay of the order releasing the funds, such that the funds remainwithin the control of the Court of Queen’s Bench in a trust account at the law firm acting for 9711 SaskCo. IV. Issues

[ 18 ] According to the grounds of appeal and the submissions of the parties, these are the issues that must be resolved by the Court: 1. whether the Chambers judge or this Court is precluded from considering the law of oppression in deciding whether to grant a remedy; 2. what is the proper analytical framework to apply when an applicant for an injunction claims oppression within the meaning of The Business Corporations Act ; 3. since s. 234(1) of The Business Corporations Act does not refer specifically to relieving against threats of oppressive conduct, does the Court have the jurisdiction in this case to grant an injunction; 4. whether the Chambers judge erred by concluding that there is no serious issue to be tried that is connected to the relief requested; 5. whether the Chambers judge erred by finding that there was no meaningful risk of irreparable harm; and 6. what do the balance of convenience and the overall equities and justice of the case dictate with respect to the situation at hand.

V. Analysis 1. Whether the Chambers judge or this Court is precluded from considering the law of oppression in deciding whether to grant a remedy? [ 19 ] Counsel for 9711 SaskCo submitted that the Court cannot look to the case law pertaining to the law of oppression because the notice of motion, invoking relief from the Court of Queen’s Bench, does not mention s. 234 of The Business Corporations Act . In my view, if the Court were to accede to this argument, it would be a triumph of form over substance.

While 4752 SaskCo did not apply for an injunction pursuant to s. 234 of The Business Corporations Act , the remedy 4752 SaskCo seeks is clearly grounded in the law of oppression. [ 20 ] Prior to applying for injunctive relief, 4752 SaskCo commenced an action, alleging acts of oppression committed in contravention of s. 234 of The Business Corporations Act , which reads in salient part: Application to court re oppression 234

(1) A complainant may apply to a court for an order under this section. [1] Grounds

(2) If, upon an application under subsection (1), the court is satisfied that in respect of a corporation or any of its affiliates: (

a) any act or omission of the corporation or any of its affiliates affects [2] a result; (

b) the business or affairs of the corporation or any of its affiliates are or have been carried on or conducted in a manner; or (

c) the powers of the directors of the corporation or any of its affiliates are or have been exercised in a manner; that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of any security holder, creditor, director or officer, the court may make an order to rectify the matters complained of. Powers of court

(3) In connection with an application under this section, the court may make any interim or final order it thinks fit including, without limiting the generality of the foregoing: (

a) an order restraining the conduct complained of; [ 21 ] 4752 SaskCo alleged these acts of oppression in its statement of claim: Oppression Remedy 63. 752 Sask. Ltd. says that the acts of Viasat as majority shareholder of 9711 Sask. Ltd., of Dmitry Kantor and Tony Le-Ta as directors of 9711 Sask. Ltd. and Devonian, and of Lyubov Kantor as a director of Devonian, and the manner in which the business and affairs of 9711 Sask. Ltd. and Devonian have been carried on are oppressive or unfairly prejudicial to or unfairly disregard the interests of 752 Sask. Ltd. as a shareholder of 9711 Sask. Ltd., contrary to

section 234 of The Business Corporations Act , R.S.S. 1978, c. B-10. Among other things, Viasat, Dmitry Kantor, Lyubov Kantor, Tony Le-Ta, 9711 Sask. Ltd. and Devonian have: (

a) Neglected or refused to comply with the rights of 752 Sask. Ltd. under the USA, including its contractual right to 30 days' notice of an "Offer" to purchase all or substantially all of the assets of 9711 Sask. Ltd.;

(

b) Neglected or refused to provide any information to 752 Sask. Ltd. regarding the place or method of payment of the proceeds ofsale of all or substantially all of the assets of 9711 Sask. Ltd. to Yanzhou Coal Mining Company Limited; (

c) Failed to protect the rights of 752 Sask. Ltd. as minority shareholder to a proportionate distribution of the proceeds of sale of all orsubstantially all of the assets of 9711 Sask. Ltd. to Yanzhou Coal Mining Company Limited; (

d) Ceded control of decision-making over the business and affairs of Devonian and 9711 Sask. Ltd. to Acron and to ViatcheslavKantor; (

e) Neglected or refused to provide complete disclosure of the details of the transaction with Yanzhou Coal Mining CompanyLimited, including any supplementary or collateral agreements that exist between Yanzhou Coal Mining Company Limited or itsaffiliates and 9711 Sask. Ltd., Viasat, and Acron or their affiliates; (

f) Neglected or refused to make adequate or any banking arrangements for 9711 Sask. Ltd. or Devonian in Canada; (

g) Neglected or refused to provide for the rights of 752 Sask. Ltd to acquire, at cost, potash production resulting from the permitsowned by Devonian, or to negotiate compensation for 752 Sask. Ltd. for the loss of such proprietary rights. [Appeal Book, Vol.

I, pp.14a-15a.] [22] In its statement of defence and counterclaim, dated September 16, 2011, 9711 SaskCo denied having committed acts of oppressionand stated further that 4752 SaskCo is not entitled to an oppression remedy because of the breaches of fiduciary duty of its “principal,Mann,” the particulars of which are set out in the counterclaim (see paras. 19-32 of the statement of defence).

As part of itscounterclaim, 9711 SaskCo asked, inter alia, for a declaration that 4752 SaskCo is not entitled to any shares in 9711 SaskCo and for anorder transferring 4752 SaskCo’s shares in 9711 SaskCo to Viasat. [23] Meanwhile on August 19, 2011, 4752 SaskCo applied to the Court of Queen’s Bench for an interlocutory injunction pursuant to s.65 of The Queen's Bench Act, 1998, S.S. 1998, c. Q-1.01, Rule 387A of The Queen's Bench Rules, and the inherent jurisdiction of theCourt.

Section 65 of The Queen's Bench Act reads as follows: Interlocutory mandamus, injunction or appointment of receiver 65(1) A judge may, on an interlocutory application, grant a mandamus or an injunction or appoint a receiver where it appears to thejudge to be appropriate or convenient that the order should be made.

Rule 387A of The Queen's Bench Rules provides as follows: Applications, how made 387A Subject to the provisions of The Queen’s Bench Act, interim orders for mandamus or an injunction or the appointment of a receiveror for the interim preservation of property may be made by the court on an ex parte application or upon notice as the court may direct. [24] As part of its notice of motion, 4752 SaskCo repeated all of its allegations from the statement of claim.

It described the corporatestructure of Devonian, 9711 SaskCo and Viasat, including that Viasat has no registered office in Canada and no assets other than theshares in 9711 SaskCo. It also described its attempts to receive information about when the sale would close and what would happen tothe sale proceeds. Finally, it described its concerns as to what would happen to the sale proceeds: 18. Given the absence of banking arrangements in Canada for 9711 Sask.

Ltd, Devonian and NAPI [North Atlantic Potash Inc.], theirrefusal to reveal what they intend to do with the sale proceeds, the fact that Viasat and TrustService do not have registered offices inCanada, and the inability of counsel for 9711 Sask. Ltd, Devonian and NAPI to obtain information on how the proceeds of the sale willbe handled, there is a high likelihood that the proceeds from the sale of the potash exploration permits will be removed from Canada. … 23.

There is a serious risk that, if the sale proceeds from the sale of the potash exploration permits are removed from Canada, 752 Sask.Ltd. will not share in any distribution of the sale proceeds, will not have any say in their distribution, and will not have any realisticability to locate the sale proceeds. [Appeal Book, p. 32a.] 4752 SaskCo originally applied ex parte for short service but, on the direction of the Court, notice was given to 9711 SaskCo. [25] While 4752 SaskCo did not mention s. 234 of The Business Corporations Act in its notice of motion as a source of the Court’sauthority to grant relief, nothing can turn on this omission.

The notice of motion referred to the statement of claim and relied on thealleged acts of oppression as the basis upon which relief should be granted. Further, the brief of law that accompanied the notice ofmotion referred to s. 234 and this Court’s decision in Wind Ridge Farms Ltd. v. Quadra Group Investments Ltd., (SKCA), [1999] 12 W.W.R. 203. Indeed, the brief of law filed in the Court of Queen’s Bench on behalf of Devonian and 9711 SaskCoreferred to other key oppression authorities: Naneff v.

Con-Crete Holdings Ltd. (1995), (ON CA), 23 O.R. (3d) 481(C.A.) and BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, [2008] 3 S.C.R. 560. In light of this context, the resolution of the issuesin this case require that the law of oppression be considered.

2. What is the proper analytical framework to apply when an applicant for an injunction claims oppression within the meaning of TheBusiness Corporations Act? [26] At bottom, this issue is about what standard to apply to measure the strength of 4752 SaskCo’s claim for injunctive relief. Thematter was argued before the Chambers judge on the basis that the proper test to apply is the serious question to be tried standard ratherthan prima facie case or strong prima facie case.

In this Court, counsel for 9711 SaskCo now takes the position that the test should besomething other than a “serious question to be tried.” [27] Counsel for 9711 SaskCo submits that what 4752 SaskCo seeks is better characterized as an injunction to restrain an anticipated orhypothetical harm, or an order preserving assets in the jurisdiction to satisfy a potential judgment should the anticipated mischief in factoccur.

It is submitted that these specialized injunctions, referred to respectively as quia timet and Mareva injunctions, are subject tomore stringent requirements than those applicable to the more conventional forms of injunctive relief such as those described in Mosaic.According to this submission, the Court should apply the higher standard of strong prima facie case (see: Air Canada Pilots Association v. Air Canada Ace Aviation Holdings Inc. (2007), (ON SC), 28 C.B.R. (5th) 163, aff’d 2008 ONCA 531 and OperationDismantle Inc. v. The Queen, (SCC), [1985] 1 S.C.R. 441).

Further, it is argued that it has been generally accepted that,in order to obtain injunctive relief in the context of oppression, the applicant must demonstrate a strong prima facie case. As support forthis proposition, counsel for 9711 SaskCo cites: Moosomin First Nation v. 101061721 Saskatchewan Inc., 2010 SKCA 110, [2011] 2W.W.R. 193 at para. 26 and Gazit

(1997) Inc. v. Centrefund Realty Corp. (2000), (ON SC), 8 B.L.R. (3d) 81 at para.77. In spite of counsel’s cogent arguments with respect to these matters, I am of the view that the serious question to be tried standard isthe one to apply. [28] Mosaic charted a new course for the Court. Richards J.A., on behalf of the Court, set forth a number of reasons why the seriousquestion to be tried standard is favoured over the strong prima facie case standard. For the purposes of this case, it is sufficient to stressthe following considerations: (

i) the difficulty of establishing a strong prima facie case on contradicted affidavit evidence; (ii) the need toconsider more than the strength of the applicant’s case to achieve equity in any given case; and (iii) the awkwardness of the seeming pre-judgment of the ultimate merits of the case by a Chambers judge on a point that may be sharply contested at trial (see paras. 37-40).

Richards J.A. emphasized that the ultimate focus in considering whether to grant interlocutory injunctive relief must be on the overallequities and justice of the case (see paras. 26 and 113) rather than on the mechanical application of the tri-partite test. [29] While the Court in Mosaic recognized that there may be exceptions to the serious question to be tried standard, Richards J.A.stressed that the exceptions will be “limited” (at para. 48). In my opinion, this is not the case to depart from the serious question to betried standard for four reasons.

First, the considerations put forward by the Court in Mosaic for departing from the strong prima faciecase standard apply with equal force to the within appeal. This is not the type of case where the Court might be concerned aboutinterference with the on-going management of the corporation. According to the evidence, the funds will be distributed. The onlyquestion is to whom. Second, it is not entirely clear that the test for quia timet and Mareva injunctions is immutably the strong primafacie case standard. (See: Robert J.

Sharpe, Injunctions and Specific Performance, looseleaf (Toronto: Canada Law Book, 2012) at para.2.870 and Aetna Financial Services v Feigelman, (SCC), [1985] 1 SCR 2, where the Court expresses caution withrespect to the granting of a quia timet injunction, but does not specify a specific test to apply.) Third, I am cognizant of the possibleargument that the standard injunction analysis may not apply to the granting of relief pursuant to s. 234 of The Business Corporations Act(see: Markus Koehnen, Oppression and Related Remedies (Toronto: Thomson Carswell, 2004), at pp. 338-39).

This argument was notpursued in either this Court or the Court of Queen’s Bench, but it seems inappropriate for this Court to establish an exception to theMosaic principles in this case, which may very well not have any application to oppression cases in the long term.

Finally, the matter wasargued before the Chambers judge on the basis that RJR-MacDonald and Mosaic required the strength of the case to be measured on theserious question to be tried standard—indeed, counsel candidly indicated that there was a concession in this regard. [30] For all of these reasons, I have concluded that the Court should not disturb the Chambers judge’s decision to apply the test ofserious issue to be tried to measure the strength of the applicant’s case for injunctive relief. 3.

Since s. 234(1) of The Business Corporations Act does not refer specifically to relieving against threats of oppressive conduct, doesthe Court have the jurisdiction in this case to grant an injunction? [31] Since the Directors have not passed a resolution saying there will be a distribution of the proceeds of the sale of the potash permitsto the majority shareholder only or that the funds will be spirited from the corporate bank account, 9711 SaskCo submits that the Courtsin this Province lack jurisdiction to intervene.

Unlike the legislation in British Columbia and Ontario, s. 234(2) of the Saskatchewan Actdoes not include “threats of oppression” as a type of corporate conduct addressable by the granting of an oppression remedy. See, e.g.,Bank of Montreal v. Dome Petroleum Ltd. (1987), (AB KB), 54 Alta. L.R. (2d) 289 (Q.B.) at para. 40 and AirCanada Pilots Assn. v. Air Canada Ace Aviation Holdings Inc. (2007), (ON SC), 26 B.L.R. (4th) 124 (Ont. S.C.J.) atpara. 65, aff’d 2008 ONCA 531.

[32] While s. 234 does not speak in terms of “threats of oppression,” this is not determinative of the extent of the court’s jurisdiction toprevent anticipated harm.

Section 234 of the Saskatchewan Act follows the federal legislation, which refers to actions that “effect aresult.” This language is sufficiently general to include acts that threaten oppressive conduct. As has been often stated, s. 234 isremedial legislation enacted for the relief of minority shareholders and is to be given a broad

interpretation to carry out its purpose (see: Wind Ridge Farms Ltd., supra). [33] I note as well that Air Canada Pilots Association refers to the Dome decision, but also cites Koehnen, Oppression and RelatedRemedies, supra. Professor Koehnen reasons that the federal legislation can provide a remedy to prevent threatened harm (at p. 51): All of that said, nothing in s. 241 precludes a remedy for threatened conduct. One can quite easily envisage situations in which theCBCA [Canada Business Corporations Act] might apply to threatened oppression.

For example, a state of affairs which threatens toharm a complainant may be unfairly prejudicial to his interests. In addition, nothing in the CBCA limits the court’s jurisdiction to grantinjunctive relief.

However, the test for granting such relief tends to be relatively high, requiring the applicant to establish that he has astrong prima facie case (or a serious issue to be tried), that he will suffer irreparable harm in the absence of an injunction and that thebalance of convenience favours the applicant. [Italics in original; underlining mine.] [34] As support for the proposition that the federal legislation extends to preventing impending harm, Professor Koehnen cites, interalia, Krynen v. Bugg (2003), (ON SC), 32 B.L.R. (3d) 61 (Ont. S.C.J.) at 77.

While Krynen is based on the Ontariolegislation, which does refer to “threatened” acts of oppression, the Court relied on quia timet principles, which are encompassed by thebroad remedial provisions of s. 234 or continue to exist as part of general injunctive relief as a companion to the remedies provided for inthe various Business Corporation Acts. The historical purposes for interlocutory injunctions include the preservation of property that isthe very subject matter of the litigation and the prevention of a real or impending threat to remove contested assets from the jurisdiction:Aetna, supra.

Injunctive relief has been granted to prevent the disposal of assets in such circumstances: First Choice Capital Fund Ltd.et al. v. First Canadian Capital Corporation Ltd., (SK KB), [1997] 9 W.W.R. 177 (Sask. Q.B.). [35] For these reasons, I conclude that the Court has the entire jurisdiction it needs to act in the face of the type of threatened oppressiveconduct that is in issue in the within appeal pursuant to s. 234 of The Business Corporations Act. 4.

Whether the Chambers judge erred by concluding that there is no serious issue to be tried that is connected to the relief requested? [36] At this point, it is useful to state the applicable standard of review. When considering matters involving interlocutory injunctiverelief, the standard of review is a deferential one, requiring an appellate court to find a “clear mistake on the law or the evidence, or someother glaring error.” See: Culligan Canada Ltd. v. Fettes, 2009 SKCA 144, [2010] 6 W.W.R. 420 at paras. 13-14 and Mosaic, supra atpara. 84.

In my respectful view, the Chambers judge has committed reviewable errors in relation to his analysis and approach to thegranting of an injunction. In reaching this conclusion, it is understood that the matter has arrived in this Court in a more refined statethan was originally presented to the Chambers judge. [37] In weighing the strength of the applicant’s case, the Chambers judge reviewed these paragraphs from the statement of claim: 66. Due to the failure or refusal of 9711 Sask. Ltd., Devonian and NAPI to provide assurances to 752 Sask.

Ltd. that the proceeds ofsale of permits to Yanzhou Coal Mining Company Limited will be held in trust in the home jurisdiction of the said corporations, used forlegitimate business purposes, and distributed to the shareholders in accordance with their respective interests, 752 Sask. Ltd requests aninjunction, on an ex parte and interlocutory basis, to order that the proceeds of sales of the potash exploration permits be paid into courtor otherwise held in trust in Saskatchewan until further court order or agreement between the parties. In addition, 752 Sask.

Ltd. says thatinjunctive relief is required because the majority shareholders of each of 9711 Sask. Ltd. and NAPI, Viasat and TrustServicerespectively, are foreign companies that do not have registered offices in Canada or any assets other than their shares in theSaskatchewan corporations. … 68. Therefore, 752 Sask. Ltd. claims judgment against the Defendants as follows: (

a) An accounting in respect of the financial affairs of Devonian, 9711 Sask. Ltd., and NAPI; (

b) Ex parte and interlocutory injunctive relief to restrain Devonian, 9711 Sask. Ltd. and NAPI from disposing of any proceeds ofsale of potash exploration permits without further court order or agreement between the parties, and requiring that such proceeds be heldin court or in an interest-bearing trust account in Saskatchewan pending further court order or agreement between the parties; … (

d) Compensation in the form of damages for the losses and expenses sustained by 752 Sask. Ltd. as a result of the oppressiveconduct and breaches of fiduciary duty of the Defendants; (

e) Punitive and exemplary damages;

(

f) Pre-judgment interest in accordance with The Pre-judgment Interest Act, S.S. 1984-85-86, c. P-22; (

g) Costs of this action on a solicitor-client basis. [Emphasis added.] [38] After reviewing these paragraphs, the Chambers judge concluded that: [19] The plaintiff's claim and supporting affidavits raise a serious issue to be tried, as identified in the claim. It must be remembered,however, that there is significant factual information in the affidavits that have little or nothing to do with this particular claim or therelief sought. The relief sought in para. 68(

a) is an accounting of the financial affairs of Devonian and 9711 Ltd. In para. 68(c), there isno reference to Devonian or 9711 Ltd., it deals with the issue involving the defendant, North Atlantic Potash Inc. which is no longer partof the injunction application. Paragraph 68(

d) seeks damages for losses as a result of oppressive conduct. In para. 68(e), the punitive andexemplary damages in fact are related to the question of the oppressive conduct. Although there are serious issues to be tried in relation tothose matters, the injunctive relief of having the proceeds of sale of the potash permits paid into Court has little connection to the reliefsought. To put it another way, how does the oppression claimed relate to the payment of funds requested in the injunction? Simply put, itdoes not. The real case to be considered as it relates to the injunctive relief contained in para. 68(

b) of the claim is found in para. 66,previously referred to. At its simplest, the applicant does not trust the respondents to deal with the proceeds of sale in a fashion that willprotect its interests. The manner in which it raises this lack of trust is based on the parties' current relationship, the lack of a businessactivity of Devonian or 9711 Ltd., that the Kantor group effectively controls the flow of money in the corporations, and can place theassets outside of the jurisdiction of the Saskatchewan Courts so that any eventual judgment will not be paid.

Looking back at the claim,although there is a serious issue to be tried as it relates to the points raised, those issues identified did not logically result in a connectionto the sale of the potash permits. [20] The real issue is the applicant's fear of loss of all of the money as a result of its inability, through its minority shareholdings, tocontrol any of the actions of the respondents.

To put it another way, even if the plaintiff was able to establish the oppression claimed, itis highly unlikely and extremely remote that the result of such success would be an entitlement to the entire proceeds of sale of all theassets of Devonian. [21] In a separate vein, it is implicit from the argument of the plaintiff and the injunction application that it is fearful that it will notreceive 14% of the sale proceeds. That may be the case but there are legitimate reasons for that.

Firstly, there is no obligation on thedirectors of Devonian or 9711 Ltd. to decide that the proceeds from the sale must be paid out to the shareholders of 9711 Ltd. inproportion to their shareholdings. That may be one of the legitimate conclusions reached by the directors but it is not an obligationimposed upon them. Simply by virtue of being a minority shareholder in 9711 Ltd., the applicant does not have the right to effectivelyforce the directors to conduct the business in such a fashion.

Related to that issue is the ability of the directors to decide that eitherutilizing Devonian or 9711 Ltd., the proceeds of sale could be invested in other business activities without the necessity of payment outof sale proceeds to the shareholders. [Emphasis added.] Later, in his reasons, when considering the balance of convenience, he wrote: [29] I did not find a serious issue to be tried as connected to the injunctive relief sought.... [39] It appears that the Chambers judge found a serious issue to be tried, stemming from the statement of claim, but that 4752 SaskCowould not be entitled to relief because its status as a minority shareholder would not entitle it to claim any portion of the proceeds.

Assuming that I have interpreted the Chambers judge’s reasons accurately, he has decided the case on the merits and, further, in doing sodid not consider the substantial case law pertaining to the law of oppression. This approach reflects reviewable error. [40] In Mosaic (at para. 36), this Court endorsed the approach of the House of Lords in American Cyanamid Co. v. Ethicon Ltd., [1975]A.C. 396 as to how a judge measures the strength of the case when considering an application for interlocutory relief.

An applicant forinterlocutory relief must satisfy the court that “the claim is not frivolous or vexatious; in other words, that there is a serious issue to betried” (see p. 407 of Cyanamid). When the claim of 4752 SaskCo is considered in the context of the law of oppression, in my respectfulview, the Chambers judge was required to conclude that there is a serious issue to be tried, which can only be addressed if an interiminjunction is granted. [41] The history and purpose of the oppression remedy is presented and discussed in any number of Canadian and British authorities andtexts.

As an example of this jurisprudence, one can refer to the first Court of Appeal decision in this jurisdiction: Eiserman v. Ara FarmsLtd., (SK CA), [1988] 5 W.W.R. 97 (Sask. C.A.). In Eiserman, Sherstobitoff J.A. referred to the classic British casethat discusses the law of oppression: Ebrahimi v. Westbourne Galleries Ltd., [1972] 2 All E.R. 492 at 499-500. In Ebrahimi, LordWilberforce said at 499: My Lords, in my opinion these authorities represent a sound and rational development of the law which should be endorsed.

Thefoundation of it all lies in the words “just and equitable” and, if there is any respect in which some of the cases may be open to criticism,it is that the courts may sometimes have been too timorous in giving them full force. The words are a recognition of the fact that alimited company is more than a mere judicial entity, with a personality in law of its own: that there is room in company law forrecognition of the fact that behind it, or amongst it there are individuals, with rights, expectations and obligations inter se which are notnecessarily submerged in the company structure.

That structure is defined by the Companies Act 1948 and by the articles of associationby which shareholders agree to be bound. In most companies and in most contexts, this definition is sufficient and exhaustive, equally sowhether the company is large or small. The “just and equitable” provision does not, as the respondents suggest, entitle one party to

disregard the obligation he assumes by entering a company, nor the court to dispense him from it. It does, as equity always does, enable the court to subject the exercise of legal rights to equitable considerations; considerations, that is, of a personal character arising between one individual and another, which may make it unjust, or inequitable, to insist on legal rights, or to exercise them in a particular way . [Emphasis added.] [ 42 ] All of this has found most recent expression in BCE, supra where the Supreme Court of Canada established a framework of principle by which to determine whether a complainant is entitled to relief under s. 241 of the

Canada Business Corporations Act , R.S.C. 1985, c. C-44.

Section 241 of the

Canada Business Corporations Act and s. 234 of the Saskatchewan Business Corporations Act are parallel provisions. [ 43 ] Commenting on Lord Wilberforce’s words in Ebrahimi , the Supreme Court of Canada stated in BCE : [61] Lord Wilberforce spoke of the equitable remedy in terms of the "rights, expectations and obligations" of individuals. "Rights" and "obligations" connote interests enforceable at law without recourse to special remedies, for example, through a contractual suit or a derivative action under s. 239 of the CBCA .

It is left for the oppression remedy to deal with the "expectations" of affected stakeholders. The reasonable expectations of these stakeholders is the cornerstone of the oppression remedy . [62] As denoted by "reasonable", the concept of reasonable expectations is objective and contextual. The actual expectation of a particular stakeholder is not conclusive.

In the context of whether it would be "just and equitable" to grant a remedy, the question is whether the expectation is reasonable having regard to the facts of the specific case, the relationships at issue, and the entire context, including the fact that there may be conflicting claims and expectations . [Emphasis added.] [ 44 ] As part of its general overview of the oppression remedy, the Supreme Court of Canada described a two-pronged approach to the resolution of an application under the equivalent of s. 234 . On an application under s. 234 , the judge must answer two related questions: (

i) does the evidence support the reasonable expectation asserted by the claimant; and (ii) 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?

See: paras. 56 and 68 of BCE . [ 45 ] In the case before us, the Chambers judge found that there were serious issues to be tried, but then he went on to conclude that even if oppression were proven, “it is highly unlikely and extremely remote that the result of such success would be an entitlement to the entire proceeds of sale of all the assets of Devonian” (para. 20).

Even assuming that the reference to the “entire” proceeds is a typographical mistake, in my respectful view, the Chambers judge’s approach, and finding, represent error. [ 46 ] True, a minority shareholder is not entitled to demand a share of proceeds of the sale of corporate assets, but that is a general rule. When a minority shareholder makes a claim of oppression, the Court must determine what the reasonable expectations of the particular shareholder are in relation to the claim that is made.

In this case, however, the Chambers judge had only to decide whether to grant interim relief, until such time as the trial court can decide these questions at least: (

i) what are the reasonable expectations of 4752 SaskCo; (ii) has 9711 SaskCo committed acts of oppression; and (iii) can 4752 SaskCo access any of the value represented by the sale proceeds. [ 47 ] In Eiserman , when the Court applied the law of oppression, it referred to these words of Lord Wilberforce in Ebrahimi (at p. 108): ... The superimposition of equitable considerations requires something more , which typically may include one, or probably more, of the following elements: (

i) an association formed or continued on the basis of a personal relationship , involving mutual confidence–this element will often be found where a pre-existing partnership has been converted into a limited company; (ii) an agreement, or understanding, that all, or some (for there may be ‘sleeping’ members), of the shareholders shall participate in the conduct of the business ; (iii) restriction on the transfer of the members' interest in the company –so that if confidence is lost, or one member is removed from management, he cannot take out his stake and go elsewhere. [Emphasis added.] At this stage of the analysis, all three of the criterion mentioned in Ebrahimi appear present in this case: (

i) an association formed or continued on the basis of a personal relationship, involving mutual confidence; (ii) an agreement, or understanding, that all of the shareholders shall participate in the conduct of the business; and (iii) a restriction on the transfer of the members' interests in the company. The presence of these elements must influence the analysis in this case. [ 48 ] According to the evidence before the Court, the association between Viasat and 4792 SaskCo came about because of the personal relationship between Mr. Viatcheslav Kantor and Mr. Mann.

The relationship is no longer amicable, but it originally was one of mutual trust. Hence, the granting of a 14.3% interest in the shares of 9711 SaskCo and the execution of a Unanimous Shareholders’ Agreement providing for an ongoing relationship between Mr. Mann through his corporation, 4792 SaskCo, and Mr. Kantor through his corporation, Viasat.

[ 49 ] 9711 SaskCo is a closely-held corporation and the shareholders have played a greater role than one might expect in a public corporation. The Unanimous Shareholders’ Agreement and the actions of the parties demonstrate that the parties intended that 4792 SaskCo would participate in the conduct, and perhaps, the success of the business—to the extent of its shareholding.

Article 3.1 of the Shareholders Agreement allows the majority shareholder to appoint no more than four directors and allows the minority shareholder to appoint no more than one director. While this is not particularly remarkable, the parties acted as if the directors appointed by them were “their” directors. The evidence shows that Viasat provided instructions to corporate counsel to “replace its nominee persons on the Board of Directors of [9711 SaskCo]” (Appeal Book, p. 318a). [ 50 ] Further, the Unanimous Shareholders Agreement provides these limitations on the transfer or disposition of the assets and shares of 9711 SaskCo, as follows: (

a) Article 3.12 states that, subject to certain exceptions, each shareholder agrees and covenants not to transfer any shares held by them without the consent of the other shareholder; (

b) Article 5.1 protects the minority shareholder’s interest by providing that if the Corporation requires any additional capital contribution and any shareholder is unable to advance the required capital, no shareholder’s interest can be diluted below the value of 4% of all outstanding shares; (

c) Article 6.5 provides a right of first refusal in the event that one of the shareholders proposes to dispose of all or a part of its shares in 9711 SaskCo; (

d) Article 6.6 entitles each shareholder to receive immediate notice of any bona fide offer in writing from a third party for the purchase of all or substantially all of the assets of the 9711Sask and provides a procedure to follow in such eventuality; and (

e) Article 7.1 provides 4752 SaskCo with the pre-emptive right to acquire, at commercial terms, 4% of potash product produced by 9711 SaskCo for such period of time as it is a shareholder. [ 51 ] While the Chambers judge did not give effect to the finding, he too concluded that 4752 SaskCo “may have a claim with respect to the value of its 14% interest in 9711 Ltd.” (at para. 24). He did not give effect to the finding because, in his view, a minority shareholder can have no expectation of sharing in the profits of a corporation.

As this Court indicated in Eiserman , whether that statement can be made depends on the structure of the corporation and the reasonable expectations of the shareholder. See also: Wind Ridge Farms Ltd. , supra. [ 52 ] In my opinion, the Chambers judge correctly assessed the evidence that 4752 SaskCo may have a claim with respect to the value of its interest, and it is this question of possible entitlement that gives rise to the serious issue to be tried. At the present time, 9711 SaskCo carries on no business. It has no creditors, employees or ongoing obligations.

It holds only the proceeds of the assets that were acquired through the intervention of Mr. Mann. Mr. Mann’s corporation received its shares and a promise of future potash production as a result of Mr. Mann performing a service for Mr. Kantor.

Article 7.1 grants each shareholder a portion of the potash product according to their share holdings. If 9711 SaskCo distributes all of the proceeds from the sale of the potash proceeds, it is highly unlikely that

Article 7.1 will be fulfilled. Taking all of the factors together can only result in the conclusion that there is a serious issue to be tried. [ 53 ] In the event that I have misinterpreted the reasons of the Chambers judge, the only other meaning that I can give to them is that he found a serious issue to be tried, but that 4752 SaskCo did not seek to have its shares valued and purchased as a remedy in its statement of claim. If this is what the Chambers judge intended, this would also constitute error, in my respectful view.

This Court has not held an applicant to the precise nature of the relief requested in its claim and has sought to do justice by allowing an amendment to the pleadings even after the trial has taken place in order to provide the proper relief as a remedy to oppressive conduct (see: Eiserman , supra ). 5.

Whether the Chambers judge erred by finding that there was no meaningful risk of irreparable harm? [ 54 ] Richards J.A. in Mosaic provided these comments, summarizing the proper approach to interlocutory relief: [113] In the interest of clarity, it may be useful to recapitulate the basic points which have been developed in the course of these reasons and to summarize the approach a judge should typically take when deciding whether to grant interlocutory injunctive relief. This can be done as follows: … (

b) Irreparable harm is best seen as an aspect of the balance of convenience. The general rule here is that the plaintiff must establish at least a meaningful doubt as to whether the loss he or she might suffer before trial if an injunction is not granted can be compensated for, or adequately compensated for, in damages. Put another way, the plaintiff must demonstrate a meaningful risk of irreparable harm. If this is done, the analysis turns to the balance of convenience proper . [Emphasis added.]

[ 55 ] After referring to para. 113(

b) of Mosaic , the Chambers judge in this case wrote: [24] The simple statement that the plaintiff must demonstrate a meaningful risk of irreparable harm is particularly cogent as it relates to this application. Irreparable harm may occur if in fact the Kantor group spirits away the sale proceeds in such a fashion that defeats the applicant's ability to eventually receive its minority interest out of the corporation in some positive fashion . My assessment of this action is the applicant may have a claim with respect to the value of its 14% interest in 9711 Ltd.

In the claim before me, that is the limit of the harm that could be attributed to the applicant on this oppression case. [25] The risk flows from the contention that the respondents are in a position to remove the assets from the jurisdiction . This is true, but we are living in a global village. There is no requirement that the assets of a corporation must be held in such a fashion that they are within the jurisdiction of a Court in which the minority shareholder resides in order to allow the minority shareholder to more easily obtain the intervention of the Court to protect their perceived interest .

The business affairs of a corporation should not be controlled by the courts on the basis of anticipatory breach of legal duties unless there is some serious factual foundation provided and the legal application is one which corresponds with the nature of the relief that can be provided. Is there a risk of harm to the applicant? Yes there is, but that risk arises from the organization of the corporations and their shareholders, something that was voluntarily participated in by the applicant . Is the risk meaningful? This is more problematic.

There is a natural tendency to be mistrustful of situations over which we have little or no control. The lack of meaningful control by itself does not translate into a meaningful risk of irreparable harm. The lack of control is simply one aspect in the analysis. The cross-border ownership of corporations and the significant involvement of parties residing in other countries in resource development in Saskatchewan is a fact of life.

It gives cause for concern to people like the applicant who have minority interests in these corporations and that concern is heightened by the lack of trust that exists between both parties but absent something further does not raise the concern to a level of meaningful risk . [Emphasis added.] [ 56 ] The Chambers judge makes two statements in these paragraphs that reflect errors of approach to the consideration of the irreparable harm stage of analysis.

He states: (i) “[t]he business affairs of a corporation should not be controlled by the courts on the basis of anticipatory breach of legal duties unless there is some serious factual foundation provided and the legal application is one which corresponds with the nature of the relief that can be provided”; and (ii) the risk was “voluntarily participated in by the applicant.” These are important and valid points to be made, but not in the context in which they were considered. [ 57 ] In most injunctions, the “irreparable harm” question is answered by examining the nature of the harm that will occur and the likelihood that it will occur.

The conduct that might give rise to the harm is, in most situations, ongoing and admitted (or uncontroversial). In this case, however, not only has the critical injury not occurred, but the conduct or event that will give rise to the injury has not yet occurred, i.e ., the distribution of the funds to the majority shareholder. For this reason, the injunction in this case appears quite similar to a quia timet injunction.

In such circumstances, the probability of injury is comparatively more important and makes it more relevant to weigh and consider the evidence to determine whether the respondent will commit the act that the applicant fears will happen and for which the injunction is sought to prevent happening (see: I.C.F.

Spry, The Principles of Equitable Remedies , 6th ed. (Agincourt, Ont.: Carswell Co., 2001) at pp. 380-81). [ 58 ] Given this, the Chambers judge was required to consider the likelihood of the harm occurring, but it still must be remembered that there is no threshold or hurdle to surmount in order to satisfy this step of the process. Irreparable harm must also be considered in the third stage of the analysis.

Further, the Chambers judge suggests that the conduct alleged by 4752 SaskCo to be “harmful” is not actionable or does not amount to oppression, which is also more properly considered at the first and third stages of the Mosaic analysis, not at the second stage. The significance of these errors is made clear when one notes that the Chambers judge never did reach the third stage of the analysis.

In my view, these errors of law contributed to an erroneous conclusion, i.e. , that there was no meaningful risk of irreparable harm. [ 59 ] The Chambers judge stated “[t]he risk flows from the contention that the respondents are in a position to remove the assets from the jurisdiction” (para. 25). That, however, is simply part of the risk. [ 60 ] Mr. Mann’s concerns were not solely about the movement of funds from Devonian to 9711 SaskCo’s bank account in Estonia. Indeed, it was only after he applied for injunctive relief that Mr. Mann learned the only bank account for 9711 SaskCo exists in Estonia.

By the time the application was argued, his fear was that the Board of Directors would meet and vote to pay out the funds to the majority shareholder, Viasat, whose Board would then vote to move the monies to other unknown companies—and both 9711 SaskCo and Viasat would be judgment-proof. The lack of Canadian banking facilities was only one part of the concern. [ 61 ] It is important to understand the timing with respect to the various affidavits that have been filed in this matter. To reiterate, the application for an interlocutory injunction was brought on August 19, 2011.

It was supported by the affidavits of Mr. Mann and Mr. Terry Lay, both dated August 10, 2011. Both of these affidavits indicated that the affiants had no knowledge about: (

i) the closing date for the Yanzhou sale; (ii) the banking arrangements for 9711 SaskCo; or (iii) Viasat’s intentions regarding the distribution of the proceeds.

[ 62 ] In his August 10, 2011 affidavit, Mr. Mann expressed his fears in relation to the disbursement of funds: 20. Because 9711 Sask. Ltd., Devonian and NAPI have refused or neglected to provide any assurances to 752 Sask. Ltd. that the sale proceeds received from Yanzhou Coal Mining Company Limited will be retained by the corporations and held in Canadian bank accounts, I am very concerned about the intentions of the corporations, their directors and the majority shareholders in this regard. 752 Sask.

Ltd. and its legal counsel have been unable to obtain an answer to their inquiries regarding how the sale proceeds will be paid to the corporations, in what jurisdiction the proceeds will be paid, and which financial institutions, trustees, law firms or other entities will hold the funds . Because of this non-disclosure, I am very concerned that the sale proceeds will not be received or held in trust in Canada. 21. As well, the directors of 9711 Sask. Ltd. have delegated further decisions to the corporation's President (bypassing the appointee of 752 Sask. Ltd. to the Board, Terry Lay)…. This places 752 Sask.

Ltd. at significant and, from my perspective, unacceptable risk that it will not share in any distribution of the sale proceeds, will have no say in their distribution, and will not have any realistic ability to locate such proceeds or to enforce its rights as a minority shareholder . 22. Accordingly, on behalf of 752 Sask.

Ltd., I request that the Court grant an injunction initially on an ex parte basis and then on an interlocutory basis after a hearing and notice, to preserve the proceeds of sale of the potash permits to Yanzhou Coal Mining Company Limited, pending further court order or agreement between the parties. I also believe that this injunctive relief is required because, to my knowledge, the majority shareholder of 9711 Sask. Ltd., Viasat, is a Cypress company that does not have a registered office in Canada or any assets other than its shares in 9711 Sask.

Ltd . … [See the affidavit of Jason Mann dated August 10, 2011, Appeal Book, pp. 135a- 36a; emphasis added]. [ 63 ] In response to this affidavit, Arie Zuckerman, the Vice-President of Joint Stock Company Acron, swore an affidavit dated September 13, 2001 to this effect: 44.

I will not take any steps to prejudice the interests of Mann in the proceeds from the YK [Yankuang Group Corporation] Transaction pending a determination of his rights to the proceeds. [Appeal Book, pp. 277a and 289a.] According to 4792 SaskCo, Acron is a company with headquarters in Moscow, Russia, and is traded on the Russian and London stock exchanges. According to the evidence Mr.

Viatcheslav Kantor controls Acron and Viasat. [ 64 ] On September 14, 2011, the president of 9711 SaskCo, Dmitry Kantor swore that the Devonian company will approve a distribution to its shareholder, which is 9711 SaskCo., and 9711 SaskCo plans “to approve the distribution of the proceeds among shareholders”: 22.

It is my understanding that YK will deposit $50,000,000 Canadian Dollars from the sum under the YK Transaction into an escrow account, and that the sum will be held for one year to cover any possible losses that YK might sustain due to a breach of the warranty provisions by Devonian under the YK Transaction during that year. The remaining portion of the purchasing funds will be kept pending the directors' decisions as for the distribution or use of these funds . 23.

It is also my understanding that a directors' meeting will take place during which the Board of Directors of Devonian will approve the distribution of the proceeds among its shareholders and, possibly, the cessation of activities and dissolution of Devonian. It is also my understanding that 9711 will also hold a directors' meeting to approve the distribution of the proceeds among shareholders . [Appeal Book, p. 519a; emphasis added.] [ 65 ] In reply to these affidavits, Mr. Mann swore a further affidavit, dated September 21, 2011, wherein he made these statements: 15. Regarding Paragraph 44 : Given Mr.

Zuckerman's conduct toward me to date, I have no confidence in his statement that he will do nothing to prejudice the interests of 101114752 Saskatchewan Ltd. in the proceeds of sale of the YK transaction; to the contrary, I am exceedingly worried the minority shareholder will not be protected . 16. I have read the Affidavit of Dmitry Kantor, sworn September 14, 2011. I first received a copy of this Affidavit on September 19, 2011. I was not aware that Devonian and 9711 Sask. Ltd. had opened bank accounts in Estonia on May 20, 2011 until I saw this affidavit.

I have asked on several occasions for this information, both before and after May 20, 2011, but have never received a direct response even though I am one of the principals of the minority shareholder, 101114752 Saskatchewan Ltd. I have also not been told what the plan is for distribution of the proceeds of sale of the Devonian Permits, despite numerous inquiries. Paragraph 23 of the Affidavit of Dmitry Kantor suggests that Devonian will hold directors meetings to approve the distribution of proceeds among its shareholders and possible dissolution of Devonian, and that 9711 Sask.

Ltd. will also hold a directors' meeting to approve the distribution of proceeds of sale. I note that Devonian has only one shareholder. This is the first information I have received regarding the distribution of the sale proceeds to be received by Devonian . [Appeal Book, p. 643a-44a; emphasis added.] [ 66 ] According to the evidence, there have been no meetings of the directors or shareholders of 9711 SaskCo since any of these affidavits have been sworn and the Court has no knowledge of what has happened to the balance of the share proceeds, i.e. , the US $86 million.

Further, it is significant that there is no affidavit from the person who is admitted to be the mastermind behind the Kantor empire: Mr. Viatcheslav Kantor. In my view, to avoid a conclusion of a meaningful risk of irreparable harm in this case, it was essential for Mr. Kantor to declare his intentions. Otherwise, the Court is left with a respondent successfully rebuffing an interlocutory injunction by adducing no evidence that it is unlikely to do the very thing that the injunction hopes to restrain—despite the fact that the conduct in question would be in its self-interest.

Counsel’s submissions to the contrary are not sufficient to overcome this lack of evidence.

[67] According to the affidavit evidence of Mr. Medge, Mr. Kantor has called Mr. Medge “a thief and a traitor” and told him that if hedid not do as instructed he “would spend all the money needed to drive me, my family and Jason Mann into financial disaster throughlitigation over the AgriKalium Mining Corporation and 101119529 Saskatchewan Ltd. interests” (see: p. 179a, Affidavit of Igor Medge,Appeal Book in CACV 2062 incorporated by reference in the Medge affidavit dated September 17, 2011, Appeal Book in this appeal, p.585a).

It is also open to the Court to consider the Counterclaim brought against 4752 SaskCo and Mr. Mann. As explained earlier inthese reasons, one purpose of the Counterclaim is to obtain a court order stripping 4752 SaskCo of all of its shares in 9711 SaskCo and arelated corporation [Appeal Book, p. 26a]. [68] Further, while it is important to consider the likelihood of the harm occurring, it is also important to consider whether the applicantwill have a sufficient opportunity to obtain relief subsequently if a need should arrive (see: Spry, The Principles of Equitable Remedies,supra at pp. 380-81).

On the matter of bankrupt defendants, it should be noted that the Supreme Court in RJR-MacDonaldacknowledged that the solvency of a defendant may impact the “irreparable harm” stage of the analysis (see p. 341). As was stated inTurbo Resources Ltd. v. Petro Canada Inc., (FCA), [1989] 2 F.C. 451, the inability of the defendant to satisfy anaward of damages is a very serious consideration in establishing irreparable harm. Turbo Resources Ltd. makes it clear that the ability ofthe defendant to pay damages if ordered is an important concern.

In this case, given the corporate structures of Devonian, 9711 SaskCoand Viasat, if the threatened act occurs, there will be no means to satisfy any judgment that might be obtained—a factor which also mustinfluence the balance of convenience analysis. [69] In short, Chambers judge erred when he concluded that there is no meaningful risk of irreparable harm. 6.

What do the balance of convenience and the overall equities and justice of the case dictate with respect to the situation at hand? [70] The Chambers judge wrote: [30] Without a finding that the first two criteria have been satisfied, it is impossible as well as inappropriate to embark upon anattempted analysis of balance of convenience. If I was mandated to assess the balance of convenience independent of the other twoissues, the issues would be relatively straightforward.

The applicant's view of the matter is that it will lose its entire interest in the saleproceeds of the potash permits as the money will have left the jurisdiction, ostensibly to Kantor's place of citizenship in Israel or Russiaor his residence in Switzerland and the applicant will be unable to recover it.

From the respondents' point of view, an order restricting itsability to have access over proceeds of a legitimate sale, whether the full sum or just the 14% potentially attributable to the applicantcould have a significant impact on the continuing business operations, although on the evidence, there has been nothing laid out by theKantor group with respect to its intentions regarding the sale proceeds at this time. [71] At this stage of the analysis, it was clearly relevant to consider whether to grant this injunction will interfere with the ongoingoperations of the corporation.

These concerns, however, must be balanced by the law of oppression applied to the whole of evidence,including these salient facts: (i) 9711 SaskCo has no business, no creditors, no other assets, and no obligations of any sort; and (ii) itintends to distribute these funds, representing almost all of its assets.

When all relevant matters are weighed, traditional corporate lawconcerns must give way to the interim protection of the interests of the minority shareholder in this closely-held corporation. [72] Considering this issue from the arguments and submissions made in this Court and the conclusions previously articulated, justiceand equity support the necessity of the court’s intervention. An injunction maintains the status quo until all of the issues, currently beinglitigated between the parties, can be resolved. VI. Conclusion [73] The appeal is allowed.

An interlocutory injunction shall issue, requiring that the US $14,300,000 presently being held in the trustaccount of McKercher LLP shall remain in trust, to be released or otherwise invested following further order or the agreement of theparties only. 4752 SaskCo shall have its costs in this Court in the usual way. The costs order in the Court of Queen’s Bench, directing that 4752 SaskCo pay Devonian $2500, is reversed in favour of 4752 SaskCo.

DATED at the City of Regina, in the Province of Saskatchewan, this 25th day of June, A.D. 2012. ___​​​​​​​​​​​​ “Jackson J.A.” ____________________ Jackson J.A. I concur ___ “Jackson J.A.” ____________________ for Vancise J.A. I concur __ “Herauf J.A.” ______________________ Herauf J.A.