Gordon v White, 2020 SKCA 129

Court of Appeal for Saskatchewan Docket: CACV3542 and CACV3543 Citation: Gordon v White , 2020 SKCA 129 Date: 2020-11-18 Between: Coleen Gordon, Vickie Wells, Wells Ranching Ltd. and Wells Resources Ltd. Appellants (Respondents) And Jackie White and Stephen Wells Respondents (Applicants) Before: Caldwell, Whitmore and Leurer JJ.A. Disposition: Appeal dismissed Written reasons by: The Court On appeal from: QBG 3288 of 2018 and QBG 3447 of 2018, Regina Appeal heard: October 16, 2020 Counsel: Kevin Mellor for the Appellants Rachel Haack for the Respondents The Court I.

INTRODUCTION [ 1 ] This is an appeal from a decision of a judge of the Court of Queen’s Bench in Chambers granting the respondents’ application for a finding of oppression and incidental relief and dismissing the appellants’ application for dissolution of Wells Ranching Ltd. [Wells Ranching]: White v Gordon (16 December 2019) Regina, QBG 3288 of 2018 and QBG 3447 of 2018 (Sask). For the reasons that follow, the appeal must be dismissed. II. BACKGROUND [ 2 ] The appellants, Coleen Gordon [Coleen] and Vickie Wells [Vickie], and the respondents, Jackie White [Jackie] and Stephen Wells [Stephen], are siblings.

The parents of the parties, William Victor Wells [Victor] and Audrey Wells [Audrey], established two corporations which are the subject of this appeal, namely, Wells Ranching and Wells Resources Ltd. [Wells Resources]. [ 3 ] Victor and Audrey owned 12 quarter sections of pastureland in 2009. On May 14, 2009, Wells Ranching was incorporated. Each of Jackie, Stephen, Victor, Audrey, Coleen and Vickie were named as directors. Title to the land was transferred from Victor and Audrey to Wells Ranching and two promissory notes in the total amount of $518,122 were issued to Victor and Audrey by Wells Ranching.

Victor and Audrey ceased to be directors of Wells Ranching in 2009, but Victor managed Wells Ranching until his death in 2013. [ 4 ] Coleen has prepared the financial statements for Wells Ranching since its incorporation. At a directors’ meeting of Wells Ranching on January 11, 2018, the directors unanimously agreed to have the Regina branch of Meyers Norris Penny LLP [MNP LLP] become the accountants for Wells Ranching.

However, despite this agreement, Coleen prepared the 2018 financial statements and tax returns for Wells Ranching. [ 5 ] The respondents have never had signing authority for the Wells Ranching bank accounts and had limited access to those accounts and to the financial documents of Wells Ranching and, frequently, had to request this information from the appellants. [ 6 ] Wells Resources was founded in 1983. Both the appellants and the respondents are shareholders of Wells Resources, but only Vickie and Coleen are directors.

The respondents state that they have never attended any of the shareholder meetings for Wells Resources, despite the records indicating that they have attended for many years. [ 7 ] In 2016, the appellants sold much of the farm equipment of Wells Ranching. The respondents maintain they were not advised of this transaction until after it had occurred. The appellants say the equipment was merely scrap material. [ 8 ] The parties fell into disagreement over a number of matters.

The respondents felt they were not receiving necessary financial information for the two corporations and that they were excluded from the affairs of Wells Ranching. In 2016, the cooperation between the appellants and the respondents in operating Wells Ranching began to break down and the siblings, as directors, could not agree to the point where they have been only discussing business through lawyers. [ 9 ] On or about March 14, 2017, the respondents’ counsel inquired whether the appellants would consider selling their shares in Wells Ranching.

The appellants asked for an appraisal of the property and consented to engage an appraiser on behalf of Wells Ranching. The sale did not take place. [ 10 ] Several incidents appear to have caused further deterioration in the parties’ relationship and the parties were unable to agree on the disposition of the assets of Wells Ranching.

[ 11 ] On November 21, 2018, the appellants brought an originating application to dissolve Wells Ranching pursuant to s. 207 of The Business Corporations Act , RSS 1978, c B-10 [ Act ], with the proceeds to be used to pay the liabilities and equally distribute the remainder to the shareholders. [ 12 ] On December 7, 2018, the respondents brought an application for dissolution of Wells Ranching and a declaration of oppression. III.

THE QUEEN’S BENCH DECISION [ 13 ] The Chambers judge heard both applications together and found that the material facts and issues raised in both applications were similar and that the applicable law for the two applications was the same.

She therefore determined it was appropriate to consolidate the two actions and did so. [ 14 ] The Chambers judge considered BCE Inc. v 1976 Debentureholders , 2008 SCC 69 , [2008] 3 SCR 560 [ BCE Inc. ], and observed that, in order to find oppression, she must determine whether the evidence supported a reasonable expectation of fair treatment and whether that reasonable expectation had been breached.

She found that the respondents had a reasonable expectation of fair treatment and enumerated several instances of conduct of the appellants that she found had breached the respondents’ expectation of fair treatment: [ 15 ] I find that the evidence supports that Jackie and Stephen had reasonable expectations of fair treatment, including that financial disclosure would be provided. I further find that the evidence supports, at a prima facie level, that the conduct of Coleen and Vickie in respect of Wells Ranching has been oppressive and has unfairly disregarded those reasonable expectations.

I accept, as noted by Jackie and Stephen, that in the circumstances the following conduct is oppressive and unfairly disregards Jackie’s and Stephen’s interests: (

a) Denying access to Wells Ranching’s financial statements and banking information; (

b) Allowing the same director (Coleen) who prepared the financial statements approve the financial statements, rather than requiring approval by all directors by way of a vote pursuant to s. 152 of the [ Act ]; (

c) Failing to comply with the January 11, 2018 decision of the board of directors to have MNP LLP complete the financial statements; (

d) Failing to consult the board of directors of Wells Ranching before selling the vast majority of the equipment of Wells Ranching; (

e) Failing to consult the shareholders of Wells Ranching and failing to hold a vote prior to offering the land of Wells Ranching for sale; and, (

f) Failing to provide each of the directors of Wells Ranching with access to bank statements of the corporation. She thereupon found the respondents had established a prima facie case of oppression and ordered certain relief. [15] The Chambers judge declined to order dissolution of Wells Ranching on the basis that the evidence before her did not provide sufficient information as to the financial position of the corporation.

She understood that the parties were unable to agree on anything regarding Wells Ranching but held that, nevertheless, certain financial information was required to ensure the corporation could be dissolved in a manner that would be fair and equitable. She then made certain orders as follows: [18] I therefore make the following order: (

a) QBG 3447 of 2018 and QBG 3288 of 2018, both Judicial Centre of Regina, shall be consolidated; (

b) Pursuant to s. 234(3) of The Business Corporations Act : (

i) Meyers Norris Penny LLP [MNP] in Estevan, Saskatchewan, shall perform a review of all financial statements, bank statements, general ledgers, invoices and income tax returns of Wells Ranching Ltd. for the fiscal years 2010 to end 2018.

This review shall include, but is not limited to, reviewing matters relating to amounts allegedly owing by Wells Ranching Ltd. pursuant to two promissory notes dated July 2, 2009; (ii) No later than April 15, 2020, Wells Ranching Ltd., Coleen Gordon and Vickie Wells shall produce to MNP any and all financial documentation in their possession or control as MNP may require to effect its review. with a copy of said documentation also being provided to Jackie White and Stephen Wells; (iii) Coleen Gordon and Vickie Wells shall provide to MNP, Jackie White and Stephen·Wells, an accounting in relation to any payments made by Wells Ranching Ltd within the last eighteen (18) months; (iv) Jackie White and Stephen Wells shall have signing authority over the bank accounts of Wells Ranching Ltd., and in respect of any other financial matters for Wells Ranching Ltd., and signing authority shall be revoked for Coleen Gordon and Vickie Wells; (

v) Wells Ranching Ltd. shall pay any invoices of MNP LLP in respect of the financial review ordered: (

c) Pursuant to s. 234 of The Business Corporations Act : (

i) Jackie White and Stephen Wells shall be appointed directors of Wells Resources Ltd., and each of Coleen Gordon, Vickie Wells, Jackie White, and Stephen Wells shall execute any documentation necessary to effect this appointment of directors with Information Services Corporation by no later than February 14, 2020; (ii) MNP LLP in Estevan, Saskatchewan shall perform a review of all financial statements, invoices, bank statement and income tax

returns of Wells Resources Ltd. from the years 2015 to end 2018; (iii) No later than April 15, 2020, Wells Resources Ltd., Coleen Gordon and Vickie Wells, shall produce to MNP any and all financial statements or records required by MNP to effect its review, with a copy of said documentation to be sent to Jackie White and Stephen Wells; (iv) Wells Resources Ltd. shall pay any invoices of MNP in respect of the financial review ordered; (

v) Jackie White and Stephen Wells shall have signing authority over the bank accounts of Wells Resources Ltd., and in respect of any other financial matters for Wells Resources Ltd. and signing authority shall be revoked for Coleen Gordon and Vickie Wells; (

d) Any of the parties may apply to this Court for further relief on fourteen days’ notice to the other parties hereto; and (

e) Jackie White and Stephen Wells shall have the costs of this application in the cause. [ 16 ] From this decision the appellants appeal. IV. STANDARD OF REVIEW [ 17 ] The Court of Appeal has jurisdiction to hear this appeal pursuant to s. 7(2) (

a) of The Court of Appeal Act, 2000 , SS 2000, c C- 42.1 .

Section 242 of the Act provides that an appeal lies to the Court of Appeal from any order made by a court under that Act . [ 18 ] The appellate standards of review established in Housen v Nikolaisen , 2002 SCC 33 , [2002] 2 SCR 235, apply in this appeal. Therefore, questions of law are reviewed on the standard of correctness and findings of fact and mixed law and fact are considered on the palpable and overriding error standard unless they involve an extricable error of law.

This standard is applicable so far as the appellants’ appeal regarding the Chambers judge’s finding of oppression. [ 19 ] The Act grants the court the discretion to “make any interim or final order it thinks fit” (s. 234(3)).

This Court in Gustafson v Future Four Agro Inc. , 2019 SKCA 68 , 438 DLR (4th) 647, discussed the standard of review applicable to discretionary decisions: [13] The parties agree the appellant has the right to appeal the Chambers Decision pursuant to s. 7(2) of The Court of Appeal Act, 2000 , SS 2000, c C-42.1 [ Act ], and that the basis of this Court’s jurisdiction to hear the appeal is s. 10 of the Act . [14] The Chambers judge was primarily concerned with whether he should exercise the authority conferred on him by Rule 13-7 of The Queen’s Bench Rules to amend the Consent Order by extending the time for service of the affidavit of documents.

It is uncontroverted that decision was discretionary, and that as such, the deferential standard of review relating to appeals from discretionary orders set out by this Court in Rimmer v Adshead , 2002 SKCA 12 , [2002] 4 WWR 119 [ Adshead ] applies: [58] In turning to this issue, it is necessary to bear in mind that the powers in issue are discretionary and therefore fall to be exercised as the judge vested with them thinks fit, having regard for such criteria as bear upon their proper exercise. The discretion is that of the judge of first instance, not ours.

Hence, our function, at least at the outset, is one of review only: review to determine if, in light of such criteria, the judge abused his or her discretion. Did the judge err in principle, disregard a material matter of fact, or fail to act judicially? Only if some such failing is present are we free to override the decision of the judge and do as we think fit.

Either that, or the result must be so plainly wrong as to amount to an injustice and invite intervention on that basis. [ 20 ] Justice Barrington-Foote recently conducted a nuanced review of the standard of review applicable to appeals from discretionary decisions in Strom v Saskatchewan Registered Nurses’ Association , 2020 SKCA 112 at paras 60–63 . [ 21 ] In Toor v 1176520 Alberta Ltd. , 2019 ABCA 334 , the Alberta Court of Appeal reviewed the application of this standard of review in the context of cases dealing with oppression: [23] Corporate oppression cases are highly fact-specific and the granting of equitable remedies in this area is discretionary: Shefsky v California Gold Mining Inc , 2016 ABCA 103 , paras 21 , 41-42, 31 Alta LR (6th) 1; Booster Juice Inc v West Edmonton Mall Property Inc , 2019 ABCA 58 , paras 9-10 . [24] This Court should not interfere with the exercise of a trial judge’s discretion in an oppression decision unless it is based on a wrong principle, insufficient weight is given to relevant considerations, or the decision results in an injustice: Jaguar Financial Corporation v Alternative Earth Resources Inc , 2016 BCCA 193 , para 64 . [25] The Supreme Court of Canada said in Wilson v Alharayeri , 2017 SCC 39 , para 59 , [2017] 1 SCR 1037, that appellate courts should adopt a deferential stance when reviewing judgments rendered on oppression applications.

Three principles govern the standard of review: 1) First, absent palpable and overriding error an appellate court must defer to the trial court’s findings of fact…. 2) Second, an appellate court may intervene and substitute its own decision for the trial court’s if the judgment is based on “errors of law…erroneous principles or irrelevant considerations”…. 3) Third, even if it was not so based, an appellate court may intervene if the trial judgment is manifestly unjust…. [26] Finally, “it is unwise for appeal courts to retry and reweigh…choice of remedy.

There should be a significant disproportion between the illness and the cure before the appeal court intervenes”: Pearson Finance Group Ltd v Takla Star Resources Ltd , 2002 ABCA 84 , para 28 , [2002] 5 WWR 637.

[ 22 ] These cases indicate that the determination of whether the oppression remedy is appropriate is highly fact specific and contextual and should be accorded deference. V. ISSUES [ 23 ] The issues that arise are: (

a) Did the Chambers judge err in the course of deciding that an oppression remedy was appropriate? (

b) Did the Chambers judge err in the course of deciding that an order for dissolution of Wells Ranching was premature? VI. ANALYSIS A. Did the Chambers judge err in the course of deciding that an oppression remedy was appropriate? [ 24 ] Section 234(2) of the Act establishes the preconditions to the grant of an oppression remedy: 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 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 . (Emphasis added) [ 25 ] The Supreme Court’s decision in BCE Inc. is the leading authority with respect to the oppression remedy.

Oppression is fact specific and what is just and equitable is to be judged by the reasonable expectations of the stakeholders in the context and in regard to the relationships at play.

The Supreme Court stated at paragraph 95 that, in assessing a claim of oppression, a court must answer two questions: (1) does the evidence support the reasonable expectation asserted by the claimant? and (2) 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? [ 26 ] Factors to be considered when determining whether a reasonable expectation exists include: general commercial practice; the nature of the corporation; the relationship between the parties; past practice; steps the claimant could have taken to protect itself; representations and agreements; and the fair resolution of conflicting interests between corporate stakeholders ( BCE Inc. at para 72 ). [ 27 ] With respect to the second question, namely, whether the reasonable expectation was breached, a claimant must show that the failure to meet the reasonable expectation involved unfair conduct and prejudicial consequences.

Not every failure to meet a reasonable expectation will give rise to the equitable considerations that ground actions for oppression. The court must be satisfied that the conduct falls within the concepts of “oppression”, “unfair prejudice”, or “unfair disregard” of the claimant’s interest ( BCE Inc. at para 89 ). The Supreme Court in BCE Inc. defined these terms as follows: [67] Having discussed the concept of reasonable expectations that underlies the oppression remedy, we arrive at the second prong of the s. 241 [of the

Canada Business Corporations Act , RSC 1985, c C-44 ] oppression remedy. Even if reasonable, not every unmet expectation gives rise to claim under s. 241. The

section requires that the conduct complained of amount to “oppression”, “unfair prejudice” or “unfair disregard” of relevant interests. “Oppression” carries the sense of conduct that is coercive and abusive, and suggests bad faith. “Unfair prejudice” may admit of a less culpable state of mind, that nevertheless has unfair consequences. Finally, “unfair disregard” of interests extends the remedy to ignoring an interest as being of no importance, contrary to the stakeholders’ reasonable expectations: see [Markus Koehnen, Oppression and Related Remedies (Toronto: Thomson/Carswell, 2004)] at pp. 81-88.

The phrases describe, in adjectival terms, ways in which corporate actors may fail to meet the reasonable expectations of stakeholders. [ 28 ] Oppressive conduct was further described as “‘burdensome, harsh and wrongful’, ‘a visible departure from standards of fair dealing’, and an ‘abuse of power’ going to the probity of how the corporation’s affairs are being conducted” (at para 92). [ 29 ] In Moosomin First Nation v 10106 1721 Saskatchewan Inc. , 2010 SKCA 110 at para 26 , [2011] 2 WWR 193 , this Court affirmed that in order to secure an interim order under s. 234(3) of the Act , an applicant must prove its position on a “‘strong prima facie case’ basis” of oppression, unfair prejudice, or unfair disregard of a stakeholder’s reasonable expectations. [ 30 ] In the case at hand, the Chambers judge identified five specific categories of conduct on the part of the appellants that she found to have been oppressive and in disregard of the respondents’ reasonable expectations as shareholders, most relating to the failure to provide proper disclosure of financial information, the failure to allow participation in corporate decision-making and the refusal to follow shareholder direction when it was given (at para 15).

The appellants did not seriously contend this the type of conduct was not capable of grounding an oppression remedy, nor could they have reasonably done so.

[31] The respondents were entitled to rely upon ss. 20 and 21 of the Act, which outline the ability of a shareholder to request andreceive financial documents from a corporation. It is well established in Saskatchewan that a failure to provide financial information canconstitute a breach of reasonable expectations of shareholders of the corporation. In Lee v To (1997), (SK KB), 153Sask R 58 (QB), affirmed Lee v To (1998), (SK CA), 168 Sask R 66 (CA), the majority shareholder and operator ofthe business failed to keep basic records and failed to provide the applicant with financial information.

This Court held that an oppressionremedy was appropriate. [32] The respondents were also entitled to participate, as shareholders, in the approval of financial statements. Ayers v Summach,2011 SKQB 360, 383 Sask R 170, involved a situation where there was both a failure to provide information to which the applicants, asshareholders, were entitled, and to involve those shareholders in corporate decisions: [132] That then leaves for consideration the two remaining grounds in the originating motion found in paras. 3(

c) and (d). Theseprovisions relate to the failure to provide proper and adequate financial information to the shareholders by way of proper financialstatements as required by the Saskatchewan Business Corporations Act, and the failure to provide proper and adequate financialinformation as determined by resolution of the shareholders.

As an adjunct to this, while it has not been advanced as a specific ground, ithas been commented upon in the submissions of the complainants, more particularly in that regard the very able submission of JackAdams [one of the complainants], and that is of course the matter of the calling and holding of appropriate meetings as required by thevarious provisions of the Saskatchewan Business Corporations Act.

In contemplating these specific matters, I am mindful of the fact thatthe Saskatchewan Business Corporations Act places a positive duty upon directors of a corporation to properly call meetings either at theinstigation of the directors, or under special circumstances at the initiative of a shareholder or shareholders undertaken in accordance withthe Act, and a similar legislative duty requires directors to in accordance with time lines produce meaningful financial statements andfinancial information for consideration by shareholders of the corporation again, in a timely fashion as that is addressed in the legislation. [133] As the Supreme Court of Canada postulated [in BCE Inc.], “does the evidence support the reasonable expectation asserted by theclaimant”.

In this instance, I am of the view that the evidence does support shareholders having a reasonable expectation in a fashion asasserted by the complainants, more particularly as it relates again to proper and adequate financial information and statements and theconvening of meetings in a fashion mandated by the legislation.

Here, while the respondents have provided explanations as to why forinstance meetings were not called when they ought to have been called, or why financial statements were not provided when they ought tohave been provided and were not provided in the form in which they were specifically required to be provided, the evidence nonethelessdiscloses a failure by the respondents to meet the obligations which the legislation contains. As Mr.

Gidluck [one of the complainants]very ably articulated in his affidavit and oral submissions, he had an expectation throughout, as an experienced investor, businessman andfinancial planner, that financial statements would be provided as required by the legislation, and that meetings would be convened ascalled for in the legislation. The failure to do so in my view does have the effect of prejudicing shareholders who have such reasonableexpectations.

Indeed the legislation itself, in addition to sound business practice, gives rise to the expectation, and it is a reasonable one.That then requires a consideration of whether the evidence before me on these limited areas establishes that the reasonable expectation orexpectations was or were violated by conduct falling within the terms “oppression”, “unfair prejudice” or “unfair disregard” of a relevantinterest. (Emphasis added) [33] The appellants challenged some of the conduct identified by the respondents as being oppressive. The focus of the appellants’arguments was that financial statements were provided.

However, when the detail of the appellants’ evidence is examined, it becomesapparent that the disclosure, when it came, was late and incomplete. Therefore, the appellants’ own evidence proved many aspects of theoppression the Chambers judge found. The same holds true with other aspects of the oppressive conduct. Again, and only by way ofexample, the shareholders had directed that the financial statements were to be completed by the independent accounting firm MNP LLPrather than by the appellant, Coleen. The appellants initially suggested that the accounting firm had refused the assignment.

However,when the record is examined, it discloses that the appellants simply ignored the shareholders’ direction because Coleen could completethe task more cheaply. The trial judge might have conducted a more detailed examination of the evidence, but there was nevertheless asolid evidentiary basis for her conclusion that oppression was made out. [34] The Chambers judge correctly set out the test for oppression.

She also concluded that the respondents had a reasonableexpectation that the appellants, as directors of Wells Ranching and Wells Resources, would meet their obligations under the Act and thatthis expectation was breached when the appellants failed to adequately disclose relevant financial information. We find no error in theChambers judge’s assessment of the applicability of the oppression remedy pursuant to s. 234 of the Act. B.

Did the Chambers judge err in finding that an order for dissolution ofWells Ranching was premature? [35] Having found oppression, the Chambers judge’s remedial authority was set out in s. 234(3) of the Act, which provides asfollows: 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, withoutlimiting the generality of the foregoing: (

a) an order restraining the conduct complained of; (

b) an order appointing a receiver or receiver-manager; (

c) an order to regulate a corporation’s affairs by amending the articles or bylaws or creating or amending a unanimous shareholderagreement;

(

d) an order directing an issue or exchange of securities; (

e) an order appointing directors in place of or in addition to all or any of the directors in office; (

f) an order directing a corporation, subject to subsection (6), or any other person, to purchase securities of a security holder; (

g) an order directing a corporation, subject to subsection (6), or any other person, to pay to a security holder any part of the moneys paidby him for securities; (

h) an order varying or setting aside a transaction or contract to which a corporation is a party and compensating the corporation or anyother party to the transaction or contract; (

i) an order requiring a corporation, within a time specified by the court, to produce to the court or an interested person financialstatements in the form required by

section 149 or an accounting in such other form as the court may determine; (

j) an order compensating an aggrieved person; (

k) an order directing rectification of the registers or other records of a corporation under

section 236; (

l) an order liquidating and dissolving the corporation; (

m) an order directing an investigation under Division XVII to be made; (

n) an order requiring the trial of any issue. [36] In this case, the relief granted by the Chambers judge was directly related to the oppression she found to exist – the disclosureof financial information, an accounting by the appellants for payments made by the corporations under their direction and also directingthe retaining of MNP LLP. The Chambers judge also directed a change in the signing authority over bank accounts of the corporations.

Inthe context of the oppression she found to have occurred, this cannot be said to have been an error in principle, in disregard of any materialmatter of fact or a failure to act judicially. [37] The appellants’ principal complaint in this Court is that the Chambers judge erred in not ordering the dissolution of WellsRanching. They point to the fact that both parties initially had requested dissolution in their notices of application and the suggestion thatthere had been a complete breakdown in the working relationship among the parties rendering the continued governance of thecorporations impractical. [38]

Section 206 states that a director or an interested party may apply to a court for an order dissolving the corporation if thecorporation has: (

a) failed for two or more consecutive years to comply with the requirements of this Act with respect to the holding ofannual meetings of shareholders; (

b) contravened s. 16(2) (exercise restricted power), s. 21 (access to corporate records), s. 151(examination of financial statements), or s. 153 (provide copies of financial statements to shareholders); or (

c) procured any certificateunder the Act by misrepresentation. [39]

Section 207 reads as follows: 207(1) A court may order the liquidation and dissolution of a corporation or any of its affiliated corporations upon the application of ashareholder: (

a) if the court is satisfied that in respect of a corporation or any of its affiliates: (

i) any act or omission of the corporation or any of its affiliates effects a result; (ii) the business or affairs of the corporation or any of its affiliates are or have been carried on or conducted in a manner; or (iii) 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; or (

b) if the court is satisfied that: (

i) a unanimous shareholder agreement entitles a complaining shareholder to demand dissolution of the corporation after the occurrence ofa specified event and that event has occurred; or (ii) it is just and equitable that the corporation should be liquidated and dissolved. [40] Section 207(2) permits the court to grant an order under s. 234 of the Act as it sees fit. [41] This Court has held that a court may make an order for the dissolution of the corporation where it is just and equitable to do so:Reznick v Bilecki (1986), (SK CA), 49 Sask R 232 (CA) at para 6.

I voice no disagreement that it may be just andequitable to order a dissolution where there has been a breakdown in a relationship among shareholders. J. Anthony VanDuzer highlightsthis as one of the common circumstances in which a court may order a dissolution of a corporation in The Law of Partnerships andCorporations, 4th ed (Toronto: Irwin Law, 2018) at 507 as follows: First, courts have been willing to order liquidation and dissolution where it is no longer possible for the corporation to carry on thebusiness for which it was created.

Second, liquidation and dissolution has been ordered where the shareholder seeking relief has a“justifiable lack of confidence” in the conduct of the management of the corporation. Such a lack of confidence cannot consist only of adisagreement about the policies of the management. Rather, there must be some serious misbehaviour on the part of management. This

would include not only fraud but also deliberate violations of corporate policy, such as failing to hold annual meetings and attempting to prevent shareholders from exercising their rights to participate in the corporation. Third, courts have ordered liquidation and dissolution where the corporation is, in effect, a partnership between two or more persons, with more or less equal power in the corporation, who have come to disagree fundamentally on how the business should be operated.

The courts have been particularly sympathetic where, because of the decision-making structure in place in the corporation, the disagreement has made it impossible for the corporation to act. This situation is referred to in the cases as a “deadlock” . (Emphasis added; footnotes omitted) [ 42 ] However, dissolution is not a default remedy.

It has been described as “drastic” and a “bludgeon”, suggesting it is a remedy of last resort or close to it ( Sevaal Holdings Inc. v LCB Properties Inc. , 2014 SKQB 47 at paras 83 and 94 , 437 Sask R 249 [ Sevaal ]; see also, Keho Holdings Ltd. v Noble , 1987 ABCA 84 at para 53 , 38 DLR (4th) 368). Certainly, its appropriateness as a remedy is subject to legal principles that require nuance in their application. [ 43 ] In this case, while the respondents requested dissolution in their notice of application, they amended their request before the Chambers judge.

This is made clear in paragraph 4 of the Chambers judge’s decision, wherein she notes that the respondents’ position was that it was premature to make a dissolution order. The Chambers judge agreed with the respondents’ submission in this regard, stating: [17] While Coleen and Vickie seek an order to liquidate and dissolve Wells Ranching, I have determined it is premature for the court to award final relief in this matter.

The current evidence before me does not provide a fulsome picture of the financial position of Wells Ranching so as to support an application for dissolution and liquidation: Stephanson v Phillips , 2004 SKQB 356 at para 18 . While it may be that the opposing parties are unable to come to agreement on any issue involving Wells Ranching, this information is nevertheless required to ensure that the corporation can be dissolved in a fair, equitable and responsible manner. [ 44 ] Properly understood, therefore, the Chambers judge did not refuse to order dissolution at all.

She simply held that more information was “required to ensure that the corporation can be dissolved in a fair, equitable and responsible manner”. This characterization of her decision is made abundantly clear by the fact that, rather than making a final order, the Chambers judge directed that “[a]ny of the parties may apply to [the] Court for further relief on fourteen days’ notice to the other parties hereto” (at para 18(d)). [ 45 ] In this Court, the respondents defended the Chambers judge’s exercise of discretion on the basis of their need for more information to protect their interests.

Given the limitations in the information available to the respondents, this was reasonable position for them to take, and on its own was a sufficient basis for the Chambers judge’s order. [ 46 ] It is also vital to point out that an order for the dissolution of a corporation requires consideration of more than the interests of the shareholders of the corporation; a Chambers judge faced with a dissolution request must be confident that the interests of creditors and interested parties are protected throughout liquidation.

If the corporation is more than a shell, its affairs must also be wound up before dissolution can be effected. The evidence discloses that Wells Ranching is actively carrying on business. The affairs of Wells Resources are opaque but, from the financial records that have been produced, it appears to have entered into contracts with third parties and other creditors. In these circumstances, an order for dissolution of either or both of the corporations could only be made in the context of a plan for the orderly liquidation of their respective business and affairs.

The form of order would typically encompass this plan. [ 47 ] The need to protect third party interests is properly encompassed by the Chambers judge’s direction that more information was required to “ensure that the corporation can be dissolved [i.e., “liquidates”] in a fair, equitable and responsible manner” (at para 17). None of this appears to have been recognized by the appellants who, in this Court, acknowledged that the Chambers judge was given no plan whatsoever as to how this liquidation would occur.

At the very least, any plan should include specific provisions for the discharge of the liability of the corporation and the distribution of its remaining property. Guidance for a plan can be taken from s. 203(2.1) of the Act which deals with dissolution of a corporation by special resolution. Indeed, s. 221(1) of the Act provides that any “property of a corporation that has not been disposed of at the date of its dissolution vests in the Crown”. If the corporations had been dissolved by the Chambers judge as the appellants requested, the assets of the corporations would have vested in the Crown.

This cannot be what any of the parties intended. [ 48 ] In our respectful view, even if a stricter standard of review was to be applied than that applicable to discretionary orders, the Chambers judge did not err when she concluded that it was premature in the absence of a liquidation plan to order dissolution of either of these two corporations. [ 49 ] We do not see merit to this ground of appeal. VII. C ONCLUSION [ 50 ] The appeal is dismissed.

The Chambers judge’s conclusion that there was oppression was not the result of error, nor was the determination that the dissolution of Wells Ranching was premature. [ 51 ] The respondents shall have their costs. “Caldwell J.A.” Caldwell J.A. “Whitmore J.A.” Whitmore J.A. “Leurer J.A.” Leurer J.A.