THE OPPRESSION REMEDY:
CLARIFYING PART II OF THE BCE TEST
Keywords:Oppression, harm, BCE, corporate law, director liability, Canada Business Corporations Act, unfairness
Claiming oppression is easy. Only the low bar of unfairness must be overcome. It seems to arise from any unwelcome conduct in a (usually) closely held corporation. It can be appended to any corporate misconduct claim. Broad statutory language governs the remedy, making it facially applicable to a broad range of conduct. In addition, the remedy is fact-based, being granted when a party satisfies the court that the corporation or its directors acted in a way that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, any security holder, creditor, director or officer. In the face of these challenges, courts have struggled to maintain a clear set of applicable rules to govern when oppression has occurred. As a consequence, predicting the outcome of an oppression case is difficult.
This article prescribes how courts can achieve greater clarity in cases where a party has alleged oppression by developing a principled approach to determine whether the impugned conduct rises to the level of harm required by the statute. This approach has two parts. The first part identifies the elements necessary to entitle the applicant to an oppression remedy and combines them to form two overarching principles. The second part of the approach discusses the effect of the impugned conduct on a complainant to show how prejudicial conduct or conduct that disregards the complainant can become conduct that is “unfairly prejudicial” or that “unfairly disregards” the complainant.