What is "oppression" in Canadian and Ontarian corporate law?

When owners of corporations get into disputes, things can get pretty ugly. What does the law have to say about resolving disputes among directors and shareholders of corporations in Canada?

The affairs of corporations in Ontario are governed by Ontario’s Business Corporations Act (BCA), or the Canada Business Corporations Act if the company is registered federally.

Both the BCA and the CBCA empower the court to rectify any oppressive or unfairly prejudicial conduct that unfairly disregards the interests of any security holder, creditor, director or officer of the corporation.

The court can do many things to rectify oppression. For example, the court can order compensation be paid to an aggrieved person, order that the unlawful conduct be stopped, change the directorship of the corporation, order a transfer of shares in the corporation, and many other things.

How does someone sue for oppression?

Typically, when a stakeholder in a corporation wishes to make a claim against another person as a result of oppressive conduct, the correct process is to file an application (as opposed to an “action”). These applications are generally called “oppression remedy” applications. 

Since applications follow a very different court process than a standard “action”, there are many advantages to claimants through this route. Specifically, applications are decided by a Judge at a “hearing” rather than a “trial”, with the primary difference being that hearings are decided without oral testimony. 

Judges make decisions about oppression remedy applications on the basis of written evidence. This evidence is called “affidavit” evidence, and will include each party’s side of the story along with supporting documentation.

Keep in mind that parties will still be required to provide oral testimony in a recorded meeting, it just won’t be in front of a Judge. This is because applicants and respondents have the right to question each other (i.e. “cross-examine”) about what they alleged in their written affidavit evidence. These questions and answers are recorded. Then, a transcript of that process can also be shared with the Judge to assist the Judge in making a decision.

If you require assistance regarding a dispute among owners of corporation, feel free to book an appointment with one of our civil litigation lawyers.