Law Times

Page 14 August 7, 2017 • LAw times www.lawtimesnews.com CASELAW Supreme Court of Canada Business Associations SPECIFIC MATTERS OF CORPORATE ORGANIZATION Directors and officers Directors found personally liable for oppression As result of private placement, proportion of common shares held by CEO of corporation were significantly reduced. Conse- quently, value of CEO's A and B shares, which were convertible into common shares, was also greatly reduced. This prompted CEO to file application for op- pression under s. 241 of Canada Business Corporations Act against corporation's directors, including two members of audit committee. Trial judge found that CEO had reasonable expec- tation that board would consider his rights as A and B shareholder in any transaction impacting A and B shares. Trial judge held that those two directors who were also members of audit commit- tee had personally benefitted from private placement. Trial judge concluded that those two directors were personally liable for CEO's loss. Court of Appeal dismissed directors' appeal, hold- ing that imposition of personal liability was justified, given posi- tions of directors on audit com- mittee. Directors appealed be- fore Supreme Court of Canada. Appeal dismissed. Determining personal liability of director re- quired two-pronged approach. First, oppressive conduct must be properly attributable to director because of his or her implication in oppression. In this case, trial judge found that those two di- rectors who were also members of audit committee had played lead roles in board discussions resulting in non-conversion of CEO's A and B shares. In mak- ing that finding, trial judge held that those directors were impli- cated in oppressive conduct. It was therefore open to trial judge to determine that oppression was properly attributable to those two directors. Second, imposition of personal liability must be fit in all circumstances. In this case, trial judge found that, in addition to lead role he had played, one of directors had accrued personal benefit as result of oppressive conduct. Additionally, remedy went no further than necessary to rectify CEO's loss. Finally, remedy was appropriately fash- ioned to vindicate CEO's reason- able expectations. Therefore, trial judge's decision did not ref lect any errors warranting appellate intervention. Wilson v. Alharayeri (2017), 2017 CarswellQue 5230, 2017 CarswellQue 5231, 2017 SCC 39, 2017 CSC 39, McLachlin C.J.C., Abella J., Moldaver J., Karakat- sanis J., Wagner J., Gascon J., Côté J., Brown J., and Rowe J. (S.C.C.); affirmed (2015), 2015 CarswellQue 13380, 2015 Car- swellQue 7661, 2015 QCCA 1350, Morissette J.C.A. (C.A. Que.). Federal Court of Appeal Administrative Law PRACTICE AND PROCEDURE On application for certiorari Applicant, not party to original proceedings, not granted standing to apply for judicial review Applicant EB was not party to original proceedings before Pub- lic Service Labour Relations and Employment Board. Applicant brought application for judi- cial review on basis that Board member involved in decision failed to satisfy legal residency requirement and Board member released decision beyond time permitted by law. Application dismissed. Applicant was not granted standing to apply for ju- dicial review. Applicant was not directly affected by proceedings before Board within meaning of s. 18.1(1) of Federal Courts Act. Applicant was not party to Board proceedings, was not member or employee of union involved in Board proceedings, and had no relationship with individual re- spondent grievors before Board. Applicant offered no evidence suggesting that Board's decision affected her legal rights, imposed legal obligations upon her, or prejudicially affected her. Appli- cant did not have public interest standing. Assuming applicant raised serious justiciable issue, this was not situation where is- sue of significance was evasive of review. Parties involved in pro- ceedings did not apply for judi- cial review, which suggested that they chose to accept decision, and granting standing to appli- cant would disrupt that choice. It was not wise use of judicial re- sources to grant applicant stand- ing in these circumstances. Bernard v. Close (2017), 2017 CarswellNat 769, 2017 FCA 52, David Stratas J.A., Boivin J.A., and Woods J.A. (F.C.A.); ap- plication for judicial review re- fused (2016), 2016 CarswellNat 915, 2016 CarswellNat 916, 2016 PSLREB 18, 2016 CRTEFP 18, Kate Rogers Member (Can. P.S.L.R.E.B.). Tax INCOME TAX Administration and enforcement Question was whether application for extension of time brought as soon as circumstances permitted In 2010, taxpayer sold condo- minium property that he had acquired three years previously. He declared gain from sale in 2010 income tax return as capi- tal gain. In 2014, Minister reas- sessed taxpayer's return, treated gain from sale of condominium property as income and assessed penalty. Taxpayer filed notice of objection. On January 12, 2016, Minister confirmed reassess- ment and sent notice of confir- mation to taxpayer. Bookkeeper who had been assisting taxpayer referred taxpayer to chartered accountant who communicated with Canada Revenue Agency to persuade them that confirma- tion of reassessment was error. Within short time, CRA advised that file had been closed and that taxpayer would have to file notice of appeal to Tax Court of Canada (TCC). Accountant asked taxpayer to obtain rel- evant documentation for appeal, which took taxpayer beyond 90 day limitation period for filing notice of appeal. TCC dismissed taxpayer's application for exten- sion of time for appeal. Taxpayer appealed. Appeal allowed. Rel- evant issue was taxpayer's use of time between expiry of 90 day appeal period and filing date of application for extension of time. TCC did not direct its mind to appropriate period when it con- sidered whether taxpayer's ap- peal had been brought as soon as circumstances permitted. TCC asked whether circumstances permitted taxpayer to file notice of appeal during 90 day period rather than asking whether, once period expired, he brought ap- plication for extension of time as soon as circumstances permit- ted. Case was one in which Fed- eral Court of Appeal should ren- der decision which TCC ought to have given. Having incurred ex- pense of hearing in TCC and ap- peal, taxpayer ought to be spared necessity of further hearing on question. Evidence was that tax- payer spent period between ex- piry of 90 day period and filing of his application for extension of time gathering documentary ev- idence. Evidence suggested that application for extension of time was brought as soon as necessary documents were in hand and ap- plication for extension of time were made as soon as circum- stances permitted. It was just and equitable to grant application.. Bygrave v. Canada (2017), 2017 CarswellNat 2687, 2017 FCA 124, J.D. Denis Pelletier J.A., Wyman W. Webb J.A., and D.G. Near J.A. (F.C.A.). Federal Court Business Associations LEGAL PROCEEDINGS INVOLVING BUSINESS ASSOCIATIONS Practice and procedure in proceedings involving corporations Corporate veil lifted to execute default judgment Court issued default judgment against corporate third party car- rying on business as "jbloom", on ex parte motion brought by plaintiff A Corp.. Corporate third party brought motion seeking various types of relief in relation to execution of Writ of Seizure and Sale that was issued by court. Among other things, corporate third party sought to have execution of Writ set aside and nullified, and to have itself declared as sole owner of goods that were seized. Motion dis- missed. Corporate third party's corporate veil was lifted to per- mit A Corp. to execute Default Judgment against corporate third party. Bringing of this motion by corporate third party, after having been party to deliber- ate and improper actions taken by its principals, JN and JPN, to CASELAW Caselaw is a weekly summary of notable civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada and all Ontario courts. These cases may be found online in WestlawNext Canada. To subscribe, please access carswell.com or call 1-800-387-5164. REACH ONE OF THE LARGEST LEGAL AND BUSINESS MARKETS IN CANADA! AVAILABLE ONLINE AND IN PRINT With more than 300,500 page views and 100,000 unique visitors monthly canadianlawlist.com captures your market. FOR MORE INFORMATION CONTACT Colleen Austin T: 416.649.9327 | E: colleen.austin@thomsonreuters.com www.canadianlawlist.com Get noticed by the lawyers, judges, corporate counsel, finance professionals and other blue chip cilents and prospects who find the contacts they need for Canadian legal expertise at canadianlawlist.com with an Enhanced listing. ENCHANCE YOUR LISTING TODAY! Untitled-2 1 2017-07-27 2:23 PM

• Cover