Oppression remedy

In Icahn Partners LP v. Lions Gate Entertainment Corp., 2011 BCCA 228, the British Columbia Court of Appeal recently restated the law on the oppression remedy. The summary is helpful:

In 2008, in BCE Inc. v. 1976 Debentureholders 2008 SCC 69 (CanLII), 2008 SCC 69, [2008] 3 S.C.R. 560, the Supreme Court of Canada reviewed and reframed the law relating to the 'oppression remedy' found in the business corporations statutes of Canada and most Canadian provinces. Among other things, the Court highlighted the primary importance to be given to complainants' "reasonable expectations" in determining whether corporate conduct should be characterized as oppressive or unfairly prejudicial, emphasizing that the analysis in each case is highly contextual and fact-specific. A series of factors was identified from previous authorities as useful in determining when such expectations may arise. Importantly for this case, these included the "fair resolution of conflicting interests". The Court characterized the duty of corporate directors to act in the best interests of a corporation as comprehending a "duty to treat individual stakeholders affected by corporate actions equitably and fairly." In each case, the Court said:

... the question is whether, in all the circumstances, the directors acted in the best interests of the corporation, having regard to all relevant considerations, including – but not confined to – the need to treat affected stakeholders in a fair manner, commensurate with the corporation's duties as a responsible corporate citizen. [At para. 82.]

… The BCE Court also suggested a two-step inquiry to be followed in assessing oppression claims: courts were directed to ask first whether the evidence supports the reasonable expectation asserted by the claimant; and second, assuming it does, whether the evidence establishes that the reasonable expectation was violated by conduct that falls within the term "oppression", "unfair prejudice", or (in some but not all provinces) "unfair disregard" of a relevant interest. (Para. 68.)