Ontario Court conducts jurisdictional analysis on proposed class claim for oppression remedy under the OBCA

9 mai 2011

Ce billet est disponible en anglais seulement.

The Ontario Superior Court of Justice recently considered the issue of whether it had jurisdiction simpliciter in a proposed class action on behalf of all primary and secondary purchasers of common shares in an Alberta corporation known as Birch Mountain Resources Limited (Birch Mountain) which was incorporated under the Alberta Business Corporations Act.  The representative plaintiff advanced an oppression remedy claim under the Ontario Business Corporations Act (the OBCA) alleging that certain conduct, including a court-appointed receiver’s sale of the assets of Birch Mountain was oppressive conduct under the Ontario Act.  Also named as defendants were three alleged affiliates of Birch Mountain.  The alleged connections with Ontario for the purposes of the “real and substantial connection” jurisdictional analysis outlined in Van Breda v. Village Resorts Ltd.  were based on: trading of Birch Mountain shares on the Toronto Stock Exchange; two of the three defendants being Ontario residents; the two Ontario defendants making their decisions in Toronto; and the application of the oppression remedy provisions of the OBCA.   

In staying the action for lack of jurisdiction simpliciter and because Ontario was forum non conveniens, Justice Perell noted that the plaintiff’s main argument – that the parties and the matter were connected to Ontario through the oppression remedy provisions of the OBCA – was untenable.   The plaintiff was a resident of the United States; she and many of the putative class members had no personal connection to Ontario.  All of the events took place in Alberta.  The critical event involved a court order made in Alberta about a contract governed by the law of Alberta made with an Alberta corporation carrying on business in Alberta and forced by the court to order to sell its assets, also located in Alberta.  None of these factors supported a real and substantial connection between Ontario and the matter and the parties.   Justice Perell held that even assuming the plaintiff qualified as a “complainant” under the OBCA as a shareholder in Birch Mountain, in order to have a tenable claim for oppressive conduct under the Ontario Act she would have to establish both that: (a) Birch Mountain was a “corporation” under the Ontario Act; and (b) that one of the alleged affiliates would actually qualify as an “affiliate” of Birch Mountain.  The plaintiff was unable to establish either prerequisite.   For a more detailed background and analysis of this case the reasons for the decision can be found here.

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