(416) 916-1387
Team
Expertise
Appellate Litigation
Media
Contact

The Ontario Court of Appeal (ONCA) in Maurice v. Alles (2016) found section 4 of the Limitations Act to apply to oppression claims under the Ontario Business Corporations Act (OBCA). Accordingly, claimants must bring their oppression claims within two years of the alleged oppressive conduct, subject to discoverability. In the case of multiple oppressive acts over a period of time, the matter can proceed only with respect to the alleged acts that occurred within the two-year window. Maurice dealt with a series of discrete oppressive acts over time rather than a single incident of “ongoing oppression”. Therefore, the reasoning applied to discoverability in an oppression claim under Maurice could not necessarily extend to a case involving ongoing oppression, as recently explained by the ONCA in Zhao v. Li (2020).

A Series of Oppressive Acts

A private numbered company (210) incorporated under the OBCA carried on a dry-cleaning business from rented premises. LY owned shares totalling 42.50%, BW owned 17.59% (both were Respondents) and the Appellant RZ purchased her interest of 39.81% sometime later.

As a result of the new purchase, On February 12, 2010, RZ, LY and BW, met and reached several agreements, including:

  • The appellant RZ would assume responsibilities for quality control and human resources;
  • The respondent LY  would serve as President and Director. He would run the day-to-day operations of the business, including the responsibility of handling all financial matters, in the interest of and for the benefit of all owners;
  • The appellant RZ was to have “voting rights, receipt of dividends and entitlement to the value of 210 upon its dissolution or winding up”;
  • They would pay the appellant RZ wages for her work at the business;
  • The consent of 50% or more of the shareholders would be required to pass resolutions; and
  • All three shareholders “expressed an intention to sell the business for $250,000—$300,000, if such an offer ever became available.”

The appellant never did receive back any part of her investment. She received no dividends or other payments.

In June 2010, LY was charged with assault and uttering a death threat against RZ. As a result, RZ did not attend the business again until LY signed a peace bond in March 2011. Between then and August of that year, RZ attended to her business duties and felt all was normal. The judge felt differently, as she noted:

  1. In June and July 2011, the respondent LY told the appellant RZ that he had stopped paying rent on the premises because the business could not afford it;
  2. In the summer of 2011, a representative of the landlord told RZ that rent was in arrears;
  3. In July 2011, RZ was told by the respondent LY of a proposed sale of the business for $20,000 to which she agreed, subject to Mr. Wang being consulted;
  4. On September 3, 2011, RZ attended Perfect Cleaner’s premises. She found a new dry cleaning business operating there under a different name. The person in charge of the new business, described by the appellant as the “new owner”, told her he had purchased the business from the landlord.

In February 2012, RZ obtained a corporate profile that revealed that the respondent LY had filed Articles of Dissolution for 210 on October 12th, 2011. The appellant did not know of this step and had not consented to it being done.

Motion Judge Dismissed All Claims As Statute-Barred

RZ started an action on October 31st, 2013 alleging many causes of action including breach of contract, breach of trust, unjust enrichment and the oppression remedy found in the OBCA. Her problem was the general limitation period of two years found in the Limitations Act. In the end, the appellant ran with the oppression claim only. Her allegations of oppression were:

  1. the respondent LY had unilaterally dissolved the business without her approval, authority, or knowledge (the “corporate dissolution claim”);
  2. the respondent LY had failed to pay her share of the proceeds of any sale or transfer of the business, including the value of any assets owned by the business at the time of the sale or transfer (the “sale claim”); and
  3. the respondent LY had failed to account for or pay any profits of the business to the appellant since June 2010 (the “profits distribution claim”).

The respondents were successful in a motion for summary judgment, dismissing the claims. The motion judge accepted the allegations made as true and proven for the motion. The judge held that by September 3rd, 2011 (the date RZ was told about the new ownership) RZ knew or ought to have known she had suffered a loss, that new owners were in place and she had received no payment. She was accordingly out of time.

Appeals Court: One Oppression Claim Fell Within Limitation Window

The ONCA held that the acts of alleged oppression here were discrete events and not one continuous act of “ongoing oppression”. Each was a singular act, they occurred at different times and none of them depended on the others for oppression to be found. The limitation period is not extended for acts of oppression that are actionable in themselves simply because a later singular discrete act of oppression occurs. 

As Maurice provides: “Courts must be careful not to convert singular oppressive acts into ongoing oppression claims to extend limitation periods. To do so would create a special rule for oppression remedy claims”. The appeal was therefore allowed in part with respect to the corporate dissolution claim, as RZ discovered the Articles of Dissolution less than two years before starting the claim.

The definition of “ongoing oppression” was only alluded to. It appears each case will depend on its facts and whether the claimant can establish an ongoing, interdependent, set of allegations of oppression.

The highly skilled Toronto commercial litigation lawyers at Milosevic Fiske LLP have the experience necessary to guide clients through any litigation, no matter how complex. We have litigated before all levels of Canada’s court system including the Ontario Court of Appeal and Supreme Court of Canada and can provide you with advice and guidance suited to your unique situation. Call us at 416-916-1387 or contact us online to learn more about how we can help.