Shareholder plaintiffs commenced an action alleging that directors and officers of a publicly traded corporation engaged in improper transactions and that certain third parties knowingly assisted in those transactions.
The moving defendants sought to strike the statement of claim, arguing that the claim improperly sought recovery for losses suffered by the corporation and therefore required leave to proceed as a derivative action under s. 246 of the Ontario Business Corporations Act.
The court held that the plaintiffs’ claim, which sought disgorgement of funds to the corporation, was fundamentally derivative in nature and could not proceed as an oppression claim in the circumstances of a large publicly traded corporation.
The court distinguished appellate authority permitting overlap between oppression and derivative remedies in closely held corporations.
The statement of claim was struck without prejudice to the plaintiffs applying for leave to bring a derivative action.