Wilfred et al. v. Dare et al.
[Indexed as: Wilfred v. Dare]
Ontario Reports
Ontario Superior Court of Justice, Divisional Court,
Marrocco A.C.J.S.C., Thorburn and Mulligan JJ.
April 23, 2018
141 O.R. (3d) 345 | 2018 ONSC 2532
Case Summary
Corporations — Oppression — W and her two brothers being shareholders in family holding company — Shareholder agreement containing right of first offer and permitting shareholder to sell shares to third party on equal or better terms if other shareholders declined offer — Brothers rejecting W's offer to sell her shares to them and W unable to find third party purchaser — W applying unsuccessfully for order compelling brothers to value and purchase her shares — Application judge not erring in finding that W did not have reasonable expectation of liquidity for her shares.
W and her two brothers were the shareholders of a family holding company. They received the shares as a result of a 1980 estate freeze by their father. The shares were initially issued to a family trust, and were distributed equally to the siblings in 2001. W and her brothers entered into a shareholders' agreement which required any shareholder who wished to sell his or shares to first offer them to the other two shareholders. If the others declined the offer, the shares could be sold to a third party on the same terms. W offered to sell her shares to her father. He redeemed only 25 per cent of her shares, and it was agreed that she would receive dividends on her remaining shares for five years. In 2014, W offered to sell her shares to her brothers. They rejected her offer, and she was unable to find a third party purchaser. W applied for an oppression remedy under s. 248 of the Ontario Business Corporations Act, R.S.O. 1990, c. B.16, seeking a court-ordered sale of her shares to her brothers. The application was dismissed. W appealed.
Held, the appeal should be dismissed.
The application judge did not err in finding that, in all of the circumstances, W did not have a reasonable expectation of liquidity for her shares. While he was not persuaded by the evidence that W's shares were unmarketable at any price, the fact that W advanced that position caused the application judge to consider whether it was reasonable for her to expect her brothers to buy her shares. He concluded that it was not. On the evidence, he was entitled to reach that conclusion.
The application judge did not err in finding that W's interest as a shareholder was not unfairly disregarded. Even if the dividend arrangement was unfair, a court-ordered buyout was well beyond what would be required to rectify any unfair treatment. [page346]
820099 Ontario Inc. v. Harold E. Ballard Ltd., [1991] O.J. No. 266, 3 B.L.R. (2d) 113 at 123, 25 A.C.W.S. (3d) 853 (Gen. Div.), consd
Other cases referred to
Housen v. Nikolaisen, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 2002 SCC 33, 211 D.L.R. (4th) 577, 286 N.R. 1, [2002] 7 W.W.R. 1, J.E. 2002-617, 219 Sask. R. 1, 10 C.C.L.T. (3d) 157, 30 M.P.L.R. (3d) 1, 112 A.C.W.S. (3d) 991; Wellwood v. Ontario (Provincial Police) (2010), 102 O.R. (3d) 555, [2010] O.J. No. 2225, 2010 ONCA 386, 262 O.A.C. 349, 90 C.P.C. (6th) 101, 191 A.C.W.S. (3d) 774; Wilfred v. Dare (2017), [2017 ONSC 1633](https://www.canlii.org/en/on/onsc/doc/