Opinion ID: 2257707
Heading Depth: 1
Heading Rank: 3

Heading: Subject Matter Jurisdiction under Section 241 of the Canadian Act

Text: LSI Canada contends that the Delaware Court of Chancery lacks subject matter jurisdiction because Section 2 of the Canada Business Corporations Act requires that suits based on the Canadian Act be brought only in the courts of Canada. In contrast, Taylor contends that Section 2 relates only to procedural venue and is not a jurisdictional provision. Taylor concedes that the sole basis for her claim is Section 241 of the Canadian Act, commonly referred to as the oppression remedy. The oppression remedy has been described as being the: Charter of Rights and Freedoms of corporate law. It is a relatively new creature of statute, so it is little developed. It is broad and flexible, allowing any type of corporate activity to be the subject of judicial scrutiny. The potential protection it offers corporate stakeholders is awesome. Nevertheless, the legislative intent of the oppression remedy is to balance the interests of those claiming rights from the corporation against the ability of management to conduct business in an efficient manner. [13] Section 241 of the Canada Business Corporations Act provides in relevant part: (1) A complainant may apply to a court for an order under this section. (2) If, upon an application under subsection (1), the court is satisfied that in respect of a corporation or any of its affiliates  (a) any act or omission of the corporation or any of its affiliates effects a result, (b) the business or affairs of the corporation or any of its affiliates are or have been carried on in a manner, or (c) the powers of the directors of the corporation or any of its affiliates are or have been exercised in a manner that is oppressive or unduly prejudicial or that unfairly disregards the interest of any security holder, ... the court may make an order to rectify the matters complained of. [14] (emphasis added) Section 2 of the Canadian Act provides: (1) In this Act, ... court means: (a) in the Province of Newfoundland, and Prince Edward Island, the trial division or branch of the Supreme Court of the Province, (a.1) in the Province of Ontario, the Ontario Court (General Division), (b) in the Provinces of Nova Scotia and British Columbia, the Supreme Court of the Province, (c) in the Province of Manitoba, Saskatchewan, Alberta, and New Brunswick, the Court of Queen's Bench for the Province, (d) in the Province of Quebec, the Superior Court of the Province, and (e) in the Yukon Territory and the Northwest Territories, the Supreme Court thereof; [15] In construing a statute, this Court must ascertain the Legislative intent. [16] In ascertaining the intent of the Canadian Parliament we look for guidance to the cases in Canada that have construed the Canada Business Corporations Act. While the cases in Canada interpreting Section 2 of the Canadian Act are limited, they are persuasive. In Anderson v. Ralston Court, Ltd., [17] the plaintiff filed an action in the British Columbia Provincial Court alleging a claim that the court determined to be premised on Section 241. The court found that, because the British Columbia Supreme Court's jurisdiction was limited by Section 2 of the Act, its jurisdiction was also limited. [18] The court then dismissed the action finding that the Supreme Court in the province was the properly designated court in which to bring a corporate claim. [19] In Nova Ban-Corp Ltd. v. Tottrup, [20] the plaintiff brought an action as the creditor of the defendant corporation, seeking a refund for tax payments improperly paid on behalf of its president. The Court of the Queen's Bench in Alberta granted plaintiff permission to file a derivative action pursuant to Section 232 of the Canada Business Corporations Act. [21] The court then issued an order which permitted the plaintiff to file an action in the Federal Court of Canada to determine the proper and appropriate tax payable by [the corporation] ... and all related questions touching thereon ... [22] The Federal Court held that the Court of the Queen's Bench, as the designated court in Section 2 of the Act, had exclusive jurisdiction for the plaintiff's corporate claims finding that: [o]n its face subsection 232(1) might suggest that if that court once authorized an action whether in that court or some other court, then Parliament must be taken to have so authorized the action. However it is clear from subsections 232(2) and 234(2) that the action or application when brought must also be brought in the court as defined; namely, in Alberta, in the Court of the Queen's Bench. In subsection 232(2) it is provided that `No action may be brought ... under subsection (1) unless the court is satisfied that.' This clearly implies that the action is to be brought in the same `court' as gives leave for the action to be brought. Similarly in subsection 234(2) it is the `court' which has authority to give the various forms of relief specified there, some of which relief might be involved in the statement of claim in the Federal Court in this action. Thus, the Canada Business Corporations Act does not provide a basis for a creditor to commence proceedings in the Federal Court in the name of its debtor in respect of the tax assessment of that debtor. [23] We, therefore, find that it was the intent of the Parliament that actions brought under Section 241 of the Canada Business Corporations Act be brought only in the courts of Canada identified in Section 2 of the Canadian Act. We also find that Taylor's contention that Section 2 of the Canadian Act is merely a procedural venue provision to be unsupported by the clear text of the Canadian Act. In addition, the Canadian Act's provisions for an appraisal, Section 190, specifically contains a venue provision. [24] It states: [a]n application... shall be made to a court having jurisdiction in the place where the corporation has its registered office or in the province where the dissenting shareholder resides if the corporation carries on business in that province. [25] We, therefore, hold that Taylor's exclusive equitable remedy under Section 241 of the Canada Business Corporations Act for oppressive corporate acts lies in the courts of Canada as defined in Section 2 of the Canadian Act. [26] Our holding is further supported by Section 4 of the Canadian Act's enumerated goal of seeking to provide a uniform law for Canadian corporations: The purposes of this Act are to revise and reform the law applicable to business corporations incorporated to carry on business throughout Canada, to advance cause of uniformity of business corporation law in Canada and to provide a means of allowing an orderly transference of certain federal companies incorporated under various Acts of Parliament to this Act. [27]