In a recent BC Court of Appeal decision, Brockman v. Valmont Industries Holland B.V., the court clarified that when there is ongoing conduct — ongoing oppressive conduct in this instance — the limitations clock will start to run when the conduct complained of is first discovered. The court disagreed with the lower court’s holding that where conduct is ongoing or continuous, a limitation period does not begin to run at least until the oppressive conduct ceases or is rectified. This shift in approach is crucial for shareholders to be mindful of, should they seek a remedy for oppressive conduct.
The court reasoned that “a claim sounding in oppression involves company conduct causing particular types of injury to one or more shareholders”, and therefore, “oppression, even if it is ongoing, has a starting point; at some juncture, a pattern of conduct becomes oppression”. The court drew a distinction between the issue of a claim arising and whether the oppression continues. Ultimately, for the limitation clock to commence, the oppressive conduct must be “discovered” by the affected shareholder for purposes of the Limitation Act. This analysis is not one size fits all: an analysis dependent on the facts of each case must be conducted.
Oppressed shareholders should be mindful of other temporal guidelines along with the above. The court in Brockman went on to remind litigants to bring their oppression claims in a timely manner, as per the statutory requirements of section 227 of the Business Corporations Act (BCA). Further to section 227 of the BCA, oppression claims must be brought in a timely manner, and courts may strike out claims as untimely even if they are brought within the limitation period. The criteria for deciding if a claim has been brought in a timely manner also calls for a fact-driven analysis of the conduct of the parties, and reflects a policy that the parties should deal with oppression claims expeditiously, and not allow them to become stale or fester. This, the court says, is a separate analysis from an inquiry into when a party discovered a claim per the Limitation Act (para. 12).
Brockman is a helpful reminder for shareholders when they are confronted with oppressive conduct: act without delay to preserve your rights.
For more information, please contact Erin Kotz.