Insights

The practice of law is changing every day, and the effect of changing legislation on businesses is significant. We write about recent developments in the world of tax & business law, keeping a watchful eye on the changing landscape for our clients. See what we’re thinking about, and what your business should be looking out for.

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Litigation

Dissolution Not a Shield to Oppression Claims

Our article focuses on the recent Alberta Court of Appeal decision of 698829 Alberta Ltd. v Elite Homes (1998) Ltd. et al., 2020 ABCA 154 ("Friesen"). This case serves as a reminder of the liabilities of a dissolved corporation and that dissolution does not protect a directing mind from claims of oppression. This decision is of interest considering the current economic conditions due to the COVID-19 pandemic and the increased number of struggling businesses. Background 698829 Alberta Ltd. ("698") and Elite Homes (1998) Ltd. ("Elite") entered into a joint venture agreement ("JVA") wherein 698 contributed $692,626 to assist in the...

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Litigation

An Important Update on Employee Bonuses

Supreme Court ruling entitles employees to bonuses after termination if within reasonable notice period Our focus in this article is the recent decision of the Supreme Court of Canada in Matthews v Ocean Nutrition Canada Ltd., 2020 SCC 6 (“Matthews”).  Being touted a landmark ruling in employment law, Matthews should be of interest to Canadians who receive any kind of bonus or commission.  We carry on below to address the interplay between Matthews and the important Alberta Court of Appeal decision in Styles v Alberta Investment Management Corporation, 2017 ABCA 1 (“Styles”), which clarified the law with respect to how...

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Litigation

Invoice Interest: The Alberta Court of Appeal provides a warning to suppliers

Suppliers who incorporate interest provisions into their invoices should take heed of the Alberta Court of Appeal’s decision in H2S Solutions Ltd. v Tourmaline Oil Corp., 2019 ABCA 373. In H2S, the appellants had provided certain services to the respondents, and occasionally issued invoices. On the bottom of each invoice, the appellants included the following language: TERMS: 2% PER MONTH (24% PER ANNUM) CHARGED ON ALL OVERDUE ACCOUNTS The respondent argued that despite the wording on the invoices, there was no express or implied agreement between the parties to pay the invoice interest. The Court agreed with the respondent, noting...

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Litigation

Creditors and the Oppression Remedy

We have written a series of articles about the oppression remedy and its application to the shareholders of a corporation. See “Business Judgment and the Fair Treatment of Shareholders” (July 2016), “A Brief Overview of the Oppression Remedy” (April 2017), “Director Liability in Oppression Actions” (August 2017), “Liquidation and Dissolution of a Corporation as a Remedy for an Aggrieved Shareholder” (February 2018). This article discusses the application of the oppression remedy to the creditors of a corporation. Introduction Historically, the oppression remedy was limited to shareholders. However, both the federal Canada Business Corporations Act and the provincial Business Corporations Acts...

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Litigation

A Primer on Regulatory Offences

Criminal law is premised on the notion that “an act does not make a person guilty unless the mind is also guilty”. The two components that make up a true Criminal Code offence, therefore, are the actus reus (the guilty act) and the mens rea (the guilty mind). However, a “regulatory offence” is quasi-criminal in nature. Many provincial statutes contain regulatory offences, of which there are two types: absolute liability offences and strict liability offences. The standard for proving culpability of an accused person is lowered through the partial or total removal of the mens rea requirement. To be found...

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Litigation

Letter of Credit Security and the “Autonomy Principle”

In commerce, parties often provide security in the form of letters of credit. A party (the “promisor”) may provide security for performance of its obligations under a commercial transaction (“underlying contract”) with the other party (the “promisee”) by procuring a letter of credit (“LOC”) from a bank.  The LOC would stipulate that a certain amount of money is to be released by the bank to the promisee/beneficiary if the promisor defaults in the underlying contract.  There would therefore be two different relationships at play: 1) that between the promisor and promisee in the underlying contract and 2) that between the...

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Litigation

Forcing an Opposing Party to Take Urgent Action before Trial

There are essentially two types of interlocutory (pre-trial) injunctions: 1) a prohibitive injunction and 2) a mandatory injunction. The former is an order for a party to refrain from doing a certain act.  For example, a corporation may seek a prohibitive injunction against a departed executive who is improperly taking corporate opportunities that rightfully belong to the corporation. The corporation would need to establish that there is a serious issue to be tried, that irreparable (non-monetarily-compensable) harm would be suffered absent issuance of the injunction and that the harm of granting the injunction would be less than the harm in...

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Litigation

Liquidation and Dissolution of a Corporation as a Remedy for an Aggrieved Shareholder

Click here to view in PDF. In the recent past, I wrote about the oppression remedy.  See “A Brief Overview of the Oppression Remedy” (April 2017) and “Director Liability in Oppression Actions” (August 2017).  Those articles serve as a helpful, but not necessary, lead-in to this article, which focuses on an alternative way by which an aggrieved shareholder may wish to exit an incorporated business absent oppression or shareholder agreement terms that may be utilized.  On that latter topic, have a look at my articles on “shot-gun” clauses, “Shot-Gun Clauses: Important but Draft Carefully and Use with Care” (July 2017),...

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Litigation

Enforcing a Settlement Agreement

Click here to view in PDF. This brief article focusses on how a party may enforce a settlement agreement. However, the principles cited here are largely applicable whether one is enforcing a settlement or any other type of deal. The Alberta Court of Appeal in the recent Buterman decision confirmed that parties may enforce on a settlement deal before they complete and execute the documentation evidencing that settlement. This is consistent with the principle that generally contracts, whether relating to settlement or otherwise, may be enforceable even if the parties do not reduce their agreements to a written form. The...

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Litigation

The Elements of a Partnership

Click here to view in PDF. This article provides an overview of the current state of partnership law and highlights the elements that form that type of business association. A partnership is defined in legislation throughout Canada, including Alberta’s Partnership Act, as a relationship between persons carrying on a business in common with a view to profit. Courts have found that a person conducts a business when the following elements are present: 1) the allocation of time, attention, and labour; 2) the incurring of liabilities to other persons; and 3) the purpose of earning a livelihood.  A simpler definition is...

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