Quebec court affirms “considerable” burden of proof on plaintiffs in oppression actions: Ogilvy Renault

Quebec’s Superior Court has confirmed that plaintiffs launching oppression actions against company board members bear a “considerable” burden of proof to prove their thwarted expectations were “reasonable.”
Ogilvy Renault made the observation in an online published comment on Brassard c. Forget, decided in the Quebec Superior Court in April 2010.
The case involved Clemex Technologies Inc., which designs, manufactures and markets image analysis software.
The plaintiff, Karol Brassard, sued Clemex and its directors for oppression, arguing that, among other things, they refused to let Brassard, a Clemex shareholder, participate in a private placement.
He alleged that by refusing to let him participate in the placement process, the company intended to dilute the value of his shares.
The court found against Brassard and awarded costs to the company’s board of directors.
In doing so, the court reiterated the onus is on the plaintiff in an oppression action to specify what expectations have been violated and must prove their reasonableness.
“The reasonableness of the expectations must be appraised objectively, taking into consideration the relationships at play and the whole context, including the possibility of conflicting expectations,” Ogilvy Renault notes in its commentary.
“Moreover, whether or not it is reasonable, not every expectation gives rise to an oppression remedy. The expectation must have been unjustly frustrated by abusive conduct or an unjust omission, or unjust prejudice must have been caused.”
The court said the backdrop for the case included a press release published by Clemex on Jan. 15, 2008. The release announced the beginning of the examination of various strategic options by the company, the desire to further enhance shareholder value, the search for potential purchasers or partners for a merger or acquisition and the creation of an independent strategic orientation committee in order to examine possible options.
The release contained the following caveats: 1) “there is no guarantee that the process will result in specific financial or strategic transactions,” and 2) “there is no timetable for this process.”
In light of this press release, Brossard had no reasonable expectation that he would be involved in the private placement, since it wasn’t inevitable that such a placement would occur, the court found.