An expectation based on loss of an opportunity that is merely speculative is insufficient to ground an oppression claim.

Shefsky v. California Gold Mining Inc.
2016 CarswellAlta 649
Alberta Court of Appeal

Business associations --- Specific matters of corporate organization — Shareholders — Shareholders' remedies — Relief from oppression — Oppressive conduct — Dealings with share

Appellants, MS and holding company, alleged respondents breached MS's reasonable expectations he would control public company if he raised $5M and engaged in oppressive conduct including secret placement of shares that diluted MS's voting power and refusing to allow MS to appoint third member to five-member board when initial nominee refused position — Chambers judge determining MS had reasonable expectation Term Sheet would be honoured but not reasonable expectation he had sufficient shareholder support for control and dismissing appellants' oppression motion — MS and holding company appealed — Appeal dismissed — Expectation based on loss of opportunity to gain control of CGM Inc., without proof that opportunity more than merely speculative, insufficient to ground oppression — MS failing to identify personal interest that was violated; not sufficient to allege shareholders generally have expectation directors will not act oppressively — Timing, source and pricing of additional financing was solely matter of business judgment entitled to substantial deference and no evidence directors did not act in best interests of corporation, despite that so acting may not have coincided with MS's personal interests — Any expectation to control composition of board past date of annual meeting was inconsistent with corporation's public statements, statutory disclosure obligations and basic rights of shareholders to choose board of publicly-traded company — MS's reasonable expectation to appoint third director arising out of MS's capacity as potential financier rather than shareholder — MS and holding company's claims were contractual in nature, falling outside legal and jurisdictional boundaries of oppression remedy — MS and holding company not met burden of showing they suffered oppression, unfair prejudice or unfair disregard.