THE ADVOCATE 347
VOL. 80 PART 3 MAY 2022
AT TRIAL
In the oppression proceeding, the trial court found that Milne’s conduct had
been oppressive or unfairly prejudicial to Dubois, a valuator should be
appointed to determine the value of Dubois’s shares in Lucid and the valuation
date would be the date of commencement of the oppression proceeding,
August 1, 2012. The trial judge, Tindale J., also ordered that Milne
purchase Dubois’s shares at a value to be determined. En route to finding
that Milne’s conduct rose to the level for a finding of oppression, the court
found that the relationship between the two men was toxic.
After the trial, but before the judge gave his judgment, Lucid went bankrupt,
but the bankruptcy did not affect the judge’s findings at trial.
COURT OF APPEAL
Milne appealed to the Court of Appeal, which declined to set aside the
orders made at trial. Chief Justice Bauman agreed with the trial judge that
the conduct of Milne, in appointing himself to three new positions and
tripling his salary, was for the “specific purpose of depriving Dubois of dividends
he was entitled to”, and that the withholding of dividends in two fiscal
years was “for the purpose of forcing Dubois out of Lucid”.3 In denying
Milne’s appeal, Bauman C.J.B.C. focused, in part, on the question of
whether a wrongful dismissal, on its own, on these facts established a finding
of oppression, as the trial judge had found.
He held that there was a “close connection” between Dubois’s rights as an
employee and as a shareholder, and the trial judge’s conclusion that
Dubois’s employment expectations were reasonable “betrayed no error”.4
The Chief Justice held that the plaintiff’s expectations that Milne would
not suddenly fire Dubois, triple his own salary and refuse to pay dividends
were reasonable. He also held that Milne’s decisions were not protected by
the business judgment rule. (A discussion of the business judgment rule is
beyond the scope of this article.)
Groberman J.A. gave separate reasons, concurring in the result. He held
that the company’s failure to pay dividends in a timely manner was oppressive
conduct, and that the substantial salary increases Milne gave to himself
were also oppressive.
Groberman J.A. agreed with the Chief Justice on the remedy of an order
requiring Milne to buy out the shares of Dubois. Further, Groberman J.A.
agreed that Milne, by substantially increasing his own salary, had diverted
profits to himself that reduced the amount that would otherwise be available
to pay dividends, and that Milne’s failure, as a director, to declare dividends
in a timely way reduced the benefits flowing to minority
shareholders like Dubois.