Argo Protective Coatings Inc., Re

Argo Protective Coatings Inc., Re

For an interim investigation under s.116 the applicant need not prove oppression on a balance of probabilities; it must present evidence that, on its face and in absence of better evidence available to the respondent, supports a reasonable inference the complained conduct likely occurred and that the applicant lacks access to records. Applying that standard the court found apparent unfairness in pricing differentials and in Argo's non-collection of Parker's $26,600 receivable and therefore ordered an independent inspection and an interim injunction.

Citation
2006 NSSC 283
Parties
Applicant (minority Shareholder): 3026709 Nova Scotia Limited (Cherubini); Respondent (company): Argo Protective Coatings Inc.
Court
Supreme Court of Nova Scotia
Jurisdiction
Canada
Judgment Date
2 October 2006
Procedural Posture
Companies Act Oppression Application / Interim Application for Court Appointed Inspector and Interim Relief
Outcome
Interim relief granted: Ernst & Young Inc. appointed as court inspector under s.5(3)(m) Third Schedule and s.116 of the Companies Act to investigate specified allegations; interim injunction restraining Argo from making payments to Parker until final determination; applicant to pay inspector's costs subject to later...
Legal Topics
Oppression Remedy, Related Party Transactions, Inspector Appointment Under S.116, Shareholders' Agreement, Interim Relief
Source Language
English
Corporate Law Equity Commercial Law Oppression Remedy Related Party Transactions Inspector Appointment Under S.116 Shareholders' Agreement Interim Relief

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Parties

3026709 Nova Scotia Limited (Cherubini)

Applicant (minority Shareholder)

Argo Protective Coatings Inc.

Respondent (company)

Procedural Posture

Companies Act Oppression Application / Interim Application for Court Appointed Inspector and Interim Relief

Legal Issues

  1. 1 Whether an interim court-appointed inspection under s.116 should be ordered
  2. 2 Whether the complained acts constituted oppression or unfair prejudice (related party pricing, asset purchases, preferential receivable treatment)
  3. 3 What evidentiary threshold applies to interim investigative relief

Ratio Decidendi

For an interim investigation under s.116 the applicant need not prove oppression on a balance of probabilities; it must present evidence that, on its face and in absence of better evidence available to the respondent, supports a reasonable inference the complained conduct likely occurred and that the applicant lacks access to records. Applying that standard the court found apparent unfairness in pricing differentials and in Argo's non-collection of Parker's $26,600 receivable and therefore ordered an independent inspection and an interim injunction.

Court Disposition

Interim relief granted: Ernst & Young Inc. appointed as court inspector under s.5(3)(m) Third Schedule and s.116 of the Companies Act to investigate specified allegations; interim injunction restraining Argo from making payments to Parker until final determination; applicant to pay inspector's costs subject to later...

Orders

  • Ernst & Young Inc. appointed as inspector pursuant to s.5(3)(m) Third Schedule and s.116 of the Companies Act to investigate the matters that on their face constitute oppressive or unfair conduct (pricing disparities and Parker receivable)
  • Inspector authorized to access, recover and maintain custody of corporate books and records, examine officers and agents under oath, use APC bookkeeping staff under supervision to locate relevant information, and report factual findings with documents to the court and parties