s.248 of the Ontario Business Corporations act is an all-purpose review provision that gives Ontario superior court judges significant discretion to determine when a particular action constitutes a business-wrong.
In the process of buying a business (i.e.specialty truck insurance brokerage) many buyers decide that the seller will stay on in order to ease the transition process, and that part of the purchase price will be deferred to make sure the promised net income actually materializes.
This arrangement handcuffs the buyer. Even where you write into the shareholders agreement the contemplation that the buyer might terminate the seller, the act of doing so may still constitute oppression, particularly where the seller says that constructively dismissing him meant a loss of profits and therefore a lowering of his share-value.
take-away for the buyer of a business: put an oppression waiver into the shareholder agreement to the effect that the parties agree that the termination of the seller, whether justified or not shall not be actionable and the buyer acknowledges having been compensated in advance, at time of sale, for this waiver in favour of the seller.
take-away for the seller of a business: Crescent(1952) Ltd. v. Jones (2019) 145 OR(3d)594 now situates all seller-stays-on situations squarely within the oppression domain.
