CSL successfully represented the petitioner in a shareholder dispute that resulted in the liquidation of an investment company which owned property valued at over $40 million. The link to the decision is here.
Background
The petitioner and respondent had been business partners for over 35 years, holding interests in a group of operating and investment companies. The petition centred around Bradko Enterprises Ltd., a passive investment company equally owned by the two families, whose principal asset was a 17.6-acre parcel in Surrey purchased in 1990. The affidavit evidence in the proceeding placed the property's value in the range of $40–60 million.
By 2020, the parties could no longer agree on when to sell. The petitioner, who was approaching retirement, wanted to sell or have his interest bought out. The respondent wanted to hold the property for a longer period, believing the property's value would continue to climb.
Communication between the two families broke down almost entirely. By the time of the hearing, they had not spoken directly in three years.
The petition sought a liquidation under s. 324(1)(b) of the Business Corporations Act on the basis that it was "just and equitable" to do so through deadlock, a justifiable loss of confidence, and an alleged partnership-like breakdown of trust. The respondent argued that the dispute was really just a disagreement over timing that had not impaired the company's core operations, and that the petitioner had manufactured the conflict to force a buyout.
The Decision
Justice Norell agreed with our client, finding that Bradko and its subsidiaries should be liquidated and dissolved, applying the deadlock branch of the traditional "just and equitable" analysis. This decision is a useful illustration of how deadlock analysis applies to closely-held, two-family investment vehicles where there is no shareholders' agreement and no built-in exit mechanism.
It also reinforces that a company's "core operation" for deadlock purposes is defined by corporate purpose rather than by whatever passive administrative tasks happen to still be functioning, and that courts will look past intemperate correspondence and mutual recrimination to assess whether the underlying business relationship remains workable. For our client, the decision secured the principle that the tens of millions of dollars tied up in the Surrey Property would finally be realized, with the mechanics of that realization to follow through the receiver-manager process.
