Stewart McKelvey

CASE COMMENT THE OPPRESSION REMEDY AND BARGAINING IN GOOD FAITH 2011 NBCA 44 By Catherine Lahey O n May 12, 2011, the New Bruns- wick Court of Appeal issued its decision in Doucet v. Spielo Man- ufacturing Inc., 2011 NBCA 44 ("Spielo"). The plaintiffs (Appel- lants) had sought damages in ex- cess of 30 million dollars advancing claims based upon negligent misrepresentation, failure to bargain in good faith, unjust enrichment, oppression and wrongful dis- missal. The Court of Appeal upheld the dismissal of all claims advanced by the plaintiffs against the defen- dants and confirmed an award of costs in favour of the defendants which is the largest award of costs issued by a New Brunswick court to date. This action was launched by two former employ- ee shareholders of Spielo (Yves Doucet and Peter Dauphinee) who alleged their dismissal had been orchestrated by Spielo and its majority shareholder for the purpose of reclaiming the plaintiffs' shares and depriving the plaintiffs of the opportunity of receiving fair market value when the company was subsequently sold. The plaintiffs were management level employees and held shares in Spielo in accor- dance with the terms of Share Subscription Agree- ments ("SSAs") which provided that, in the event 2 FALL 2011 DOING BUSINESS IN ATLANTIC CANADA of the termination of their employment – whether with or without cause, the plaintiffs would sell their shares back to Spielo for net book value. In September 2002 the plaintiffs were dismissed from Spielo. There was no allegation of just cause at the time and both plaintiffs were provided with sev- erance packages and were paid the net book value for their shares in accordance with their SSAs. Spielo was sold to GTech Corporation in April 2004, as a result of which all shares held in Spielo at that time were acquired for fair market value. The plaintiffs contended that Spielo and its major- ity shareholder were aware of the pending sale of the company at the time they were dismissed and further alleged that the termination of their employment was motivated by the intention to deprive them of the finan- cial opportunity associated with being a shareholder at the time of the sale. They contended that the conduct of the defendants was oppressive and in violation of section 241 of the Canada Business Corporations Act. In dismissing the plaintiffs' oppression claim, the Court of Appeal applied the analytical framework identified by the Supreme Court of Canada in BCE Inc. v. 1976 Debentureholders, in determining wheth- er relief should be granted for "oppressive" conduct. D O U C ET V . S P I E L O MAN U F A C TU R I N G I N C.,

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