In BCE, the court affirms Peoples‘ criteria on how to think about the fiduciary duty of directors to the best interests of the corporation, saying that it is appropriate to consider – when trying to find what those best interests are – the interests of various stakeholders (eg. shareholders, creditors, employees, the government, etc). However, how those stakeholder interests are weighed and balanced in each case does seem to have to do with the facts of the cases themselves and how those parties’ interests are perceived by the courts.
From the facts of BCE, the court concludes that there was a reasonable expectation that the board of directors would consider the interests of the debentureholders when ascertaining the best interests of the company – however they also concluded that the board fulfilled this expectation by deciding that the bare contractual terms with the debentureholders would be met even though no further commitments would be made – such as structuring an arrangement to preserve the economic interests (eg. the investment grade rating) of the debentureholders during and after the buyout, like they wanted. This is because they were a sophisticated party, and could have arranged for this in the contract if that’s the outcome they wanted.
There, in my opinion , is the crux of where the facts turn on the equality of the parties when discussing oppression remedies. Where the party is sophisticated enough to have dealt with corporate clients and partners, they can therefore have realistic expectations based on the parties contractual obligations with each other, rather than a more inexperienced party (such as, perhaps, an individual shareholder) who may not have this clarity of corporate realities. This, in my mind, modifies “reasonable” expectations to include the context of the situation (ie. a modified objective test, rather than just objective), much the same way the court had conceptualized the duty of care of directors in Peoples. Personally, I quite like the symmetry – or perhaps more accurately, consistency – in the way the court here deals with objectivity in the corporate world.
As a final thought, I do not believe this flexibility precludes the oppression remedy from being used as a right to reform corporate conduct – all it needs in order to be used to its intended purpose is a clarity in language and tests, much the same way Peoples clarified the duties of directors. The facts of BCE do this, true, but it would be nice to have the SCC back it up with a solid test. After all, what corporate law really seems to suffer from is that it’s a huge inconsistent mess that too often turns on the facts in ways that we can’t easily predict – so being able to form tests to predict the direction of corporate law is, in my opinion, a definitive step in the right direction
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Aashish, I agree with your thoughts on this. I’d like to add to your final point with regards to the inconsistencies of corporate law. Theoretically, I think, corporate law appears to provide rules and solutions that work in an ideal corporate world. But when is it ever ideal in corporate law? Corporate law suffers from an incurable form of conception disorder. A lot of what a court does when applying these remedies is, like you so aptly stated, factor in their conceptions of what the parties’ interests are. Naturally assumptions will seep into a court’s judgement – a group of directors are assumed to be sophisticated entities but what about one director? Are they still considered sophisticated enough?