In this third and final post, I wish to discuss the benefits of oppression actions and at the same time, discuss the disadvantages of such an equitable remedy.
The benefits of the oppression remedy, or any equitable remedy for that matter, are the flexibility that the adjudicator and the claimant can expect. The remedies, not being limited to damages or specific performance, can be almost anything that the courts seem equitable, including the removal of directors or an order for a party to purchase shares of a company. The courts can provide a remedy that satisfies each claimant for each specific set of circumstances. This is fitting as the central principle of the oppression remedy is “reasonable expectations.” As expectations vary in difference set of facts, it is fitting that the appropriate remedies vary. Because the parties can expect a variety of remedies, not limited to the traditional damage awards, parties will se
However, flexibility is also a disadvantage as flexibility leads to uncertainties in law and even arbitrariness. As situations and expectations vary, remedies will vary, but both claimants and respondents will not be able to anticipate what they can expect from the adjudicator. Sometimes the results may even seem arbitrary and unfair because judges will have the power and discretion to provide an unlimited variety of remedies that they think is just and equitable. Nevertheless, judges are well-trained in law and equitable remedies, and are trained to exercise their discretion in a disciplined manner. Hence, the uncertainty aspect of equitable remedies can be overcome.
The discussion question further asked whether the subjectivity and the fact-based analysis of oppression will become a problem in oppression remedies. Of course, reasonable expectations involve what the parties subjectively understood as the expectations of the purchase contract, but it also requires the courts to consider, based on the evidence, whether those expectations could reasonably be inferred from the wording of the contract and the conduct of the parties. This is the same in any area of law. For example, reasonable and probable grounds of arrest requires both subjective and objective grounds. In labour law, one reads the collective agreement and the past conduct of parties to infer the intention of the parties. Hence, I do not believe that the subjective element of the oppression remedy is a problem. The real problem, I think is that many times, small scale shareholders are more likely to sell their shares than to seek an oppression remedy. Legal fees and the time that needs to be invested in a legal action will prompt shareholders to just sell their shares once they are faced with prejudice or unfair treatment. Unless these shareholders can start a class action, the individual small-scale shareholders are left without an accessible and affordable remedy against corporate conduct. Thus, the oppression remedy is more accessible to the large-scale shareholders with more resources and funds to start a legal action.
Hence, the principles of oppression remedies, including flexibility and reasonable expectations are good in and of themselves, but the realities of the business world prevent it from being used effectively as a shield against bad corporate conduct.
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