The Company’s only asset is a large property on Denman Island. The respondent Sidney and Zella Clark Holdings Ltd., is a shareholder of Orkney Farms Ltd., which is in turn owned by the sole full-time resident on the property. The petitioners sought dissolution of the Company or in the alternative, an order to sell the property through a bid process. Had the petitioner succeeded, the respondent would have risked being removed from his home on the property.
Karen and Heather succeeded in having the petition dismissed in its entirety (see reasons for judgment at 2022 BCSC 2077), with costs in their favour. The Supreme Court rejected the petitioners’ argument that they could not fairly extricate themselves from the Company except through a court-ordered wind up or sale, relying among other things on the fact that they had not availed themselves of alternative remedies. The Court further accepted the respondent’s arguments that the petitioners could not meet any of the indicia that would typically justify a winding up, such as where the organization is akin to a partnership, where there is a breakdown in mutual trust, or where there is a loss of substratum.
The reasons for judgment draw on recent jurisprudence from the BC Court of Appeal confirming the use of a reasonable expectations analysis in applications to liquidate and dissolve a company (see for e.g., Esposito v. 304768 B.C. Ltd., 2022 BCCA 51), as well as the role of corporate structure and documents in determining reasonableness and in deciding what is just and equitable. This is so even where the company is closely held and where the parties had previously had close personal relationships
