PATEL v TULAN, 2015 ABCA 384


14.68: No stay of enforcement

Case Summary

The Plaintiffs (Respondents at the Court of Appeal) were minority shareholders in two companies. They obtained an Order directing an investigation pursuant to s.231 of the Alberta Business Corporations Act, RSA 2000, c B-9 for oppression. The Defendants (Applicants at the Court of Appeal), who were the controlling directors and shareholders of both companies, applied to the Court of Appeal for a stay pending Appeal for the enforcement of the investigation Order.

Justice O’Ferrall applied the three-part test for injunctions from leading Supreme Court authority: whether there is a serious issue to be tried; whether the Applicant will suffer irreparable harm if the injunction were not granted; and whether the balance of convenience favours the injunction. The Applicants argued that in the context of a stay pending Appeal, a serious issue to be tried should be found unless the party opposing the stay can demonstrate that the appeal has no possibility of success. Justice O’Ferrall expressed doubt that this was the proper test given the default position under Rule 14.68 that the filing of an Appeal or an Application for permission to Appeal does not operate as a stay of proceedings or enforcement of the Decision under appeal. This presumption, according to Justice O’Ferrall, implied that the onus should be on the Applicant to demonstrate that their Appeal has a reasonable prospect of success. For the purposes of the Application however, Justice O’Ferrall was prepared to accept that the test for a serious issue to be tried was that there was no possibility of success. Justice O’Ferrall was not prepared to find that the Appellants had no possibility of success on their Appeal.

Justice O’Ferrall further held that the refusal to grant a stay would at most render the Appellant’s Appeal without merit, but that this would amount to no more than an adverse procedural ruling. An adverse procedural ruling could not meet the second part of the three-part test. Furthermore, Justice O’Ferrall found that both the Business Corporations Act and the Order under appeal provided sufficient safeguards to prevent there being irreparable harm.

Justice O’Ferrall held that granting a stay of the investigation Order could undermine the rights and protections given to the Respondents under the Business Corporations Act, which were invoked to obtain the impugned Order. As such, the balance of convenience was in favour of the Respondents. The Application was therefore dismissed.

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