14.48: Stay pending appeal

Case Summary

This matter related to an ongoing dispute amongst four siblings each holding 25% of the shares in a closely-held family business. On September 15, 2023, Justice Marion granted an Order that declared that one of the siblings (the “Applicant”) was not permitted to vote at a director’s meeting on May 6, 2019 and, in doing so, breached section 120(6) of the Alberta Business Corporations Act, RSA 2000 c. B-9 (the “ABCA”); and (2) declared that the Applicant was not entitled to vote on any future directors’ vote about the termination of their own employment, provided that none of the exceptions in section 120(6) of the ABCA applied (the “Vote Declaration”).

On October 6, 2023, the Applicant appealed the first two paragraphs of Justice Marion’s Order. He then applied to Stay the Vote Declaration aspect of Justice Marion’s Decision pending Appeal pursuant to Rule 14.48(a). Thus, the issue before the Court was whether the Vote Declaration should be stayed pending Appeal.

Under Rule 14.48, the Applicant seeking a Stay must show: (1) that there is a serious question to be considered on Appeal, (2) that the Applicant will suffer irreparable harm if the Stay is not granted, and (3) that the balance of convenience favours granting the Stay. Even if the tripartite test is not met, the Court can issue a Stay if the interests of justice call for it.

As it pertained to a serious question to be considered on Appeal, the Applicant planned to argue on Appeal that Justice Marion’s interpretation of the meaning of “transaction” was too broad. Justice Marion was satisfied that this was a serious question to be considered on Appeal.

Justice Marion further found that the collective harm caused to the Applicant would render the Appeal nugatory, both legally and practically, due to the potential loss of his right to vote as a director and the disruption to his long-standing employment which may not be practically reversed if he is successful on Appeal. Therefore, the Applicant sufficiently established irreparable harm.

Lastly, Justice Marion considered whether the balance of convenience supported a Stay. If a Stay was not granted, it was likely that the Applicant’s employment would be terminated. On the other hand, the Respondents had delayed in taking any steps to address or confirm the Applicant’s employment during events that gave rise to a portion of the dispute. Then, during the lengthy wait to have their Application heard, they agreed not to take steps pending the outcome of their Application and to preserve the status quo pending clarification of the parties’ rights by the Court. Though the Court acknowledged that the Respondents would like to move on to direct the affairs of the business, the Court found that the balance of convenience favoured a Stay pending the Appeal.

Therefore, Justice Marion granted a Stay pending Appeal of the Vote Declaration portion of the Order.

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