Marital divorce rates in Canada are widely available, and many have at least a general understanding of some of the issues encountered in divorces. The permanent breakup of business ownership relationships is not as widely tracked or discussed. That does not mean that it is not as frequent or difficult an occurrence.
There are many forms of business ownership and many ways in which those ownership relationships can come to an end. Just as with a divorce, an agreement by everyone that there needs to be a permanent split and on how that split should be completed can make the business separation process much more efficient and less difficult. Unfortunately, there are many breakups of business ownership relationships that do not go any more smoothly than many divorces. There are frequently reasons beyond just having different visions or plans for the future for business owners to stop wanting to continue being in business together. Sometimes there are personal relationship disputes. Sometimes there are concerns about the business acumen of the other. And sometimes, business owners are very frustrated or angry about the actions or suspected actions/inaction of others in their roles as co-owner, director, officer, or shareholder of the business.
In disputes between business owners, many descriptions of unfair, prejudicial and unreasonable actions or omissions by individuals who own, operate, control or manage companies will be provided by upset owners. Often, the conduct described has occurred, and the frustrations accumulated over many months or years. There is usually a straw that has "broken the camel's back" and caused the individual to pursue legal advice or court proceedings. Just as in some marital divorce proceedings where spouses may allege bad conduct by the other in disputes over custody of children, some business owners will allege bad conduct by the other in disputes over who keeps the business or what has value associated with the business.
Oppression remedies such as a forced buy-out, seeking a windup of a company, or other court-requested relief is frequently the last resort for many people who have not been able to resolve the issues with the other owners. While a disgruntled business owner will frequently be prepared to discuss the conduct of others in looking for a solution to the business dispute, it is also important that each of the parties reflect on their own conduct. In any request for relief, the court will look at the conduct of all the parties in the circumstances. There may be a desire by one business owner to shine a light on the behaviour of the other owner, but it is important to recognize and consider the circumstances, including the disgruntled individual's own conduct and the operation of the business.
In requests for oppression remedies, the courts look for a fair and just outcome. The courts also have broad discretion to examine the business realities of the situation, and not merely narrow legalities when looking at what the reasonable expectations of the parties were and whether those expectations were frustrated by conduct that was oppressive or unfairly prejudiced/disregarded an interest. The courts will scrutinize all of the circumstances, such as the setup of the business, the conduct of the business, and the behaviour of all owners that is brought to the Court's attention in evidence, not just the story told by the individual who started the legal proceedings. It can be difficult to be objective about one's own conduct, and whether there are risks in opening up the business operations to scrutiny. Being frank and fulsome, and having insight into what allegations can be made by the other side, are important steps in assessing the case and risks of litigation. The light will not just be shone on the disgruntled owner's ire, but potentially into all corners of the business. Being prepared is much better than being surprised. The preparation is not just the "laundry list" of the conduct complained about, but also what else the light might unveil during the litigation – everyone's own conduct and business operations within the framework of that business' industry.
