38 www.lexpert.ca
Top 10 Business Decisions
CO-WRITTEN BY AIDAN MACNAB, BERNISE CAROLINO
THIS IS a precedent-setting ruling on
common law derivative actions, which
are lawsuits brought over failed manage-
ment decisions by corporate sharehold-
ers against corporate directors or other
shareholders. The Hong Kong-based
Treasure Bay brought common law deriv-
ative actions against three BC companies
and one BC resident alleging fraud on the
minority. This is an improper exercise of
voting power by a majority of sharehold-
ers that is detrimental to the company.
"It's the first case in Canada to clearly
establish that no leave is required to bring
a common law derivative action in the
courts," says Young at McMillan LLP.
The BC companies applied to strike
Hong Kong courts lacked jurisdiction
over the parties in this dispute, and the
parties had a contract that said they were
governed by BC law, which is why it end-
ed up in the BC courts, says Young. She
says the case will give the green light to
foreign corporations to bring common
law claims in Canada without pre-ap-
proval from the court if they come from a
jurisdiction that has no leave requirement
and there is sufficient connection to the
Canadian jurisdiction.
• 1115830 B.C. Ltd., 1104227 B.C. Ltd., Kenny
Zou, Harlow Holdings Ltd. > McCarthy
Tétrault LLP > Michael Feder, Patrick
Williams
• Treasure Bay HK Limited > McMillan LLP
> Robert Wisner, Daniel Shouldice
CLIENTS > FIRMS > LAWYERS
the action, arguing Treasure Bay lacked
leave to pursue a derivative action on the
company's behalf. A BC Supreme Court
judge dismissed the application to strike,
finding it was not plain and obvious that
the province's common law imposed a
leave requirement. The Court of Appeal
agreed, finding it was up to the legislature
to impose such a requirement as it has
done for statutory derivative actions. The
SCC dismissed leave to appeal.
Common law derivative claims are an
"unusual beast," says Young. She says that
statutes across Canada have mostly replaced
the claims, but they can still be relevant to
foreign-incorporated companies and can
arise in the context of partnerships.
1115830 B.C. LTD. V. TREASURE BAY HK LIMITED,
2022 BCCA 380
