Estate Litigation

Fair Warning! Recent Judicial Treatment of No-Contest Clauses in Wills

One of the more controversial clauses that a testator can place in his or her will is a “no-contest” clause, the purpose of which is to deter any would-be challengers to the will and discourage fighting amongst beneficiaries. This objective is accomplished by wording to the effect that a beneficiary will be automatically disentitled to any distribution or gift contained in the will if he or she challenges the will or commences litigation in respect of the will. These clauses have often been challenged as being “in terrorem” – a category of unenforceable forfeiture clauses that includes restraints on marriage…


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Estate Litigation

Addressing the Problem Child: The Efficacy of Placing Limits on Testamentary Bequests

A recent case decided by the Court of Queen’s Bench of Alberta dealt with a rare, yet not unheard of, set of circumstances where a beneficiary survives the testator but passes away before a grant of probate is obtained. What made this case especially unique, however, is that the beneficiary in question (one of the testator’s four children) was designated to receive only a monthly income from an annuity that the trustee was directed to purchase with the beneficiary’s share of the estate. A dispute resulted about what, if anything, the deceased beneficiary’s estate was entitled to from her late…


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Litigation

Purchasers Issued Expensive Reminder to Respect Closing Obligations

On January 12, 2021 the Alberta Court of Appeal issued its decision in H&C S Holdings PTE Ltd v Pengrowth Energy Corporation, 2020 ABCA 473, upholding the 2019 decision of Justice R.A. Neufeld of the Alberta Court of Queen’s Bench. This decision issues a stark reminder to purchasers of the consequences that can flow from failing to adhere to their contractual closing obligations. The purchaser was a start-up energy company formed by veteran oil executives. It entered into a contract to purchase certain oil and gas assets from the vendors for $180,000,000 and provided an $18,000,000 deposit under the purchase...

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Litigation

Dissolution Not a Shield to Oppression Claims

Our article focuses on the recent Alberta Court of Appeal decision of 698829 Alberta Ltd. v Elite Homes (1998) Ltd. et al., 2020 ABCA 154 ("Friesen"). This case serves as a reminder of the liabilities of a dissolved corporation and that dissolution does not protect a directing mind from claims of oppression. This decision is of interest considering the current economic conditions due to the COVID-19 pandemic and the increased number of struggling businesses. Background 698829 Alberta Ltd. ("698") and Elite Homes (1998) Ltd. ("Elite") entered into a joint venture agreement ("JVA") wherein 698 contributed $692,626 to assist in the...

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Litigation

An Important Update on Employee Bonuses

Supreme Court ruling entitles employees to bonuses after termination if within reasonable notice period Our focus in this article is the recent decision of the Supreme Court of Canada in Matthews v Ocean Nutrition Canada Ltd., 2020 SCC 6 (“Matthews”).  Being touted a landmark ruling in employment law, Matthews should be of interest to Canadians who receive any kind of bonus or commission.  We carry on below to address the interplay between Matthews and the important Alberta Court of Appeal decision in Styles v Alberta Investment Management Corporation, 2017 ABCA 1 (“Styles”), which clarified the law with respect to how...

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Litigation

Invoice Interest: The Alberta Court of Appeal provides a warning to suppliers

Suppliers who incorporate interest provisions into their invoices should take heed of the Alberta Court of Appeal’s decision in H2S Solutions Ltd. v Tourmaline Oil Corp., 2019 ABCA 373. In H2S, the appellants had provided certain services to the respondents, and occasionally issued invoices. On the bottom of each invoice, the appellants included the following language: TERMS: 2% PER MONTH (24% PER ANNUM) CHARGED ON ALL OVERDUE ACCOUNTS The respondent argued that despite the wording on the invoices, there was no express or implied agreement between the parties to pay the invoice interest. The Court agreed with the respondent, noting...

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Litigation

Creditors and the Oppression Remedy

We have written a series of articles about the oppression remedy and its application to the shareholders of a corporation. See “Business Judgment and the Fair Treatment of Shareholders” (July 2016), “A Brief Overview of the Oppression Remedy” (April 2017), “Director Liability in Oppression Actions” (August 2017), “Liquidation and Dissolution of a Corporation as a Remedy for an Aggrieved Shareholder” (February 2018). This article discusses the application of the oppression remedy to the creditors of a corporation. Introduction Historically, the oppression remedy was limited to shareholders. However, both the federal Canada Business Corporations Act and the provincial Business Corporations Acts...

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Litigation

A Primer on Regulatory Offences

Criminal law is premised on the notion that “an act does not make a person guilty unless the mind is also guilty”. The two components that make up a true Criminal Code offence, therefore, are the actus reus (the guilty act) and the mens rea (the guilty mind). However, a “regulatory offence” is quasi-criminal in nature. Many provincial statutes contain regulatory offences, of which there are two types: absolute liability offences and strict liability offences. The standard for proving culpability of an accused person is lowered through the partial or total removal of the mens rea requirement. To be found...

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Litigation

Letter of Credit Security and the “Autonomy Principle”

In commerce, parties often provide security in the form of letters of credit. A party (the “promisor”) may provide security for performance of its obligations under a commercial transaction (“underlying contract”) with the other party (the “promisee”) by procuring a letter of credit (“LOC”) from a bank.  The LOC would stipulate that a certain amount of money is to be released by the bank to the promisee/beneficiary if the promisor defaults in the underlying contract.  There would therefore be two different relationships at play: 1) that between the promisor and promisee in the underlying contract and 2) that between the...

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Litigation

Forcing an Opposing Party to Take Urgent Action before Trial

There are essentially two types of interlocutory (pre-trial) injunctions: 1) a prohibitive injunction and 2) a mandatory injunction. The former is an order for a party to refrain from doing a certain act.  For example, a corporation may seek a prohibitive injunction against a departed executive who is improperly taking corporate opportunities that rightfully belong to the corporation. The corporation would need to establish that there is a serious issue to be tried, that irreparable (non-monetarily-compensable) harm would be suffered absent issuance of the injunction and that the harm of granting the injunction would be less than the harm in...

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