Executive Summary: Key Legal and Evidentiary Issues

• Arbitration rights under two shareholder agreements were held extinguished by the majority shareholder's exercise of a separate Option Agreement.

• The court declared the arbitration provisions in the USAs invalid or inapplicable pursuant to section 47(2) of the Arbitration Act.

• Oppression claims raised by Mr. Eger could not override the contractual valuation mechanism established in the Option Agreement.

• Validity of the Option Agreement was upheld despite arguments regarding lack of exclusivity, irrevocability, and time limits.

• Procedural disputes over Data Room access and content were found arbitrable under the Option Agreement.

• The Applicants were awarded Schedule C Column 2 costs as they were substantially successful in striking out two of three Notices to Arbitrate.

Background and the dispute

This litigation involved a dispute between ONE Properties Holdings Corp, ONE Properties Senior Management Corp (OPSMC), Durs (2013) Holdings Corp, and Darren Durstling (the Applicants) and Turtle Bay Investments Ltd and Thomas Eger (the Respondents). Mr. Eger, a long-time OPSMC employee who retired on December 31, 2019, held shares in OPSMC indirectly through his holding company, Turtle Bay.

The shareholding structure was as follows: Durs Corp held 30.3% of OPSMC, Turtle Bay held 24.24%, and two other holding companies held 30.3% and 15.15%, respectively. OPSMC owned 33% of ONE Properties Holdings Corp (Holdings), while Durs Corp held the remaining 67%. OPSMC’s only asset was its shareholding in Holdings.

Upon his retirement, Mr. Eger believed the retirement provision in the amended OPSMC Unanimous Shareholders Agreement (USA) triggered Durs Corp’s option to purchase Turtle Bay’s shares. That option expired 90 days after retirement, on or around March 30, 2020, without being exercised.

Later, on May 21, 2021, Durs Corp exercised its option under a separate Option Agreement dated October 31, 2014. This agreement granted Durs Corp a continuing option to acquire all of Mr. Eger’s shares in Turtle Bay at fair market value (FMV), using a dual-CBV mechanism: each party would appoint a certified business valuator, and the purchase price would be the mean of the two valuations.

The Applicants retained Deloitte LLP (Mr. Webster), who produced a report on February 24, 2022 concluding the Turtle Bay shares had “nil or nominal” value. Grant Thornton LLP (Mr. Lacasse), retained by Mr. Eger, provided only a high-level opinion on February 4, 2022 indicating the ONE Properties enterprise was in a "$74 million hole," but did not produce a full report. Mr. Eger claimed insufficient access to the Data Room and incomplete disclosure prevented completion of Grant Thornton’s valuation.

Three Notices to Arbitrate were issued by Mr. Eger on May 17, 2022, invoking arbitration clauses in the OPSMC USA, Holdings USA, and the Option Agreement. He alleged various forms of oppression and misconduct, including failure to appoint him as a director of Holdings, inadequate financial disclosure, failure to pay shareholder distributions, and the withholding of key documents.

Policy terms and valuation mechanism

The Option Agreement included an arbitration clause and laid out the FMV determination method: both parties would engage CBVs to value the shares “having regard to past and present financial performance and future financial prospects determined as of the date that the option is exercised,” with the final value being the mean of the two valuations.

The USAs also contained arbitration provisions and mechanisms for triggering share buyouts in certain events, including retirement. The 2016 Amending Agreement to the OPSMC USA added retirement from competitive industry work as a triggering event.

Court's analysis and findings

Justice Mah held that the arbitration clauses in the OPSMC and Holdings USAs had ceased to apply once the Option Agreement was exercised. He found that Mr. Eger had acknowledged being bound by the Option Agreement, and had acted upon it by appointing a CBV.

Applying UK case law on abuse of process, the Court reasoned that where a buyout at FMV had been offered and the parties had agreed to a valuation mechanism, it was generally improper to pursue an oppression claim arising from those same circumstances. The Court concluded that any disputes over alleged misfeasance or misconduct affecting share value should be addressed by the valuator, not through arbitration under the USAs.

Justice Mah ruled that the Option Agreement was valid. It met legal requirements for enforceability: it was exclusive to Durs Corp (and any assignee), irrevocable (no provision for revocation by Mr. Eger), and valid indefinitely as a “continuing option.” The fact that it could be amended by mutual agreement did not render it revocable.

The Court found that although Mr. Eger’s arbitration claims under the USAs were extinguished, the arbitration clause in the Option Agreement remained valid for two specific issues: (1) access to the Data Room and (2) its content. These matters required fact-finding and were not purely legal questions, making them suitable for arbitration.

Arguments that the Amending Agreement restored primacy to the USA option were rejected. Justice Mah noted that the option in the OPSMC USA expired 90 days after Mr. Eger’s retirement, and Mr. Durstling had indicated in advance (in a November 15, 2019 email) that he would not exercise it. The Court found that the exercise of the continuing Option Agreement in May 2021 was valid and binding.

The Court further declined to impose a deadline on Grant Thornton for completing its valuation, suggesting that such timing issues be addressed in arbitration if necessary. The Deloitte Report was acknowledged as undisputed hearsay and was not considered for its probative conclusions. The Applicants’ request to remove Mr. Durstling personally as a party was denied due to lack of procedural notice.

Outcome and costs ruling

In a separate Costs Endorsement (2025 ABKB 411), Justice Mah found the Applicants were substantially successful. They achieved full success in having the USAs' arbitration clauses declared inapplicable and avoided complex and costly arbitrations on Mr. Eger’s claims. Although arbitration under the Option Agreement would proceed on two procedural issues, these were deemed minor.

Costs were awarded to the Applicants on Schedule C, Column 2, including disbursements. The Court found this to be fair and reasonable, noting the complexity, history, and significance of the matter to both sides. The exact monetary total is not specified in the decision.