Executive Summary: Key Legal and Evidentiary Issues

• Whether the conduct of the respondent brother and related companies constituted oppression under section 227 of the Business Corporations Act.

• Dispute over valuation methodology and fair market value of closely held shares in a family business.

• Consideration of whether termination from employment formed part of the oppressive conduct or was a separate employment issue.

• Evaluation of whether the appellant was entitled to compensation beyond share value, including unpaid wages and compound interest.

• Determination of whether a deduction for negative goodwill was appropriate in calculating share value.

• Appellate court review of trial judge’s discretion in selecting the midpoint of a valuation range and declining additional remedies.

Facts and outcome of the case

Frank Gierc Jr. and his company, 628578 B.C. Ltd., brought an oppression claim against his brother, Thomas Gierc, and two related companies: Wescon Cedar Products Ltd. and Wescon Holdings Ltd. The dispute arose out of a long-standing family business relationship that deteriorated over time. Frank and Thomas co-founded Wescon Cedar Products in 1985 with financial assistance from their parents. Both were shareholders, directors, and employees. However, by 2015, relations soured, and Thomas terminated Frank’s employment, excluded him from the business premises, and cut off his access to company information.

Following these events, Frank filed an oppression petition in February 2016 under section 227 of the Business Corporations Act (BCA), alleging that Thomas’s conduct was oppressive, unfairly prejudicial, and contrary to his reasonable expectations as a shareholder. The parties briefly entered into a settlement agreement in July 2016 involving redemption of shares and a non-competition agreement, but disputes over payments and performance of that agreement led to further litigation.

In a judgment rendered in January 2021 (the Oppression Judgment), the trial judge found that Thomas’s actions, including exclusion from business affairs and delay in payment, amounted to oppressive conduct. The court accepted Frank’s reasonable expectations that he would continue to participate in the business and be treated fairly as a 50% stakeholder.

Subsequently, in a Remedy Judgment in February 2023, the trial judge ordered that the appropriate remedy was for the respondents to purchase Frank’s shares at fair market value. Based on an independent valuation report, the total value of the companies was assessed at $4,646,500. Frank was entitled to half, i.e., $2,323,250, less prior payments. The judge awarded simple pre-judgment interest under the Court Order Interest Act from the valuation date of January 31, 2016, but denied compensation for additional wages and declined to use the high end of the valuation range or compound interest.

Frank appealed, arguing that the trial judge erred in refusing additional compensation, misapplying the valuation, and undervaluing his interest. The British Columbia Court of Appeal dismissed the appeal. It upheld the trial judge’s conclusions that the share purchase was the appropriate remedy, the claim for additional wages was brought qua employee (not qua shareholder), and the judge had not erred in selecting the midpoint of the valuation range. The appellate court also found no basis to interfere with the decision to award simple, rather than compound, interest or to challenge the deduction for negative goodwill.

Ultimately, the respondents prevailed. The court affirmed that Frank’s entitlement was limited to the value of his shares with applicable simple interest, and no further monetary or equitable relief was warranted.