Executive Summary: Key Legal and Evidentiary Issues

• The 2017 Buy/Sell Notice was invalid due to joint issuance by multiple shareholders, contrary to Article 13.B of the USA which only permits a single shareholder to issue such notice.

• The valuator for the 2017 Buy/Sell Notice was selected unilaterally by the Exercising Shareholders without JBRO Holdings’ required approval, breaching Article 11.01 of the USA.

• Privileged settlement correspondence from Mr. Brown was improperly relied upon in selecting the valuator, contributing to a finding of oppression.

• Portions of the May 2024 Brown Affidavit were struck for containing inadmissible legal opinion, speculation, and privileged content.

• The conduct of the Exercising Shareholders in issuing and closing the Buy/Sell transaction was found to be oppressive under section 242(2)(b) of the ABCA.

• Damages were awarded for both breach of contract and oppression, with valuation and quantification deferred to the next stage of proceedings.

The dispute and corporate background

Jason Brown, a founding director and CFO of Dynasty Power Inc., along with entities associated with him—JBRO Holdings Inc., JBRO Investments Inc., JDFA Holdings Inc., and the Brown Family Trust—brought proceedings against Dynasty Power Inc. and other related corporate and individual defendants. The dispute centered on the breakdown of business relations within Dynasty Power, an electricity trading company incorporated in 2011. The shareholders, including Mr. Brown and the Defendants, entered into a Unanimous Shareholders Agreement dated July 1, 2013 (the USA).

Mr. Brown held 275,000 shares in Dynasty Power—10.38% of the share capital—which were eventually assigned to JBRO Holdings. He also served as director and CFO. His employment was terminated on September 28, 2016, for cause, citing failures in financial reporting and tax oversight. After termination, Mr. Brown resisted efforts to diminish his role and rights in the company and objected to signing a revised USA that would restrict his powers.

The Buy/Sell notice and dispute over its validity

On April 10, 2017, the Exercising Shareholders issued a Buy/Sell Notice to JBRO Holdings, proposing to purchase its shares for $1,919,500 and giving JBRO Holdings the reciprocal option to purchase their shares for $16,572,793. JBRO Holdings objected, arguing that the notice did not comply with the USA, particularly with the requirement for determining Fair Market Value under Article 11.01. The Defendants proceeded unilaterally and used a power of attorney under the USA to close the transaction, tendering $2,033,979.39 and an additional $98,000 in outstanding dividends. JBRO Holdings did not accept the proceeds and deposited the funds in trust.

The valuation dispute and use of privileged information

The Court found that the 2017 Buy/Sell Notice was invalid for two reasons. First, the notice was issued jointly by multiple shareholders, contrary to Article 13.B.01, which permits only a single shareholder to initiate such a process. Second, the valuator, Trevor Kawka of MNP LLP, was selected without JBRO Holdings’ approval, breaching Article 11.01 of the USA, which requires mutual acceptance of a valuator or, at minimum, an approval right not to be unreasonably withheld.

The Court rejected the Defendants’ argument that Mr. Brown’s prior mention of Mr. Kawka in an October 5, 2016 “without prejudice” settlement letter constituted consent. The Court found that this letter was protected by settlement privilege and that its use by the Exercising Shareholders—who were not parties to the letter—was improper. The letter proposed a comprehensive settlement and a jointly controlled valuation process, which was never accepted. Therefore, reliance on the letter to justify unilaterally selecting Mr. Kawka was unjustified.

Findings of oppression

Justice Simard concluded that the conduct of the Exercising Shareholders—issuing the joint Buy/Sell Notice, selecting the valuator unilaterally, and closing the transaction using a power of attorney—constituted oppression under section 242(2)(b) of the Business Corporations Act (Alberta). The impugned actions, while taken by shareholders rather than the corporation or its directors, still qualified as conduct in respect of the “business or affairs of the corporation.” The Court held that JBRO Holdings had reasonable expectations under the USA that were unfairly disregarded, particularly the expectation of fair procedure and the protection of confidential communications.

Procedural rulings and amendments

The Court permitted the Plaintiffs to amend their Amended Statement of Claim to include allegations of fiduciary duty and seek disgorgement of profits. The Court found that the amendments were not “hopeless” and could proceed to trial. Portions of the May 2024 Brown Affidavit were struck for including inadmissible content such as legal opinions, speculation, and privileged communications, including Exhibits “BB,” “DD,” and “GG.”

However, most of the affidavit remained on the record, as both sides had submitted similarly broad and imperfect affidavit material. The Court chose to weigh admissibility rather than strike large swaths of the evidence.

Outcome and remedy

The Court declared the 2017 Buy/Sell Notice invalid and ruled that the conduct surrounding it was oppressive. Nevertheless, it declined to reinstate share ownership or reverse the transaction, citing the lack of full evidentiary context—especially financial and tax implications—and the parties’ mutual agreement to pursue a “corporate divorce,” whereby the Defendants would buy out the Plaintiffs’ shares.

Instead, the Court awarded damages for both breach of contract and oppression. The amount and method of valuation will be determined in the next phase. The Court retained carriage of the case for procedural matters, including the setup of a process to determine the valuation dates and the calculation of damages.

The Plaintiffs were ordered to file their amended pleadings by August 1, 2025, and the Defendants are to respond by August 29, 2025. If no agreement is reached on procedural next steps, a half-day hearing may be scheduled before the Court in late 2025.

No monetary award was granted in the decision.