Executive Summary: Key Legal and Evidentiary Issues

• Jurisdiction to compel arbitration without a signed agreement or clear consent was the central dispute before the Court.
   
• Absence of any arbitration clause in the parties' unanimous shareholder agreement (USA) required the Court to examine whether such a term could be implied.
   
• Whether the parties' course of dealings, including an unsigned draft arbitration agreement, amounted to a binding agreement to arbitrate was closely examined.
   
• Consent from both sides was found lacking on the specific question of whether the Court could determine the scope of arbitration.
   
• Mandatory redemption of a departing shareholder's shares emerged as the one issue on which the parties could not agree to arbitrate.
   
• Statutory oppression remedies under the Business Corporations Act remained available to the defendant despite the arbitration ruling.

Facts of the case

This dispute arose from a shareholder disagreement involving 1775773 Alberta Ltd. ("177"), 2377799 Alberta Ltd. ("237"), and Jason Hill. Jason worked for Formations Inc., a wholesale distributor of non-structural wood products, until his employment ended in April 2025, with the circumstances of that departure disputed. Jason held a minority interest in 177, a holding company that owned the majority interest in Formations, while 237 held the majority interest in 177. Michael Tyler Hill ("Tyler") served as a director of Formations, sole director of 177, and sole director and shareholder of 237. Jason, Tyler, and 177 had entered into a unanimous shareholder agreement (USA) dated March 1, 2017, which required a shareholder who ceased employment with Formations to offer their shares for sale, first to remaining shareholders and then, if unaccepted, to a third party. Jason was also indebted to 177 under a loan tied to his original share purchase. After Tyler obtained a valuation report dated April 30, 2025 and 237 made a purchase offer on June 17, 2025, Jason rejected it over concerns about the minority discount applied. No agreement on the value or disposition of his shares followed. 177 and 237 issued a Statement of Claim on September 8, 2025, and Jason responded with a Statement of Defence, a Counterclaim alleging oppression, and a Notice of Application for Relief from Oppression. By the time of the June 19, 2026 hearing, the parties agreed that valuation, the amount Jason owed to 177, arbitration costs, the minority discount, and Jason's oppression claim should go to arbitration. The sole remaining issue was whether mandatory redemption of Jason's shares by 177 should also be included in that arbitration.

Policy and legislative provisions at issue

The USA governed the core relationship between the parties. Article 5.1 required a shareholder no longer employed by Formations to offer their shares for sale under Article 6.1. Article 6.1 gave remaining shareholders first right of refusal, with any subsequent third-party sale requiring the buyer to accept the USA's terms, including continued employment with Formations. Article 6.2 set the purchase price based on the departing shareholder's proportionate interest, less amounts owed to 177, but the USA did not define "value" or include any mechanism compelling redemption or purchase. The Arbitration Act was also central: section 1(1)(a) defines an arbitration agreement as one where parties agree to submit a dispute to arbitration, section 5 confirms such agreements need not be in writing, and section 6 limits the Court's power to matters where an arbitration agreement or statutory arbitration already exists. The Business Corporations Act was raised as an alternative remedy, with section 242(3)(g) empowering the Court to order purchase or redemption of shares as an oppression remedy under a section 242(1) application.

Reasoning and analysis

Justice Mah identified three possible routes by which the Court could direct the mandatory redemption question to arbitration: an arbitration agreement arising from the parties' course of dealings, an arbitration clause necessarily implied into the USA, or consent by both parties allowing the Court itself to settle the scope of arbitration. On the first point, the Court found that although a draft arbitration agreement had been provided to Jason, it was never signed, and Jason's affidavit confirmed his agreement to arbitrate was conditional on including the redemption issue. Citing Professor Tamar Meshel's text on arbitration law and GreCon Dimter Inc v JR Normand Inc, the Court held that without a genuine meeting of the minds on the scope of submission, no arbitration agreement existed. On the second point, the Court applied AG Clark Holdings Ltd v HOOPP Realty Inc, which held it is an error of law to imply terms not present in an agreement, and found the USA's silence on dispute resolution did not support implying a mandatory arbitration clause, particularly since the Business Corporations Act already provided a default court remedy for oppression. On the third point, the Court relied on SSG v SKG and Stuve v Stuve to confirm that, absent an existing arbitration agreement, the Court's role under section 6 of the Arbitration Act is limited to assisting an existing process, not creating one. Because 177 and 237 explicitly did not consent to the Court deciding the scope of arbitration, and Jason's consent alone was insufficient, the Court concluded it lacked jurisdiction to resolve the matter.

Ruling and overall outcome

Justice Mah dismissed Jason's application to direct 177 to arbitrate the question of mandatory redemption of his shares, finding no jurisdiction to do so without the consent of both sides. The Court also declined to refer any of the otherwise agreed-upon issues to arbitration, since Jason's consent had been conditional rather than final and no arbitration clause could be implied into the USA. The successful parties on this application were 177 and 2377799 Alberta Ltd., who successfully opposed both the referral of the redemption issue and the broader request for court-ordered arbitration terms. No monetary damages or costs award was made in this decision; the Court noted that if costs are sought and not agreed upon, the parties may make written submissions within 30 days, supported by a draft Bill of Costs. Jason remains free to pursue the mandatory redemption question through his separate application for Relief from Oppression before a different judge.