Canada Cooperatives Act (S.C. 1998, c. 1)

Marginal note:Solicitor-client privilege or professional secrecy

336 Nothing in this Part may be construed as affecting solicitor-client privilege or, in Quebec, the professional secrecy of advocates and notaries.

Marginal note:Inquiries

337 The Director may make inquiries of any person relating to compliance with this Act.

PART 18.1Apportioning Award of Damages

Interpretation and Application

Marginal note:Definitions

337.1 The definitions in this section apply in this Part.

financial interest

financial interest, with respect to a cooperative, includes

• (a) a security;

• (b) a title to or an interest in capital, assets, property, profits, earnings or royalties;

• (c) an option or other interest in, or a subscription to, a security;

• (d) an agreement under which the interest of the purchaser is valued for purposes of conversion or surrender by reference to the value of a proportionate interest in a specified portfolio of assets;

• (e) an agreement providing that money received will be repaid or treated as a subscription for shares, units or interests at the option of any person or the cooperative;

• (f) a profit-sharing agreement or certificate;

• (g) a lease, claim or royalty in oil, natural gas or mining, or an interest in the lease, claim or royalty;

• (h) an income or annuity contract that is not issued by an insurance company governed by an Act of Parliament or a law of a province;

• (i) an investment contract; and

• (j) anything that is prescribed to be a financial interest. (intérêt financier)

financial loss

financial loss means a financial loss arising out of an error, omission or misstatement in financial information concerning a cooperative that is required under this Act or the regulations. (perte financière)

third party

third party includes any subsequent party that is joined in proceedings before a court. (Version anglaise seulement)

Marginal note:Application of Part

• 337.2 (1) This Part applies to the apportionment of damages awarded to a plaintiff for financial loss after a court has found more than one defendant or third party responsible for the financial loss.

• Marginal note:Non-application of Part

  (2) This Part does not apply to an award of damages to any of the following plaintiffs:

  • (a) Her Majesty in right of Canada or of a province;

  • (b) an agent of Her Majesty in right of Canada or of a province or a federal or provincial Crown corporation or government agency, unless a substantial part of its activities involves trading, including making investments in, securities or other financial instruments;

  • (c) a charitable organization, private foundation or public foundation within the meaning of subsection 149.1(1) of the Income Tax Act; or

  • (d) an unsecured creditor in respect of goods or services that the creditor provided to a cooperative.

Apportionment of Damages

Marginal note:Degree of responsibility

• 337.3 (1) Subject to this section and sections 337.4 to 337.6, every defendant or third party who has been found responsible for a financial loss is liable to the plaintiff only for the portion of the damages that corresponds to their degree of responsibility for the loss.

• Marginal note:Uncollectable amounts

  (2) If any part of the damages awarded against a responsible defendant or third party is uncollectable, the court may, on the application of the plaintiff, reallocate that amount to the other responsible defendants or third parties, if the application is made within one year after the date that the judgment was made enforceable.

• Marginal note:Reallocation

  (3) The amount that may be reallocated to each of the other responsible defendants or third parties under subsection (2) is calculated by multiplying the uncollectable amount by the percentage that corresponds to the degree of responsibility of that defendant or third party for the total financial loss.

• Marginal note:Maximum amount

  (4) The maximum amount determined under subsection (3), in respect of any responsible defendant or third party, may not be more than fifty per cent of the amount originally awarded against that responsible defendant or third party.

Marginal note:Exception — fraud

• 337.4 (1) The plaintiff may recover the whole amount of the damages awarded by the court from any defendant or third party who has been held responsible for a financial loss if it was established that the defendant or third party acted fraudulently or dishonestly.

• Marginal note:Contribution

  (2) The defendant or third party referred to in subsection (1) is entitled to claim contribution from any other defendant or third party who is held responsible for the loss.

Joint and Several, or Solidary, Liability

Marginal note:Individual or personal body corporate

• 337.5 (1) Defendants and third parties referred to in subsection 337.2(1) are jointly and severally, or solidarily, liable for the damages awarded to a plaintiff who is an individual or a personal body corporate and who

  • (a) had a financial interest in a cooperative on the day that an error, omission or misstatement in financial information concerning the cooperative occurred, or acquired a financial interest in the period between the day that the error, omission or misstatement occurred and the day, as determined by the court, that it was generally disclosed; and

  • (b) has established that the value of the plaintiff’s total financial interest in the cooperative was not more than the prescribed amount at the close of business on the day that the error, omission or misstatement occurred or at the close of business on any day that the plaintiff acquired a financial interest in the period referred to in paragraph (a).

• Marginal note:Exception

  (1.1) Subsection (1) does not apply when the plaintiff brings the action as a member of a partnership or other association or as a trustee in bankruptcy, liquidator, receiver or sequestrator of a body corporate.

• Marginal note:Interpretation

  (2) For the purposes of this section,

  • (a) a personal body corporate is a body corporate that is not actively engaged in any financial, commercial or industrial business and that is controlled by an individual, or by a group of individuals who are connected by marriage, common-law partnership or any legal parent-child relationship or are connected indirectly by a combination of those relationships, whether or not the individuals through whom they are connected are members of the group; and

  • (b) a common-law partnership is a relationship between two persons who are cohabiting with each other in a conjugal relationship and have done so for a period of at least one year.

Marginal note:Equitable grounds

• 337.6 (1) If the value of the plaintiff’s total financial interest referred to in subsection 337.5(1) is greater than the prescribed amount, a court may nevertheless determine that the defendants and third parties are jointly and severally, or solidarily, liable if the court considers that it is just and reasonable to do so.

• Marginal note:Factors

  (2) The Governor in Council may establish factors that the court shall take into account in deciding whether to hold the defendants and third parties jointly and severally, or solidarily, liable.

• Marginal note:Statutory Instruments Act

  (3) The Statutory Instruments Act does not apply to the factors referred to in subsection (2), but the factors shall be published in Part I of the Canada Gazette.

Marginal note:Value of security

• 337.7 (1) When, in order to establish the value of the total financial interest referred to in subsection 337.5(1), it is necessary to determine the value of a security that is traded on an organized market, the value of the security is, on the day specified in subsection (3),

  • (a) the closing price of that class of security;

  • (b) if no closing price is given, the average of the highest and lowest prices of that class of security; or

  • (c) if the security was not traded, the average of the bid and ask prices of that class of security.

• Marginal note:Court may adjust value

  (2) The court may adjust the value of a security that has been determined under subsection (1) when the court considers it reasonable to do so.

• Marginal note:Valuation day

  (3) The value of the security is to be determined as of the day that the error, omission or misstatement occurred. If the security was acquired in the period between that day and the day, as determined by the court, that the error, omission or misstatement was generally disclosed, the value is to be determined as of the day that it was acquired.

• Marginal note:Definition of organized market

  (4) In this section, organized market means a recognized exchange for a class of securities or a market that regularly publishes the price of that class of securities in a publication that is generally available to the public.

Marginal note:Court determines value

• 337.8 (1) The court shall determine the value of all or any part of a financial interest that is subject to resale restrictions or for which there is no organized market.

• Marginal note:Factors

  (2) The Governor in Council may establish factors that the court may take into account in determining value under subsection (1).

• Marginal note:Statutory Instruments Act

  (3) The Statutory Instruments Act does not apply to the factors referred to in subsection (2), but the factors shall be published in Part I of the Canada Gazette.

Marginal note:Application to determine value

337.9 The plaintiff may, by application made at any time before or during the course of the proceedings, request the court to determine the value of the plaintiff’s financial interest for the purpose of subsection 337.5(1).

PART 19Remedies, Offences and Punishment

Marginal note:Definitions

338 The definitions in this section apply in this Part.

action

action means an action taken under this Act. (action)

complainant

complainant means

• (a) a member or former member;

• (b) a registered holder or beneficial owner, or a former registered holder or beneficial owner, of a security of a cooperative or any of its affiliates;

• (c) a director or an officer, or a former director or officer, of a cooperative or any of its affiliates; or

• (d) [Repealed, 2001, c. 14, s. 219]

• (e) any other person who, in the opinion of the court, is a proper person to make an application under this Part. (plaignant)

Marginal note:Commencement of derivative action

• 339 (1) Subject to subsection (2), a complainant may apply to the court for leave to bring an action in the name and on behalf of a cooperative or any of its subsidiaries, or to intervene in an action to which the cooperative or any of its subsidiaries is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of the cooperative or subsidiary.

• Marginal note:Condition precedent

  (2) No person may bring an action and no person may intervene in an action brought under subsection (1) unless the court is satisfied that

  • (a) if the directors of the cooperative or its subsidiary do not bring, diligently prosecute, defend or discontinue the action, the complainant has given notice to the directors of the cooperative or its subsidiary of the complainant’s intention to apply to the court under subsection (1) not less than fourteen days before bringing the application, or as otherwise ordered by the court;

  • (b) the complainant is acting in good faith; and

  • (c) it appears to be in the interests of the cooperative or its subsidiary to bring, prosecute, defend or discontinue the action.

• Marginal note:Powers of court

  (3) In an action brought or intervened in under this section, the court may make any order it considers appropriate, including an order

  • (a) authorizing the complainant or any other person to control the conduct of the action;

  • (b) giving directions for the conduct of the action;

  • (c) directing that an amount adjudged payable by a defendant in the action be paid, in whole or in part, directly to a former or present member or to a former or present security holder of the cooperative or its subsidiary instead of to the cooperative or its subsidiary; or

  • (d) requiring the cooperative or its subsidiary to pay reasonable costs incurred by the complainant in connection with the action.

Marginal note:Application to court re oppression

• 340 (1) A complainant may apply to the court for an order, including an alternate order, under this section.

• Marginal note:Grounds

  (2) If the court receives an application under subsection (1) and is satisfied that an act or omission of a cooperative effects a result, that the business or affairs of the cooperative are or have been carried on or conducted in a manner, or that the powers of the director are or have been exercised in a manner, that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of a member or other security holder, creditor, director or officer of the cooperative, the court may order the rectification of the matters complained of.

• Marginal note:Types of order

  (3) For the purpose of subsection (2), the court may make any order that it considers appropriate, including an order

  • (a) restraining the conduct complained of;

  • (b) appointing a receiver or receiver-manager;

  • (c) requiring the cooperative to amend an agreement with members generally or with a member;

  • (d) regulating the affairs of the cooperative by amending its articles or by-laws or creating or amending a unanimous agreement;

  • (e) directing an issue or exchange of securities;

  • (f) directing changes in the directors;

  • (g) determining whether a person is or is qualified to be a member;

  • (h) determining any matter in regard to the relations between the cooperative and a member;

  • (i) subject to subsection (6), directing the cooperative or any other person to purchase securities of a security holder;

  • (j) subject to subsection (6), directing the cooperative or any other person to pay to a security holder any part of the money paid by the security holder for securities;

  • (k) subject to subsection (6), directing the cooperative to redeem membership shares, repay member loans or to pay to a member any other amount standing to the member’s credit in the records of the cooperative;

  • (l) varying or setting aside a transaction or contract to which the cooperative is a party and compensating the cooperative or any other party to the transaction or contract;

  • (m) directing the production and delivery within a specified time of financial statements of the cooperative;

  • (n) directing an accounting;

  • (o) compensating an aggrieved person;

  • (p) directing rectification of the registers or other records of the cooperative under section 342;

  • (q) liquidating and dissolving the cooperative;

  • (r) directing a special audit or an investigation under section 329; or

  • (s) requiring the trial of an issue.

• Marginal note:Duty of directors and members

  (4) If an order made under this section directs an amendment of the articles or by-laws of a cooperative,

  • (a) the directors, members and shareholders must comply with subsection 303(5); and

  • (b) no other amendment to the articles or by-laws may be made without the consent of the court, until the court orders otherwise.

• Marginal note:Exclusion

  (5) A member or shareholder is not entitled to dissent under section 302 if an amendment to the articles is effected under this section.

• Marginal note:Limitation

  (6) No cooperative may make a payment to a member or shareholder under an order of the court if there are reasonable grounds to believe that

  • (a) the cooperative is, or would after that payment be, unable to pay its liabilities as they become due; or

  • (b) the realizable value of the cooperative’s assets after the payment would be less than the total of

    • (i) its liabilities, and

    • (ii) the amount that would be required to pay the holders of securities who have a right to be paid, on a redemption or liquidation, rateably with or in priority to the holders of the securities to be purchased or redeemed.

• Marginal note:Alternate order

  (7) An applicant under this section may apply for an order under section 313 instead of the order under this section.