The Saskatchewan Court of Appeal’s recent decision in McDougall CPC Networks Corp. v McDougall, 2021 SKCA 127 considered two issues of particular concern to minority shareholders and corporate counsel. In the case at bar, two minority shareholders of CPC who had subsequently assumed control of the corporation sought an order for production of the corporation’s files from former corporate counsel, McDougall Gauley LLP (McDougall), and leave to bring a derivative action against McDougall for breach of fiduciary duties owed to CPC. McDougall succeeded on both applications at first instance but lost to the minority shareholders on appeal. The SKCA held that the Chambers judge had been wrong to hold that former counsel could claim privilege over a client’s files in order to refuse their production. And further held that the Chambers judge was wrong to hold that the limitation period applicable to a derivative action could begin to run even while those connected with the alleged wrongdoing remained in control of the corporation, and thus in control of the claim.
By Xiyuan Feng – Supervised by Professor Maharaj
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