Case information

Judgments and orders — Summary judgment — Partial summary judgment — Sufficiency of reasons — Whether partial summary judgment must demonstrate procedural efficiencies — Whether palpable and overriding error standard permits appellate court to defer to lower court when no reasons provided on key issues.<br><br>Commercial law — Corporations — Cooperatives — Oppression —Member of fuel and grocery cooperative ceased purchasing groceries from cooperative — Fuel and grocery cooperative implemented loyalty program that offered few benefits to member — Chambers judge held imposition of loyalty program oppressive on partial summary judgment — Whether co-operatives’ factual and legal environment relevant in test for oppression — Whether reasonable expectations analysis and business judgment rule remain part of oppression test.<br>

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

Federated Co-operatives Limited (“FCL”), is a body corporate continued under and governed by the Canada Cooperatives Act, S.C. 1998, c. 1. It carries on business in western Canada as a general wholesaler and fuel producer for the supply of groceries, liquor, home and business products, crop inputs and fuel to about 170 cooperative association members for retail sale. Calgary Co-operative Association, a body corporate incorporated under the Cooperatives Act, S.A. 2001, c. C-28.1, carries on business as a retailer of food, pharmaceuticals, fuel and other products in the Calgary area. It has been a cooperative association member of FCL since the 1950s and is its largest member.

Historically, FCL distributed almost 65 per cent of its surplus income to its membership through equity and cash patronage returns in accordance with s. 155 of the Canada Cooperatives Act and Part 13 of FCL’s bylaws as “patronage returns”. Patronage returns are discretionary, variable from year to year, and are not set until the end of FCL’s fiscal year, which has been the source of cash flow issues for its members. FCL has also instituted targeted programs for particular members to address specific circumstances.

For various reasons, Calgary Co-op gave formal notice on August 6, 2019, that it was discontinuing its grocery purchases from FCL effective August 13, 2020. Inter alia, the notice specified that it was not withdrawing from membership with FCL, and that it would continue to honor its fuel supply contracts. After receiving this notice, FCL, inter alia, announced a new Loyalty Program on November 16-17, 2019, at a meeting to which Calgary Co-op was not invited. The Loyalty Program was retroactive to November 1, 2019, and applied to FCL’s 2019-20 fiscal year. Under it, members who purchased from 90 per cent of their total products for resale from FCL would receive quarterly cash payments based on the number of litres of fuel they had purchased that quarter. Calgary Co-op was informed of the Loyalty Program on November 21, 2019, by FCL representatives who had travelled to Calgary to deliver a Loyalty Payment Agreement already signed by FCL. It chose not to participate because, as FCL was aware, it could not meet the 90 per cent total purchase requirement without reversing its decision to stop purchasing groceries from FCL and abandoning its new commitments. It was the only member not to participate.

Having initially requested summary judgment of its entire oppression claim, Calgary Co-op limited its request to partial summary judgment with respect to the implementation of the Loyalty Program and the amendment of the equity investment return bylaw.