Brown, Gow, Wilson v Beleggings-Societeit NV,
| Court | Superior Court of Justice of Ontario (Canada) |
| Date | 29 June 1961 |
(McRuer C.J.)
War In general of outbreak of war On enemy subjects with regard to property Whether Netherlands war-time decrees recognized in Canada The law of Canada and the law of the Netherlands.
The Facts.This was a trial to determine the ownership of certain shares in a company incorporated in the Netherlands which were held in trust in Canada for German nationals and which had been declared to belong to the State of the Netherlands by war-time Decrees of that Government. The Beleggings-Societeit N.V., known as Belso, was incorporated in 1934 under the laws of the Netherlands, with its seat at the City of Amsterdam. In the same year, a declaration of trust was prepared whereby the Trustees, a Netherland subject and a British solicitor, held a number of shares for certain persons whose identity was disclosed in a separate memorandum. The laws of England were made to apply to the construction and administration of the trust. The beneficiaries were in fact a German national, Dr. Koppers, his wife and family. The shares constituted the bulk of the capital stock of Belso, which owned securities represented by investments all over the world. In 1939, it was decided at a meeting of shareholders to transfer the total affairs of Belso to a new company in Canada having the same objects. The Dutch Trustee emigrated to Canada, bringing with him the share certificates and the assets of Belso. A Canadian company was incorporated known as Ambrican Investments Ltd., and the total share capital of this company was issued to Belso in exchange for all its assets.
On 10 September 1939 Canada declared war on Germany, followed by the Netherlands on 10 May 1940. Subsequently, the Ambrican and Belso shares came under the control of the Canadian Custodian of Enemy Property. On 17 September 1944, the Netherlands Government-in-Exile proclaimed Decrees E. 100 and E. 133 providing for the restoration of civil rights and the passing of enemy property into the ownership of the State in order to compensate Netherlands subjects who had suffered at the hands of the enemy during the war. These Decrees had, according to Dutch law, the force of statutes and came into force throughout the Netherlands when the German army withdrew.
In 1956, the Canadian Custodian released the Belso shares from his control. An application was made by the Trustees under Decree E. 100 for recognition of ownership of the Belso shares, but the Securities Registration Division of the Council for the Restoration of Civil Rights, a juristic body created under the Decree, decided that the German nationals for the benefit of whom the trust had been set up did not qualify for recognition as owners of the securities, since the property in the securities had passed to the State of the Netherlands under Decree E. 133. The Trustees took the position that the decision was a nullity, with the result that both they and the Government of the Netherlands proceeded to assert the right of ownership over the Belso shares. By that time both these shares and the Ambrican shares were in safety deposit boxes in Toronto banks. After some litigation in the Netherlands, which confirmed the passing of the shares to the State, conflicting claims were put forward in Canada, and one of the banks applied to the Courts for an order determining whether the Trustees were the owners of the shares and the managers of Belso. The main questions to be decided were the following: (1) did the ownership of the Belso shares pass to the Government of the Netherlands under the provisions of the war-time Decrees, and (2) if the ownership did pass, were the Decrees of such a confiscatory nature that the ownership should not be recognized by Canadian Courts?
Held: that the Trustees were not shareholders of the capital stock of Belso, nor managers of the company, and that the stock of Ambrican Investments Ltd. must be delivered to the managers appointed under the Dutch war-time Decrees. The Netherlands, as the domicile of the company, was the proper jurisdiction to determine the ownership of the Belso shares, and their confiscation and transfer to the Netherlands Government must be recognized in Ontario.
The domicile of the company was the jurisdiction where the company was incorporated and where it had its seat. Although the Ontario Courts would not enforce revenue or penal laws of foreign jurisdictions, the Netherlands war-time Decrees were not of that nature but rather were similar to foreign exchange laws, which had always been recognized by Canadian Courts. The Decrees could not be refused recognition as being confiscatory in nature and hence contrary to domestic public policy inasmuch as Canada itself had precisely the same sort of legislation in force for the same purpose and, moreover, the Decrees in question accorded with international treaties and conventions to which both Canada and the Netherlands were signatories, such as the Bretton Woods Agreement, which were designed to make German property available as reparations for devastated countries, no matter how such property was cloaked or disguised.
The Court stated the facts and said (in part):
Per McRuer C.J.: In deciding different aspects of this case regard must be had to three different bodies of law: the law of Ontario must be applied to determine the situs of the Belso shares and what effect will be given in Ontario Courts to the Dutch Decrees and the proceedings taken thereunder; the construction of the Decrees, the legal effect of what has been done pursuant to them in the Netherlands and the jurisdiction of the Netherlands Courts must be decided according to Dutch law; the trust deed must be construed according to English law.
It is convenient now to deal with the situs of the shares of Belso. A company is a body corporate consisting of divisible shares owned by its shareholders but distinct from its shareholders: Salomon v. A. Salomon & Co.ELR, [1897] A.C. 22. It has its domicile in the State which created it and as a consequence has no domicile anywhere else: Gasque v. Com'rs of Inland RevenueELR, [1940] 2 K.B. 80.
Schroeder J. (as he was then) in Nat'l Trust Co. v. Ebro Irrigation & Power Co.UNK, [1954] 3 D.L.R. 326 at p. 341, O.R. 463 at p. 478 said:
In Lovibond v. G.T.R. & C.N.R.UNK, [1939] 2 D.L.R. 562 at p. 579, O.R. 305 at p. 326, 50 C.R.T.C. 124 at p. 143, Masten J.A. quoted the following from Bradbury v. English Sewing Cotton Co.ELR, [1923] A.C. 744 at p. 767:
In the oft-quoted case of Borland's Trustee v. Steel Bros. & Co.ELR, [1901] 1 Ch. 279 at p. 288, Farwell J. defined a share in these words:
A useful and learned discussion of this case is found in Gower on Modern Company Law, 2nd ed., pp. 320 et seq.
The share certificate is in no sense analogous to the share in the company. It is evidence of the ownership of the share. According to the English law and, on the evidence, the Dutch law is the same, the power of granting certificates is to give to the shareholders the opportunity of more easily dealing with their shares in the market and to offer facilities to them of selling their shares by at once showing a marketable title: Re Bahia & San Francisco R. Co.ELR (1868), L.R. 3 Q.B. 584 at p. 594.
When considering the cases dealing with situs of shares one must pay close attention to the care with which Judges have kept in mind the purpose of the particular legislation in question. For the purposes of succession and succession duty, shares in a company have their situs where the ownership of the shares can be effectively dealt with: Brassard v. SmithUNK, [1925] 1 D.L.R. 528, A.C. 371, 38 Que. K.B. 208; The King v. WilliamsUNK, [1942] 3 D.L.R. 1, A.C. 541; Treasurer of Ontario v. BlondeUNKELR, [1946] 4 D.L.R. 785, [1947] A.C. 24.
An examination of the judgment of the Supreme Court of Canada [sub nom. Smith v. LevesqueUNK, [1923] 3 D.L.R. 1057, S.C.R. 578] from which the appeal was taken makes it quite clear that the judgment in this case is confined to determining the situs for the limited purpose of deciding whether the Succession Duty Act of the Province of Quebec (where the head office of the corporation was situate) applied to shares owned by the deceased, who died in Nova Scotia.
In the Williams case Viscount Maugham said at p. 3 D.L.R., p. 549 A.C.:
And at p. 15 D.L.R., p. 559 A.C. the learned Lord Chancellor made it clear that the Judicial Committee was only determining situs in relation to the incidence of a tax imposed by provincial law.
Again it was emphasized by Lord Uthwatt in the Blonde case at p. 788 D.L.R., p. 30 A.C. that for the purpose of death duties a local situation is to be attributed to shares in a company.
These cases, together with others, were fully discussed in Royal Trust Co. v. The King, (Brookfield Estate)UNK, [1949] 2 D.L.R. 153, S.C.R. 329, by Kerwin J. (as he was then), and the learned Justice in referring to the judgment of Duff J. (as he was then) in Smith v. LevesqueUNK, [1923] 3 D.L.R. 1057, S.C.R. 578, pointed out at p. 158 D.L.R., p. 335 S.C.R.,
In the Levesque case Duff J., in commenting on the language of the Quebec Civil Code, said that words had been used with the object of excluding that fiction in determining situs expressed in the rule commonly stated in the form that personal property is deemed to be situate wherever the owner is domiciled. At p. 1063 D.L.R., p. 586 S.C.R. he went on to discuss situs in the case of intangible chattels for the purpose of probate jurisdiction as (quoting from Dicey)
and went on to say:
And after discussing the provisions of the Quebec Civil Code, using the phrase actually situate, the learned Judge said (p. 1064 D.L.R., p. 587 S.C.R.):
And at p. 1065 D.L.R., p. 588 S.C.R., Anglin J. (as he then was) said:
My conclusion is that the line of cases with which I have been dealing go no further than determining the considerations to be applied in deciding the situs of shares in a company for...
To continue reading
Request your trial