Case v. Edmonton Country Club Ltd., (1974) 1 N.R. 563 (SCC)

• Judge: Laskin and Dickson, JJ.
• Court: Supreme Court (Canada)
• Case Date: March 18, 1974
• Jurisdiction: Canada (Federal)
• Citations: (1974), 1 N.R. 563 (SCC);[1974] 4 WWR 626;1 NR 563;44 DLR (3d) 554;[1975] SCR 534;1974 CanLII 142 (SCC)

Case v. Edmonton Country Club Ltd. (1974), 1 N.R. 563 (SCC)

MLB headnote and full text

Case v. Edmonton Country Club Ltd.

Indexed As: Case v. Edmonton Country Club Ltd.

Supreme Court of Canada

Ritchie, Spence, Pigeon,

Laskin and Dickson, JJ.

March 18, 1974.

Summary:

This case arose out of an action by a shareholder of a company for a declaratory order that resolutions of a company were void. The company operated a golf club and the resolutions resulted in the assessment of each shareholder of a minimum annual fee regardless of whether the shareholder used the company's facilities. Bowen, J., of the Alberta Supreme Court declared the resolution void. On appeal to the Alberta Court of Appeal the appeal was dismissed and the judgment of Bowen, J., was affirmed - see 30 D.L.R.(3d) 211.

On appeal to the Supreme Court of Canada the appeal was dismissed and the judgment of the Alberta Court of Appeal was affirmed. The Supreme Court of Canada declared void the resolutions of the company which attempted to fix on a shareholder any financial obligation in excess of the price paid by a shareholder for his shares.

The Supreme Court of Canada declared valid an article of association of a public company which required share transfers to be approved by the board of directors. The Supreme Court of Canada stated that such a restriction was valid in the absence of bad faith, arbitrariness or abuse of power - see paragraphs 15 to 18.

Laskin and Spence, JJ., dissenting in part, would have declared void the articles restricting the transfer shares without the consent of the board of directors on the ground that the restraint was unreasonable and arbitrary on its face. Laskin, J., stated that such restrictions should establish a reasonable exercise of discretion capable of being considered in advance of a transfer of shares - see paragraph 22.

Company Law - Topic 2702

Shareholders - Limited liability - Liability of a shareholder to an incorporated public company - The company operated a golf club and the company annually assessed each shareholder a minimum fee regardless of whether the shareholder used the company's facilities - See paragraph 7 - Alberta Companies Act - The Supreme Court of Canada declared void resolutions of the company which attempted to fix on a shareholder any financial obligation in excess of the price of the shares purchased by the shareholder - See paragraphs 1 to 12.

Company Law - Topic 3351

Share transfer - Transfer fee - Limitation on the amount of the fee - The Supreme Court of Canada stated that a transfer fee must be limited to the reasonable costs of transfer and that any fee in excess of such costs is a violation of the principle of limited liability of shareholders - See paragraphs 12 to 14.

Company Law - Topic 3335

Share transfer - Close company by-law or article - Restrictions on transfer of shares by an article of association - The Supreme Court of Canada held valid an article which required the consent of directors of the company to a share transfer - The Supreme Court of Canada stated that such a restriction was valid in the absence of evidence of bad faith, arbitrariness or abuse of power - See paragraphs 15 to 18.

Company Law - Topic 3306

Share transfer - Restrictions of transfer - The Supreme Court of Canada stated that shares in a "public company are species of property and as such are entitled to the advantage of alienability free from unreasonable restrictions unless there is a statutory warrant otherwise" - See paragraph 25.

Company Law - Topic 1102

Incorporation - Contractual aspect of incorporation by articles of association - The Supreme Court of Canada stated that the contractual aspect of such a method of incorporation "is submerged in a statutory regime subjecting the company to public regulation" - See paragraph 25.

Cases Noticed:

Ooregum Gold Mining Company of India Limited v. Roper et al., [1892] A.C. 125, folld. [para. 5].

Bisgood v. Henderson's Transvaal Estates, Limited, [1908] 1 Ch. 743, folld. [para. 5].

Shalfoon v. Cheddar Valley Co-Operative Dairy Co. Ltd., [1924] N.Z.L.R. 561, folld. [para. 5].

McKewan's Case (1877), 6 Ch. Div. 447, dist. [para. 9].

Lion Mutual Marine Insurance Association, Limited v. Tucker (1883), 12 Q.B.D. 176, dist. [para. 9].

Baird's case, [1899] 2 Ch. 593, dist. [para. 9].

Biddulph and District Agricultural Society v. Agricultural Wholesale Society, [1927] A.C. 76, dist. [para. 9].

Hole v. Garnsey, [1930] A.C. 472, dist. [para. 10].

Penney's Case (1872), L.R. 8 Ch. A. 446, folld. [para. 16].

Hodgson's Case (1891), 65 L.T.R. 245, folld. [para. 16].

Canada National Fire Insurance Company v. Hutchings, [1918] A.C. 451, folld. [para. 16].

In re Coalport China Company, [1895] 2 Ch. D. 404, folld. [para. 16].

In re Smith and Fawcett, Limited, [1942] L.R. Ch. D. 304, folld. [para. 16].

Canadian National Fire Insurance Co. v. Hutchings, [1918] A.C. 451, not folld. [para. 26].

Ontario Jockey Club v. McBride, [1927] A.C. 916, folld. [para. 27].

Statutes Noticed:

Companies Act, R.S.A. 1970, c. 60, sect. 2(1), sect. 15(1), sect. 16 [para. 5]; sect. 42(1) [para. 8]; sect. 61 [para. 17]; sect. 68(4) [para. 6].

Counsel:

J.E. Redmond, Q.C., for the appellant;

Tom Mayson, Q.C., for the respondent.

RITCHIE and PIGEON, JJ., concurred with DICKSON, J.

SPENCE, J., concurred with LASKIN, J.