Kletchko et al. v. Gerhardt et al., (1986) 48 Sask.R. 125 (CA)

• Judge: Brownridge, Wakeling and Gerwing, JJ.A.
• Court: Court of Appeal (Saskatchewan)
• Case Date: May 30, 1986
• Jurisdiction: Saskatchewan
• Citations: (1986), 48 Sask.R. 125 (CA)

Kletchko v. Gerhardt (1986), 48 Sask.R. 125 (CA)

MLB headnote and full text

Kletchko, Kletchko and Schulhauser v. Gerhardt and Patterson

(No. 8577)

Indexed As: Kletchko et al. v. Gerhardt et al.

Saskatchewan Court of Appeal

Brownridge, Wakeling and Gerwing, JJ.A.

May 30, 1986.

Summary:

The defendants became interested in the invention of a propane conversion valve which would improve automobile efficiency by using propane. The defendants invested in licences to purchase the valves and set up businesses to install them. The defendants caused the plaintiffs to also become interested in the venture and got them to invest $66,000. The plaintiffs were under the impression that they were investing in a share of the licence, but the defendants had them actually sign a request for an allotment of shares. The defendants were subsequently convicted of offences under the Securities Act. The plaintiffs served notice of rescission of their agreement to buy shares pursuant to s. 155 of the Act and brought an action to recover their investment.

The Saskatchewan Court of Queen's Bench, in a decision reported in 36 Sask.R. 50, in allowing the plaintiffs' claim, held that the sales by the defendants were in violation of the Securities Act because the sales were made by persons who were not licensed as required by the Act and the shares were in primary distribution and trade in them by any person licensed or unlicensed was prohibited. The defendants appealed.

The Saskatchewan Court of Appeal dismissed the appeal.

Securities Regulation - Topic 5345

Trading in securities - Illegal trading - Remedies - Rescission - Securities Act (Sask.), s. 155, provided that where a person traded in securities every person who entered a contract to purchase any of the securities was entitled to rescission where the person who traded was convicted of certain offences under the Act - The Saskatchewan Court of Queen's Bench held that persons who agreed to purchase shares were entitled to rescission under s. 155 because the traders were convicted for trading while unlicensed and for trading shares, the trade of which was prohibited - The Saskatchewan Court of Appeal dismissed the traders' appeal.

Statutes Noticed:

Securities Act, S.S. 1979, c. S-42, sect. 6 [para. 2]; sect. 155 [para. 1].

Counsel:

D.G. MacKay, for the appellants;

K.W. Noble, for the respondents.

This appeal was heard before Brownridge, Wakeling and Gerwing, JJ.A., of the Saskatchewan Court of Appeal. The decision of the Court of Appeal was delivered orally at Regina, Saskatchewan on May 30, 1986 by Gerwing, J.A.