TCR Holding Corp. v. Ontario et al., 2010 ONCA 233

• Judge: Goudge, MacPherson and MacFarland, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: March 08, 2010
• Jurisdiction: Ontario
• Citations: 2010 ONCA 233;(2010), 261 O.A.C. 256 (CA)

TCR Holding Corp. v. Ont. (2010), 261 O.A.C. 256 (CA)

MLB headnote and full text

Temp. Cite: [2010] O.A.C. TBEd. MR.123

In The Matter Of The Business Corporations Act, R.S.O. 1990, c. B.16, as amended

In The Matter Of TCR Holding Corporation

TCR Holding Corporation (applicant/respondent) v. Her Majesty the Queen in Right of Ontario (respondent) and Henry Heidt and Angela Young (intervenors/appellants)

(C51033; 2010 ONCA 233)

Indexed As: TCR Holding Corp. v. Ontario et al.

Ontario Court of Appeal

Goudge, MacPherson and MacFarland, JJ.A.

March 30, 2010.

Summary:

TCR Holding Corp. applied to set aside a 2008 amalgamation amongst itself and three subsidiary corporations, the effect of which was to render TCR liable on a guarantee of a promissory note given by one of the amalgamating corporations in 2000 when a business that had since failed was acquired from the intervenor Henry Heidt (Heidt). The holders of the guarantee, the intervenors, took the position that the 2008 amalgamation should stand with the result that they would obtain the guarantee of TCR that was not bargained for when Heidt sold the business in 2000. The respondent, the Province of Ontario, did not contest the application.

The Ontario Superior Court, in a decision reported at [2009] O.T.C. Uned. K09, allowed TCR's application, on the basis of rectification and, alternatively, mistake, and set aside the amalgamation nunc pro tunc. The intervenors appealed.

The Ontario Court of Appeal dismissed the appeal, holding that the relief was properly granted on the basis of mistake.

Company Law - Topic 7075

Fundamental changes and shareholders' rights - Amalgamation - Setting aside - Grounds - TCR Holding Corp. applied to set aside a 2008 amalgamation amongst itself and three subsidiary corporations, the effect of which was to render TCR liable on a guarantee of a promissory note given by one of the amalgamating corporations (846) in 2000 when a business that had since failed was acquired from the intervenor Henry Heidt (Heidt) - The holders of the guarantee, the intervenors, took the position that the 2008 amalgamation should stand with the result that they would obtain the guarantee of TCR that was not bargained for when Heidt sold the business in 2000 - The application judge allowed TCR's application, on the basis of rectification and, alternatively, mistake - The intervenors appealed - The Ontario Court of Appeal dismissed the appeal - There was no basis for interfering with the application judge's conclusion that "the intention of TCR ... was that 846 was to be included in the amalgamation as a corporation without any liabilities" - Second, the court found no palpable and overriding error in his finding that the creation by amalgamation of a debt owing to the intervenors was a windfall to them - The court found some force in the intervenors' submission that the remedy did not comport with a rectification remedy - A pure rectification order amending the amalgamation to reflect the parties' intention that 846 was joining the amalgamated company with no liabilities would have violated s. 178(2)(a)(i) of the Business Corporations Act - Although the applications judge purported to use a rectification analysis, in the end he simply set aside the amalgamation nunc pro tunc - This order was lawful and appropriate as a remedy for mistake, the alternative basis for the application judge's order - The amalgamating companies agreed to the amalgamation based on the mistake that 846 was debt free - See paragraphs 1 to 27.

Deeds and Documents - Topic 5051

Rectification - When available - General - [See Company Law - Topic 7075 ].

Deeds and Documents - Topic 5055

Rectification - When available - Intention of parties - [See Company Law - Topic 7075 ].

Mistake - Topic 4005

Relief - General - Circumstances when granted - [See Company Law - Topic 7075 ].

Practice - Topic 7159

Costs - Party and party costs - Liability for - Intervenors - TCR Holding Corp. applied to set aside a 2008 amalgamation amongst itself and three subsidiary corporations, the effect of which was to render TCR liable on a guarantee of a promissory note given by one of the amalgamating corporations (846) in 2000 when a business that had since failed was acquired from the intervenor Henry Heidt (Heidt) - The holders of the guarantee, the intervenors, took the position that the 2008 amalgamation should stand with the result that they would obtain the guarantee of TCR that was not bargained for when Heidt sold the business in 2000 - The application judge allowed TCR's application - The intervenors appealed, submitting, inter alia, that the application judge should not have awarded costs to TCR because it was TCR's fault that the application became necessary - The Ontario Court of Appeal rejected the submission and otherwise dismissed the appeal - The respondent in the application, Her Majesty the Queen in right of Ontario, did not contest the application - The appellants, as intervenors on the application, did - Their intervention generated costs to TCR in preparation and in response to their position - See paragraphs 28 and 29.

Cases Noticed:

80 Wellesley St. East Ltd. v. Fundy Bay Builders Ltd. et al., [1972] 2 O.R. 280 (C.A.), refd to. [para. 26].

771225 Ontario Inc. et al. v. Bramco Holdings Co. et al. (1995), 77 O.A.C. 75; 21 O.R.(3d) 739 (C.A.), refd to. [para. 26].

Juliar v. Canada (Attorney General) et al. (2000), 136 O.A.C. 301; 50 O.R.(3d) 728 (C.A.), refd to. [para. 27].

Authors and Works Noticed:

Snell's Equity (31st Ed. 2005), para. 14-02 [para. 21].

Counsel:

S.R. Cameron and F. Stephen Finch, Q.C., for the appellants;

J. Alan Aucoin and Katherine McEachern, for the respondent, TCR Holding Corporation;

No one appearing, for the respondent, Her Majesty the Queen in right of Ontario.

This appeal was heard on March 8, 2010, by Goudge, MacPherson and MacFarland, JJ.A., of the Ontario Court of Appeal. MacPherson, J.A., delivered the following decision for the court on March 30, 2010.