United Canso Oil & Gas Ltd., Re, (1980) 41 N.S.R.(2d) 282 (TD)

• Judge: Hallett, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: August 18, 1980
• Jurisdiction: Nova Scotia
• Citations: (1980), 41 N.S.R.(2d) 282 (TD)

United Canso Oil & Gas Ltd., Re (1980), 41 N.S.R.(2d) 282 (TD);

    76 A.P.R. 282

MLB headnote and full text

Re United Canso Oil & Gas Ltd.

(S.H. No. 28338)

Indexed As: United Canso Oil & Gas Ltd., Re

Nova Scotia Supreme Court

Trial Division

Hallett, J.

August 18 and September 14, 1980.

Summary:

This case arose out of an application by company for an order appointing a referee to inquire into the validity of an election of a board of directors of a company by the shareholders, the existence of a quorum and the results of the vote. A dissident group of shareholders of the company succeeded by a substantial margin in electing a new board of directors. The chairman of the meeting, who was a member of the old management group, was unwilling to accept the results, stated that there were irregularities in the election, particularly the proxy vote, declared that there was no quorum present and terminated the meeting. The old board of directors brought the application for the appointment of the referee.

The Nova Scotia Supreme Court, Trial Division, dismissed the application because there was no evidence of any serious irregularities and the results of the vote were not likely to change after an inquiry. See also Jacobsen v. United Canso Oil & Gas Ltd. (1980), 40 N.S.R.(2d) 692; 73 A.P.R. 692, and Jacobsen v. United Canso Oil & Gas Ltd. (1980), 23 A.R. 412.

Company Law - Topic 2332

Shareholders - Meetings - Procedure - Chairman - Duties of - The chairman of a company shareholders' meeting was a member of the group which controlled management of the company - At the meeting a rival group succeeded in electing a new board of directors by a substantial margin of shareholder votes - Rather than accepting the result the chairman without any grounds stated that there were irregularities in the election, particularly in the proxy vote, ruled that there was no quorum and terminated the meeting with the intention of applying to the court to determine the validity of the election - The chairman and the old board of directors left the meeting, but the remaining shareholders continued the meeting - The Nova Scotia Supreme Court, Trial Division, held that the chairman was not impartial and acted in bad faith and in breach of his duty to the meeting when he declared that there was no quorum and terminated the meeting in an attempt to maintain control of the company - See paragraphs 35 to 39 and 46 - The court held that the remaining shareholders validly continued the meeting without the chairman - See paragraph 41.

Company Law - Topic 2514

Shareholders - Shares - Voting of - Restriction of voting rights - Shareholder - What constitutes - A company by-law limited to 1,000 the number of shares which a shareholder could vote no matter how many shares held - A group of dissident shareholders made a successful effort to win the election of a new board of directors - The old incumbent board claimed that the group of dissident shareholders constituted a joint venture and in effect one shareholder limiting them to the voting of 1,000 shares - The Nova Scotia Supreme Court, Trial Division, held that the group was not so limited merely because they had a common goal of ousting the old management - See paragraph 37.

Company Law - Topic 2614

Shareholders - Meetings - Voting by proxy - Signing of proxy forms - A company by-law provided that the authority of a proxy shall be in writing in any sufficient form signed by the shareholder - The Nova Scotia Supreme Court, Trial Division, held that proxy forms with a facsimile or mechanically rendered signature were sufficient - See paragraphs 14 to 19, 59, 64, 98 and 99, 104 to 105.

Company Law - Topic 2616

Shareholders - Meetings - Voting by proxy - Authority of proxy - A company by-law required only that a proxy instrument be lodged with the company - After voting by shareholders on a new board of directors the defeated incumbent board claimed there was no documentation filed with the proxy forms verifying the authority of proxies, mainly brokers, to cast votes for shareholders - The Nova Scotia Supreme Court, Trial Division, held that, where there was no requirement in the by-laws that the authority of a proxy to vote for a shareholder was required to be filed or demonstrated and where there was no evidence to show that brokers voted improperly, the proxy vote in the election was valid - See paragraphs 26 to 32, 56 to 58, 82.

Deeds and Documents - Topic 1545

Execution - Signing - Facsimile signatures - The Nova Scotia Supreme Court, Trial Division, in ruling that facsimile or mechanical signatures on proxy forms were valid discussed the current and widespread practice of signing documents by methods other than a handwritten signature - See paragraphs 14 to 19, 59, 64, 98 to 99, 104 to 105.

Practice - Topic 3766

Referee - When available - To review the procedure and results of company shareholders' meetings - A group of shareholders succeeded in electing a new board of directors of a company, unseating the incumbent board - The chairman of the shareholders" meeting, who was a member of the old management group, refused to accept the overwhelming vote against the incumbent board, stated that there were irregularities in the election, particularly with the proxy vote, declared that no quorum was present and attempted to terminate the meeting - Subsequently, the old board of directors applied for an order appointing a referee to inquire into the validity of the election, including the proxy vote, the existence of the quorum and the results of the vote - The Nova Scotia Supreme Court, Trial Division, dismissed the application, because there was no evidence of any serious irregularities and the results of the vote were not likely to change after an inquiry.

Statutes Noticed:

Companies Act, R.S.N.S. 1967, c. 42, sect. 74(22).

Authors and Works Noticed:

Stroud's Judicial Dictionary (3rd Ed.) [para. 15].

Counsel:

G. David Cover, J. Gerald Godsoe, and Carman G. McCormick for United Canso Oil & Gas Ltd.

John H. Dickey, Q.C., George B. Robertson, Q.C., and C. Peter McLellan, in opposition.

This case was heard on August 5 - 8 and 15, 1980, at Halifax, Nova Scotia, before HALLETT, J., before the Nova Scotia Supreme Court, Trial Division.

On August 18, 1980, HALLETT, J., delivered the judgment orally (see paragraphs 1 to 54) and on September 14, 1980, delivered a supplemental judgment (see paragraphs 55 to 115).