Colonist Printing & Publishing Co. v. Dunsmuir

Colonist Printing & Publishing Co. v. Dunsmuir

A provision in a memorandum or pre‑incorporation agreement purporting to give a minority of shareholders the perpetual right to elect a majority of directors is ultra vires and void because it contravenes mandatory statutory election rules (one share one vote) and the statutory condition that corporations formed under the Companies Act, 1890 (B.C.) are subject only to the conditions imposed by that Act; the shares were not preference shares under the 1891 amendment.

Citation
(1902) 32 SCR 679
Parties
Defendant/appellant: Colonist Printing & Publishing Co.; Defendant/appellant: James Dunsmuir; Defendant/appellant: Charles Edward Pooley; Defendant/appellant: Albert G. Sargison; Defendant/appellant: J. A. Lindsay; Defendant/appellant: H. Maurice Hills; Plaintiff/respondent: Joan Olive Dunsmuir; Plaintiff/respondent: Forbes George Vernon
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
17 November 1902
Procedural Posture
Appeal (company Law) / Supreme Court of Canada Judgment on Appeal From Supreme Court of British Columbia
Outcome
Appeal allowed; judgment of the Supreme Court of British Columbia reversed; order of Drake J. setting aside the election set aside; action dismissed with costs.
Legal Topics
Memorandum of Association, Preference Shares, Election of Directors, Ultra Vires, One Share One Vote, Public Policy
Source Language
English
Company Law Commercial Law Corporate Governance Statutory Interpretation Memorandum of Association Preference Shares Election of Directors Ultra Vires +2 more

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Parties

Colonist Printing & Publishing Co.

Defendant/appellant

James Dunsmuir

Defendant/appellant

Charles Edward Pooley

Defendant/appellant

Albert G. Sargison

Defendant/appellant

J. A. Lindsay

Defendant/appellant

H. Maurice Hills

Defendant/appellant

Joan Olive Dunsmuir

Plaintiff/respondent

Forbes George Vernon

Plaintiff/respondent

Procedural Posture

Appeal (company Law) / Supreme Court of Canada Judgment on Appeal From Supreme Court of British Columbia

Legal Issues

  1. 1 Whether a pre‑incorporation agreement and memorandum could lawfully give a minority of shares the perpetual right to elect a majority of directors
  2. 2 Whether the shares in question constituted preference shares under the Companies Amendment Act 1891 (B.C.)
  3. 3 Whether sections 2 and 11 of the Companies Act 1890 (B.C.) are mandatory and override private agreements among shareholders

Ratio Decidendi

A provision in a memorandum or pre‑incorporation agreement purporting to give a minority of shareholders the perpetual right to elect a majority of directors is ultra vires and void because it contravenes mandatory statutory election rules (one share one vote) and the statutory condition that corporations formed under the Companies Act, 1890 (B.C.) are subject only to the conditions imposed by that Act; the shares were not preference shares under the 1891 amendment.

Court Disposition

Appeal allowed; judgment of the Supreme Court of British Columbia reversed; order of Drake J. setting aside the election set aside; action dismissed with costs.

Orders

  • Appeal allowed with costs
  • Final order of Drake J. set aside