Fallis and Deacon v. United Fuel Investments

Fallis and Deacon v. United Fuel Investments

Because the supplementary letters patent expressly denied notice and voting rights to class B preference shares and redemption on a voluntary winding-up was a contemplated incident of those preference shares, the Court held class B shareholders were not entitled to notice or to vote and the Court's limited discretion to refuse a winding-up order would not be exercised to prevent payment of preference shares absent fraud or equivalent bad faith; therefore the appeal was dismissed and the winding-up order affirmed.

Citation
[1963] SCR 397
Parties
Appellant (class B Preference Shareholder): G.A. Fallis; Appellant (class B Preference Shareholder): D.M. Deacon; Respondent (company): United Fuel Investments, Limited
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
24 June 1963
Procedural Posture
Winding Up Petition Under Winding Up Act S.10(b); Appeal to Supreme Court of Canada From Court of Appeal for Ontario / Appeal to Supreme Court of Canada; Judgment on Petition to Wind Up Company Affirmed
Outcome
Appeal dismissed; Court of Appeal judgment and winding-up order affirmed
Legal Topics
Winding Up, Preference Shares, Shareholder Meetings, Voting Rights, Court Discretion, Redemption, Winding Up Act S.10(b)
Source Language
English
Commercial Law Corporate Law Company Law Insolvency Law Winding Up Preference Shares Shareholder Meetings Voting Rights +3 more

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Parties

G.A. Fallis

Appellant (class B Preference Shareholder)

D.M. Deacon

Appellant (class B Preference Shareholder)

United Fuel Investments, Limited

Respondent (company)

Procedural Posture

Winding Up Petition Under Winding Up Act S.10(b); Appeal to Supreme Court of Canada From Court of Appeal for Ontario / Appeal to Supreme Court of Canada; Judgment on Petition to Wind Up Company Affirmed

Legal Issues

  1. 1 Whether holders of non-voting class B preference shares were entitled to notice of and a vote at the special meeting under s.10(b) of the Winding-up Act
  2. 2 Whether the Court has a discretionary equitable jurisdiction to refuse a winding-up order where majority common shareholders pass a resolution under s.10(b)
  3. 3 Whether the Court should exercise any discretion to protect non-redeemable or non-voting preference shareholders from being paid off on a voluntary winding-up

Ratio Decidendi

Because the supplementary letters patent expressly denied notice and voting rights to class B preference shares and redemption on a voluntary winding-up was a contemplated incident of those preference shares, the Court held class B shareholders were not entitled to notice or to vote and the Court's limited discretion to refuse a winding-up order would not be exercised to prevent payment of preference shares absent fraud or equivalent bad faith; therefore the appeal was dismissed and the winding-up order affirmed.

Court Disposition

Appeal dismissed; Court of Appeal judgment and winding-up order affirmed

Orders

  • Appeal dismissed with costs, including costs of the application for leave to appeal
  • Winding-up order of the Court of Appeal for Ontario affirmed