Gordon et al. v. Gaby et al.

Gordon et al. v. Gaby et al.

The word "shareholders" in the shareholder agreements was not limited to registered holders; a purchaser who had bought and paid for shares and was owner in equity (despite delay in registration due to company by-laws) counted as a shareholder for the purpose of determining proportionate pre-emption rights, and an undisclosed beneficial partner did not disqualify the registered purchaser from exercising those rights.

Citation
[1966] SCR 527
Parties
Defendants/appellants: Willard M. Gordon and George H. Bell; Plaintiff/respondent: Robert M. Gaby; Defendant/respondent: Federal Packaging and Partition Company Limited
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
26 April 1966
Procedural Posture
Commercial Law Shareholder Dispute (pre Emption Rights) / Appeal to the Supreme Court of Canada (final Judgment)
Outcome
Appeal dismissed; judgment of Court of Appeal affirmed in favour of Gaby.
Legal Topics
Pre Emption Rights, Share Transfer, Registration of Shares, Equitable Ownership, Interpretation of Shareholder Agreements
Source Language
English
Commercial Law Company Law Contract Law Equity Pre Emption Rights Share Transfer Registration of Shares Equitable Ownership +1 more

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Parties

Willard M. Gordon and George H. Bell

Defendants/appellants

Robert M. Gaby

Plaintiff/respondent

Federal Packaging and Partition Company Limited

Defendant/respondent

Procedural Posture

Commercial Law Shareholder Dispute (pre Emption Rights) / Appeal to the Supreme Court of Canada (final Judgment)

Legal Issues

  1. 1 Whether a purchaser who has paid for shares but is not yet registered on the company register counts as a "shareholder" for pre-emption rights under shareholder agreements
  2. 2 Whether the term "shareholders" in the parties' agreements must be read to mean "registered shareholders" only
  3. 3 Whether beneficial ownership or an undocumented partnership interest in the purchased block disqualifies the registered transferee from exercising pre-emption rights

Ratio Decidendi

The word "shareholders" in the shareholder agreements was not limited to registered holders; a purchaser who had bought and paid for shares and was owner in equity (despite delay in registration due to company by-laws) counted as a shareholder for the purpose of determining proportionate pre-emption rights, and an undisclosed beneficial partner did not disqualify the registered purchaser from exercising those rights.

Court Disposition

Appeal dismissed; judgment of Court of Appeal affirmed in favour of Gaby.

Orders

  • Appeal dismissed with costs payable by the appellants.
  • Directions given by solicitors to effect transfers in accordance with respondent's contention were affirmed.